Two drugmakers tried a new pricing strategy—and got the industry talking

The pricing strategy used for a newly approved drug to treat a serious form of eczema could prompt industry-wide changes, according to industry experts.

The drug, Dupixent, is jointly marketed by Regeneron and Sanofi and last week received FDA approval to treat moderate-to-severe atopic dermatitis. Regeneron said about 300,000 U.S. residents could qualify for using the drug.

Elaine Siegfried, a professor of pediatrics and dermatology at the St. Louis University School of Medicine, called Dupixent "groundbreaking," saying the drug appears to work well and has few side effects. According to the New York Times, most other treatments do not successfully treat moderate atopic dermatitis.

Drugmakers' approach to pricing sparks industry debate

According to the Times, Regeneron and Sanofi took a distinct approach to pricing Dupixent amid public debate about high prescription drug prices and directly negotiated the price and other details with insurers ahead of its approval.

Before FDA approved Dupixent, Regeneron CEO Leonard Schleifer spent months collecting feedback from payers and gauging insurers' reactions to different pricing scenarios, STAT News reports. Schleifer's team also met with the Institute for Clinical and Economic Review (ICER), which determines whether drugs are cost effective. ICER determined that when accounting for discounts and rebates for Dupixent, the drug's net price will be around $30,000.

Based on those negotiations, the drugmakers set Dupixent's list price at $37,000 for a year's worth of treatment. According to the Times, that price is slightly lower than the prices set for commonly used biologic drugs that treat other skin diseases, but experts say the price is still very high.

Discussion on negotiation tactic

Richard Evans, an analyst at Sector & Sovereign Research, called it "smart" for Regeneron to reach out to payers before a drug is approved, saying, "In this environment, payers don't want unpleasant surprises."

MA calls for value-based drug pricing 

Geoffrey Porges, an analyst at Leerink, described the drugmakers' pricing approach to pricing as a "new paradigm" for working with payers. "If all this works then other companies are going to rethink launches, and maybe pricing as well," he said.

However, not every drugmaker can take such an approach, STAT News reports.

John LaMattina, a senior partner at the venture capital firm PureTech Health who previously served as the head of research and development at Pfizer, said, "This is likely to be more the exception than the rule," adding, "There can be uncertain (product pipeline) issues that can make it difficult for a company to do this" (Thomas, New York Times, 3/28; Silverman, STAT News, 4/3).

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