Roche's MS hopeful will amp up payer pricing pressure, analyst says

Armed with positive results from two studies, Roche ($RHHBY) is one step closer to entering the MS market. And when it does, other players in the field had better watch out, analysts say: Formulary pressure will be ramping up.

In a pair of Phase III studies, Roche's ocrelizumab "significantly reduced" relapses and progression of disabilities in relapsing forms of MS, compared with Merck KGaA's Rebif. The Swiss pharma giant plans to submit that data to U.S. and European regulators in the first quarter of 2016, setting itself up to join MS players including Teva ($TEVA), Biogen ($BIIB) and Novartis ($NVS).

As is becoming more and more frequent for drugmakers, Roche's rivals will have more to worry about than just the extra marketplace competition if and when ocrelizumab does roll out, Bernstein's Ronny Gal wrote in a recent note to investors.

Products in the late-stage MS pipeline will add to the list of payers' available choices, "thus serving to increase intermediate term formulary pressure," he wrote.

That pressure has so far proven effective for payers looking to tamp down costs. Since last year's first quarter, red-hot price momentum in the MS market has cooled down; prices stayed steady at about $60,000 per year after growing at a compound annual rate of about 15%, Gal noted.

And that means the pressure isn't likely to go away anytime soon. A recent Bernstien analysis found that 24 of 25 payers used some sort of formulary tool to differentiate among MS drugs, with most of them boasting multiple reference tiers. Six payers excluded at least one product from their formularies.

Of course, formulary management in the MS arena is "relatively moderate" when compared with other therapeutic areas--such as respiratory, where a battle between GlaxoSmithKline ($GSK) and AstraZeneca ($AZN) has led to aggressive discounting for their respective Advair and Symbicort. And some MS contenders have other things to worry about--including shaky long-term IP protection for products like Novartis' Gilenya and Biogen's Tecfidera, Gal says.

"We are concerned that a combination of more aggressive payers, more product alternatives and potentially more generics will lead the ~$11B U.S. market to 'roll over' around the end of the decade," Gal wrote.

- read Roche's release

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