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Can AbbVie ABBV -0.22% make a dent in the burgeoning hepatitis C market?


http://blogs.wsj.com/pharmalot/2014/10/14/if-abbvie-discounts-its-hep-c-drug-would-pricing-reach-a-tipping-point/?mod=yahoo_hs


Now that the FDA has approved the Harvoni treatment from Gilead Sciences GILD -3.92% and a $94,500 price for a 12-week regimen has been established, attention is turning toward AbbVie and the steps the big drug maker must take to win market share. Already, though, some Wall Street prognosticators believe AbbVie may find it daunting.

For instance, in an investor note, Sanford Bernstein analyst Geoff Porges wrote that Gilead left AbbVie “less room to start a price war” than some may have expected. How so? Gilead priced the eight-week regimen at $63,000, which means average pricing for Harvoni would be about $80,000, assuming that as many as 45% of the patients with most common form of the virus use the drug for eight weeks.

This is actually less than what most insurers are now paying for Sovaldi, which costs $84,000 for a 12-week regimen, but must be taken with another drug. This pushes the cost to somewhere between $95,000 or so and $160,000, depending upon which medication is added. In short, the Gilead maneuver may place added pressure on AbbVie to consider aggressive pricing.

One wag thinks AbbVie may have no choice, but that such a move may also help to overhaul insurance reimbursement and pricing for expensive medicines across the board. “We could be at a tipping point,” says Roger Longman, who runs Real Endpoints, a research firm that specializes in reimbursement issues confronting the pharmaceutical industry. “Everybody in the insurance industry is watching this.”

As Longman sees it, AbbVie should contemplate a $76,000 price tag – or a 20% discount – for the simple reason that its own hepatitis C treatment, which is expected to win FDA approval shortly, is not as convenient. The treatment requires taking more pills more frequently, including Norvir, another AbbVie drug that can also cause interactions with other medicines.

For this reason, Longman says the AbbVie triple combination treatment scores poorly on a proprietary ranking system when compared with Harvoni – 14.6 versus 18.3 – based on safety and use. Overall, he says the drugs scored comparably – Harvoni registered 39 versus 37.2 for the AbbVie treatment – only because their efficacy rankings were fairly similar.

“If AbbVie doesn’t provide any incentive to health plans, they simply won’t make any headway,” he says. “But if AbbVie does [offer incentives], maybe what the plans will do is guarantee AbbVie first place on the formulary, [which is a list of drugs that receive preferred reimbursement.] And the plans might say to themselves ‘Gee, if we do that, AbbVie may give us a bigger discount.”

“Theoretically, the plan may not merely decide they prefer the AbbVie drug, but they mandate it, unless there’s some significant reason a patient can’t take it. If plans are willing to do this, the average cost [for hepatitis C treatment] may fall pretty significantly.” As a result, the cost per patient could fall to below $70,000, on average, across the spectrum of hepatitis C patients.

Typically, drug makers avoid discussing pricing publicly until a drug is about to launch. In any event, we asked AbbVie for comment about its pricing plans and will update you accordingly.

Some say a modest discount may suffice. “A cure for HCV is not a commodity. The price per cure just fell again from $150,000 to $80,000, on average, with significantly less side effects. I don’t believe anyone can convincingly argue the price trend per cure is gouging the payers,” says John Schroer, head of the US health care sector and a portfolio manager at Allianz Global Investors. There may be some “variances” involving a 10% discount, but he does not see pricing as a “significant” part of the AbbVie sales pitch.

Longman, however, is suggesting a scenario in which payers are willing to become more assertive about taking hepatitis C prescribing decisions into their own hands. “That would be huge, because it could change the drug industry,” he says. “It has the potential to change things in a big way.”

To what extent this occurs remains to be seen, of course. As Longman notes, payers have been leery of being more aggressive about coverage for many cancer medications, because the illness is as an emotional topic, which has made limiting choice difficult. And doctors make significant money from administering these medicines. But he opines that hepatitis C may offer an opportunity to do things differently.