Biogen set to raise $300M from New Year's price hikes, just enough to offset MS competition

Allergan, Teva and several other specialty pharmas weren't the only drug companies to raise prices Monday. Biogen also boosted the stickers on some of its key multiple sclerosis drugs, a move that could pay off with $300 million in sales.

That sales fuel is crucial for the MS franchise now, one analyst figured, thanks to new competition expected to take a hefty bite out of revenue.

Biogen increased the U.S. prices on MS drugs Avonex, Plegridy and Tecfidera by 8% and Tysabri by 3%, according to SunTrust analyst Yatin Suneja, who cited the third-party Wolters Kluwer PriceRx service in a Tuesday note.

If the drugmaker can capture two-thirds of the price hikes after negotiations with payers, it'll amount to an extra $300 million in sales, Suneja figured. In the past, Biogen took "more frequent price increases," but has been "more disciplined recently and is now taking price increases (for at least these four drugs) once per year in January," he noted.

The price hikes could help the company fight off trouble in MS due to increased competition, notably with the entry of Roche's Ocrevus last year. Consensus estimates call for a 3% decline in Biogen's MS business in 2018.

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That 3% decrease would amount to a $270 million dip in revenues for the franchise, according to Suneja. The January price hikes—if they deliver as the analyst predicted—would more than offset that expected decline. Suneja and his team have themselves predicted a 1.4% dip in Biogen's MS sales.

Biogen's moves also come as lawmakers delve into pricing for the MS field as a whole. Last summer, Rep. Elijah Cummings helped launch an inquiry, noting that Biogen's Avonex, for instance, has grown in price several times over since its initial approval in 1996.

The company didn't immediately respond to a FiercePharma request for comment on the price hikes.

As industry watchers know, however, it's not unusual for pharma companies to raise prices to start the year. Jefferies analyst David Steinberg noted earlier this week that Allergan, Teva, Horizon Pharma and other companies hiked prices on more than 30 drugs; many of those increases were above 9%, though all of them were in the single digits. 

The single-digit price hike trend is notable because back in 2016—as pharma was under fire from multiple sides on pricing—Allergan CEO Brent Saunders suggested the industry police itself or risk regulatory reform. He committed to single-digit price hikes once a year, and many other drugmakers followed his lead.

But not all drugmakers have chosen to follow suit. Celgene raised prices on key drugs Revlimid and Pomalyst multiple times last year, bringing their total increases for the year to 19.8% and 17.7%, respectively. Between two sets of increases rolled out in January and June last year, Pfizer raised Viagra's list price by 27.5%, according to a Financial Times report in June. 

After a multiyear firestorm on prices and without any real action in Congress, states such as California, Maryland and Nevada have worked to take the issue into their own hands with differing legislation; pharma has largely pushed back at state-level efforts to rein in prices or bring transparency to the market.