Mavyret’s cheap price ‘throws the gauntlet down to Gilead,’ said Leerink’s Geoffrey Porges
AbbVie Inc.’s newly approved drug Mavyret can treat hepatitis C’s six major strains in eight weeks.
It’s also a positive steal in the hepatitis C drug world, at $26,400 for a eight-week course of treatment.
That’s on paper, at least, according to a chart from EvercoreISI analyst Umer Raffat, which shows AbbVie’s ABBV, +0.00% Mavyret coming in cheaper than the company’s other hepatitis C therapies, Viekira Pak and Viekira XR, Gilead Sciences Inc.’s GILD, -1.63% Sovaldi, Harvoni, Epclusa and Vosevi, and Merck’s MRK, -0.66% Zepatier.
Gilead shares declined 2.2% in heavy midday trade on Friday, and Merck shares slumped 0.7% in light-to-moderate trade.
But the figures, which reflect the various drugs’ wholesale acquisition cost (WAC) — the price a drug maker offers wholesalers — matter less than the net price drugmakers actually take home, Raffat said.
“Thus, the key would be what gross:net ABBV offers,” he said, noting that the gross price of Gilead’s Harvoni is about $63,000 for eight weeks, but discounts bring the net price to about $30,000.
Still, the price “throws the gauntlet down to Gilead and its customers in this market,” Leerink analyst Geoffrey Porges said, who suggested Mavyret could launch “the Hunger Games once more.”
See more: Gilead cured hepatitis C. That’s become its biggest problem
Price is a fraught topic in the drug world, but especially so when it comes to hepatitis C, which affects an estimated 3.2 million people and can cause long-term harm or death.
Gilead’s Sovaldi is the disease’s first and best-known treatment. When the therapy came out with an $84,000 price tag, it sent shock waves across the industry and made Sovaldi the poster child for expensive drugs. Critics said the price was too high, but Gilead argued that it was justified by the drug’s value.
Read: This is the most expensive drug in America
Since then however, Gilead’s hepatitis C franchise has faced challenges, in large part because the company’s critical hepatitis C franchise has been flagging.
AbbVie’s new drug is likely to up the ante. It was approved for hepatitis C genotypes 1-6 for adult patients without the liver disease complication cirrhosis or with mild cirrhosis. The therapy can also be used to treat patients with a genotype 1 infection who have been previously treated with one of two other regimens.
“This label gives AbbVie access to the vast majority of the US HCV market, only excluding those patients who failed prior treatment with Merck’s Zepatier or those earlier failures on Bristol’s BMY, +0.81% Daklinza and JNJ’s JNJ, -0.13% Olysio,” Porges said.
“Patients, physicians and payers are likely to embrace Mavyret given the drug’s profile and excellent clinical data, and this approval and the subsequent market share encroachment are a key part of our cautious stance towards Gilead’s stock,” Porges said. “Conversely, for AbbVie, this pricing means that the revenue contribution from Mavyret is likely to be limited, and largely consistent with our existing forecast.”
Gilead shares have surged 6.8% over the last three months, compared with a 5.3% rise in AbbVie stock and a 3.6% rise in the S&P 500 SPX, +0.19%