In early March 2016, we reported on Merck's deep deep cuts on Zepatier®, to go after the Veterans Affairs (federal government payer -- VA Health Care) business -- and I do think Merck will show solid Q1 2016 sales volume in Zepatier, on Thursday morning's earnings call. However, it may well show far less margin (i.e., price performance), due to these steep discounts -- to win the business. Here is FiercePharma's reporting, of this morning:
. . . .As AbbVie CEO Richard Gonzalez acknowledged on Thursday, Merck has been "more aggressive than we anticipated from a pricing standpoint" -- a factor that’s led to both price and volume loss for AbbVie.
Merck’s list price on its med--$54,600--is well below the $83,319 charged by the Illinois pharma for its Viekira Pak before discounts, or the $94,500 charged by Gilead for its combo med Harvoni. And AbbVie interpreted Merck's pricing move "as a strategy that would go after medical exceptions," since those "historically are in at more of a list price point." On that front, Merck has been “somewhat successful” in picking up those medical exceptions, Gonzalez said.
That’s not all. Merck has also introduced steeper-than-expected discounts in public segments, particularly the Department of Veterans Affairs, AbbVie said. And in that arena, the company "ultimately made the decision that we were not going to compete with the lowest overall price in the VA," adjusting its price downward but not matching Merck’s. The resulting price and volume losses hurt AbbVie, which previously "had a fairly significant share of VA. . . ."
Again, I do see AbbVie ultimately running third, behind leader Gilead, and then Merck -- in this latest Hep C iteration of price-warring. Now you know -- as we wait for Thursday morning. Onward, with a smile.
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