Biotech

Ahead of the Curve ™

Drug Pricing Survey

Jan 3 2019

Report by Cowen’s Pharmaceutical Team & Biotechnology Team

 

In contrast to investor fears, our survey respondents expect U.S. brand drug prices will continue to rise over the next 3 years, at a rate similar to the past. Biosimilar substitution could reach 25-30% of molecules where a biosimilar is available. Cholesterol, diabetes, hepatitis C, and oncology are likely to experience the greatest expected price erosion. Price controls still appear unlikely.


Survey Of Buyers Captured One-Fifth Of U.S. Retail Drug Purchases

Cowen and Company conducted its 24th Annual Drug Pricing/Purchasing Trends survey of U.S. drug buyers to gain insight into the direction of U.S. drug prices over the next 3 years. Our survey results are based on responses from 26 U.S. HMOs, PBMs and hospitals. Collectively, they purchased $42B+ of drugs in 2017, or about one-fifth of total U.S. retail drug purchases.

Continued Low-/Mid-Single Digit Rise In Brand Drug Acquisition Prices Projected

This year’s sample of purchasers anticipate that brand drug acquisition cost per unit will increase by 3-5% annually over the next three years. This is above last year’s 3-4% forecast. Thirteen percent of respondents attribute a substantial portion (75%) of the anticipated increase to higher-priced, newer therapies vs. 40% last year. Generic drug acquisition cost per unit is expected to increase by 1% over the next three years, versus last year’s 3% forecast.

Biosimilar Substitution Expectation Increased, Assuming A 30-40% Discount

Respondents indicate that an average of a 32% price discount would be needed to switch from a brand to a biosimilar product, while the weighted average is 39%. For molecules in which one biosimilar is available, an average of 30% of dispensed prescriptions are likely to be biosimilar substitutions in three years, while the weighted average is 25%. This rises to an average of 47% and weighted average of 46% when three biosimilars are available.

 

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