Branded drugs are becoming increasingly expensive due to double-digit brand inflation along with continued rise in the price of specialty drugs.
Hepatitis C (HCV) treatments have remained in focus in 2015 so far, a trend continuing from 2014. In particular, the pricing dynamics of these expensive treatments is worrisome.
As per new data released from pharmacy benefit manager (PBM) Express Scripts Holding Co. ESRX, new expensive HCV therapies coupled with the exploitation of loopholes for compounded medications, fueled a phenomenal 13.1% surge in drug spending in the U.S. in 2014. HCV and compounded medications accounted for more than half of the total increase in expenditure.
Excluding these therapies, however, the increase recorded was 6.4%. Meanwhile, specialty medications such as biologics, along with treatments for multiple sclerosis and cancer, accounted for over 31% of the total drug spending in 2014.
HCV medications accounted for 45% of the total increase in specialty expenditure even though it had the second-lowest prescription volume among the top 10 specialty conditions. This clearly brings pricing into focus. In addition, patients in the U.S. spent 743% more on HCV treatments in 2014 compared with 2013.
Gilead Sciences (GILD) is a key player in the HCV market with drugs like Sovaldi and Harvoni.
AbbVie Inc.’s ABBV all-oral, interferon-free therapy with/without ribavirin, Viekira Pak was approved in Dec 2014 by the FDA and the company currently expects global annualized sales run rate of more than $3 billion dollars for Viekira Pak by 2015-end.
We remind investors that Express Scripts has added AbbVie’s Viekira Pak to its formulary and offers it as an exclusive option for GT 1 HCV patients, effective Jan 1, 2015. Express Scripts expects the treatment to result in savings of $1 billion in 2015.
Express Scripts’ decision to choose low-priced Viekira Pak over its expensive counterparts like Gilead Sciences' GILD Sovaldi and Harvoni, and Johnson & Johnson’s JNJ Olysio has triggered intense pricing competition in the HCV market with both AbbVie and Gilead striking deals with PBMs.
While high rates of response and tolerability coupled with low discontinuation rates should help Viekira Pak gain market share, pricing will also play an equally important role.
On the other hand, new treatments for HCV are in similar focus. Achillion Pharmaceuticals ACHN is currently evaluating its experimental HCV treatment, ACH-3102. The company announced positive interim results from the study in Feb 2015. AbbVie is also working on its next-generation HCV program which includes ABT-493, a potent protease inhibitor, and ABT-530, a new NS5A inhibitor.
In view of these factors, Express Scripts believes that there is an urgent need to tightly manage the pharmacy benefit, implement smarter formularies, control compounded medication use and offer appropriate clinical support to ensure patients receive best possible treatments at better prices.
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