Johnson & Johnson predicts 4% to 6% net price decline in pharma this year, with Remicade down by double digits in Q2

With the pharmaceutical industry closely tracking pricing developments, Johnson & Johnson executives shared the drug giant's perspective after reporting second-quarter results Tuesday. For the year, the company is expecting net prices to fall between 4% and 6%. 

Top-selling Remicade is a big part of the story. In the second quarter, the drug's price fell 14%, J&J reported Tuesday. Still, the drug holds 94% of the market share, even as rival pharma giants Pfizer and Merck work to market their biosimilars for treating arthritis and other autoimmune conditions.

Despite a portfoliowide pricing decline of 2% in the quarter, J&J's pharma sales grew nearly 11% to $20.8 billion, excluding revenues from Actelion, which J&J acquired last year. On the company's Tuesday conference call, CEO Alex Gorsky said the unit's growth reflects "strong underlying volume" increases. Stelara, Zytiga, Darzalex and Imbruvica helped fuel the sales growth. 

J&J's prediction that it'll see up to a 6% net price decline this year adds another data point to the battle over drug prices between pharma and supply chain players. Last year, the drug giant paid out $15 billion in rebates and discounts and ended with its net prices down 4.6%. It's among a group of drugmakers that reported net pricing declines in 2017, joined by Sanofi and Merck.

In recent years, as pharma's pricing has come under growing scrutiny, drugmakers have pointed to burgeoning rebates and discounts in the supply chain that don't always benefit patients. In defense of their industry, pharmacy benefit managers have said their tough negotiations drive savings for the U.S. health system and that drugmakers always set their prices.  

What isn't under debate between the sides is that rebates and discounts have ballooned in recent years, as have drug list prices. Patients pay based off of list prices, so the dynamic between pharma and middlemen has left them paying more.

Remicade could see further price erosion this year and next as more payer contracts come up for renewal, J&J execs said on Tuesday's call. Meanwhile, Pfizer has sued the J&J alleging "anticompetitive" contracting practices to protect the drug's revenue; a court's decision on J&J's motion to dismiss is expected soon.

In all, J&J's sales grew 10.6% in the second quarter versus the same period last year. Despite the strong performance, J&J reduced its sales guidance for the year to $80.5 billion to $81.3 billion because of the effect of a strong U.S. dollar. The company had previously predicted $81 billion to $81.8 billion in 2018 sales.