By Joseph Walker 

Regeneron Pharmaceuticals Inc. and Sanofi SA said they would charge $37,000 annually in the U.S. for their newly approved eczema drug, a price the companies said they reached after months of negotiations with pharmacy-benefit managers.

The Food and Drug Administration approved the drug, called Dupixent, for U.S. sale on Tuesday.

Through their negotiations, the companies said they aimed to set a price the pharmacy-benefit managers, or PBMs, would find acceptable. PBMs administer prescription drug benefits for employers and insurers.

In exchange, the companies sought, and in some cases received, assurances that the PBMs wouldn't implement coverage restrictions that could prevent patients from getting the drug, Regeneron CEO Leonard Schleifer said in an interview.

Dupixent will be one of the most closely watched drug launches this year, with analysts projecting it could reach $3.13 billion in global annual sales in 2020 if it gains favorable insurance coverage, according to analysts polled by FactSet.

Regeneron and Sanofi are still reeling from the disappointing launch of their anti-cholesterol drug Praluent last year. Many analysts say the drug flopped in part because of insurers' concerns that the $14,600 a year list price would be too costly, which led them to restrict coverage. A similar drug from Amgen Inc. that also carried a high price tag also had disappointing sales.

Dr. Schleifer said the companies learned from that experience and took extra steps while setting the price for Dupixent. "I wanted to demonstrate that adults in the room can be responsible on both sides," Dr. Schleifer said.

He said the majority of U.S. patients should find their insurers are covering the drug so long as they meet the criteria specified by the FDA in its approval decision. He cautioned, though, that the agreements with PBMs were preliminary and would have to be finalized following FDA approval.

As the companies worked to set the price, Dr. Schleifer also met personally with officials at the Institute for Clinical and Economic Review, a nonprofit group in Boston that analyzes the cost and benefits of new prescription drugs. Regeneron provided the group with previously unpublished data that ICER requested for an ongoing analysis of eczema drugs, says David Rind, ICER's chief medical officer. ICER recently shared an early version of its draft evidence report with Regeneron so the companies could take it into account when setting Dupixent's price, Dr. Rind said.

Dupixent's price falls within the cost-effectiveness range that ICER projected for the drug in the draft report, which was published on Friday.

It isn't clear that all PBMs agree the price is justified.

CVS Health Corp., one of the largest PBMs, said it is working to ensure the drug is available to patients with a demonstrated need for it. "While we believe our advocacy on behalf of our clients did ultimately influence Regeneron's initial pricing strategy, the drug will be expensive," a CVS spokeswoman said.

At least some pharmacy-benefit managers, or PBMs, say Dupixent's price is reasonable given its significant medical value to patients and when compared with similar therapies for psoriasis, another skin condition, that have list prices of $50,000 annually or more.

"I'd characterize it as a responsible price," says Steven Miller, chief medical officer at Express Scripts Holding Co., the largest PBM. "Neither side got everything it wanted, but this has been responsible."

Eczema, also known as atopic dermatitis, is a common condition that causes itchy skin. Severe forms of the disease can be debilitating, causing large areas of patients' bodies to be covered with inflamed patches of skin.

The FDA approved Dupixent for adults with moderate to severe forms of the disease for whom topical treatments, such as steroidal ointments, don't work. Regeneron and Sanofi estimate that 1.6 million people in the U.S. meet the FDA's approval criteria, but their launch will focus on about 300,000 patients who are most in need of treatment.

Olivier Brandicourt, Chief Executive of Sanofi, said in an interview that the companies took into consideration the economic and societal benefits of the drug when deciding on its price. "Early discussions [with payers] indicate coverage will be there," he said.

The companies will provide copay assistance to some patients and pay rebates to insurers; after those costs are taken into account, the companies estimate that net revenue from the drug will be at the "low" range of $30,000 to $35,000, said Dr. Schleifer.

Dr. Schleifer and Dr. Miller of Express Scripts said the rebate percentage would be in the low single digits.

U.S. lawmakers are increasingly weighing options to rein in drug costs, and President Donald J. Trump has publicly supported allowing the government to directly negotiate prices with drugmakers in the Medicare program.

"If we don't work together to solve that problem, somebody's going to do it for us, either the government or others," Dr. Schleifer said.

Investors are looking for whether pricing concerns hurt Dupixent's sales, said Geoffrey Porges, a Leerink Partners LLC analyst. "If the market doesn't accept this product, it's going to be incredibly discouraging in terms of investing in the development of real innovation," he said.

--Denise Roland contributed to this article.

 

(END) Dow Jones Newswires

March 28, 2017 12:26 ET (16:26 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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