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CVS Says Biosimilars May Bring Price Cuts of 40%–50%

Pharmacy benefit manager sees possible $250 billion savings in next decade

The entry of “copycat” biotechnology drugs into the U.S. market could cut prices of expensive medications by 40% to 50%, depending on the level of competition among drug-makers, a top executive at CVS Health Corp. told the Reuters news service in an exclusive interview.

CVS is one of the largest U.S. pharmacy benefit managers and, along with rival Express Scripts, has put pressure on global pharmaceutical makers to lower prices for its clients.

The comments by Troyen Brennan, Chief Medical Officer at CVS Health, suggest that U.S. drug-benefit managers will be pressing for much steeper discounts on new biosimilar drugs than the 20% to 30% expected by Wall Street.

Generic versions of traditional pharmaceuticals can bring discounts of as much as 98%, according to Reuters. Biosimilars retain a much higher margin because of their more- complicated manufacturing process, which can create a new version of a biotechnology drug but not an exact copy.

“As a result of that, with these new ones coming on, we are probably going to be seeing something that looks like more of a situation where there are multiple brands,” Brennan said. “In the past, that didn’t give you 98% discounts. In the past, that would give you 40% to 50% discounts.”

On March 6, the FDA approved the first biosimilar drug for use in the U.S., a copy of Amgen’s cancer treatment Neupogen (filgrastim) that was made by Novartis. Pricing on the biosimilar has yet to be determined.

Drug-makers that are currently developing biosimilars include Pfizer and Hospira. In Europe, Hospira already sells “copycat” versions of Neupogen and Merck/Johnson & Johnson’s arthritis drug Remicade (infliximab). Other biosimilar players include Amgen, Biogen Idec, Teva Pharmaceuticals, and Mylan Inc.

Earlier this year, Express Scripts and CVS pitted two novel treatments for hepatitis C against each other to win large price cuts from their manufacturers, Gilead Sciences and AbbVie.

Brennan said the two companies are likely to use similar tactics as more biosimilars enter the marketplace. That could mean excluding one of the drugs from their reimbursement list for most patients, requiring patients to try the less-expensive treatment first, or insisting that they give prior approval before patients begin the medication based on their specific medical histories, he explained.

Brennan sees competitive pressure ahead for drugs that treat autoimmune disorders, such as rheumatoid arthritis, Crohn’s disease, and colitis.

Express Scripts estimates that approximately $250 billion could be saved in the next decade if biosimilars for 11 different biological drugs are approved in the U.S., as expected.

Source: Reuters; March 12, 2015.

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