Big Pharma on the Defensive: Sanofi Caves on Oncology-Drug, Halving Price – More to Come?
In an unusual development that reflects the changing reality for drug makers in an increasingly cost-conscious world, Sanofi (SNY) earlier this week lowered the price of its Zaltrap colorectal cancer treatment after physicians at Memorial Sloan-Kettering Cancer Center wrote a scathing op-ed last month in The New York Times to say they would not use the newly approved medication.
The drug maker is now offering discounts that amount to a 50 percent price cut for Zaltrap, which had cost about $11,000 per month before this week. The physicians complained that the price was twice as high for Avastin, a competing drug sold by Roche, but was actually no better in treating patients (see Pharma news).
“We know how important it is for patients who could potentially benefit from Zaltrap to have access to this treatment,” Sanofi (SNY) said in a statement to The Cancer Letter, which first reported the price cut. “We believe that Zaltrap is priced competitively as used in real-world situations.”
“However, we recognize that there was some market resistance to the perceived relative price of Zaltrap in the U.S., especially in light of low awareness of Zaltrap in the U.S. market. As such, we are taking immediate action across the US oncology community to reduce the net cost of Zaltrap.” Sanofi, by the way, parntered with Regeneron Pharmaceuticals (REGN) to develop Zaltrap.
Pharma companies are struggling to generate revenue growth, as patents expire on blockbuster drugs and company labs fail to produce enough new drugs. Now, developing countries – a growth market – are balking at Pharma’s prices. And the Sloan-Kettering episode presents a new challenge to Pharma -- including Novartis (NVS), Pfizer (PFE), Merck (MRK) and Bristol-Myers Squibb (BMY) -- and its investors.
The price discount signals a potential shift in how the pharmaceutical industry may respond to increasing complaints about the rising prices of new medications, some of which cost tens of thousands of dollars a year or more. The move is also noteworthy because a major cancer center successfully achieved its goal with public criticism, rather than behind-the-scenes negotiating.
“Ignoring the cost of care is no longer tenable,” the Sloan-Ketting physicians wrote in their op-ed last month. ”Soaring spending has presented the medical community with a new obligation. When choosing treatments for patients, we have to consider the financial strains they may cause alongside the benefits they may deliver.”
Lee Newcomer, senior vp for oncology at UnitedHealthcare, tells The New York Times it was the first time he could recall a company cutting the price of a cancer drug so much. “It was the first time physicians have stood up and said, “Enough is enough,’ ” he says. “And I think that was a watershed moment.”
To read the remainder of this article, go to Pharmalot.
Ed Silverman is the editor of Pharmalot and a contributor to YCharts, which includes the just-released YCharts Pro Platinum for professional investors.
Read more articles about: Company Analysis
- pharma stocks
- tech stocks
- stocks that look cheap
- stocks that look pricey
- money managers
- value investing
- retail stocks
- dividend growth
- income investing
- energy stocks
- stock buybacks
- growth stocks
- earnings season
- warren buffett
- bank stocks
- stock screener
- dividend yields
- short sellers
- dividend yield
- healthcare stocks
- interest rates
- junk bonds
- entertainment stocks
- federal reserve