2014 in review – US drug pricing: Sovaldi the red herring as primary care takes a kicking

Over the next few weeks, FirstWord's IAV team will be reviewing the key pharmaceutical market trends and news events of 2014...

The pricing, reimbursement and access environments of the European and US pharmaceutical markets remain notably distinctive in 2014, but there are signs of convergence.

It is an evolution in the US market, which enjoys significantly greater pricing elasticity, which is driving this trend. The past year has seen the issue of high, and arguably unsustainable, drug prices thrust further into the US public consciousness, propelled by debate surrounding Gilead Sciences' hepatitis C treatment Sovaldi – the headline-friendly '$1000 per pill' drug.

Sovaldi (and its recently launched follow-up Harvoni) remains something of a red herring, however. This is a drug that has transformed the treatment of hepatitis C, allowing many patients to be cured without the need for uncomfortable therapy with interferon and with a course of treatment radically reduced to just a couple of months.

Instead, Sovaldi is arguably a victim of its own success; patient demand for this wonder drug – rather than its price – is what has scared the US payer community. A lowering in the voices of discontent as the year concludes suggests some concession that perhaps Gilead was unfairly targeted; it is expensive drugs that offer little benefit over cheaper alternatives that should be in the crosshairs.

To this end, 2014 saw the impact of increased US pricing pressure in certain primary care markets – characterised by multiple, minimally differentiated products positioned within a specific drug class – intensify. The rapid change in temperature caught GlaxoSmithKline and Sanofi cold, with repercussions at both companies set to extend into 2015.

This material impact will encourage US pharmacy benefit managers and managed care providers who are already poised to benefit from greater rebates next year. Thus, while 2014 has proven encouraging from a drug development perspective, payers are already preparing themselves for a handful of expensive – and effective – new drug classes to hit the market, such as the PD-1/PD-L1 inhibitors in cancer and the PCSK9 inhibitors for dyslipidaemia.

Developers of these products will be hoping that to facilitate access, payers will intensify their cost-saving focus on the primary care markets, thereby justifying a broad trend over the past decade for Big Pharma to invest more heavily in specialty care products (ViewPoints: Pharma showing a subtle shift in US drug pricing policy?

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