Business Corpus: Regeneron Is Undercutting Amgen In Cholesterol Drugs — Will It Help Share?Regeneron slipped to a four-year low Tuesday — prodding rival Amgen to also dip — after announcing a deal to cut the net price of its cholesterol drug. The post Regeneron Is Undercutting Amgen In Cholesterol Drugs — Will It Help Share? appeared first on Investor's Business Daily.

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Regeneron Pharmaceuticals (REGN) tumbled to a four-year low Tuesday — prodding rival Amgen (AMGN) to also dip — after announcing a deal with Express Scripts (ESRX) to cut the net price of cholesterol drug Praluent.

Express Scripts will list Praluent as its exclusive PSCK9 inhibitor on its national formulary as of July 1. In exchange, it will pay a lower price for the drug. PCSK9 inhibitors, like Praluent and Amgen's Repatha, work to reduce "bad" LDL cholesterol in the blood. They also benefit cardiovascular outcomes.

The move is in an effort to expand access to cholesterol drug Praluent, Regeneron and partner Sanofi (SNY) said. Some reports suggest 70% of prescription requests are rejected by insurers. That could be, in part, due to price. Praluent and Repatha go for north of $14,000 per year.

Regeneron Chief Executive Leonard Schleifer praised the deal in a written statement. He sees the agreement as setting a new standard model for medicines like Praluent.

"This paradigm-shifting agreement is designed to break the gridlock so that Praluent is finally able to reach patients most in need," he said. "U.S. cardiologists have experienced unprecedented challenges in securing access for Praluent for patients who were clearly appropriate, but were denied coverage."

But investors weren't as keen on the deal. In afternoon trading on the stock market today, Regeneron slipped 0.8% to 301.22. Amgen dropped 3% to 169.28. Sanofi lost a fraction to 39.13.

Expanding PCSK9 Access

The agreement significantly reduces the documentation necessary to secure Express Scripts insurance coverage for the cholesterol drug, Regeneron and Sanofi said in a press release. Physicians will submit a simplified attestation form to confirm the patient is appropriate for Praluent.

Express Scripts also agreed to pass a portion of the savings onto patients enrolled in other plans. Those patients should see lower out-of-pocket costs for their Praluent prescriptions, the companies said.

Analysts were largely positive on the deal, though note the specifics of the price cut aren't public. It's likely Praluent will be priced in line with a recent report that suggested it would be cost effective for higher risk patients at $4,500-$8,000 annually, RBC analyst Brian Williams said in a note.

Taking On Amgen's Repatha

The "price for volume" announcement leaves a lot of the financial benefit up in the air, Williams said. The PCSK9 market is particularly attractive given its massive size. But this type of deal could further incentivize insurers to implement complicated utilization processes, he said.

Further, if the deal prices the cholesterol drug closer to the $4,500 annual target, it would represent a 50%-plus cut to the net price, Williams said.

"Despite this, we do not view this as a pricing 'race to the bottom' given potential for annual compounding and lifetime treatment creating distinct differences vs. the 'price for volume' contracts in the curative one-time-treatment hepatitis C space," he added.

Now, it's a battle for the other insurers, Williams said. Amgen is in negotiations with payers and will likely leverage its "expertise in winning contracting agreements" to seek deals with United Health (UNH), CVS Health (CVS), Anthem (ANTM), Aetna (AET), Cigna (CI) or Humana (HUM), he said.

Amgen estimates the Express Scripts formulary decision will impact 2,000, or 6%, of Repatha patients, Piper Jaffray analyst Christopher Raymond said in a report to clients. But he kept his model on Praluent intact until after the first-quarter earnings conference call on Thursday.

"Just doing some back-of-the-envelope math, if all 2,000 Repatha patients switched to Praluent on July 1, this would be an $8 million tailwind for Praluent in the second half of 2018 on the formulary decision alone," he said.

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