What Are Payors Saying About Managed Care Giants?

In a report published Thursday, RBC Capital Markets analyst Michael J. Yee said that a review of comments by major payors like Express Scripts Holding Company (NASDAQ: ESRX) and CVS Health Corp (NYSE: CVS) indicated pressure on PCSK9 launches and a slowdown in HCV utilization. In the report RBC Capital Markets mentioned, "Notably now, the tone is more modest on HCV drugs, where comments suggest utilization and sales may be slowing." Growth in the impact by Hep C seemed unlikely in view of the utilization trend of the new Hep C drugs, which was "consistent with flattening scripts and decelerating sales that we've seen."Analyst Michael Yee mentioned that Gilead Sciences Inc. (NASDAQ: GILD) was expected to record Hep C sales of $11.6 billion in USA in 2015. Although the company's management expected strong US demand and advertisements aiming to reinvigorate awareness have resurfaced, any upturn in scripts was yet to be seen. "On the upside, we still think OUS Harvoni could be underappreciated," although competition from Merck & Co., Inc. (NYSE: MRK) could be expected in 2016.In their comments on PCSK9, the payors had mentioned that they expected to use "formulary exclusion strategy" to help manage PCSK9 costs and try and attain the "lowest possible price," Yee said.Express Scripts highlighted that PCSK9s could "wreak financial havoc," while indicating that they would try to interpret Praulent from Regnerron Pharmaceuticals Inc (NASDAQ: REGN) as "pretty narrow" to manage "appropriate use."In their comments, Prime Therapeutics maintained that most patients were under-treated with statins and they believed that statins were the "best and most affordable therapy," while PCSK9s may be appropriate only for "rare genetic" illnesses.Although payors could force exclusive deals and seek lower prices for PCSK9s, companies like Amgen Inc (NASDAQ: AMGN) and Regeneron Pharmaceuticals may refrain from a "price war given similar drugs," the analyst stated."Net-net, long-term we maintain our positive view on PCSK9s, and believe this could become a multi-billion-dollar business for AMGN and CV outcomes studies in 2017+ should be positive and have a large efficacy benefit that payors will pay for," the report concluded.