- The New York Times reports that there is a growing trend among health insurers specifying branded drugs over generics, driven by more attractive margins for pharmacy benefit managers (PBMs), but saddling patients, in many cases, with higher out-of-pocket costs.
- Examples of the trend include Merck's (MRK -0.4%) cholesterol med Zetia (ezetimibe), Boehringer Ingelheim's stroke risk reducer Aggrenox (aspirin/extended-release dipyridamole) and Endo Pharmaceuticals' (ENDP -0.3%) pain reliever Voltaren Gel (diclofenac sodium).
- Shire's (SHPG +0.2%) ADHD med Adderall XR (mixed salts of single-entity amphetamine) is another case where negotiated discounts with middle men have preserved much of its market share, 29% last year, but at a reduced return. According to research outfit SSR Health, Shire's take/pill has steadily declined, $1.73 in Q1 2017 versus $2.93 in Q1 2013, despite the list price holding relatively steady at $7.12, reflecting the ever-growing haircut from PBMs and distributors (i.e., McKesson (MCK +0.4%), Cardinal Health (CAH +0.5%) and AmerisourceBergen (ABC -1.2%)).
- In December, CVS Caremark (CVS +1.2%) informed pharmacies that some of its Medicare prescription drug plans would only cover branded versions of 12 drugs, including J&J's (JNJ -0.4%) schizophrenia med Invega (paliperidone).
- Teva Pharmaceutical Industries' (TEVA -6.4%) SVP for customer and marketing operations Christine Baeder says, "You definitely see a much more aggressive posture [from branded drug makers] than you used to see."
- The tactic appears to be spreading to biosimilars.
- Selected tickers: LLY BMY NVS AGN AZN GSK PJP IHE XPH PPH GNRX PRGO MYL PFE