Biotech Values

[DewDiligence]

John LaMattina weighs in on the PCSK9 pricing dilemma:

http://www.forbes.com/sites/johnlamattina/2012/03/26/new-cholesterol-lowering-drugs-will-test-the-future-healthcare-system

We are now in a world where generic statins exist. Over the coming months, the cost of therapy for even high doses of atorvastatin (the active ingredient of Lipitor) might be as low as $1 per day. Antibodies, on the other hand, are expensive with the majority costing tens of thousands of dollars per year. Insurance companies and other payers will undoubtedly look at this situation not necessarily with regard to the degree of LDL lowering provided by these compounds but rather with regard to cost. Why reimburse the costs for a PCSK-9 antibody at $20,000 per year when a generic statin at $400 per year is almost as effective? What degree of extra lipid-lowering will justify a 50-fold increase in cost per patient?

…My guess would be that these agents will be reserved for people at high risk and for whom statins are not very effective or for whom statins are not tolerated. Given that these drugs will have a high price tag, they should be a commercial success. But the initial use will be limited.