Pharmaguy's Insights Into Drug Industry News
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Pharmaguy's Insights Into Drug Industry News
Pharmaguy curates and provides insights into selected drug industry news and issues.
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Insurance Companies Accuse #Pharma of Gaming the Orphan Drug Approval System

Insurance Companies Accuse #Pharma of Gaming the Orphan Drug Approval System | Pharmaguy's Insights Into Drug Industry News |

Pharma companies may be exploiting a legal loophole that increases utilization costs of certain drugs, according to a study from AHIP (America's Health Insurance Plans).


"Orphan drugs" treat rare diseases impacting populations fewer than 200,000 annually that are otherwise lacking special treatment. Pharmaceutical companies can make tremendous profits by finding uses for those drugs outside of the original condition the medications were intended to treat. While the practice is legal, some experts say pharmaceutical companies are “gaming the system,” according to the brief.


Almost half of the orphan drug use in the study was for non-orphan diseases and conditions.


AHIP notes,"in a 2012 study on more than 350 orphan drugs approved through mid-2010, researchers found that 43 drugs, having at least one approved orphan indication, achieved global sales in excess of $1 billion in 2008."


Market exclusivity and extremely high prices have created such “blockbuster” orphan drugs, “a result that seemingly runs counter to the spirit” of the law which incentivizes rare disease research, the report adds.


[FDA approved 45 new drugs in 2015, four more than in 2014 and the highest number since 1996. Twenty (20) of those (43%) were "orphan" drugs. More on this here:]

Pharma Guy's insight:

Even CRESTOR is an “Orphan Drug”: Also read “Orphan Drug Sales: An Enduring Prospect for #Pharma Profits”; and "Orphan Drugs Now Where the Money Is"; 

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Health Insurers to Drug Companies: Bargain or Be Banned

Health Insurers to Drug Companies: Bargain or Be Banned | Pharmaguy's Insights Into Drug Industry News |

In dealing with health plans, drug companies are facing a new imperative — bargain or be banned.

Determined to slow the rapid rise in drug prices, more health plans are refusing to cover certain drugs unless the companies charge less for them.

The strategy appears to be getting pharmaceutical makers to compete on price. Some big-selling products, like the respiratory medicine Advair and the diabetes drug Victoza, have suffered precipitous declines in market share because Express Scripts, the biggest pharmacy benefits manager, recently stopped paying for them for many patients.

“There’s clearly more price competition in the marketplace,” Andrew Witty, chief executive of GlaxoSmithKline, said, talking about Advair in a recent company earnings call.

Executives of pharmacy benefit management firms say they must do something to cope with rising prices, particularly for so-called specialty pharmaceuticals, which are used to treat complex diseases like cancer and multiple sclerosis.

Spending on specialty drugs rose 14.1 percent last year and by even greater amounts in previous recent years, according to Express Scripts. Most of that increased spending comes not from new drugs or new patients, but from price increases on older drugs that can often exceed 10 percent year after year.

Many other countries control drug prices in some manner, so drug companies have become dependent on increasing prices in the United States to grow.

Pharmaceutical companies rarely talk in detail about how they set prices or decide on price increases. They generally say that the price reflects the value of the medicine, which in some sense is a measure of what the market will bear.

They also say that insurers and government programs like Medicaid typically pay less than list price, though how much is usually kept confidential. If health plans are now winning bigger discounts or rebates, it will not show up in list prices but will help relieve pressure on insurance premiums.

That appears to be happening to some extent. Analysts at Credit Suisse estimate that the collective discounts and rebates for 15 large drug companies amounted to 31.9 percent of gross United States sales in 2013, up from 30.2 percent in 2012 and 19.7 percent in 2007.

How much bigger and broader discounting will become remains to be seen. Tim Anderson, pharmaceutical analyst at Sanford C. Bernstein & Company, said he had always been skeptical that pharmacy benefit managers could rein in prices.

Pharma Guy's insight:

Sovaldi - A Cure for the One to Ten Percenters

Gilead, for example, only needs 15,000 patients to generate $1 Billion in sales of its recently approved HCV treatment, Sovaldi. There are an estimated 3.2 million Americans with chronic Hepatitis C infection. Gilead only has to provide 0.5% of them with Sovaldi to reach the magic $1 Billion in sales. Of course, Gilead would like to make more than $1 Billion from Sovaldi, maybe even $20 Billion, which would require treating 10% of current Hep C sufferers. OK, not quite "one percent," but close enough for all practical purposes!

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