Tuesday, January 13, 2015

Gilead, AbbVie Hit By Fresh Concerns On Hep C Discounting

(Reuters) - Shares of Gilead Sciences Inc closed down 6 percent on Tuesday, after a pharmacy benefit manager said it would cover both Gilead and rival AbbVie Inc's hepatitis C offering, renewing concerns of pricing pressure.

Investors interpreted this as further discounting of hep C drugs, signaled by an increasing willingness by drugmakers to offer rebates, Sanford Bernstein's Geoffrey Porges wrote in a note.

Express Scripts, the largest U.S. pharmacy benefit manager, dropped Gilead's hep C drugs in December in favor of AbbVie's newly approved alternative at a cheaper price.

Meanwhile, CVS Health Corp, the second-largest pharmacy benefit manager, and health insurer Anthem Inc inked deals with Gilead to cover Harvoni.

On Monday, St. Paul, Minnesota-based pharmacy benefit manager Prime Therapeutics LLC, which serves over 25 million people, said it would cover both Gilead's Harvoni and AbbVie's Viekira Pak.

"There has been a substantial reduction in the net price of both of these drugs just in the past few weeks, so sometimes it pays not to go first," said Peter Wickersham, Prime's senior vice president of Integrated Care and Specialty.

While exact rebate rates will unlikely be disclosed we would hesitate to read too much into the claims from Prime, and we do not believe they alter expectations about hep C pricing, Porges said.

"It is possible that neither Gilead nor AbbVie felt the need to offer a deep rebate to Prime for exclusivity."

Prime is not known for exclusionary formularies in contrast with CVS and Express Scripts, and consequently, both drugmakers may have been less pressured with Prime than they were with CVS and Express Scripts, he said.

AbbVie's shares closed down 3.6 percent on the New York Stock Exchange on Tuesday.

(Reporting by Natalie Grover in Bengaluru)

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