The pharmaceutical industry, particularly in the US, has been facing considerable pricing pressure in the last few months. The surge in drug price hikes in the last few years has triggered talks of pricing reforms, but despite this, the surge continues.
According to a research note from Cowen and Company analysts, Gilead Sciences, Inc. (NASDAQ:GILD) hiked the list prices of six of its drugs last week. These include the antibiotic Cayston, the blood cancer drug, Zydelig, and the chest pain medicine, Ranexa, each of which saw their prices increase 10%. The biotech giant raised prices of its hypertension treatment, Letairis, and its blockbuster HIV regimens, Complera and Stribild by 7% each. Note that Gilead had raised prices of the latter two HIV treatments just six months ago by 7% and 5%, respectively. Complera pulls in some $1.4 billion each year while Stribild is a $1.8 billion-a-year brand. The two drugs are combination treatments based on Viread (tenofovir disoproxil fumarate also known as TDF), which is due to lose patent protection by the end of next year, while Complera will go off-patent in 2023. Gilead has already launched alternative HIV regimens based on a safer salt, tenofovir alafenamide (TAF), in market, but it seems the company hopes to squeeze every last bit of sales potential from the older brands prior to cheaper competition.
Cowen analysts have also suggested that Gilead’s price hikes on Complera and Stribild may be designed to steer patients toward its new TAF-based HIV regimens. Gilead’s HIV franchise has also been facing strong competition from GlaxoSmithKline’s Triumeq/ Tivicay, with GSK projected to have the highest annualized growth rate of 21% in the disease area.
The price hikes come shortly after the US government said a cost-cutting mechanism formed under Obamacare, called the Independent Payment Advisory Board or IPAB, will not likely be triggered until 2017, instead of this year as most suspected. The IPAB is a 15-member board, which would be appointed by the president and has authority to set in motion major reductions in Medicare payments to biotech and pharmaceutical companies. According to a report by Medicare’s trustees, the government health insurance program for the elderly and disabled spent $648 billion last year, making it the single largest buyer of health services in the US. Biotech index had rallied as much as 2.7% on IPAB’s delay news on June 22 in the biggest intraday gain in over a month.
Note that Gilead has already drawn considerable criticism over the exorbitant pricing of its blockbuster hepatitis C medicines, Sovaldi and Harvoni; the former was launched in 2013 at a list price of $84,000 for a 12-week course, while Harvoni was launched a year later at $94,500. Large pharmacy benefit managers (PBM) strictly restricted the drugs’ access to the sickest of patients due to their prices while Express Scripts removed Harvoni from its 2015 formulary of covered drugs in favor of a rival treatment; Gilead has ended up offering sharp discounts and rebates on Sovaldi/Harvoni to other PBMs for their coverage. In fact part of the reason the biotech giant saw HCV sales decline last quarter was because it offered strong discounts on its drugs to accommodate lifting of payer restrictions in the US and overseas.
The drug pricing debate was re-triggered in the US last fall after presidential candidate, Hillary Clinton, pointed out instances of aggressive price gouging in the specialty pharma industry. The Canadian drugmaker, Valeant Pharmaceuticals Intl Inc., fueled the debate with two particularly unjustified price increases applied on acquired age-old heart drugs last year. The move had already drawn inquiries from prominent Senate members and Valeant was facing a federal investigation into its growth strategy, which centered almost entirely on sharp price hikes, by October. Valeant’s former CEO, Michael Pearson, was not able to name a single US drug that the company acquired and did not raise the price of, at a Senate committee meeting investigating price increases in April. A Wells Fargo research report released prior to the meeting claimed that Valeant had boosted prices on 16 of its products this year alone, even after facing fire from all quarters over its pricing tactics.
Valeant, however, is not alone, though it may be the worst example yet. In June, the largest US drugmaker, Pfizer Inc. (NYSE:PFE) increased US drug prices by an average of 8.8%, according to a note by Morgan Stanley analyst, David Risinger. The company had substantially raised its US drug prices by an average of 10.4% in January alone. Mr. Risinger said: “Pfizer’s price hikes have been consistent with historical action despite political media noise regarding US drug pricing.”
Wells Fargo analyst, David Maris, has noted that the generic drug giant, Mylan NV (NASDAQ:MYL) raised prices on two dozen of its products by over 20% in the past six months, including some “exceptionally large” increases amounting to more than 400%. However, note that Mylan increased prices of drugs that represent a small chunk of its business, while Pfizer and Gilead offer their drugs at large rebates and discounts, which make their net price growth considerably less. Despite this, the fact that drugmakers are making these moves amid the pricing controversy in the US is alarming in itself.
