Quick! Which group of hotly anticipated, next-generation therapies for a widespread health problem is expected to cost payers beaucoup bucks when they hit the market? If you said the new crop of hepatitis C treatments, you'd be half right. Pharmacy benefits managers say they're just as worried--perhaps even more so--by a coming class of cholesterol drugs known as PCSK9 inhibitors.
As the Pink Sheet reports, executives from CVS Caremark ($CVS) and Express Scripts ($ESRX), the two biggest U.S. PBMs, say these drugs are groundbreaking treatments that are proving safe and effective at controlling cholesterol in people who've had little success at that in the past. But at an estimated $10,000 per year, drugs like Sanofi ($SNY) and Regeneron's ($REGN) alirocumab, Pfizer's ($PFE) bococizumab, and Amgen's ($AMGN) evolocumab won't fit the healthcare budget.
Compared with Sovaldi, the $1,000-per-day hepatitis C treatment that's already turned blockbuster for Gilead Sciences ($GILD), $10,000 per year doesn't seem like a lot. But after a course of Sovaldi and its companion treatments, patients are cured. They don't take hep C meds day in and day out, year after year.
Private payers and government officials are spooked by the prospect of treating some 3 million patients infected with hepatitis C, at some $100,000 a shot, Express Scripts CMO Steve Miller said at a recent conference. So should they be about the PCSK9 class. "[T]hink about a lifetime drug that's probably going to cost greater than $10,000 annually times 71 million people," Miller said, citing the number of patients with high cholesterol. "Those are the problems we're going to face."
PCSK9 products are all injectables, so they're necessarily more expensive than cholesterol pills like AstraZeneca's ($AZN) Crestor, one of the few top statin drugs still on patent in the U.S.--and even more so compared with off-patent pills such as Pfizer's Lipitor and Merck's ($MRK) Zocor. Patients with hard-to-control cholesterol are going to be moving from these cheap, commoditized meds to biologics "that may cost up to $1,500 per prescription," CVS Caremark President Jon Roberts said at the same conference. "We think they're going to be highly prescribed and they're going to be very expensive."
The words "highly prescribed" and "expensive" may be anathema to PBMs, but they're music to drugmakers' ears. After all, Sanofi and Regeneron aren't spending some half-a-billion dollars on a long-term outcomes trial to end up with a drug that won't bring in the big bucks. Analysts figure alirocumab will deliver, too--some $3 billion a year, eventually. Amgen's evolocumab is also pegged at $3 billion in annual sales.
In all, the PCSK9 market could be worth $10 billion a year. Even recent worries from the FDA about potential neurocognitive side effects, which initially hit Regeneron and Sanofi shares hard, have eased, at least for now.
As rival PBM Catamaran said in a recent report, PCSK9 drugs aren't likely to be approved for first-line cholesterol fighting. But even so, the entire class marks a move from regular old cholesterol treatments to specialty drugs. And that's a move the entire industry is making, with specialty meds representing a greater and greater share of new drugs and new prospects--and a larger and larger piece of the drug-spending pie.
Drugmakers big and small are depending on specialty meds to jump-start growth that's still lagging because of patent-cliff losses. Patients want those specialty meds, which in many cases promise much better results than their predecessors, albeit at a much bigger price. And PBMs and other gatekeepers want to make them available, Miller said.
"This is about a great pipeline of drugs coming out and America's ability to pay for them," Miller said (as quoted by the Pink Sheet). "We have to work together with the pharmaceutical industry, with the regulators, with the payers, with the patients, and with the physicians, because if we don't, the next great big thing that comes out for cardiovascular disease, or for cancer, or for Alzheimer's, we're not going to be able to afford."
Miller's prescription is, essentially "a debate on what rational drug pricing is." With more pricey hep C treatments on their way, and the PCSK9 drugs not far behind, that debate needs to start soon.
- read the Pink Sheet story (sub. req.)
Special Reports: 10 top drugs in biopharma's late-stage pipeline - Alirocumab | The 10 best-selling drugs of 2013