After months of waiting and anticipation, the hepatitis C treatment price wars are finally getting under way. Express Scripts, the largest pharmacy benefits manager in the U.S., has released a new treatment from AbbVie as its exclusive treatment for patients with genotype 1, the most common form of the chronic disease. This drug covers 75% of the estimated 3.2 million Americans who are infected.
And this new drug will likely change the market for the hepatitis C treatments that are currently led by a pair of medications from Gilead Sciences which is likely to reach $20 billion in revenue next year thanks to demand for its treatments.
"I would say it hastens [the likelihood of a price war] quite a bit," R.W. Baird analyst Brian Skorney says. "But we'll have to see how market share plays out, in reality."
Gilead has, so far, dominated the market with its Sovaldi treatment, which costs $84,000 for a 12-week regimen, or $1,000 per pill. The follow up drug, Harvoni, costs anywhere from $63,000 to $94,500 depending upon the duration of the regimen. These prices have caused concern for both state Medicaid directors and private insurers alike making the new treatment an attractive alternative for providers.
With cure rates exceeding 90%, Gilead argues its drugs are a good value compared to other treatments and long-term hospital costs, including transplants. Though, there are many signs that the impending price wars are coming. After winning FDA approval, AbbVie revealed it's pricing for the drug, known as Viekira Pak, at $83,300 for twelve weeks.
Yet, even with the companies prepared for a bidding war on the horizon, there are still many unanswered questions. Currently, experts are unsure about the extent to which Express Scripts will be able to move the market share, and doctors are also a mitigating factor. Recently, doctors have complained that public and private payers have made it difficult to prescribe the Gilead treatments.
By offering the discount on the drugs, AbbVie hopes to remove this obstacle. However, it should be noted that the drug requires several pills a day instead of just one from the Harvoni treatment. Sicker patients must also be on the AbbVie treatment for 24 weeks compared to the 12 weeks for Harvoni.
"In short, Express Scripts is now saying that payers and employers are finally willing to accept certain disadvantages to drugs for severe conditions - in Viekira Pak's case, convenience and duration of therapy - in return for big discounts," Real Endpoints researcher who deals with reimbursement issues the firm sees, Roger Longman says. "That means that any company going into a highly competitive specialty area had better be able to articulate, systematically and objectively, all their relative advantages over the competition. And those advantages must be valued as their payer customers value them. Otherwise, payers could value those drugs on the element that is easiest to compare - price."
The Express Scripts deal with AbbVie could generate a remarkable amount of revenue for AbbVie, as well as trigger a price war between it and its largest competitor, Gilead Sciences, as both compete to be the leader in hepatitis C treatments today.
