Big pharma coming under greater pressure to cut prices

Looks like the years of skyrocketing drug prices in the United States may finally cause a backlash, according to the Financial Times.

The recently developed drug to treat hepatitis C might be the breaking point, the publication reported. Gilead, which developed the drug, known as Harvoni, is the most despised pharmaceutical company in the U.S. among patients and doctors, according to the British newspaper. That the company charges $94,500 for a 12-week treatment regimen may have been the last straw.

"Gilead is a test case in the court of public opinion," Peter Bach, M.D., director at the Memorial Sloan-Kettering Cancer Center in New York, told the Financial Times. "It has become the poster child for high drug prices."

As a result, Gilead has come under "concerted pressure" to lower the cost of its drug, according to the newspaper, even though it has only been on the market for a year. But Gilead is apparently not alone.

"Without any doubt there is pressure on price in the U.S.," Pascal Soriot, chief executive of AstraZeneca, told the newspaper."We've seen what has happened in (hepatitis C) and insulin, we see it in respiratory; it is going to be an issue in oncology. The market is . . . more challenging than it was five years ago."

Large drug purchasers such as Express Scripts has created some competitive pressures, such as engaging into an exclusive use contract with AbbVie, which recently introduced Viekira Pak,  a competitor to Harvoni, but at a steep discount to Harvoni's prices. That forced Gilead to offer discounts of as much as 50 percent to other bulk purchasers, such as large commercial insurers.

In addition to the discounts to commercial insuers, AbbVie has also entered into discounts with state Medicaid plans, which will likely create even more downward price pressures.

Nevertheless, despite having to ramp up its discounts to an average of 46 percent from its retail price, Gilead has locked up an 83 percent market share for its hepatitis C drug, according to the Wall Street Journal.

To learn more:
- read the Financial Times article (registration may be required)
- check out the Wall Street Journal article