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Pharm Exec's 2015 Brand of the Year Sovaldi and Harvoni are huge game-changers for Hepatitis C, but the big-picture impact will come down to how well the market aligns pricing, distribution, and access toward the broader goal of making sure that those patients who need the cure, get the cure.
PHARM EXEC'S 2015 BRAND OF THE YEAR AWARD goes to two drugs, Sovaldi and Harvoni, from one company, Gilead Sciences. Together, the two have set revenue records for newly launched products while revolutionizing the standard of care for the hepatitis C virus (HCV), a dangerous, ubiquitous, below-the-radar threat to public health worldwide.
Not only do they vanquish the virus faster, more completely and with fewer side-effects than previous treatments, Sovaldi and Harvoni are back-to-back symbols of the innovation chain of continuous improvement-the way new drug R&D is supposed to work. And from a purely commercial point of view, the products are a game-changer, having broken the stereotype of the sclerotic, slow-build launch cycle that appeared to be the industry’s destiny just a year ago.
Now it’s time to see if the market works its own magic through tougher segment competition that aligns pricing, distribution, and access toward the broader goal of making sure that 160 million patients around the world who need the cure, get the cure. This is where the real story of the pharmaceutical industry gets written, and where the outcome carries significant impact for its reputation.
The situation certainly looks promising. Competition in the HCV drug space has been on a solid upswing since Sovaldi’s December 2013 launch. In addition to rendering some earlier, less efficacious treatments obsolete, which is itself a driver of market efficiency, arrival of the two Gilead products was quickly followed by another oral non-interferon-based treatment, AbbVie’s Viekira Pak. Merck, Bristol-Myers Squibb, and Achillion have drugs in final-stage testing that promise to advance the cure for HCV patients in three distinct ways: (1) a shorter treatment cycle than the current 12 weeks; (2) in all of the virus’ six main genotypes; and (3) for victims with specialized comorbidities like HIV and advanced liver disease. Not resting on their laurels, Gilead and AbbVie are doing the same.
Pipelines as flush as this support the broader assertion that true market exclusivity-the period of time when an inventor is a price-setter, rather than a price-taker-is now measured in months, not years. Lack of price transparency aside, discounting of HCV therapies has been intense over the past six months as Gilead and AbbVie vie for share of script in anticipation of the post-launch stretch, with estimated rebates as high as 50% for key US customers like pharmacy benefit managers (PBMs) and Medicaid.
Moreover, almost all the new HCV business in Europe is risk-volume contracting, which caps pricing to a predetermined level of demand. In developing countries, prices have been set at the much lower benchmark of GDP per capita. Gilead has taken the unusual step of licensing Sovaldi and Harvoni to eight Indian drugmakers who, in return for specified royalty payments, will be able to manufacture and set their own prices for the two drugs in 91 developing countries, a geographic spread that covers more than half of HCV patients worldwide. One licensee, Hetero, launched its version of Sovaldi in India in March at a local price equivalent of $11.36 per pill-a tiny fraction of the $1,000 Gilead is said to command here in the US.
Looking ahead, the HCV space offers similarities to the evolution of HIV/AIDS. Innovation, competition, and public visibility gradually transformed that business model, giving payers and patients more options on pricing and greater access to treatment. But there is something distinctive about HCV: it is one of the first major illnesses to make the transition from the chronic care maintenance paradigm to a full, Lazarus-like cure. Among other things, a drug that cures quickly turns the traditional value proposition on its head, at least for some: PBMs, for example, like to spread per patient expenditures over time rather than booking such costs up front. With high turnover in covered lives, PBMs don’t benefit from savings that extend long term, so value as defined by outcome fails to resonate.
HCV is complex. Every victim endures its varied symptoms separately. Part of the furor over the cost of these new cures can be attributed to a failure by parties to anticipate how demand would be stimulated by the previous wasteland of options for a hidden, clinically demoralized HCV community. Controversy over the HCV drug rollouts suggest that pharma must put more focus on the epidemiological grunt work of understanding the pathway to disease in different populations, identifying key stakeholders and interpreting their behaviors, anticipating budgetary exposures that impede access, and targeting therapy only to patients whose symptoms fit the indication and the label. Sound familiar? Yes, its personalized medicine, delivered in a multichannel, not brand-centric, population health context. Getting this configuration right for the next wave of cures is pivotal to making sure our industry benefits-in revenues and reputation-from the sweep of new science.
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