Amgen’s hotly watched migraine drug, Aimovig, isn’t even approved by the FDA yet, but questions about its insurance coverage still overshadowed the company’s better-than-expected quarterly earnings.
There’s good reason for that. Just hours before the company announced its first-quarter earnings, pharmacy benefits manager Express Scripts advised Amgen to think carefully before launching Aimovig at its expected $8,000 to $10,000 list price.
The PBM is worried about a forthcoming new class of migraine medicines—led by Aimovig—and it wants their makers to reconsider the usual strategy of setting high list prices and then offering big rebates to payers to win coverage deals.
“If your expectation is that you are not going to actually get that high list price, then don’t do that to patients who have high co-pays,” said Steve Miller, chief medical officer of Express Scripts, in an interview with Reuters. Though payers' bills are based on the price after rebates, patients have to pay their share based on the list price.
Express Scripts is also urging the company and others working on similar drugs to refund payers two-thirds of the cost of their products whenever a patient stops using them within 90 days because of side effects or a lack of efficacy, according to Reuters.
Analysts jumped on the issue during Amgen's first-quarter earnings call. But meanwhile, Amgen reported street-beating first-quarter results, with revenues of $5.6 billion up 2% year over year and 3% higher than analysts’ expectations. And adjusted earnings per share grew 10% to $3.47, beating estimates by 22 cents.
The company credited double-digit growth of recently launched products, including its PCSK9 cholesterol drug, Repatha, which brought in sales of $123 million for the quarter, up 151% over the same period a year ago.
That line item is itself an apt reminder of how high expectations can be dampened by persnickety payers. Analysts initially had blockbuster hopes for the drug, but then Express Scripts and others balked at its $14,000 list price. Payers limited access by requiring physicians to fill out forms for preauthorization. Amgen has tried everything from a refund deal with Harvard Pilgrim, to a long-term study on the drug’s ability to prevent heart attacks and strokes, to revamped TV ads. Still, the product has a long way to go toward its blockbuster dreams.
And investors wouldn’t be misguided in comparing Aimovig’s launch challenges with those of Repatha. The migraine drug, a once-monthly self-injectable that works by targeting the calcitonin gene-related peptide (CGRP) pathway, is expected to bring in nearly $1.2 billion in sales in 2022. But Amgen is far from the only player in the CGRP market; Eli Lilly, Teva and Allergan are also working on migraine drugs that work on the same pathway. That, plus payer backlash, could put pressure on pricing.
During a conference call with analysts after the earnings report, one participant kicked off the Q&A session by asking how the company would apply what it learned from the Repatha launch to Aimovig's rollout.
Tony Hooper, Amgen’s chief of global commercial operations, pointed out that the company’s Aimovig marketing partner, Novartis, would be contributing a salesforce that’s experienced in hawking neuroscience drugs. What’s more, if the FDA approves Aimovig in May as expected, Amgen will be first to market. “And this is clearly a market where patients have huge symptoms and actually know when they’re not being properly treated,” Hooper said. “So we look forward to a large dose of patients who want to come on this drug as quickly as possible.”
But another caller reminded Hooper of a recent draft report (PDF) on CGRP inhibitors released by U.S. drug-price watchdog Institute for Clinical and Economic Review (ICER). Using an estimated annual price of $8,500 a year, the organization concluded that Aimovig would add $6,000 in annual costs per patient—and at that price, only 16% of eligible patients could be treated without overstressing the U.S. healthcare budget.
Hooper noted that an earlier analysis written by headache specialists and economists suggested that CGRP inhibitors would add value to the health system, and that the ICER review fails to account for the broader effects of migraines, such as worker productivity. “The ICER report doesn’t seem to take into account things such as absenteeism and presenteeism, which we would argue is really an important thing to look at, from both an employee perspective and an employer perspective,” he said.
Still, many analysts came away from the earnings report with questions about the ability of Aimovig and other new products to make up for expected declines in older top-sellers, such as Epogen, Neupogen and Enbrel, all of which are facing biosimilar competition. “With a lack of meaningful near-term catalysts, Amgen’s growth outlook is not exciting,” said Leerink analyst Geoffrey Porges in a note to investors.
Jefferies analyst Michael Yee told investors in a note that he expected Aimovig to be a “key revenue upside driver,” but cautioned against expecting a short-term hit drug, “since [insurers] will likely try to restrict usage in first year.”