(Bloomberg) -- A rare ceasefire has been declared in the battle over the nation’s drug prices.
Express Scripts Holding Co., one of the biggest U.S. pharmacy-benefit managers, agreed to ease restrictions on a novel cholesterol-cutting therapy after its manufacturers, Regeneron Pharmaceuticals Inc. and Sanofi, lowered its $14,600-a-year price.
The deal is the first struck since the March announcement by Regeneron and Sanofi that they would cut the price of their drug, Praluent, in exchange for better access to patients. It comes as President Donald Trump, lawmakers, insurers and patient-advocacy groups have assailed pharmaceutical companies for what they claim are the exorbitant costs of some treatments.
“It’s a game changer,” said Steven Miller, chief medical officer of Express Scripts. “This paves the way for a really exciting future. We’ve all been wanting to get to fair drug prices. We’re not trying to get to the lowest price; we’re trying to get to the right price.”
While the companies didn’t disclose the agreed-to price, as is common, representatives said it was within the $4,500 to $8,000 annual range recommended by Institute for Clinical & Economic Review, an independent body that evaluates the cost effectiveness of medical care.
It’s unusual that pharmaceutical companies would adhere to the recommendation made by ICER, a group that often deems therapies too expensive.
“Following a decades-long trend toward dysfunction and finger-pointing, the U.S. health care system is beginning to address its drug pricing problem through the emergence of a ‘grand bargain,”’ said Steven Pearson, president of ICER, in a statement. This “is a model for the rest of the industry to contemplate.”
Under the deal, Praluent, which competes with a drug sold by Amgen Inc., will become the exclusive therapy of its kind offered by Express Scripts on its national list of preferred drugs. Express Scripts will also relax a previously cumbersome approval process, making the drug easier for doctors to prescribe.
The agreement will go into effect July 1 for Express Scripts’s 25 million commercial patients subject to the list. The pharmacy-benefit manager covers about 83 million people in total.
Praluent belongs to a new class of cholesterol drugs known as PCSK9 inhibitors, which were once thought of as instant blockbusters. Instead, the drugs became symbols of the nation’s rising drug prices after they were approved in 2015, with insurers and other payers thwarting their use, in part due to their high cost and the large number of potential patients.
Faced with underwhelming sales, the companies have tried to combat insurance companies’ resistance with studies showing the drugs’ effectiveness in preventing heart attacks and other health problems.
Amgen was the first to show that its therapy Repatha reduced a composite measure of cardiac ailments by 15 percent, a benefit that was disappointing to investors at the time who had hoped its effect would be more dramatic. Regeneron and Sanofi in March announced similar results, though their study also found that the therapy reduced the risk of death. Miller said that finding and the price cut spurred Express Scripts to provide easier access to the drug.
In an email, Amgen spokeswoman Kristen Davis said that the company was disappointed by Express Scripts’s decision, which she said will affect about 2,000 Repatha patients. She said the company will still compete for the Express Scripts patients unaffected by the change and will continue to offer rebates in exchange for better access.
“We have been aggressively negotiating with several payers for months now to expand patient access to Repatha,” she said. “We are offering significant discounts that are in line with our competitors and have multiple offers pending.”
Sales of Regeneron and Sanofi’s drug have lagged behind those of Amgen’s therapy.
The lowered negotiated price is a public relations victory for Express Scripts, which competes against other middlemen to show its customers that it can negotiate deeper discounts. Pharmacy-benefit managers make money by keeping a small portion of the discounts that they negotiate with drugmakers on behalf of insurance companies. In March, insurer Cigna Corp. announced a deal to acquire Express Scripts for $54 billion.
For 2018, Express Scripts and rival CVS Health Corp., which has agreed to acquire insurer Aetna Inc., each refused to cover about 150 drugs, usually because they were able to negotiate a better price for competing treatments.
“That’s what PBMs do, pit drugs against each other,” Miller said. Express Scripts said it will pass on some of the discount it receives from the drug companies directly to patients and anticipates that some out-of-pocket costs for consumers will also decline.
Representatives from Regeneron and Paris-based Sanofi said in an interview that the companies are having discussions with large national health plans as well as regional ones, and that so far the reception has been positive.
“The goal of this at the beginning was really to ensure that the patients that are not getting our drug, that are eligible, will now get our drug in a very quick and easy way,” Michael Suesserman, vice president of Regeneron’s cardiometabolic and opthalmology business unit, said. “That’s really what we hope to gain from it.”
©2018 Bloomberg L.P.