Sorry, Gilead. AbbVie cuts exclusive hep C deal with Express Scripts

AbbVie ($ABBV) has made Express Scripts' ($ESRX) wish come true. Or perhaps it's the other way around. The proud new parent of Viekira, a highly anticipated hepatitis C cocktail, AbbVie now has exclusive access to millions of the pharmacy benefits manager's patients in return for a "significant discount" off its $85,000 list price.

Viekira--Courtesy of AbbVie

It's the fulfillment of a promise from Express Scripts CMO Steve Miller, who's been a vocal critic of nosebleed prices on Viekira's competition, namely Gilead Sciences ($GILD) and its drugs Sovaldi and Harvoni, and Johnson & Johnson ($JNJ) and its Olysio, the first three treatments in a new generation of hepatitis C fighters. Miller said months ago that he'd be horse-trading with hepatitis C drugmakers, using his status as a gatekeeper to win price cuts.

Gilead has made headlines for pricing its two meds at $1,000 per pill and up--or $84,000 per 12-week treatment course for Sovaldi and $95,000 for combo med Harvoni--and for turning Sovaldi into a multibillion-dollar seller during its first quarter on the market. J&J's Olysio, which runs $60,000 per treatment course, made a less dramatic debut, but it's on track for blockbuster sales this year, too.

With Gilead's two meds vacuuming up share and Viekira still awaiting approval, AbbVie had been suggesting that growth in hepatitis C treatment overall would offer plenty of opportunity for its new treatment. But behind the scenes, it was negotiating with Express Scripts to make sure of that.

Under the deal, patients infected with genotype 1--the most common strain of hepatitis C--will be steered to AbbVie's cocktail beginning January 1. Patients already in treatment with Gilead's drugs can continue. Because AbbVie's drugs are only approved for genotype 1 disease, Express Scripts will cover Gilead's meds in patients with other genotypes. The deal applies to the 25 million people covered under Express Scripts' National Formulary.

The agreement also allows all patients access to treatment, regardless of the severity of their disease. Like other payers, Express Scripts has been trying to limit its hep C spending by focusing on patients in advanced stages of hepatitis C.

"This is huge," Miller said of the agreement (as quoted by the St. Louis Post-Dispatch). "In the last year, plan sponsors have had to, by necessity, prioritize patients and only treat those with the most severe disease."

It's big for AbbVie's rivals, too. Express Scripts began barring particular brand names from its national formulary in 2013, and drugs left off the list have suffered. GlaxoSmithKline's ($GSK) Advair took a blow in 2014, for instance, and came back with a discount offer to win 2015 placement. When Novo Nordisk's ($NVO) Victoza and NovoLog were left off the PBM's national formulary, one analyst estimated that Express Scripts accounted for 15% or more of the drugs' U.S. sales.

The two follow-up questions are these: Has AbbVie has scored similar arrangements with other payers? The most significant partner would be CVS Caremark ($CVS), which is Express Scripts' biggest rival and itself a critic of high hep C treatment prices. But smaller PBMs and other payers, including state Medicaid programs, could be lining up, too.

And is Gilead fighting back with discounting of its own? The California-based drugmaker has shown some willingness to negotiate. It recently struck a deal with France, offering Sovaldi at a big discount off the list price, and with a money-back guarantee attached. In return, the French government agreed to cover Gilead's med at 100%, so potential patients wouldn't be deterred by co-payments.

- read the Post-Dispatch coverage

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