By: Roberto Bellini
REIMBURSEMENT
specIalty Drug prIcIng:
was largely blown out of proportion - the losses in the NBI were recovered in a matter of days - Express Scripts’ deal was perceived by market watchers as a shot across the bow to drug companies that were used to more pricing leverage. As the landscape shifts going forward, these are the important themes to watch.
Specialty Pharma Continues to Push Premium Pricing The poster child for pricing in specialty pharma is a drug called Acthar from Mallincroft. It was first discovered over 50 years ago to treat infantile spasms and, until recently, sold for $50 per vial. Over the last five years, Acthar has increased in price from $50 to $1,650, to the current price of $28,000 per vial, which translates into more than $100,000 per treatment course. While that may seem high, it’s in line with many high priced specialty drugs, and particularly the ones that treat rare pediatric conditions like infantile spasms. The vertiginous - and most often justified - pricing of rare disease drugs is the extreme example of specialty drug pricing. Combine the robust pricing with the fact that more and more traditional drugs are going generic, spending on specialty drugs is in line to surpass that of their traditional counterparts by 2018, according to data from market analytics firm Artemetrx (see Table 2).
Worth risking payor Wrath
O
n December 23rd of last year, the Nasdaq Biotech Index (NBI) dropped dramatically, plummeting nearly 300 points in one day and losing 8.5 per cent of its value. Despite the fall, the NBI, which tracks the performance of the most important Nasdaq-listed biotech companies, had an exceptional 2014 gaining over 35 per cent overall. In fact, the NBI has been one of the top performing indexes for the last five years, driven largely by increasing FDA approvals for new drugs, strong M&A activity and increased earnings. So, what’s so important about one poor
trading day during one of the most significant bull runs in biotech history? The cause of the decline on December 23rd. Before market open, Express Scripts, one of the largest pharmacy benefits managers in the United States, announced it would exclusively reimburse Abbvie’s newly approved Hepatitis C drug, Viekira Pak, in return for a significant discount to the list price. Most importantly, this deal froze out Gilead and its more expensive hepatitis C virus drug Sovaldi from the 25 million people in Express Scripts National Preferred Formulary. While the threat of a pharma pricing war
Payors Are Fighting Back with More Exclusionary Deals Likely to Come Health plans and pharmacy benefit managers, like Express Scripts, have been very vocal about their opposition to high drug pricing. The Hepatitis C market in particular has been a lightning rod for this frustration following Gilead pricing their Sovaldi treatment at $84,000. Considering there are three to four million Hepatitis C patients in the U.S., the combination of pricing and patient numbers will result in a potentially massive bill for payors.
Table 1: Examples of Specialty Drug Pricing DRUG
COMPANY
INDICATION
ESTIMATED ANNUAL OR TREATMENT COURSE PRICE
Humira
Abbvie
Inflammatory Conditions
$50,000
Soliris
Alexion
Paroxysmal nocturnal hemoglobinuria
$440,000
Kalydecko
Vertex
Cystic fibrosis
$275,000
Naglazyme
Biomarin
Maroteax-Lamy syndrome VI
$375,000
Solvaldi
Gilead
Hepatits C
$84,000
Gleevec
Novartis
Multiple forms of cancer
$95,000 February/March 2015 BIOTECHNOLOGY FOCUS 13
