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PCSK9 Inhibitor Therapies Face Pricing Pressures

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PCSK9 inhibitor therapies

The FDA (U.S. Food and Drug Administration) approved Regeneron’s (REGN) and Sanofi-Aventis’s (SNY) Praluent and Amgen’s (AMGN) Repatha in July 2015 and August 2015, respectively. Although clinically superior compared to existing statin drugs, Repatha and Praluent, both PCSK9 inhibitor therapies, are priced at a substantial premium. This is leading to worries and debates in the health payer community.

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The above diagram shows how PCSK9 therapies Praluent and Repatha help reduce cholesterol. PCSK9 inhibitors target a protein called PCSK9 in the body and bind to it. This allows the low-density lipoprotein (or LDLR) receptors on the liver to remove cholesterol from the blood. PCSK9 drugs have been proved to be substantially better than existing statin therapies.

Praluent and Repatha have been priced at $14,600 and $14,100 per year, respectively. This price is at a substantial premium to existing statin drugs such as Merck’s (MRK) Mevacor, Pfizer’s (PFE) Lipitor, and Novartis’s (NVS) Crestor. Hence, pharmacy benefit managers Express Scripts and CVS Health Care have been actively trying to control access to these costly drugs.

Pricing pressures

CVS Health has been insisting on guidance for specific cholesterol levels where PCSK9 inhibitors such as Praluent and Repatha are necessary. Since these drugs have received wide approvals for several labels, CVS has been attempting to control the number of patients who can qualify for PCSK9 prescriptions.

Express Scripts also didn’t provide coverage for the first approved PCSK9 drug, Praluent, as it was waiting for the entry of Repatha into the market. The pharmacy benefit manager expects to benefit from competition between Praluent and Repatha to score substantial price discounts.

A similar scenario was played out in 2014 in the hepatitis C market. Gilead Science’s Harvoni, priced at about $1,200 per pill, had to offer discounts up to 46% due to competition from AbbVie’s Viekira Pak. These pricing pressures can reduce the overall profit margins of Praluent and Repatha.

Investors can limit exposure to Repatha’s pricing risks and still participate in Amgen’s upside potential by investing in the iShares NASDAQ Biotechnology ETF (IBB). This ETF  has 8.53% of its total holdings in Amgen.

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