December 10, 2013

Gilead HCV Drug May Face Price War; Rival AbbVie Up


Posted 03:08 PM ET


Gilead Sciences' (GILD) newly approved hepatitis C drug Sovaldi came under fire for its price from pharmacy benefit manager Express Scripts (ESRX) Tuesday, as rival AbbVie (ABBV) reported good data for its competing drug candidate. Gilead's stock dropped while AbbVie's rose on the stock market today.

Bloomberg reporter Drew Armstrong said on Twitter that Express Scripts' chief medical officer, Steve Miller, told him that the convenience of Sovaldi's one-pill-a-day regimen won't necessarily justify the $84,000 price tag for a 12-week regimen. "We will identify which drugs can be pitted against each other and make some really tough formulary decisions," Armstrong quoted him as saying.

This was a positive sign for AbbVie's regimen, which has so far performed as well as Sovaldi in clinical trials but involves four different drugs. Coincidentally, early Tuesday AbbVie released a second round of data from the regimen's phase-three program, showing a 96% sustained response rate among patients with the most common genotype of the virus who'd failed previous treatments.

ISI Group analyst Mark Schoenebaum wrote in an email to clients that while Express Scripts' size (around 100 million lives covered) gives it considerable leverage on these matters, the impact on Gilead might not be felt for a few years out.

"A big price differential would likely be necessary to block GILD's regimen," he wrote. "In a two-player market (before other competitors reach the market), whether ABBV would be willing to take a large price cut is not clear. Thus, the larger risk to price could be pushed out until 2017 when other competitors are able to reach the market."

Gilead stock, which hit a new high Monday after Sovaldi was approved, shed 3.5% in afternoon trading Tuesday. AbbVie spiked briefly to a new high above 54, but in afternoon trading was up 2%. Its partner Enanta Pharmaceuticals (ENTA), which developed the technology behind the drugs, got a much bigger lift and was up 27% in afternoon trading, to what is by far an all-time high for the stock.

RELATED: Gilead Hep C Drug Wins EU Panel Approval.


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