Biotech Values

[DewDiligence]

Re: ABBV/ENTA US price of Viekira Pak

From the standpoint of the US market only, ABBV’s $83.3K price doesn’t make much sense insofar as it cedes to GILD any US patient who is eligible for the 8-week Harvoni regimen. (Even after offering generous rebates to large accounts, ABBV’s price probably won’t be competitive with GILD’s price for an 8-week regimen.)

Therefore, the impetus behind ABBV’s US price must be to optimize ABBV’s pricing power in Europe. I.e., by aiming high in the US, ABBV will be able to persuade EU governments that Viekira Pak at a reimbursed price of roughly $50K is a terrific bargain! Had ABBV instead priced Viekira Pak in the US at $60K (as I originally expected), the reimbursed price in most European countries would surely have been less than $50K and probably much less.

ABBV’s focus on the European HCV market makes a lot of sense. Europe not only has about 50% more HCV patients than the US, but also has a much higher proportion of GT1 patients with genotype 1b, which is where Viekira Pak enjoys its greatest efficacy (#msg-96696670).

Although my kneejerk reaction to ABBV’s pricing announcement was negative insofar as I had wanted ABBV to compete for the entire US patient pool, ABBV clearly knows more about this decision than I do and I do not think ABBV’s management is stupid. Thus, upon further reflection, I think ABBV’s decision is economically sound.

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p.s. H/t ‘Rocky3’ (@Colavito00) for thinking about ABBV’s pricing along the above lines before the announcement.