Several major drugmakers have thrown a wrench into the typical drug pricing system this week by setting lower than normal prices for two newly-approved drugs, reports Bloomberg.
Here are four takeaways.
1. Sanofi and Regeneron Pharmacetucial's on Tuesday earned Food and Drug Administration approval for its new eczema drug, which will cost $37,000 a year, compared to the $50,000-a-year price tags for similar, yet older, treatments, according to Bloomberg. To limit public scrutiny of the drug's price, Sanofi and Regeneron communicated directly with insurers about pricing and other details prior to winning FDA approval.
"We believe that Sanofi and Regeneron and the payers are heading perhaps towards setting a new paradigm," Regeneron CEO Leonard Schleifer said during an investor call Tuesday night. "But it ain't over yet."
2. The same day, Roche earned FDA approval for its new multiple sclerosis treatment and said it would cost $65,000 — a 25 percent decrease from the price of Merck's competing treatment approved 15 years ago, according to the report.
3. Drugmakers are waking up to a new reality, Roger Longman, CEO of Real Endpoints a data analytics firm that assesses the value of drugs, told Bloomberg.
"In the old days, if you could convince the physician that one drug was slightly better than another, then he or she would prescribe it, it didn't matter what the cost was," said Mr. Longman. "Now, the decision makers are the payers: the insurance companies, the employers."
4. Since the newly approved drugs have no direct competitors and fill a previously unmet need for specific patient populations, the drugmakers will not have to offer as large of discounts as drugs with more competition, notes Bloomberg. So despite these price decreases, the companies will still rake in the same net prices for the new drugs as their competitors.
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