(Bloomberg) — AbbVie Inc. agreed to make its hepatitis C drug the exclusive treatment for most patients covered by Express Scripts Holding Co.’s main formulary, a blow against rival Gilead Sciences Inc. and a move that will escalate the debate over drug prices and insurance benefits.
Express Scripts, the biggest manager of prescriptions for U.S. insurance plans when measured by revenue, will make AbbVie’s Viekira Pak available to all patients with genotype 1, the nation’s most common form of hepatitis C. The deal includes a “significant discount” wrung from two months of negotiations, Express Scripts Chief Medical Officer Steve Miller said.
Gilead’s Sovaldi and Harvoni will be excluded starting Jan. 1 for most patients under Express Scripts’ biggest formulary, which covers about 25 million people in the U.S. Express Scripts, based in St. Louis, has waged a campaign all year against Gilead’s hepatitis C drugs, calling them part of an unsustainable trend of rising prices for specialty medicine.
“We have asked pharma companies to work with us closer and demonstrate good judgment,” Miller said. “AbbVie heard our concerns and they came to the table in a very creative way.”
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While AbbVie’s drug has proven effective in trials, it requires more pills than Gilead’s drug and sometimes must be taken with another medication with unpleasant side effects. That means the Express Scripts deal is likely to stir controversy about whether the company’s push to rein in rising drug prices is also limiting patients’ treatment options.
“Gilead has been negotiating in good faith with Express Scripts and other payers to ensure patients and health-care providers have access to our medications and can make informed treatment decisions,” Gilead said in a statement.
Stefanie Prodouz, an AbbVie spokeswoman, had no immediate comment.
Gilead’s Sovaldi costs $84,000 for a course of treatment, and the company’s Harvoni, which combined Sovaldi with another medication in a single pill, costs $94,500. Viekira Pak, approved last week by the Food and Drug Administration, sells for $83,319 before any negotiated discount.
The deal with AbbVie is for multiple years, Miller said, without providing further information. He declined to disclose the discount Express Scripts is getting for offering Viekira Pak exclusively. AbbVie Chief Executive Officer Rick Gonzalez was personally involved in the negotiations, Miller said.
The pact was the first time a specialty drugmaker agreed to a major discount off of its published price in exchange for fewer restrictions on access to the medication, he said. Gilead had been privately offering a discount of about 8 percent for its drugs to prescription benefit managers, Miller said.
In exchange for its discount, AbbVie gets a guaranteed market for its drug without limitations on the extent of liver damage patients must have before Express Scripts will approve coverage. In addition to specialists, primary-care doctors will be able to prescribe Viekira Pak under the agreement, broadening the market for AbbVie. The deal lets everyone with hepatitis C be treated, Miller said.
The preliminary agreement was signed Dec. 19, the same day Viekira Pak won FDA approval. Express Scripts’ committee of doctors that evaluates its list of allowed drugs gave the go-ahead for the formulary decision over the weekend.
“This is exactly what our plan sponsors hire us to do is to negotiate and try to make drugs more affordable,” Miller said. “We look at this as being the first of what will happen the field of cancer, rheumatoid arthritis and many other of the expensive specialty fields.”
About 3 million people in the U.S. have the hepatitis C virus, which infects the liver and can lead to scarring, cancer and organ failure — sometimes necessitating a costly liver transplant. Hepatitis C is transmitted through infected needle sharing and sexual contact. Others with the infection got it through blood transfusions or organ transplants done before 1992, when the U.S. began screening the blood supply for the virus.
Gilead has said the price of Sovaldi and Harvoni, which cure the virus without many of the side effects associated with older treatments, should be compared with the long-term costs to care for those with the disease.
AbbVie’s drug requires most patients to take four to six pills a day for 12 weeks, compared with one pill a day for Gilead’s. Some patients on Viekira Pak will also be told to take ribavirin, an older hepatitis C drug whose side effects include fatigue and nausea. Gilead’s Sovaldi doesn’t require ribavirin for genotype 1 patients.
“The difference in the pill burden is trivial,” said Miller. The AbbVie drug “comes in a really elegant blister pack” that makes it easy to use, despite having to take more pills.
The AbbVie drug “is very well-tolerated and has incredibly high cure rates,” he said.
In six clinical trials testing Viekira Pak, 91 percent to 100 percent of patients, including those considered difficult to treat, were cured. Three clinical trials on Harvoni showed at least 94 percent of patients who took the drug were cured in eight or 12 weeks, the FDA said when it approved the medicine Oct. 10.
In addition to Gilead’s medications, Express Scripts excluded Johnson & Johnson’s Olysio from the national formulary. Patients who are already on the drugs will still be covered, and those with other types of hepatitis C and advanced liver disease can still get Sovaldi.
Viekira Pak may generate $2.9 billion in sales next year, according to the average of three analysts’ estimates compiled by Bloomberg. The revenue will help North Chicago, Ill.-based AbbVie expand its sources of revenue beyond best-seller Humira, the rheumatoid arthritis treatment that is projected by analysts to bring in $12.6 billion this year.
–With assistance from Caroline Chen in San Francisco and Anna Edney in Washington.