US drug majors work to get insurers on board
Companies are trying to avoid the fiasco that surrounded launch of an $84,000 wonder drug
Drugmakers worried about a backlash over soaring drug prices are increasingly talking with insurers ahead of time about paying for new therapies that could cost six figures a year.
Companies such as Biogen Inc, Amgen Inc and Sanofi are wary of the negative attention Gilead Sciences Inc received over hepatitis C cure Sovaldi, which surprised the industry in late 2013 with its cost — $84,000 (Dh308,280) for 12 weeks of treatment. The price tag had House Democrats calling for an explanation from Gilead executives, and Gilead was spurned by the biggest manager of drug insurance benefits in the US, which backed a rival’s discounted hepatitis C drug instead.
Insurers and hospitals felt blindsided by the introduction of Sovaldi, which was a “case study of how not to collaborate,” said Betsy Nabel, president of Brigham and Women’s Hospital. The medical centre hadn’t planned for the steep price, which also put pressure on the Massachusetts state Medicaid budget for medicine, she said at a conference last week in Boston.
Biogen and Amgen have been in talks with insurers even while their drugs are under development. And Sanofi is contemplating how to work with insurers to determine how pricey gene therapies get paid for.
Before Sovaldi, drugmakers often paid little attention to the impact their products would have on the health care system.
Potential stampede
Sovaldi was different because it promised a cure in a matter of weeks, creating a potential stampede on private and government insurers as doctors began doling out prescriptions to the 3.2 million Americans living with hepatitis C. Gilead said last week that 210,000 US patients have started its treatments for the liver disease since December 2013, and that at least 250,000 will begin this year.
Drug spending in the US rose 13 per cent last year, the fastest rate in more than a decade, fuelled by hepatitis C drugs like Sovaldi, according to benefit manager Express Scripts Holding Co.
The public relations fallout over Sovaldi has been a blemish on one of the most successful drug introductions of all time. Gilead reported that sales of its hepatitis C drugs doubled to $4.55 billion last quarter, soaring past the average estimate of analysts by almost $1 billion.
Still, the stock’s 33 per cent climb in the past year has trailed its peers — a sign of the toll that pricing pressure has taken on Gilead investors’ psyche.