A Tale of Two New Hepatitis C Drugs

Despite discount, Merck's just approved Zepatier unlikely to win share with most US payers, except in Medicaid, according to RxScorecard™. New combo from Gilead could ensure company's dominant position among US payers.

​​​It can take more than a big discount to get payers to buy into a new drug. 

Although Merck is launching its new hepatitis C virus (HCV) medicine, Zepatier, at an approximate 30% discount to the “list” price of the overwhelming market leader, Gilead’s Harvoni, RxScorecardanalysis shows that it is unlikely to make significant headway in most commercial and Medicare plans.

Meanwhile, RxScorecard shows that Gilead’s sofosbuvir/velpatasvir (SOF/VEL) combination, likely to be approved this summer, could be a big winner, obsoleting Gilead’s own Harvoni, as Harvoni sidelined Gilead’s first entry, Sovaldi.  But SOF/VEL will succeed only if it matches the discounting Gilead is providing with Harvoni.

Real Endpoints LLC (RE) came to these conclusions based on its proprietary tool RxScorecard, which assesses the relative value of marketed and pipeline drugs from a payer’s point of view.  RE defines value as a full assessment of a drug’s efficacy, safety, convenience, adherence and economic attributes in comparison to other therapies in the indication. 

The HCV market has been enormously attractive to drug companies.  According to Informa’s Biomedtracker, more than 40 HCV therapies are in various stages of development, targeting a market which has grown from about $1 billion in 2013 to what will likely be $11 billion by the end of 2016.

Not too long ago, many of these competitors could have hoped to gain market share by convincing physicians of the differential value of their efficacy, safety or convenience.  But in a world in which prescribing options are increasingly controlled by industrial purchasers such as insurers and pharmacy benefit managers, choices are made based on a broader combination of factors, including economics. 

Reflecting this broader analysis, RxScorecard shows that Zepatier has similar overall value to Harvoni in the largest subpopulation of US patients infected with HCV (previously untreated genotype 1 patients).  The problem is that Zepatier demonstrates little-to-no value in smaller subpopulations which contain a high percentage of patients likely to be diagnosed and treated, such as those with moderate-to-severe cirrhosis. 

The economic problem for payers: if they use the cheaper Zepatier in the “larger” populations, they will still have to use Harvoni for the “smaller” populations – but will forfeit the rebates Gilead provides customers who use Harvoni exclusively. 

These rebates have become a fierce battleground between pharma companies.  Gilead’s are known to be as high as 45% of the “list” price, reducing the effective net price from between $82,000-$94,500 to $45,000-$55,000 (Zepatier’s “list” price is $54,600).  The aggregate value of Gilead’s rebates to payers is several billion dollars a year, an enormous competitive barrier for new entrants like Merck.  By forfeiting those rebates even for the smaller patient populations in favor of Zepatier, plans could see their net HCV drug costs rise unless Merck were to dramatically increase its discount on Zepatier, probably to below $30,000.  Without these additional discounts, Zepatier use will largely be limited to specific payer segments which by law get Harvoni’s post-rebate price – such as Medicaid.

Meanwhile, Gilead’s SOF/VEL works quite well in virtually all patient populations, including genotypes for which Harvoni doesn’t.  The new combo could thus potentially become a virtual one-stop-shop for HCV therapy.  If Gilead discounts SOF/VEL to the same degree it currently discounts Harvoni, payers will adopt it quickly. 

To dislodge Gilead, competitors will either need to provide increasingly large discounts or dramatically improved therapies – for example, both eliminating the HCV infection and reversing the liver disease it causes and/or blocking the development of viral resistance.  But absent meaningful clinical or economic differentiation from its competitors, Gilead will continue to dominate the HCV market.

For a graphical summary of the RxScorecard analysis of Zepatier, SOF/VEL and other HCV marketed and pipeline drugs, contact Viviana Ramos at vramos@realendpoints.com or 203-517-4769.

About Real Endpoints

Real Endpoints (RE) is a healthcare information and analytics company that prepares healthcare providers, payers and pharmaceutical companies for the value-based healthcare economy. For information on other RxScorecards beyond hepatitis C, contact Viviana Ramos at vramos@realendpoints.com. 

Learn more at www.realendpoints.com


Categories: Pharmaceuticals and Biotech, Private, Group, and Managed Care Practices, Healthcare and Medical News

Tags: Gilead, Harvoni, HCV, healthcare, Medicaid, medicare, Merck, patients, Real Endpoints, Sovaldi, Zepatier

About Real Endpoints

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Real Endpoints (RE) is a healthcare information and analytics company that prepares healthcare providers, payers and pharmaceutical companies for the value-based healthcare economy.

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