Biotech Investors Bail After Gilead Sciences, Inc. Drug Price Fight
December 24, 2014
By Mark Terry, BioSpace.com Breaking News Staff
Biotech stocks took a hit yesterday, at least in part by Express Scripts Holding Co. that it plans to block its U.S. patients from receiving Gilead Sciences, Inc. ’s hepatitis C medication. Chicago-based AbbVie signed an agreement with Express Scripts to sell its hepatitis C medication, the Viekira Pak, at a discount.
Gilead’s hepatitis C medications are Sovaldi and Harvoni, which sell for a full treatment cost of $84,000 and $95,000, respectively. Gilead began selling Solvadi in 2013 at a $1,000 per day price and had projected sales for 2014 of $12.7 billion.
Express Scripts’ announcement led the way for a Nasdaq Biotechnology Index drop of 4.6 percent. Gilead’s stock promptly dropped 18 percent. To date the stock price is $89.45 per share. On Friday, Dec. 19 it sold for $108.45. The Street’s Jim Cramer, co-manager of the Action Alerts PLUS portfolio said in a statement that Gilead is a solid company, but the price war is likely to damage margins for both AbbVie and Gilead.
In November BioSpace reported on how AbbVie and Gilead were trading lawsuits over Harvoni. AbbVie has five U.S. patents for the use of sofosbuvir and lepipasvir, the active ingredients in Gilead’s Harvoni. Gilead does not hold patents for the two drugs used in the combination, although it did file an application in September 2011, a month before AbbVie’s first application.
The legal arguments revolve around AbbVie’s use of a novel computer model that predicted effective combination therapies. The U.S. Patent and Trademark Office (PTO) accepted AbbVie’s arguments and expedited review and issued the first of two patents before Gilead could jump in. Gilead filed a more traditional “method of use” patent a month prior to AbbVie’s applications.
On Friday, the FDA approved AbbVie’s Viekira Pak, which is priced at $83,319 for 12 weeks, which comes to $991 per day. It’s an odd sort of price war with Gilead, since some patients on Gilead’s Harvoni can be treated for an 8-week course for $63,000. But the Express Scripts announcements to shut out Gilead pushes both companies into offering rebates, or at least continued negotiations.
“I think it’s a volume issue, not a price issue,” said Douglas Paul, a consultant at Medical Marketing and Economics in a statement, discussing the fact that Gilead bought the company Pharmasset, which developed Sovaldi. “I’m disappointed that their pipeline reviews did not prepare the payor market for a product that was purchased in an $11 billion dollar deal.”