AbbVie Inc. and Gilead Sciences Inc., the only hepatitis C drug makers , have already begun offering consistent discounts on their products to health insurance providers across the U.S. Both companies said last year that they weren’t planning get involved in a price war in 2015. However, business is business.
Yesterday, Anthem Inc, the most important provider of health insurance plans in the U.S., said that it had struck a deal with one of the two drug makers in exchange of cheaper hepatitis C drugs. Anthem Inc is the third insurer to publicly announce an exclusive deal with one of the pharma companies.
Still, it is not certain if such deals led to lower prices in other best-selling drugs such as treatments for heart disease, multiple sclerosis, cancer or rheumatism. During the JPMorgan Healthcare Conference in San Francisco, which will be held next week, health care investors will discuss hot topics including how far should the drug price war should go.
John Milligan, Gilead President, said in 2013, that pricing was a differentiating feature of Gilead’s drugs only in rare cases. He also said that people wouldn’t risk taking cheaper drugs that are less effective. So, Mr. Milligan concluded, low pricing strategies to gain market share would “probably” not work in that area.
Also, Richard Gonzalez, CEO of AbbVie, said in April that cutting prices to get more consumers was not his company’s strategy.
Despite such claims, both companies eventually engaged in the price war. Express Scripts Holding Co. said it closed a deal with AbbVie in December – the biotech company offered price discounts while Express Scripts Holding promised to promote the hepatitis C drug among most patients for more than 2 years.
Right away, Gilead closed two mutual beneficial deals with CVS Health Corp and Anthem on Harvoni drug. Yesterday, Anthem said that in order to get on the list of covered drugs, Gilead proposed discounts in return.
Both Gilead and Abbvie refused to comment.
Roger Longman, CEO of Real Endpoints LLC, said that Gilead-Abbvie price war was the first of its kind in specialty pharmaceuticals area.
Anthem’s business plans cover nearly 17 million Americans, while Express Scripts’ plans involve 8 million more.
Mr. Longman also said that we were going to see similar price wars in other drug categories such as cancer and rheumatoid arthritis medication.
Insurers, health providers and lawmakers have been criticizing Gilead and Abbvie for their overpriced hepatitis C drugs. Sovaldi, Gilead’s first hepatitis C drug, costs 84,000 for 12 weeks, Harvoni, Gilead’s improved hepatitis C drug, costs nearly $95,000 for a 12-week course of treatment, while Abbvie’s Viekira Pak costs $83,319 for a 12-week-long treatment.
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