The highly lucrative and competitive hepatitis C virus (HCV) market is back in focus with Merck & Co. Inc. MRK gaining FDA approval for Zepatier – a once-daily, fixed-dose combination of elbasvir (50 mg; NS5A inhibitor) and grazoprevir (100 mg; NS3/4A protease inhibitor) for the treatment of adults suffering from chronic HCV genotype (GT) 1 or GT4 infection with or without ribavirin. The approval came following a priority review by the FDA.
Zepatier is approved for a treatment duration of 12 or 16 weeks depending on the HCV genotype, prior treatment history and, for patients with GT1a infection, the presence of certain baseline NS5A polymorphisms.
We note that Zepatier enjoys two Breakthrough Therapy designations in the U.S. for chronic HCV GT1 patients with end stage renal disease on hemodialysis and for chronic HCV GT4 patients. The drug is also under review in the EU where a decision could be out in mid-2016.
Pricing of the Drug
Per information provide by Merck in its press release, though HCV treatments are now available, there is still a significant unmet medical need. It is estimated that less than one in five patients with chronic HCV infection are currently treated with thousands of new cases being diagnosed each year. Also, a majority of patients with chronic HCV have not yet been treated in some cases due to cost constraints.
Taking into account these factors, Merck has set the drug at a list price of $54,600 for a 12-week regimen. The company considers the price to be in the range of net prices of other commonly used HCV direct-acting antiviral regimens at 12 weeks of therapy.
The company also said that it intends to seek broad coverage of the drug across commercial and public segments, to help accelerate patient access to treatment.
Our Take
Zepatier’s approval comes as a major boost for Merck and a boon for patients providing them with another treatment option. We note that the HCV market already has drugs like Gilead Sciences Inc.’s GILD Sovaldi and Harvoni and AbbVie Inc.’s ABBV Viekira Pak regimen.
Since Sovaldi, Harvoni and Viekira all come with premium price tags, these companies are working on providing rebates and discounts and also working with public programs and private insurers to broaden access.
Merck’s lower list price of its HCV drug would surely take the HCV market by surprise. Now the question is whether this would give rise to another pricing competition in the market. We expect investor focus to remain on the launch of Zepatier and its sales ramp up along with potential pricing competition.
Merck is a Zacks Rank #3 (Hold) stock. Gilead and Anika Therapeutics Inc. ANIK are a couple of better-ranked stocks in the health care sector, each carrying a Zacks Rank #1 (Strong Buy).
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