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Is Sovaldi the new Lipitor?

16 April 2014 Margaret Labban

Pfizer's Lipitor (atorvastatin), a small-molecule drug prescribed to lower cholesterol, set a world record in 2006 by generating $13.7 billion in peak sales. No other drug has come close to stripping Lipitor of its title as the world's best-selling drug of all time...until now...

The new wave of HCV drugs Gilead Sciences' Sovaldi (sofosbuvir) is one of the first of a new wave of hepatitis C virus (HCV) drugs to be granted approval in the United States. Out of a string of anti-viral candidates hoping to capitalise on the HCV market, the drug is thought to be one of the most promising. HCV infections are the most prevalent blood-borne infections in the US, and can remain unnoticed in patients for years, leading to liver scarring or cirrhosis. If left untreated, patients can need liver transplants before life- threatening liver failure or liver cancer develops.

The new wave of HCV drugs promises to shorten treatment durations, allow for all-oral once-daily dosing, and eliminate or greatly reduce the need for interferon injections that lead to unfavourable flu-like side effects. The market for the new wave of HCV therapies is significant, with an estimated 3.2 million people infected in the US, according to the Centers for Disease Control and Prevention (CDC), and over 150 million infected worldwide, according to the World Health Organisation (WHO). Standard of care has mainly consisted of a regimen of interferon and ribavirin together with the more recent availability of first-generation anti-viral agents such as Merck & Co's Victrelis (boceprevir) or Johnson & Johnson (J&J)'s Incivek (telaprevir) taken in multiple doses daily for a little under six months to a year. It is also important to keep in mind that there are six different genotypes for HCV, and each responds differently to therapy.

The $1,000 pill controversy The good news is that with Sovaldi the virus is now curable across all genotypes in a significant proportion of patients. However, it comes at a cost: Sovaldi may cost patients, or their insurance providers, $84,000 for a 12-week course of treatment (some difficult to treat infections require 24 or more weeks of treatment), and this is without factoring in the costs of any other agents used in the treatment - ideally a combination regimen of antiviral molecules is used to boost cure rates and eliminate the use of interferon injections. This has definitely started to worry payers, from private insurance plan providers to public programmes such as Medicaid that carry a disproportionate burden among payers due to the high concentration of HCV infected individuals within low-income minority groups. Meanwhile, the CDC has urged all "baby boomers" to get screened for HCV as there is potentially a high percentage of undiagnosed infections in that population at or among those close to retirement age.

US democratic congressional representatives, Henry Waxman, Frank Pallone Jr, and Diana DeGette, from the House Energy and Commerce Committee have already sent a letter to the Chief Executive Officer of Gilead Sciences, John Martin, asking for a briefing on the methodology used to establish Sovaldi's pricing as well as the extent of discounts and rebates that will be offered to patients, public payers and private purchasers of the drug among other raised concerns. Physicians are already requesting a $150,000 combination treatment of Sovaldi and J&J's recently approved HCV drug Olysio (simeprevir), according to the letter; this poses a significant risk to the sustainability of payers. Several Medicaid programmes, including those in Colorado and Pennsylvania, have taken steps to limit access to Sovaldi, offering to reimburse the drug only for patients with severe/advanced HCV infections. Steven Miller, the CEO of Express Scripts, the largest pharmacy benefit manager (PBM) in the US, has already publicised his concerns regarding Sovladi's price in an interview with Bloomberg, stating that if all HCV-infected individuals in the US were to seek treatment with Sovaldi the costs would surpass $300 billion - that exceeds the total US prescription drug expenditure in a given year.

In its latest Drug Trend Report, Express Scripts expects spending on specialty pharmaceuticals to increase 63% between 2014 and 2016 - mainly driven by an unprecedented 1,800% increase in HCV drug expenditure during the same period.

Will Gilead be forced to reduce Sovaldi's price? Not likely. Gilead is no stranger to pricing pressure, having faced significant scrutiny over its pricing strategy for HIV anti-viral drugs. Its Stribild four-in-one pill is one of the most expensive AIDS treatments at over USD28,000 annually. However, the difference is that HCV can be cured within a few months, whereas HIV medication is a life-long maintenance treatment. Outside the US, the firm has adopted a tiered pricing strategy for Sovaldi that will facilitate access to the drug in international markets based on each country's economic situation. For example, in Egypt where there is a significantly high prevalence of HCV, Sovaldi will be sold at a 99% discount compared to its price in the US*.

A piece of the pie Moving forward, market-entry of competitors may drive down payers' costs in HCV significantly: AbbVie, Merck & Co, and Bristol-Myers Squibb all have FDA-designated "Breakthrough Therapy" candidates in development that are due to hit the market soon thus putting pressure on the price. This will likely stabilise the market and appease the payers - although conversely it may also increase the overall size of the market because of the number of new players on the market. Also, given the curative nature of the new generation anti-viral drugs, the first drugs on the market are likely to grab a big portion of market share. This is why pricing strategies and payer-industry partnerships that help firms secure a favourable formulary status will play a key role for drug makers in obtaining a significant share of the pie.

The best-selling drug of all time If Sovaldi's price is not in immediate danger of being dropped, optimistic analysts have forecast significant revenues for the drug in its first year debut on the market, in the range of $10 billion according to Bloomberg analysts. Gilead refrained from including a forecast for Sovaldi in its 2014 guidance, and it remains to be seen if Sovaldi will generate such high revenues this year. If it does, it may surpass Lipitor's peak sales record as early as next year but it has a long way to become the best-selling drug of all time - Lipitor holds on to that title with over $140 billion in cumulative revenues. Certainly, the outlook is favourable, given that it is rare to have both a substantial patient population and a high price in one product.

*We are currently working in a study on tiered pricing. Contact us to learn more about the research and how to best implement it for your markets. The final study will be released this summer.

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