More Pricing Pressure On Big Pharma


There has been, an ever increasing behind the scenes, push from Pharmacy Benefit Managers, to drive pharmaceutical prices down.

Pricing, for the newer Hepatitis C therapeutics, went head to head recently, as two major players didn’t want to be left out the picture.

A recent deal – reported by BloombergBusiness – will put even more pressure of Big Pharma’s pricing structures. This becomes extremely important as more, and more higher priced biotherapeutic drugs enter the market. Coupled with the introduction of Biosimliars things are becoming very challenging for Big Pharma.

As reported by BloomberbgBusiness:

UnitedHealth Group Inc.’s deal for Catamaran Corp. is going to build a bigger pharmacy benefit manager. It will also put even more pressure on drugmakers’ high prices for breakthrough medicines.

Once UnitedHealth’s $12.8 billion acquisition closes, 75 percent of prescriptions filled in the U.S. will be in the hands of three players, according to Pembroke Consulting Inc. UnitedHealth, along with No. 1 Express Scripts Holding Co. and No. 2 CVS Health Corp., will have significant leverage.

Pharmacy benefit managers and drug companies have been locked in a struggle over expensive medicines for cancer, hepatitis and cholesterol, some already out and some coming to market this year. Bulking up will give PBMs like UnitedHealth’s OptumRx more patients and more clout in negotiations.

The combination “will make us a competitive force in the industry,” Optum Chief Executive Officer Larry Renfro told Catamaran employees Monday, according to a regulatory filing. “We expect to negotiate for lower prices and offer lower costs to our customers.”

Benefits managers like Catamaran help administer the drug coverage in health plans, working with employers and insurers to negotiate with drug companies and pharmacies. They also often oversee patients’ drug use, maintaining lists of covered drugs and handling mail orders or complex treatments.

OptumRx, UnitedHealth’s drug benefit arm, covers about 30 million people, while Catamaran represents about 35 million. That compares with about 90 million people for Express Scripts and more than 65 million for CVS.
Negotiating Prices

“It definitely helps to negotiate down pharma prices, for sure,” said Steve Halper, an analyst at FBR & Co. “You’re negotiating with the manufacturers for rebates and pricing with a much larger base.

Express Scripts rose 3.7 percent to $85.41 at the close in New York. CVS gained 1.3 percent and UnitedHealth was up 2.5 percent.

Pharmacy managers have been willing to use those large volumes of patients to negotiate with drugmakers. Express Scripts ignited a price war for hepatitis C drugs last year when it excluded from coverage Gilead Sciences Inc.’s new drug that cost more than $1,000 a day. Instead, Express Scripts picked a competing medicine from AbbVie Inc. in return for significant discounts. Gilead struck its own agreements with CVS in exchange for price concessions.

Next targets in this important, and evolving drug pricing war are Biosimilars.

The next target for pharmacy benefit managers may be a new class of powerful cholesterol drugs expected to come to market this summer and cost as much as $12,000 a year. Also on pharmacy benefit managers’ lists are new psoriasis medicines that are likely to cost more than $30,000 a year, and $150,000-a-year cancer drugs that trigger the immune system to fight deadly lung and skin tumors.

‘‘When these competing therapies come out, that is your negotiating leverage point” to get better discounts, said Jim Yocum, executive vice president of DRX, a unit of Connecture Inc. that provides comparison software for health plans. Part of the deal rationale “may be the need to get big to negotiate.”

Pharmacy benefit managers will also look for savings from “biosimilar” versions of expensive biotechnology drugs. A version of Amgen Inc.’s Neupogen drug made by Novartis AG won U.S. government approval early this month, the first biosimilar to be approved in the U.S.

There are a lot of behind the scene activities developing in the Pricing Wars.

Sourcing: BloombergBusiness

Facebooktwitterredditpinterestlinkedinmailby feather

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.