One hell of a fight

One hell of a fight

According to a post on the FiercePharma web site Express Scripts in their continuing quest to combat the rising cost of medications is launching a new program aimed at older drugs. The post states;

“Express Scripts new “market events” program allows the PBM to “act within weeks, instead of months or longer,” when a company jacks up prices or tries to shift patients to more expensive therapies, CMO Steve Miller told Bloomberg. The effort “sends a message to the marketplace that we are prepared to respond very quickly to these things,” Miller said.

The program will be optional for Express Scripts’ employer and health-insurer clients. Customers that sign up will give the PBM advance permission to move patients to cheaper alternatives when an old drug’s price increases, Miller told the news outlet. Express Scripts will also be able to push patients away from pharmacies that are doling out pricier meds instead of cheaper therapies.”

This news is interesting considering that short-acting insulins, which we would classify as an older drug, have seen several price increases. In a recent report Humalog, Lilly’s (NYSE: LLY) short-acting insulin was listed as drug with major price increases over the past few years. This same report also identified Lantus, from Sanofi (NYSE: SNY) as a price gouger. Keep in mind these price increases are for list prices and do not take into account discounts and/or rebates.

Yet, this fight over the direction of drug prices continues to intensify.

Looking specifically at the diabetes drug market we see payors such as Express Scripts holding the high ground. As we have noted on numerous occasions the diabetes drug market is headed for commodization. Yet recent developments have thrown a monkey wrench into the market. In a commodity market its assumed that each entrant in a category does the same thing the same way, that it does not make a difference which drug a patient uses as all the drugs in the category get the job done.

However, this was before we learned that Onglyza a DPP4 from AstraZeneca was experiencing a label change due to cardiovascular concerns, while Januvia the leading DPP4 from Merck (NYSE: MRK) would not be required to make any label changes. The same can be said in the growing SGLT2 category where Jardiance from Lilly seems to have an edge over Invokana from Johnson and Johnson (NYSE: JNJ) and Farxiga from AstraZeneca based on its cardiovascular data.

Yet in the insulin market both long and short-acting, the data indicates there isn’t much difference between the respective offerings. Yes, there are some minor differences between Lantus, Toujeo, Tresiba, Levemir and Basaglar but all these long-acting insulin are in the same ballpark. The same is true with Humalog and Novolog from Novo Nordisk (NYSE: NVO) the two most popular short-acting insulins. This makes the insulin market rip for commodization.

The growing GLP-1 market also seems set to go this direction. Yes, once-daily Victoza has established solid footing but this could be coming to an end given the remarks made by Novo that the newer once-weekly GLP-1’s – Trulicity from Lilly, Bydureon from AstraZeneca and Tanzeum from GlaxoSmithKline (NYSE: GSK) are beginning to eat into Victoza’s share.  With semaglutide, Novo’s once-weekly GLP-1 coming to market the growing GLP-1 market is the next blood bath waiting to happen.

Diabetic Investor suspects that payors, just as they were with conventional glucose monitors, will be relentless when demanding greater price concessions and/or higher rebates for insulins and GLP-1’s. They know they control the keys to the kingdom in these categories. It also shows why Sanofi and Novo have gone to great lengths to try and prove that Toujeo is better than Lantus and Tresiba is better than Levemir, efforts for the most part have failed. Yes, the newer drugs Toujeo and Tresiba are incrementally better than the drugs which they are designed to replace but neither in the eyes of payors is worthy of premium reimbursement nor favorable formulary position.

Unlike the cardiovascular data from Jardiance the data produced by Novo and Sanofi was not game changing, it was more like that’s nice but no big deal. This is also why every diabetes drug maker is looking for additional biomarkers, markers which will help them differentiate their offerings from the competition. They are looking to have a leg up when they negotiate with payors, the ability to say that their offering really is different.

This of course, will cause the inevitable data duplication effect where the competition will then do their own studies with this new biomarker and the ultimate data parsing will begin. This is exactly what will happen when JNJ and AstraZeneca release data from the cardiovascular studies for their SGLT2’s. Should the data be as ground breaking as the EMPA-REG data was for Jardiance or even close, the battle will then become one about study design, study participants, etc. Quite frankly this is exactly what payors are hoping for as they will regain the upper-hand. Right now it’s “assumed” all SGLT2’s has positive cardiovascular benefits yet Lilly is the only company with hard data.

JNJ and AstraZeneca need this data so they don’t fall behind Lilly, yet they likely realize positive data only means it’s back to a price/rebate game.

Needless to say the drug price debate has many moving parts and given the dollars involved it’s not surprising all involved are bringing out the heavy artillery. This is one hell of a fight.