By Joseph Walker
Regeneron Pharmaceuticals Inc. and Sanofi SA said they would
charge $37,000 annually in the U.S. for their newly approved eczema
drug, a price the companies said they reached after months of
negotiations with pharmacy-benefit managers.
The Food and Drug Administration approved the drug, called
Dupixent, for U.S. sale on Tuesday.
Through their negotiations, the companies said they aimed to set
a price the pharmacy-benefit managers, or PBMs, would find
acceptable. PBMs administer prescription drug benefits for
employers and insurers.
In exchange, the companies sought, and in some cases received,
assurances that the PBMs wouldn't implement coverage restrictions
that could prevent patients from getting the drug, Regeneron CEO
Leonard Schleifer said in an interview.
Dupixent will be one of the most closely watched drug launches
this year, with analysts projecting it could reach $3.13 billion in
global annual sales in 2020 if it gains favorable insurance
coverage, according to analysts polled by FactSet.
Regeneron and Sanofi are still reeling from the disappointing
launch of their anti-cholesterol drug Praluent last year. Many
analysts say the drug flopped in part because of insurers' concerns
that the $14,600 a year list price would be too costly, which led
them to restrict coverage. A similar drug from Amgen Inc. that also
carried a high price tag also had disappointing sales.
Dr. Schleifer said the companies learned from that experience
and took extra steps while setting the price for Dupixent. "I
wanted to demonstrate that adults in the room can be responsible on
both sides," Dr. Schleifer said.
He said the majority of U.S. patients should find their insurers
are covering the drug so long as they meet the criteria specified
by the FDA in its approval decision. He cautioned, though, that the
agreements with PBMs were preliminary and would have to be
finalized following FDA approval.
As the companies worked to set the price, Dr. Schleifer also met
personally with officials at the Institute for Clinical and
Economic Review, a nonprofit group in Boston that analyzes the cost
and benefits of new prescription drugs. Regeneron provided the
group with previously unpublished data that ICER requested for an
ongoing analysis of eczema drugs, says David Rind, ICER's chief
medical officer. ICER recently shared an early version of its draft
evidence report with Regeneron so the companies could take it into
account when setting Dupixent's price, Dr. Rind said.
Dupixent's price falls within the cost-effectiveness range that
ICER projected for the drug in the draft report, which was
published on Friday.
It isn't clear that all PBMs agree the price is justified.
CVS Health Corp., one of the largest PBMs, said it is working to
ensure the drug is available to patients with a demonstrated need
for it. "While we believe our advocacy on behalf of our clients did
ultimately influence Regeneron's initial pricing strategy, the drug
will be expensive," a CVS spokeswoman said.
At least some pharmacy-benefit managers, or PBMs, say Dupixent's
price is reasonable given its significant medical value to patients
and when compared with similar therapies for psoriasis, another
skin condition, that have list prices of $50,000 annually or
more.
"I'd characterize it as a responsible price," says Steven
Miller, chief medical officer at Express Scripts Holding Co., the
largest PBM. "Neither side got everything it wanted, but this has
been responsible."
Eczema, also known as atopic dermatitis, is a common condition
that causes itchy skin. Severe forms of the disease can be
debilitating, causing large areas of patients' bodies to be covered
with inflamed patches of skin.
The FDA approved Dupixent for adults with moderate to severe
forms of the disease for whom topical treatments, such as steroidal
ointments, don't work. Regeneron and Sanofi estimate that 1.6
million people in the U.S. meet the FDA's approval criteria, but
their launch will focus on about 300,000 patients who are most in
need of treatment.
Olivier Brandicourt, Chief Executive of Sanofi, said in an
interview that the companies took into consideration the economic
and societal benefits of the drug when deciding on its price.
"Early discussions [with payers] indicate coverage will be there,"
he said.
The companies will provide copay assistance to some patients and
pay rebates to insurers; after those costs are taken into account,
the companies estimate that net revenue from the drug will be at
the "low" range of $30,000 to $35,000, said Dr. Schleifer.
Dr. Schleifer and Dr. Miller of Express Scripts said the rebate
percentage would be in the low single digits.
U.S. lawmakers are increasingly weighing options to rein in drug
costs, and President Donald J. Trump has publicly supported
allowing the government to directly negotiate prices with
drugmakers in the Medicare program.
"If we don't work together to solve that problem, somebody's
going to do it for us, either the government or others," Dr.
Schleifer said.
Investors are looking for whether pricing concerns hurt
Dupixent's sales, said Geoffrey Porges, a Leerink Partners LLC
analyst. "If the market doesn't accept this product, it's going to
be incredibly discouraging in terms of investing in the development
of real innovation," he said.
--Denise Roland contributed to this article.
(END) Dow Jones Newswires
March 28, 2017 12:26 ET (16:26 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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