Roche sees no 'short term' pricing pressure for company's cancer drugs: Reuters

Roche's Daniel O'Day

Don't expect Roche's cancer drugs to get caught in the crosshairs as payers ratchet up the pressure on drug prices, the company's head of pharmaceuticals, Daniel O'Day, told Reuters.

There will be no "short term" U.S. pricing pressure for Roche's ($RHHBY) cancer drugs such as Rituxan, Avastin and Herceptin, because the meds treat patients with few other options, O'Day said. The drug-pricing pressure will focus will be more on generics rather than next-generation therapies, he added.

"There will be a bifurcation of the industry. There will be true innovators that are providing transformational medicines. And then there will be the generic medicines," O'Day said, as quoted by Reuters. "The excitement you've seen has been around generics, certain kinds of companies coming in and massively raising the price."

Among them would be Turing Pharmaceuticals and Valeant Pharmaceuticals ($VRX), whose large-scale price increases are now notorious. O'Day acknowledged that Turing's decision to buy toxoplasmosis drug Daraprim and raise its price by more than 5,000% was a "misuse of the system." And "there very well may be some legislation that stops that from happening", he told the news outlet, but Roche's cancer drugs would be spared any increased scrutiny.

Not all pharma execs are singing the same tune, however. The days of price hikes without political pushback "are over," Novartis ($NVS) CEO Joe Jimenez said last week. "You have to assume that there is going to be increased price pressure in the U.S." The Swiss pharma is "taking decisive action" to respond to the pricing environment, Jimenez said, planning to centralize some of its R&D and manufacturing functions to save $1 billion by 2020 and keep prices down.

Meanwhile, payers are taking an increasingly tough stance on pricey meds. The list of formulary exclusions is growing, and pharmacy benefits managers are taking new steps as well. Over the summer, Express Scripts ($ESRX) said it would revamp its cancer drug spending with a new value-based model, which prices meds according to their results for particular indications.

Presidential hopefuls and lawmakers are also weighing in on the issue. Democratic candidates Hillary Clinton and Bernie Sanders have laid out plans to crack down on costly meds, including giving Medicare the power to negotiate on prices. Republican candidate Donald Trump jumped into the fray last week, crossing party lines with a call for Medicare drug price negotiations.

Later this week, the House Committee on Oversight and Government Reform will hold a hearing to look at Turing's price increases on Daraprim and Valeant's price hikes for heart meds Isuprel and Nitopress, which the company raised by more than 500% and 200%, respectively. Ex-Turing CEO Martin Shkreli and Valeant's interim CEO, Howard Schiller, are on the docket, though Shkreli has said he will "plead the Fifth" to avoid testifying.

- read the Reuters story

Special Reports: 10 big brands keep pumping out big bucks, with a little help from price hikes | The top 10 most expensive drugs of 2013 | Top 10 best-selling cancer drugs of 2013 – Avastin – Rituxan/MabThera – Herceptin