AbbVie ($ABBV) has benefitted from dealmaking with PBMs to compete with rivals in the hep C sphere, inking an exclusive pact with Express Scripts ($ESRX) last year for its hep C treatment Viekira Pak and setting off a pricing war with Gilead Sciences ($GILD). But AbbVie's rapport with Express Scripts could be on the rocks after the FDA warned of serious liver injuries tied to Viekira Pak and demanded that the company update the med's label.
Express Scripts is planning to hold a Pharmacy & Therapeutics (P&T) meeting soon to review the news and changes to Viekira Pak's label, Investopedia reports. While the PBM is staying quiet on details, the meeting could potentially deal a blow to AbbVie as it tries to protect its market share. As of now, the company has access to millions of Express Scripts' patients thanks to the deal it struck last December, offering a "significant discount" off Viekira Pak's $85,000 list price in exchange for exclusive coverage for the treatment.
Last week, the FDA said 26 cases of liver issues have been reported in individuals with advanced liver disease since Viekira Pak and newcomer Technivie were approved, prompting AbbVie to add stronger language to the meds' labels warning doctors against using them for the sickest patients. The news was enough to send AbbVie's shares spiraling downward, cutting more than 10% off its share price.
Although shares recovered some in the aftermath, the FDA warning is probably a "damaging event" for AbbVie given its fierce rivalry with Gilead Sciences and its hep C drugs Sovaldi and Harvoni, which already have advantages over AbbVie's meds, Bernstein analyst Tim Anderson said in a note to investors. Patients only need to take Gilead's pills once a day, compared to multiple times a day for AbbVie's drugs.
Plus, Gilead's drugs already back a better safety record than AbbVie's. Healthcare informatics firm Advera Health Analytics recently looked at new side effect reports on hep C treatments, including those for Gilead's Harvoni and Sovaldi and AbbVie's Viekira Pak, and found that AbbVie's drug was the riskiest option among the three.
AbbVie is standing by its drugs, saying that Viekira Pak and Technivie are safe for the vast majority of patients and that risks of serious liver injury are only found in 3% to 5% of patients with the most serious stage of the disease, the Chicago Tribune reports. "I think what happened was there was a lot of confusion, and people were extending this labeling change to the broader hepatitis C population," Dr. Scott Brun, AbbVie's VP of pharmaceutical development, told the newspaper.
Still, revised labeling for Viekira Pak and Technivie will "likely materially negatively impact sales," Citigroup analyst said in a research note. Analysts expect Gilead's drugs to rake in $17 billion in sales next year compared to $2.5 billion for AbbVie's meds. Other companies such as Johnson & Johnson ($JNJ) and Merck ($MRK) could also benefit from the development, as they forge ahead with their next-generation hep C therapies. Merck's treatment, which is pending FDA approval, could rake in between $600 million and $700 million in sales next year, Anderson said, non-withstanding AbbVie's latest regulatory misfortune.
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