Biotech major Amgen $AMGN has decided to cut its losses, and the price, of its cholesterol drug Repatha in a scramble to claw back its competitive positioning versus Regeneron $REGN and Sanofi $SNY, the team behind its main rival treatment, Praluent.
Following approvals in 2015 the two drugs were pegged to attain blockbuster status for their ability to dramatically lower levels of LDL cholesterol, but instead faced pushback from insurers for their high sticker prices that led to lower adoption than expected, despite later trials that demonstrated the PCSK9 inhibitors also significantly cut the risk of heart attacks and stroke.
On Wednesday, Amgen said it was lowering Repatha’s list price by 60% to $5,850 from $14,100 per year in a bid to lower copays, particularly for patients covered by Medicare. An estimated 75% of Medicare patients prescribed a PCSK9 inhibitor never actually fill their prescriptions, mainly due to high out-of-pocket costs, noted Amgen CEO Robert Bradway.
Amgen’s move follows Regeneron and Sanofi’s decision to lower the price of its Praluent to a range of $4,500 – $8,000 from the original $14,600 per year. This change did not modify Praluent’s list price, but rather was offered in the form of a larger rebate to giant pharmacy benefit manager Express Scripts $ESRX, who rewarded the action by positioning Praluent as the preferred PCSK9 inhibitor in their formulary. Unlike Repatha, Praluent has also shown to lower the risk of death.
Last year, Repatha brought in $319 million, while Praluent generated $195 million.
Amgen’s announcement could “result in some market segmentation, where Amgen claims greater share of the Medicare market but Sanofi/Regeneron dominates the private insurance market” noted Baird analyst Brian Skorney in a note. According to Jefferies’ analyst Michael Yee, the current PCSK9 market is half Medicare and half commercial, while 75% of Medicare scripts are approved and have insurance versus only 40% for commercial payors. But, 75% of Medicare-approved prescriptions do not get filled and are eventually abandoned due to an average $280-370/month co-pay, he said. “This is money literally left on the table.”
Yee made some quick back-of-the-envelope calculations:
If we tried to estimate and gross up current “lost revenue” now that become “booked revenue” over next year…we estimate the contribution today could be up to a 25% boost – i.e. they do $200 million/year in medicare business but 75% is lost due to co-pay affordability. If the co-pay drops to the new $25-150 then the $200 million in medicare grossed up could be $150 million+ technically per year…obviously this is a longer term thing to say that half the business now should open up and get more accessibility.
As political and public scrutiny into drug pricing intensifies, a host of American drugmakers have made pledges to quell their appetite for drug price hikes. Amgen in May also pledged not to take price increases planned for July, and promised it would not do so for the rest of 2018.
Image: Amgen CEO Robert Bradway (center) at the White House shortly after President Trump took office in 2017 Getty
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