Sanofi draws a $14,600 line in the sand for Praluent payer fight

It's no surprise that Sanofi ($SNY) and Regeneron ($REGN) won FDA approval for Praluent, the PCSK9 cholesterol-fighter. But the drug's list price is another matter. At $14,600, it's almost 50% more than many analysts had estimated.

That's even for a lower dose, which some thought Sanofi and Regeneron would use to woo payers away from Amgen's ($AMGN) forthcoming alternative, Repatha.

Think of it as a negotiating ploy. Payers have been promising a big fight over PCSK9 costs, a là the hepatitis C pricing war. Flush with success in scoring discounts on AbbVie's ($ABBV) Viekira Pak and Gilead Sciences' ($GILD) Sovaldi and Harvoni, Express Scripts ($ESRX), CVS Health ($CVS) and other payers started sharpening their weapons for the Praluent-vs.-Repatha battle. In media interviews and journal articles, the major PBMs predicted astonishing costs if PCSK9 meds were adopted widely at their presumed list prices.

Which were around $7,500 at the time. By slapping a much higher tag on Praluent, Regeneron and Sanofi have bought themselves some negotiating room. They can still offer the lower Praluent dose at a "starter" price to help sew up exclusive formulary deals. They can fork over a 40% rebate here and a 50% rebate there, if they choose, reserving the highest discounts for the toughest cases or the biggest populations.

That's for the 60% of patients covered by commercial insurance, as Regeneron estimates. Most of the rest--about 35%--will be Medicare patients, the company figures. And Medicare itself doesn't have the power to negotiate prices.

Here's where it gets sticky, though, and where the official FDA labeling comes in. The FDA gave Praluent a broader approval than some feared after an FDA advisory panel met last month. Rather than restricting it to those with familial hypercholesterolemia, the agency approved it for patients whose cholesterol isn't under control despite aggressive statin therapy. That's not as broad as in Europe, where the drugs will be recommended for merely statin-intolerant patients, too. But it's a bigger group of patients than it might have been. Some 8 million to 10 million, the companies figure.

Payers will be doing all they can to whittle down that population, Leerink Partners analyst Seamus Fernandez said in a Monday investor note. "We expect the higher-than-assumed price to drive more payer restrictions, such as requirements that patients try high-dose Lipitor or Crestor in combination with Zetia before adding a PCSK9," Fernandez wrote.

Evercore ISI analyst Mark Schoenebaum

Those rules, enforced with prior authorization requirements before prescriptions are reimbursed, could cut the population by 35%, Fernandez calculates. According to Evercore ISI analyst Mark Schoenebaum, Regeneron and Sanofi will focus promotional efforts at making sure patients get the highest doses of statins they can tolerate--and stick to that therapy--to fulfill those prior authorization requirements and prepare the way for adding Praluent to the mix.

As for off-label use? Private payers will look askance at that sort of thing, and the American College of Cardiology quickly backed up that case. Doctors have in general been enthused about the promise of PCSK9 meds, which cut bad cholesterol by 60% in trials. In a Friday statement, the physicians group reiterated that enthusiasm--and then advised doctors to restrict their prescribing "to the very high risk, hard-to-treat groups approved by the FDA." At least until outcomes trials show whether the meds reduce heart attacks and strokes, the ACC said.

Production of Praluent starts Monday and the boxes will roll on Wednesday. Soon enough we'll get an idea of how it's selling--and some indication, in investor disclosures, how the overall discounts are shaping up.

Payers may get their wish and push discounted costs down to $7,000 or so. The eligible population may end up at 6 million to 7 million, rather than 8 million to 10 million. But Praluent is still likely to be a big success for Sanofi and Regeneron, partly because of their aggressive pricing. Analysts now figure Praluent itself will top $5 billion by 2020 and the entire PCSK9 market could be worth $15 billion soon enough.

- read the FDA release
- get more from Sanofi and Regeneron

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