Fitch: Debate Continues Between Drugmakers and Health Insurers

CHICAGO & NEW YORK--(BUSINESS WIRE)-- Recent decisions by an FDA advisory committee in favor of approving two new cholesterol-lowering drugs will set up another chapter in the ongoing value debate between drugmakers and health insurers, according to Fitch Ratings. The FDA generally follows the recommendations of advisory committees.

The two drugs, including one developed by Amgen (brand name Repatha) and one developed by a partnership between Sanofi and Regeneron (brand name Praluent), with more likely on the way, could generate tens of billions of dollars in annual U.S. sales; however, there is significant variance in the estimates of price and the number of ultimate patients. Health insurers and pharmacy benefit managers are likely to look closely at how they will address coverage for these new drugs, as they try to manage healthcare expenditures for sponsors and beneficiaries.

In response to the anticipated price scrutiny, the manufacturers of these therapies will need to demonstrate the clinical benefit and economic value of the medicines. Similar to the dynamic that has developed in the market for drug therapies that offer a cure for hepatitis C, Fitch anticipates that there will be price competition between manufacturers of the new cholesterol-lowering drugs.

The two therapies represent a new class of drugs known as PCSK9 inhibitors, which dramatically reduce low-density lipoprotein cholesterol (LDL-C, "bad cholesterol") levels, particularly when compared to statins, the generally accepted treatments of choice. While the recommendations are positive for Sanofi/Regeneron and Amgen, clinical data reported are of relatively short duration, and a reduction in the risk of morbidity and mortality has not yet to be established. Nevertheless, both companies will conduct large and long-duration clinical trials evaluating the safety and efficacy of these new agents.

Fitch believes the annual cost of treating a U.S. patient with one of these new drugs could be $7,000-$12,000. Importantly, these drugs will likely be used on a maintenance basis for a patient's entire life and could meaningfully contribute to drug expenditures, depending on the number of patients who will use these therapies.

Fitch believes that roughly two million to four million U.S. patients eventually could be prescribed one of the new drugs, when considering three high-risk disease segments that are not receiving optimal therapy -- homozygous familial hypercholesterolemia, statin resistant (including heterozygous familial hypercholesterolemia) and statin intolerant patients. The estimated number of patients with homozygous familial hypercholesterolemia is very small, but the combined number of patients in the last two groups could be three million to six million.

Additional information is available on www.fitchratings.com.

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article, which may include hyperlinks to companies and current ratings, can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

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Source: Fitch Ratings

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