Can J&J score sales with FDA's new Olysio-plus-Sovaldi approval?

Johnson & Johnson ($JNJ) just scored a marketing goal: Its hepatitis C drug Olysio won FDA approval as part of a two-drug cocktail that also stars Gilead Sciences' ($GILD) Sovaldi. The question now is how much that approval will help Olysio withstand competition, both current and forthcoming.

First problem: The Olysio nod follows FDA approval for Harvoni, Gilead's combo pill that combines Sovaldi with a new agent, ledipasvir. As a two-drug, interferon-free drug, it's set to compete head-to-head with any other all-oral match-up. Including Olysio plus Sovaldi.

Second problem: AbbVie ($ABBV) is on the verge of winning approval for its brand-new hep C suite of products. The three-drug combo would also line up as one of the Olysio-plus-Sovaldi rivals.

Third problem: Price. As high as the $94,500 price tag on Harvoni is, it's not nearly as high as the sum cost for Olysio and Solvadi. J&J set the price for Olysio at $66,000. Sovaldi has a list price of $84,000. Total: $150,000.

Could J&J slash Olysio's price enough to make its Sovaldi cocktail competitive? Simple math says that would put Olysio at a $10,500 list price. Of course, with rebates and and payer negotiations, the math isn't really all that simple. Still, J&J might well be reluctant to offer enormous rebates. Pay-for-performance? Maybe. J&J has done that sort of deal with payers before. Volume discounts?

J&J says it will work with payers on costs. And it has a targeted approach in mind. After all, hepatitis C comes in several genotypes, and the various drugs have varying scores among subgroups of patients.

"The availability of multiple treatment options is important to physicians and patients so optimal treatment decisions can be made, given the complexity of the disease and diversity of patient population," Dr. Eric Lawitz, lead author of the Olysio-Sovaldi study submitted to the FDA, said in a statement.

A J&J spokeswoman put it more succinctly. "There are a lot of different patient needs," spokeswoman Rebecca Tillet told Bloomberg. "We think Olysio will play a meaningful role in that mix."

Whatever the strategy, investors and even J&J execs fear Olysio's blockbuster days are numbered. Despite impressive sales so far this year, sales projections for the drug are not so impressive going forward. 

- get the release from J&J
- see the Bloomberg story

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