Price fixing: PBMs push for lower prices of PCSK9 inhibitors

Gilead Sciences' decision to slap Sovaldi, its first-in-class hepatitis-C treatment, with an $84,000 price tag was widely considered a turning point for payers and pharmacy benefit managers already anxious about rising drug costs. It wasn't a surprise, then, when PBMs immediately moved to ensure they weren't again caught off guard by the price of a new drug.

In the months leading up to the approvals this summer of Sanofi/Regeneron's Praluent (alirocumab) and Amgen's Repatha (evolocumab)—which are PCSK9 inhibitors, a new class of cholesterol-lowering drugs—negotiations were already under way between those drugmakers and Express Scripts, the nation's largest PBM. Even though pharma companies are not allowed to discuss pricing before receiving marketing approval and the FDA had not yet determined the label for the drugs, talks between the PBM and the companies began in early 2014.

“Unlike with hepatitis [drugmakers], they were very gracious and having discussions with us talking about the clinical attributes and the clinical trials,” says Dr. Steve Miller, chief medical officer at Express Scripts.

The impact of Sovaldi's pricing has been felt both far and wide, with some employers suing Gilead over cost. Patients have shared their stories about not being able to secure access to the drug, and high drug prices are taking their turn as a talking point in presidential campaigns. At the same time, Sovaldi has changed the way that the commonly opaque price negotiations between payers and drugmakers are conducted. In its wake, PBMs are becoming increasingly savvy and hard-nosed about which drugs they will cover and what they are willing to pay for them.

“PBMs have started to use rhetoric as a tool,” notes Dan Mendel­son, CEO of Avalere Health. “That is a fundamental difference. The PBMs want to position [themselves] so they are advocating on behalf of their customers. Their customers are worried.”

In a February blog post in Health Affairs, CVS Health executives estimated that a PCSK9 inhibitor costing $10,000 a year and used to treat the less common indications—familial hypercholesterolemia and severe hypercholesteremia—would cost $16 billion a year in the US. The company also said it would delay making a formulary decision on Praluent until Repatha was approved and, in an unusual tactic, it asked cardiologists to rewrite treatment guidelines for patients with high cholesterol in order to clarify which patients should be undergoing treatment with PCSK9s.

The FDA approved both drugs this summer, Praluent in July and Repatha in August. The labels are nearly identical, as are the prices: Praluent is listed at $14,600, while Repatha costs $14,100. Neither product was approved to treat statin-intolerant patients, an indication that would have significantly broadened the number of people eligible to take them. Both products, which lower LDL cholesterol levels, are approved to treat patients with clinical atherosclerotic cardiovascular disease and heterozygous familial hypercholester­olemia. Repatha has also been approved to treat homozygous familial hypercholesterolemia. The total market for these indications is estimated to be between five and ten million Americans.

Express Scripts expects to make a formulary decision by early October. The company's independent pharmacy and therapeutics committee—comprised of 18 practicing clinicians—will review both drugs and make a recommendation. This could have huge implications: Either product will be categorized as a clinical “include” (meaning it must be included on the formulary), “optional” or “exclude.” Miller predicts that both products will be considered optional.

Once Express Scripts receives the committee's recommendation, it will begin negotiating price with Sanofi/Regeneron and Amgen. But the company's work won't stop there. It will, in subsequent months, deploy utilization-management tools to ensure that the right patients are “undergoing treatment,” industry code for making sure that physicians aren't making it a practice to prescribe the pricey new medication to patients off-label.

There will be an “appropriate interrogation of each and every case,” Miller adds. “We have to protect patients from any potential downside. It's a new class [of drug] and we don't want people exposed to an agent when we don't know what any long-term impacts would be.”

Express Scripts also plans to launch a risk-sharing program, much as it did for AbbVie's hep.-C product,Viekira Pak. Through that program, the PBM offered to refund health plans the full cost of the drug if the patient didn't adhere to the three months of therapy. The terms of the risk-sharing agreements for the PCSK9 inhibitor market have not yet been established, Miller notes.

But the most notable difference between the market for PCSK9 inhibitors and the new hepatitis-C drugs is competition. Sovaldi received FDA approval in December 2013; the next hep.-C drug in that class to be approved was Harvoni, also marketed by Gilead. The launch of Viekira Pak a full year after Sovaldi arrived created the first true competition to the marketplace. (Johnson & Johnson's Olysio, approved a month earlier than Sovaldi, is mainly used in combination with Sovaldi.)

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The approvals of Praluent and Repatha within one month of each other created a competitive dynamic from the beginning. “The differ­ence here is that there's competition in the market,” Mendelson says. “With the hep.-C drugs, there wasn't.”

Express Scripts negotiated with AbbVie to make Viekira Pak the exclusive option on its formulary. As a result, Express Scripts is paying less for Viekira Pak than what patients in Western Europe pay—which is significant, as Western Europeans traditionally pay less for drugs because their governments negotiate drug prices and have price caps. “It's the first example where we've been able to negotiate the price down lower than European drugs,” Miller notes.

For their part, both Amgen and Sanofi have publicly expressed their intention to negotiate in good faith with PBMs and other payers. “We have an ongoing commitment to continuing to work with payers/insurers to provide access to Praluent to help the right patients optimize their reduction of LDL-C when current standard of care is not enough,” a Sanofi spokesperson notes in an e-mailed statement. “Discussions with payers/insurers have been positive to date and continue to be ongoing.”

Amgen, which declined comment, is working with Entrée Health on its payer strategy for Repatha. (Entrée also declined to comment.) In a statement announcing the approval of Repatha, Anthony Hooper, Amgen's EVP of global commercial operations, said the company plans to work with payers and purchasers to “provide innovative pricing programs linking the net price of Repatha to the expected LDL cholesterol reductions and anticipated appropriate patient utilization.”

Miller says he believes that Amgen and Sanofi are heeding the PBM's warnings. "Many companies were taken by surprise by the charge for Sovaldi," he says. "We feel like they heard our concerns. We were disappointed in that the announced price was on the high end of our expectations, but that's why we are now in fierce negotiations. We know we have to get those prices down."