CVS Says Drug Copies (Biosimilars) May Bring Price Cuts Of 40-50 Percent


CVS Health President and CEO Larry J. Merlo gives an interview on the floor of the New York Stock Exchange September 3, 2014.

Credit: Reuters/Brendan McDermid

(Reuters) – The entry of copycat biotech drugs (Biosimilars) into the U.S. market could cut prices of expensive medications by 40 percent to 50 percent, depending on the level of competition among drugmakers, a top executive at CVS Health Corp told Reuters.

CVS is one of the largest U.S. pharmacy benefit managers and, along with rival Express Scripts, has put unprecedented pressure on global pharmaceutical makers to lower prices for its clients.

The comments by CVS Health Chief Medical Officer Troyen Brennan suggest U.S. drug benefit managers will be pressing for much steeper discounts on new biosimilar drugs than the 20 percent to 30 percent widely expected by Wall Street.

Depending on how similar treatments are, and on demand from doctors and patients, biosimilar pricing could more closely track the face-off among branded drugs, Brennan said in an interview on Wednesday.

Generic versions of traditional pharmaceuticals can usher in discounts of as much as 98 percent. Biosimilars retain a much higher margin due to their more complicated manufacturing process, which can create a new version of a biotechnology drug but not an exact copy.

“As a result of that, with these new ones coming on we are probably going to be seeing something that looks like more of a situation where there are multiple brands,” Brennan said. “In the past that didn’t give you 98 percent discounts. In the past, that would give you 40 to 50 percent discounts.”

The U.S. Food and Drug Administration approved on Friday the first biosimilar drug for use in the country, a copy of Amgen Inc’s Neupogen cancer treatment that was made by Novartis. Pricing on the biosimilar has yet to be determined.

Drugmakers that are racing to develop biosimilars include Pfizer Inc and Hospira Inc. In Europe, Hospira already sells copycat versions of Neupogen and Merck & Co’s and Johnson & Johnson Inc’s arthritis drug Remicade. Other biosimilar players include Amgen, Biogen Idec, Teva Pharmaceuticals Industries and Mylan Inc.

Biologic drugs have already been approved in Europe, but pricing varies as each country has a role in negotiating drug costs.

Earlier this year, Express Scripts and CVS pitted two novel treatments for hepatitis C against each other to wrest large price cuts from their manufacturers, Gilead Sciences Inc and AbbVie Inc.

Brennan said they are likely to use similar tactics as more biosimilars enter the marketplace. That could mean excluding one of the drugs from their reimbursement list for most patients, requiring patients to try the less expensive treatment first or insisting they give prior approval before a patient begins the medication based on their specific medical history, he explained.

Brennan sees competitive pressure ahead for drugs that treat auto-immune disorders like rheumatoid arthritis, Crohn’s disease and colitis.

AbbVie’s Humira for arthritis and Remicade are billion-dollar biotech franchises that are close to facing biosimilar versions made by others.

Express Scripts estimates that about $250 billion could be saved in the next decade if biosimilars for 11 different biological drugs are approved in the United States as expected.

“Whenever you are engaging in greater competition, we should be able to take advantage of that to get a lower price,” Brennan said.

(Reporting by Caroline Humer; Editing by Michele Gershberg and Alden Bentley)

Source: Reuters

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John Macey

I was born, and principally educated, in the fields of biochemistry, and business management in the northeastern USA. However, my world-wide professional career has greatly expanded upon that US base to involve the many different segments of the Biotech / Life Science fields globally. – I have been dressed as a surgeon to view many, many surgical proceedures - The major players in the health care fields that I have worked for include: Johnson & Johnson, DuPont, Abbott Laboratories, and F. Hoffmann-La Roche. – Positions have included selling nuclear materials for both in-vivo & in-vitro (radio-pharmaceutical & radio-immunoassay) medical diagnostic purposes, in the four countries in Scandinavia, based south of Stockholm, to managing Ph. Ds at a global Swiss headquarters location. – At one time I held a position of Strategy Manager for Europe, Middle-East & Africa (EME&A) for a Chicago based company, but living in Germany. – I do speak fluent colloquial German. – In addition to having lived in multiple European countries, my professional career took me to Asia for well over a decade. There I had management control of Oceania, the Pacific Rim, Northern Asia, Japan, out to India. – Occasionally, management assignments have taken me to all of Latin America, and most of South America. – I am extremely culturally aware, a skilled negotiator, and a seasoned manager of men and science. – My one abiding passion has always been computing, data, and analysis. As such, my main computer operating system is Linux, and open-source computer applications. – I do also run Microsoft 7, and Mac OS X (all 3 operating systems on the same H-P Ultrabook). I hope you enjoy your time on the Blog, and should you have any comments / feedback please feel free to email me @, or visit my Linux Web Site @ (always evolving) – John J. Macey – AKA Adler, which in German means Eagle – Wildwood, New Jersey - Together, we can expand your global markets - with our partnerships. The partnerships are global utlizing multiple Law, Regulatory, Seasoned Management, Employment, M&A and buidlers of Business. Contact use.