Amarin Corp Plc (AMRN)

[Biobillionair]

The future growth of Vascepa scripts:
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Differences in Tiers For Drug Reimbursement ( $AMRN $GSK )
February 20, 2013 in Life Science Companies | Tags: $AMRN, amarin, co-pay, Drug Tier System, GlaxoSmithKline, GSK, Lovaza, Vascepa | Leave a comment
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Drugs are ranked by tier to determine the financial burden its individual client will cover with a co-pay and the insurer will cover.

This system is used to charge lower co-pays for lower costing drugs and higher co-pay for costlier ones. Individual plans vary in terms of the cost a patient would pay for a drug. The numbers or tiers can also vary between insurance plans from one tier which is a flat percentage of the drug cost to six different tiers. Generally, there are four tiers:

Tier 1 is typically for the least-expensive drugs which are generic
Tier 2 is for preferred brand drugs
Tier 3 is for non-preferred brand drugs
Tier 4 is for the most expensive drugs generally used to treat rare diseases
Preferred drugs are ones that the insurer feels they are receiving for a good price and will have a cheaper co-pay for their patients rather than non-preferred drugs. Drugs can switch tiers and sometimes drug companies will themselves pay the co-pay difference for patients between tier 2 and tier 3 to bridge the cost gap between their drug and their competitors drug. This will occur until the company can convince insurers their drug should be a preferred branded drug.

An example of a company currently implementing this strategy is Amarin who this January launched Vascepa (Icosapent ethyl) which insurers have initially placed as a tier 3 drug. Their competitor GlaxoSmithKline’s Lovaza (omega-3-acid ethyl esters) is generally a tier 2 drug for insurance plans. Thus, to help get patients to switch to Amarin’s clinically superior drug, they are paying the difference of the co-pays for Lovaza and Vascepa.