Regeneron, Sanofi strike exclusive PCSK9 deal with Express Scripts. How much can it help?

For more than a month, PCSK9 partners Sanofi and Regeneron have been shopping some long-awaited outcomes data showing that their cholesterol drug Praluent can cut cardiovascular death risks. They've been pitching a lower price to payers in exchange for better—read less hassle-ridden—coverage. Now, they have a deal.

In an arrangement that starts July 1, Sanofi and Regeneron agreed to cut Praluent's price to win an exclusive spot on Express Scripts' national preferred formulary, which covers 25 million people in the U.S. What's more, Express Scripts will pass the savings along to certain patients on commercial insurance—a new twist that should answer critics who claim PBMs pocket the spread.

While the drugmakers touted the deal on Tuesday, Bernstein analyst Ronny Gal called it differently. Instead of a victory, the pact was a "capitulation," Gal said. It's tantamount to an admission that the PCSK9 cholesterol drugs, approved to great fanfare, will never become a big drug class with megablockbuster sales. Amgen, which sells head-to-head rival Repatha, will have to shop around for deals of its own, the analyst pointed out, and that means the companies will end up splitting the market at prices far lower than their original stickers.  

PCSK9 drugs launched with list prices of around $14,000 per year, but that figure will be deeply discounted for the Express Scripts deal. Payer barriers to access have significantly curbed expectations for the class since their launches in 2015.

"When classes go exclusive, payers win," Gal said in a video discussing the deal. "Drug companies do not. That is the case here." At the same time, Gal predicted the deal would allow Regeneron to turn Praluent into a profitable drug. So far, it's been losing money for the drugmaker.

After running into barriers from payers that required doctors and patients to jump authorization hurdles before filling scripts, the drugmakers posted real-world outcomes studies that pharma watchers expected to build a stronger case for the cholesterol fighters. But though payers have been somewhat receptive, it remains to be seen how much traction the drugs can get from that new data.

Sanofi and Regeneron had already announced in March that they would lower Praluent's price to a range suggested by cost effectiveness group Institute for Clinical and Economic Review—$4,460 to $7,975 per year—after releasing their outcomes results at the American College of Cardiology (ACC) annual meeting. That trial showed that Praluent could cut the number of cardiovascular problems—such as heart attack and strokes—and cut the risk of death, too.

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Praluent does have one edge over Amgen's Repatha. The drug, which rolled out its own outcomes data at last year's ACC, already has an FDA label outlining its ability to cut CV risks but without the mortality benefit. SunTrust analyst Yatin Suneja wrote in March that Praluent's death-risk numbers will likely be seen as a "key differentiator" between the two outcomes trials, which were designed somewhat differently. 

Involved in the new deal is Express Scripts Chief Medical Officer Steve Miller, M.D., a high-profile figure at the PBM who's often vocal about high drug prices. Miller and Express Scripts previously took credit for saving $4 billion in U.S. healthcare costs through tough negotiating after Gilead Sciences launched Sovaldi and Harvoni.

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