Mylan decimates the list price of its Copaxone copy. But why?

Mylan has slashed its list price on generic Copaxone, and the move has industry watchers scratching their heads.

According to Bernstein analyst Ronny Gal, the company has sunk its sticker to $1,900 per month, well below the $5,000-per-month price it used to sport. And the way Gal’s contacts see it, “under the current system, this change makes no commercial sense.”

The reason? Teva’s branded Copaxone is “essentially free for Medicaid,” which is “the segment that often prefers low upfront cost,” Gal wrote. So why would Mylan make the move?

Two potential reasons: The first, that “this was done in response to the government pressure” to drop list prices, which would fulfill U.S. President Donald Trump’s promises for price cuts without actually impacting products’ postrebate prices or the out-of-pocket costs for patients, Gal notes. And the second, that Mylan is looking to force down its rival’s prices and “deny Teva profits,” perhaps as a way to woo shareholders.

RELATED: Mylan surprises analysts, Teva with long-delayed Copaxone approvals

“Mylan sees itself as competing with Teva for investor money and as signaling to future innovators in complex markets (Advair, Neulasta) it is willing to erode market prices, if they do not cede fair share,” Gal wrote of the possibility.

So far, Teva has been able to fend off its generic attacker, which after long delays won a surprise approval last October. To start, Mylan set its list price just $800 per month below Teva’s $5,800 and then served up discounts.

RELATED: Teva scrambles to match 30% Copaxone discounts from Mylan's knockoff: analyst

Mylan “got only moderate share using this strategy with Copaxone,” though, Gal points out. The copycat grabbed just a 15% to 20% piece of the pie, thanks in part to rebating competition from Teva.

Now, the Israeli drugmaker will have to work to protect its market share from the impact of Mylan’s latest play. With pricing pressure hurting the generics industry across the board, Teva could use some help from its specialty portfolio. And while the company is counting on new product Austedo and forthcoming fremanezumab—as well as $3 billion in cost cuts—to dig it out of a major hole, it certainly wouldn’t say no to higher-than-expected revenue contributions from its top seller.