By Russ Britt, MarketWatch
Drug retail giant CVS Health Corp. is girding to do battle with
pharmaceutical companies over a coming class of cholesterol drugs
that CVS says could cost the nation's health-care system $150
billion a year.
CVS (CVS), the nation's biggest health-related company with
nearly $140 billion in annual sales, says this new strata of
cholesterol drugs, believed to be a cut above previous medications,
would severely strain the health-care system if prescribed to all
the 15 million Americans who could benefit from the drugs.
With annual costs running between $7,000 and $12,000 for the
medication, CVS officials say the drugs -- known in the industry as
PCSK9 inhibitors -- could weigh on the system more than a class of
hepatitis C drugs put on the market in the past year and a half,
led by Gilead Sciences Inc.'s (GILD) Sovaldi, costing $1,000 a day.
CVS officials said the controversy over Sovaldi has faded, perhaps
falsely suggesting that the system is resilient.
"We believe that resiliency is about to be challenged in a
manner unlike we have seen in the past, at least in the area of
pharmaceuticals," a group of CVS officials led by William Shrank,
the company's chief medical officer, wrote in a blog post for the
trade magazine Health Affairs early Tuesday.
Shrank warns that while the hepatitis C drugs could also cost
$150 billion, that would be spread out over a decade. But this
class of cholesterol medicines could cost that much in a single
year. With potential users numbering 15 million, that is five times
the 3 million believed eligible for hepatitis C drugs.
"As this is chronic therapy, PCSK9 sales could be expected to
persist and grow over time, and will likely be the highest selling
class of medications in history. Plus, as a biologic agent, there
will not be a simple pathway to cheaper generics in a 10-15 year
time frame. Even in a system that costs $4 trillion per year, a
single therapy adding $100 billion-$200 billion in costs annually
is extraordinary," he wrote.
The warnings are reminiscent of last year's battles between
Gilead and insurers. America's Health Insurance Plans, the trade
group for carriers, took Gilead to task for pricing Sovaldi and
follow-on medication Harvoni at a level that put severe burdens on
insurers. As more hepatitis C drugs are entering the market, the
price is beginning to come down, but Gilead's revenue from this
class of medications, which have proved to be more than 95%
effective, surpassed $10 billion last year.
Drug and biotech giants such as Pfizer Inc. (PFE) , Amgen Inc.
(AMGN) , Merck & Co. Inc. and an alliance between Sanofi Inc.
(SNY) and Regeneron Pharmaceuticals Inc. (REGN) are developing this
new class of cholesterol drugs that is due to start hitting the
market later this year.
Industry sources say Amgen has the inside track with its drug
now known as Evolocumab, which has passed through its testing
phases and filed for approval with the U.S. Food and Drug
Administration last year. Amgen may get the nod within the next few
months. Pfizer and the Sanofi-Regeneron alliance are believed to be
close behind, and could hit the market with their own drugs just a
few months after.
If that's the case, it means CVS's concerns are overwrought,
says Holly Campbell, spokeswoman for PhRMA, the drug industry's
trade group. She says the company is incorporating all potential
users of the drug into the mix, with all paying list prices, with
its $150 billion figure.
"That's not actually what happens," she said. Campbell says
competition and market forces are bringing down the impact the
price on these new cholesterol drugs. She says that with these
cholesterol drugs, the competition will be at least as vigorous as
with hepatitis C, if not more so.
"We're really seeing how competition is going to work," Campbell
said. She also points out that Sovaldi and the other hepatitis C
drugs have worked to bring down overall health-care costs.
"The value of these medicines really need to be part of the
conversation," she said.
PCSK9 inhibitors will usually be injected once or twice a month,
and are considered to be well-tolerated and effective in reducing
so-called "bad" cholesterol. The prime candidates for the drug are
those with a family history of high cholesterol, though there is
growing interest in allowing other subgroups to use it, such as
those who are intolerant to statins or those with a history of
coronary artery disease.
-Russ Britt; 415-439-6400; AskNewswires@dowjones.com
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