Life Sciences

If You Charge Too Much For Your Drugs, This Could Happen

abbvie-gilead

 

Last month, I wrote about pharmacy benefit managers (PBMs), such as Express Scripts, cutting exclusive deals with pharmas who are willing to slash prices significantly, saving insurers and patients lots of money, not to mention removing competition from the game.

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So, what happened? 

Gilead historically has been the go-to company for its high-cost hepatitis C drugs Harvoni and Sovaldi. However, AbbVie’s Viekira Pak was recently approved, creating new competition. To gain market share, AbbVie agreed to a deal with Express Scripts that makes them the sole HCV drug provider. The immediate result was a $20 billion loss in market cap for Gilead, one reporter indicated.

Moral of the story? If there’s a viable competitor in the market, do yourself a favor and don’t price yourself out. After all, like Ben Levisohn said in his Barron’s article yesterday, “It doesn’t matter which drug is better, just who will pay.”

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