Roche’s deep discount for MS drug Ocrevus pays off big for Swiss drugmaker

Roche caught the market by surprise when it priced its highly touted new multiple sclerosis drug Ocrevus at a 25% discount to the competition. Roche’s gambit has surprised again, with Ocrevus winning immediate uptake and generating $200 million in its first quarter on the market.

The drug not only outperformed analysts consensus by more than three times, it appears to have outperformed Roche’s because the drugmaker today said it has decided to raise its 2017 forecast.

RELATED: Roche's much-anticipated MS game-changer, Ocrevus, nabs its FDA green light

"Particularly pleasing is the very successful launch of Ocrevus for the treatment of two forms of multiple sclerosis,” Roche CEO Severin Schwan said in a statement. “Based on our half-year performance, we raised the outlook for the full-year to midsingle-digit sales growth.”

Bernstein analyst Tim Anderson expressed his own surprise today with a bit more vigor. “Ocrevus, Roche’s launched drug for multiple sclerosis, blew it out of the water, selling CHF 192 million in its first quarter on the market, all which came from the US (vs. our estimate of CHF 100 million and consensus of CHF 54 million),” he said in a note to investors.

It wasn’t Ocrevus alone that prompted Roche to up its guidance. Newer cancer drugs Tecentriq and Perjeta also performed well, with Perjeta sales up 17% to CHF 1.1 billion in the first half (PDF)  of the year and Tecentriq adding CHF 237 million, up 19%. Pharmaceuticals sales for H1 were up 5% to CHF 20.5 billion.

Ocrevus, approved in March, came to the market with all of the elements that would have allowed Roche to price it at a premium to other drugs in the market. It outperformed Merck KGaA's MS stalwart Rebif (interferon beta-1a) in two relapsing MS phase III trials and did better than placebo in the harder-to-treat primary progressive form of the disease.

In fact, it is the first product ever to win approval for hard-to-treat primary progressive MS, which affects one in 10 MS sufferers, Roche says. It’s also an every-six-months infusion, meaning it’ll have a convenience edge over other infused medications such as Biogen’s Tysabri.

At the time, Anderson said that all would allow Roche to "argue convincingly for a high price outside the U.S., resist payers in the U.S., and own” the progressive segment.

Instead, Roche set a list price of $65,000, compared to Rebif’s list price of about $86,000. Roche at the time pointed out that MS drug prices have grown by 400% over 12 years, and said it wanted to “reverse this trend.”

Merck has said the comparison between the two drugs, and therefore their prices, is “oversimplified,” but Roche has sold the market on the differences.

RELATED: Merck KGaA disses Ocrevus-Rebif price comparison as 'misleading and oversimplified'

The drugmaker has also bought itself some good will in the process. Express Scripts Chief Medical Officer Steve Miller, one of the most vocal critics of pharma’s practice of pushing pricing to the limits, recently pointed to Ocrevus’ price as one example suggesting pharma is beginning to compromise on prices.

RELATED: Tough-and-vocal PBM executive Steve Miller says pharma may be coming around on pricing

It is not as if the new drug was not expected to do big things. EvaluatePharma has pegged Ocrevus as the No. 1 drug approval of 2017, at least in terms of 2022 sales, have forecast the newcomer to rack up $4.1 billion that year.