Novartis AG undercut the price on its established multiple sclerosis treatment with a pill to be introduced next week, a sign that change may be afoot in one of the areas of medicine most plagued by cost controversy.
The drug, Mayzent, will cost about $88,500 a year in the U.S. That’s about 7.4% less than Novartis’s Gilenya, the nearly decade-old pill that Mayzent is meant to replace at least in part. It’s the second recent case of a new multiple sclerosis medicine being priced below older therapies: Roche Holding AG introduced Ocrevus in 2017 at a 25% discount to an older drug it bested in clinical tests.
Developing a new medicine can cost more than $1 billion, so it’s unusual when new products are priced lower than forerunners. In multiple sclerosis treatment, patients tend to keep using a therapy that works well for them — meaning that even as new medicines come onto the market, doctors stayed loyal to older drugs even as prices rose.
But two factors are changing the dynamic: political pressure and market competition. U.S. President Donald Trump has slammed drugmakers for raising prices, and a Senate committee last month brought seven Big Pharma CEO’s in for questions on drug costs.
“You don’t want to stick out, price-wise, within the MS space,” Stefan Schneider, an analyst with Vontobel AG in Zurich. While Novartis has said its Mayzent list price is in line with the market, it’s hard to tell what that means for the net price the company receives after discounts, Schneider said. “That’s the problem about discounting,” Schneider said. “We don’t know.”
The Roche and Novartis drugs have some different characteristics: Ocrevus is infused, while Mayzent is a pill, and the Roche drug treats a broader range of patients.
Nonetheless, the two will compete. Ocrevus is frequently used by the same patients targeted by Mayzent — those with a severe form of multiple sclerosis known as secondary progressive. A survey conducted for the Institute for Clinical and Economic Review, or ICER, found that about one-fifth of these patients said they’re taking Roche’s drug.
Generally speaking, MS patients stay on the same therapy when their disease worsens to the secondary progressive type, according to Schneider. That makes switching people to new drugs “not an easy endeavor,” he wrote in a note to investors.
The challenge is reflected in analysts’ sales forecasts. The new Novartis drug is expected to have about $1.2 billion in sales by 2022, according to estimates compiled by Bloomberg. That’s less than a quarter of what’s anticipated for Ocrevus in the same year.
Novartis kept the list price for Mayzent intentionally low, said Paul Hudson, head of the Swiss drugmaker’s pharmaceutical business. The company also undercut the price on Biogen Inc.’s pill Tecfidera by 5.5%, according to Credit Suisse analysts. Ocrevus’s price, about $65,000 a year, hasn’t risen since it was launched.
Still Too High?
“Think about the patients, think about what they’re struggling with, and don’t be concerned about price,” Hudson said. “The first year is about building access and building education.”
Still, some might argue that the new drug’s price is still too high. An ICER review last year found that in order to hit a cost-effectiveness threshold of $150,000 per added year of health, the drug would need to be priced at $995 a month. That’s about 87% cheaper than the price Novartis chose.
Years of lockstep price increases on multiple sclerosis drugs led to a Congressional investigation in 2017. But in the long term, the biggest challenge facing new medicines like Mayzent may be market dynamics, not politics. Three popular multiple sclerosis pills — including Novartis’s warhorse Gilenya — are due to face generic competitors within the next five years. Together, they account for 38% of new treatment starts for patients, said Mark Purcell, a London-based analyst with Morgan Stanley & Co.
Gilenya’s sales are projected to slip next year. How Mayzent will fare depends now, Purcell wrote in a note to investors, on “competitive differentiation and the advent of increasing pricing pressure.”
— Read Specialty Drugs: A Primer, on ThinkAdvisor.