News

Gilead Sciences Inc. and AbbVie Inc. continue to vie for preferred coverage of their HCV drugs in the U.S. private payer market, and Gilead is out to an early lead when it comes to total lives covered. But much of the population is still up for grabs, and the real victor in share of lives could be determined by how the U.S. Department of Veterans Affairs and Medicaid plans respond.

Since FDA approved AbbVie’s Viekira Pak paritaprevir/ritonavir/ombitasvir/dasabuvir regimen to treat HCV genotype 1, the pharma and Gilead have been competing for exclusive formulary status by trading rebates for access. Gilead markets Harvoni ledipasvir/sofosbuvir and Sovaldi sofosbuvir.

The contest in genotype 1 has been decided by at least seven payers in the commercial private coverage market. AbbVie immediately won exclusive status for Viekira with the largest pharmacy benefits manager in the U.S., Express Scripts Holding Co., and secured an agreement that will see the PBM drop all restrictions on utilization.

Gilead then scored exclusive deals for genotype 1 with three private payers, and for genotypes 1-4 with CVS Health Corp.and with Aetna Inc.

The PBM Prime Therapeutics LLC gave Viekira and Harvoni co-preferred status.

A back-of-the-envelope comparison suggests that in any realistic rebate scenario, a drug company’s potential revenue pool increases significantly when access is granted to all eligible HCV patients – which is why some payers and PBMs are refusing to loosen restrictions even though it shrinks their discounts.

AbbVie obviously won’t get all of Express Scripts’ patients immediately, and perhaps not even during the undisclosed term of the deal. But what’s noteworthy is the size of the pie is so much bigger with a discount and the potential for all-comer access than it was at list price with strict utilization restrictions.

For example, with access to all of Express Scripts’ patients, a 30% rebate would translate to more than double the market opportunity for AbbVie, more than off-setting a knock-on effect of best pricing rules in Medicaid, even assuming the state programs continue to restrict access to patients with severe fibrosis.

However, if the rebate gets bigger than 41%, the increased market potential AbbVie gets from the Express Scripts deal is not enough to offset the reduction in Medicaid revenues, assuming Medicaid remains restrictive (see “Coming Out Ahead, Maybe” page 4).

All in, the announced deals tie up about 83% of all the genotype 1 patients in the private commercial market, but only 23% of all U.S. genotype 1 patients (see “HCV Landgrab,” page 3).

One other PBM has told BioCentury it expects to announce a deal soon, but the deciding factor will be how Medicaid and the VA react. Medicaid accounts for 31% of the U.S. HCV genotype 1 market, and the VA accounts for 15%.

The biggest losers could be other HCV companies that are on or close to market. Achillion Pharmaceuticals Inc., Merck & Co. Inc. and Bristol-Myers Squibb Co. each have HCV regimens – in Phase II, Phase III and registration, respectively.

Olysio simeprevir from Johnson & Johnson has been on the market for 13 months, but needs to be combined with Sovaldi to be competitive in terms of efficacy in genotype 1, meaning the total cost of treatment is very high.

Depending on the length and terms of the AbbVie and Gilead deals, the other competitors could be shut out of the market and would have to match or offer higher rebates if they hope to make it onto formulary.