Say what? CVS Health execs figure PCSK9 meds to cost up to $150B

CVS Health ($CVS) is raising eyebrows with a new estimate: A coming class of pricey cholesterol meds could cost the U.S. as much as $150 billion per year.

They're the PCSK9 drugs, with Sanofi ($SNY) and Amgen ($AMGN) each anticipating FDA approval within a few months, and others coming down the pike after that. They're biologic meds, with prices expected to be commensurately high. Up to $12,000 per year, CVS figures.

Express Scripts CMO Steve Miller

CVS and its biggest rival in pharmacy benefits management, Express Scripts ($ESRX), have been warning about the costs of these drugs for almost a year, in between pronouncements about the overwhelming costs of next-gen hepatitis C drugs. With exclusive, cut-rate deals with hepatitis C drugmakers, though, the PBMs have handled that problem. Express Scripts CMO Steve Miller recently totted up $4 billion in savings for U.S. payers this year, thanks to negotiated pricing on those meds.

Hepatitis C is a widespread illness. Therapies from Gilead Sciences ($GILD) and AbbVie ($ABBV)--with sticker prices of $84,000 to $95,000 per treatment course--are obviously pricey, but they come with high cure rates. Treatment. Cure. Done.

The problem with PCSK9 meds? They're not cures. They're treatments for chronic illness. So even at prices of $7,000 to $12,000 per person, they're still bound to be more costly, in the long run, than hepatitis C remedies, CVS figures.

But how the dickens can CVS come up with $150 billion in PCSK9 spending? "That seems like a silly estimate for the potential size of that market," said David Sobek, a contributor to the investing site The Street, on Twitter after the estimates came out. "I thought people were [estimating] closer to $20 billion."

Maybe it's something about the population size. As CVS execs note in their HealthAffairs blog post, one could argue for treating up to 15 million people--every person with a history of coronary artery disease--with PCSK9 meds.

That's a heck of a lot of people, considering that the PCSK9 meds won't be for first-line use. They're for patients whose cholesterol levels don't respond well enough to statin therapy, or those who can't tolerate statins. Current estimates put statin use at 25 million patients.

Meanwhile, analysts and the companies themselves aren't expecting anything near that level of use. Sanofi and Regeneron's ($REGN) alirocumab, for instance, carries a $3 billion estimate for annual sales, and some analysts see the entire PCSK9 market being worth $10 billion to $20 billion per year.

- read the HealthAffairs blog post

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