Last month, a game theory expert suggested Merck & Co. ($MRK) focus on winning corners of the hep C market small enough that dominant players Gilead ($GILD) and AbbVie ($ABBV) won't challenge its forthcoming combo treatment. And according to Merck execs, the company is already working to do just that.
The pharma giant is looking to carve out its own piece of the pie by targeting hard-to-treat hep C patients, Bloomberg reports. Translation: It doesn't want to escalate the pricing war that has triggered huge discounts from both Gilead and AbbVie.
|Merck's Adam Schechter|
"With a competitive product profile, you can be successful potentially without offering significantly more price concessions or discounts," Adam Schechter, Merck's president of global human health, told the news service recently.
To do that, the company is playing to the strengths of its therapy, which is due for an FDA decision in late January. As Merck R&D chief Roger Perlmutter told the news service, patients with "substantial renal insuffieciency"--and those on dialysis--can take the drug, and "there aren't any other drugs you can use in that population," he said.
|Merck R&D chief Roger Perlmutter|
And Merck may also focus in on patients with genotype 4, Bloomberg notes--a subtype that accounts for only 1% to 2% of U.S. cases. Gilead's Sovaldi is an option for those patients, but it needs to be taken with a side-effect heavy companion.
Those strategies could help Merck avoid the steep discounts Gilead and AbbVie have offered to payers ever since AbbVie signed a pact with leading PBM Express Scripts ($ESRX) to exclude Gilead's Harvoni in favor of its Viekira Pak. Gilead has said rebates and other discounts will result in an average price cut of about 46% this year, with some government agencies getting even higher discounts.
"There are ways to market this drug to get it on formulary--price isn't the only way," SunTrust Robinson Humphrey analyst John Boris told Bloomberg.
The way Leerink Partners analyst Seamus Fernandez sees it, though, Merck will need its triplet therapy--further behind in its pipeline--to really get in the game.
"We believe it is the triplet therapy … that will allow Merck to become a competitive player in HCV," he wrote in a recent note to clients. And that treatment will be "crucial to sustaining a healthier HCV pricing environment" too, he said.
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