|Gilead's Sovaldi--Courtesy of Gilead|
Gilead Sciences' ($GILD) hep C drug Sovaldi burst onto the market, impressing doctors and patients with its benefits and outraging payers and politicians with its price. It reached blockbuster status twice over in the course of a single quarter. But instead of an aberration, a new report suggests it is a reflection of a trend that has been going on for 5 years and looks to be the new normal.
According to data from EvaluatePharma, the median revenue per patient of the Top 100 drugs has ballooned to $9,400 this year from just $1,260 in 2010. That happened as the median patient population size served by a Top 100 drug in 2014 is 79% less than that 5 years earlier, 146,000 compared to 690,000 in 2010.
Part of the reason can be attributed to the patent cliff peak in that time period. Patents were lost for drugs like Pfizer's ($PFE) cholesterol treatment Lipitor, Sanofi's ($SNY) blood thinner Plavix and Takeda's diabetes drug Actos, to name a few. But other forces are also at play, EvaluatePharma suggests. FDA oversight has gotten stickier, requiring larger, more expensive trials, even as incentives and pricing have favored drugs for smaller populations that can command higher prices.
The report says that the number of Top 100 drugs in 2010 that treated a patient group of 100,000 or less was 23. By this year it had vaulted to 41. At the same time, the number of Top 100 drugs treating the 500,000-plus size category fell by 20 to 35.
Drugmakers also benefit in the U.S. from a payer system that allows a long-term monopoly for the most successful drugs and which increasingly is punishing higher priced "me-too" drugs. Sanofi found that out in 2012. Within months of launching colorectal cancer drug Zaltrap at $9,600, it cut the price in half after docs at Memorial Sloan-Kettering Cancer Center panned it in The New York Times as not worth the cost. Other drugs, like Roche's ($RHHBY) cancer products Herceptin and Rituxan and Celgene's ($CELG) Revlimid, can keep their prices high even in the face of competition, because doctors believe in the benefits to their patients, the report said.
While payers, both private and the government, may bemoan this trend, it looks likely to continue until some organized effort comes around to interrupt it, EvaluatePharma said. Maybe payers will start conducting their own cost-benefit analyses of the most expensive drugs and "call out" those that don't measure up. If the payer revolt happens, drugmakers are going to need to keep real benefits in mind if they want to keep pricing their drugs in the premium category.
- access the report here