According to a research note from Cowen and Company analysts, Gilead Sciences, Inc. (NASDAQ:GILD) hiked the list prices of six of its drugs last week. These include the antibiotic Cayston, the blood cancer drug, Zydelig, and the chest pain medicine, Ranexa, each of which saw their prices increase 10%. The biotech giant raised prices of its hypertension treatment, Letairis, and its blockbuster HIV regimens, Complera and Stribild by 7% each. Note that Gilead had raised prices of the latter two HIV treatments just six months ago by 7% and 5%, respectively. Complera pulls in some $1.4 billion each year while Stribild is a $1.8 billion-a-year brand. The two drugs are combination treatments based on Viread (tenofovir disoproxil fumarate also known as TDF), which is due to lose patent protection by the end of next year, while Complera will go off-patent in 2023. Gilead has already launched alternative HIV regimens based on a safer salt, tenofovir alafenamide (TAF), in market, but it seems the company hopes to squeeze every last bit of sales potential from the older brands prior to cheaper competition.
Cowen analysts have also suggested that Gilead’s price hikes on Complera and Stribild may be designed to steer patients toward its new TAF-based HIV regimens. Gilead’s HIV franchise has also been facing strong competition from GlaxoSmithKline’s Triumeq/ Tivicay, with GSK projected to have the highest annualized growth rate of 21% in the disease area.
The price hikes come shortly after the US government said a cost-cutting mechanism formed under Obamacare, called the Independent Payment Advisory Board or IPAB, will not likely be triggered until 2017, instead of this year as most suspected. The IPAB is a 15-member board, which would be appointed by the president and has authority to set in motion major reductions in Medicare payments to biotech and pharmaceutical companies. According to a report by Medicare’s trustees, the government health insurance program for the elderly and disabled spent $648 billion last year, making it the single largest buyer of health services in the US. Biotech index had rallied as much as 2.7% on IPAB’s delay news on June 22 in the biggest intraday gain in over a month.
Note that Gilead has already drawn considerable criticism over the exorbitant pricing of its blockbuster hepatitis C medicines, Sovaldi and Harvoni; the former was launched in 2013 at a list price of $84,000 for a 12-week course, while Harvoni was launched a year later at $94,500. Large pharmacy benefit managers (PBM) strictly restricted the drugs’ access to the sickest of patients due to their prices while Express Scripts removed Harvoni from its 2015 formulary of covered drugs in favor of a rival treatment; Gilead has ended up offering sharp discounts and rebates on Sovaldi/Harvoni to other PBMs for their coverage. In fact part of the reason the biotech giant saw HCV sales decline last quarter was because it offered strong discounts on its drugs to accommodate lifting of payer restrictions in the US and overseas.
The drug pricing debate was re-triggered in the US last fall after presidential candidate, Hillary Clinton, pointed out instances of aggressive price gouging in the specialty pharma industry. The Canadian drugmaker, Valeant Pharmaceuticals Intl Inc., fueled the debate with two particularly unjustified price increases applied on acquired age-old heart drugs last year. The move had already drawn inquiries from prominent Senate members and Valeant was facing a federal investigation into its growth strategy, which centered almost entirely on sharp price hikes, by October. Valeant’s former CEO, Michael Pearson, was not able to name a single US drug that the company acquired and did not raise the price of, at a Senate committee meeting investigating price increases in April. A Wells Fargo research report released prior to the meeting claimed that Valeant had boosted prices on 16 of its products this year alone, even after facing fire from all quarters over its pricing tactics.
Valeant, however, is not alone, though it may be the worst example yet. In June, the largest US drugmaker, Pfizer Inc. (NYSE:PFE) increased US drug prices by an average of 8.8%, according to a note by Morgan Stanley analyst, David Risinger. The company had substantially raised its US drug prices by an average of 10.4% in January alone. Mr. Risinger said: “Pfizer’s price hikes have been consistent with historical action despite political media noise regarding US drug pricing.”
Wells Fargo analyst, David Maris, has noted that the generic drug giant, Mylan NV (NASDAQ:MYL) raised prices on two dozen of its products by over 20% in the past six months, including some “exceptionally large” increases amounting to more than 400%. However, note that Mylan increased prices of drugs that represent a small chunk of its business, while Pfizer and Gilead offer their drugs at large rebates and discounts, which make their net price growth considerably less. Despite this, the fact that drugmakers are making these moves amid the pricing controversy in the US is alarming in itself.
No comments:
Post a Comment