Top drugmakers are counting on two hot drug fields—migraine and NASH—but payers are ready to rumble

PBMs such as Express Scripts are eyeing new NASH and migraine meds in an effort to control costs. (Express Scripts)

A who's who of top drugmakers are counting on sales from two new waves of drugs—one for migraine, the other for nonalcoholic fatty liver disease—to lift their top lines. Analysts are forecasting $5 billion in sales for the migraine market alone.

But pharmacy benefit managers have a different idea.

Just as they did with hepatitis C drugs as multiple competitors hit the market, PBMs are eyeing these rivalries as a source for deep discounts, according to Bloomberg. And with Amgen's migraine drug erenumab set for an FDA decision date in May—and Eli Lilly's galcanezumab eyeing its own a few months later—these payers figure they can use the close competition to their advantage.

Besides Amgen and Lilly, Allergan and Teva are each working on migraine drugs in the CGRP class, though Teva could be facing a manufacturing-related delay on its entry, fremanezumab. Credit Suisse analysts recently pegged the market for migraine prevention at $5 billion, and migraine treatment could add significantly to that.

Meanwhile, Gilead Sciences, Novo Nordisk and Intercept are among the companies working on treatments for fatty liver disease, properly known as nonalcoholic steatohepatitis (NASH). And the market for NASH drugs is far bigger than the migraine field—$20 billion or more in the long term, by some estimates.

So it's not a big surprise that payers would want to tackle those numbers. And zeroing in on competitive drug classes isn't a novel strategy; PBMs used tough negotiations to limit hep C drug costs following the closely watched launches of Sovaldi and Harvoni by Gilead back in 2014 and 2015. After bringing in $19.1 billion in 2015 from the meds, Gilead predicts its sales in the field will fall to $3.5 to $4 billion this year due to intense competition and discounting. 

Last year, a representative for the California biotech said Harvoni's actual selling price had fallen by more than 50% since its launch across all payers. Both hep C drugs generated widespread criticism over pricing back when they launched.

Payer pressure in diabetes and respiratory drugs has dragged down sales at top diabetes drugmakers, particularly in insulins, and dinged revenue from top-selling asthma and COPD meds, including GlaxoSmithKline's behemoth Advair.

The formulary management strategy is paying off for Express Scripts, as the PBM recently reported. The company disclosed earlier this month that per-person prescription drug spending in the U.S. grew just 1.5% last year, the lowest in more than two decades.

But in the PBM battle against the drug industry over prices, pharma has argued patients don't benefit from growing rebates to middlemen. A recent report found that on average, discounts have grown to 41% from 28% in recent years, with the trend likely to continue.

For 2018, Express Scripts knocked 64 drugs from its formulary, while CVS removed 17 meds in 10 therapeutic classes. Express Scripts said its formulary management will save $2.5 billion in drug costs next year. CVS expects its management will bring clients $13.4 billion in savings between 2012 and 2018. 

For another example of how formulary stiff-arming can hit pharma companies, look to Sanofi's 2017 results. The company's important diabetes sales cratered 22.8% during the year due to CVS and UnitedHealth formulary exclusions. Sanofi has had to cut costs and lay off staff to adapt as it and other companies struggle in that field.