Shire targets Allergan's dry-eye market share by pricing Xiidra at $5K per year--right on par with Restasis

What’s a quick way to nab market share from a competitor? Roll out a superior product at the same price--and that’s what Shire believes it’s doing with newly approved dry eye med Xiidra.

The Dublin-based drugmaker has decided to roll out its new product--green-lighted by the FDA earlier this month--at about $5,000 per year, according to Evercore ISI analyst Umer Raffat. A 30-day supply will cost $426.73--which just so happens to be the exact same price of a 30-day supply of rival Allergan product Restasis.

With the move, Shire forgoes an opportunity to slap a premium price on its med. Some industry watchers had expected as much; after all, Xiidra is the first med indicated specifically for dry eye, with blockbuster Restasis technically meant for “tear production.”

But doing so could have had consequences. Though the label is “clearly better” for Xiidra, a “meaningful premium” may have spurred some maneuvering from payers to make Restasis the go-to med, Raffat wrote to clients shortly after Shire’s regulatory win.

Now, it’ll be up to Shire’s sales and marketing teams to talk up Xiidra’s advantages and lure patients away from Restasis. But as Allergan commercial chief Bill Meury has said, Shire might not have an easy time doing so.

For one, Restasis boasts a payer coverage rate of about 85%, he pointed out on February’s Q4 conference call. And for two, some 70% of Restasis patients are repeat users, suggesting their loyalties lie with Allergan.

Even with the introduction of Xiidra, “I just don't see any major disruption,” he told investors.

Analysts don’t necessarily disagree. As Raffat figures, even if Xiidra does grab some Restasis volume--say, 30% over time, he estimates--Allergan may be able to offset about 10% to 15% of that through a series of price increases. And Bernstein’s Ronny Gal wrote to clients earlier this month that Allergan’s “power of incumbency” will make for what will likely be a “stable oligopoly” between the two meds.

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