Glaxo’s Advair Win Undermined by Lack of Coverage on Breo Drug

GlaxoSmithKline Plc (GSK) succeeded in getting its best-selling medicine covered once again by the biggest pharmacy-benefits manager in the U.S., though a successor drug didn’t make the list.

Express Scripts Holding Co. (ESRX) reinstated Advair, a respiratory treatment that had about 5 billion pounds ($8.4 billion) in sales last year, on its list of medicines eligible for reimbursement, London-based Glaxo said today. Breo, a newer lung drug, will be excluded, Express Scripts said yesterday.

“We’re pleased with the progress we have made in these negotiations and the positive trends towards increased patient access to GSK’s innovative medicines,” Glaxo said in an e-mailed statement today. “We are continuing to work with payers” and pharmacy benefit managers “through their ongoing formulary management decision cycles.”

Advair has been losing market share since Express Scripts decided not to cover it this year. The reversal of that policy in 2015 may boost sales volume, though it probably won’t help Glaxo win back market share, Bloomberg Intelligence analysts said. Advair’s status on the Express Scripts list as a “covered alternative” suggests patients will have to pay more to get it compared with preferred options from AstraZeneca Plc (AZN) and Merck & Co., they said.

“GlaxoSmithKline is unlikely to fully recoup this share given Advair’s tiering,” the analysts, Michael Shah and Sam Fazeli, wrote in a note today.

Advair Competition

Advair faces competition from AstraZeneca’s Symbicort and Merck’s Dulera, and additional rivals from Novartis AG and Boehringer Ingelheim GmbH may be approved in the U.S. next year, the analysts said.

Glaxo last month cut its forecast for the year after sales of Advair continued to fall, with first-quarter revenue Advair declining 12 percent to 1.1 billion pounds. Efforts to introduce two new lung drugs, Breo and Anoro, to help replace Advair revenue have taken longer to bear fruit than the company anticipated, and their marketing costs also hurt profit.

Breo may struggle to gain market share because it’s not on the Express Scripts list, the BI analysts said. Breo is predicted to generate 87.7 million pounds this year and more than 560 million pounds in 2017, according to analysts’ estimates.

“Given AstraZeneca’s Symbicort is already beating Advair on pricing, GlaxoSmithKline may need to become more creative with Breo’s pricing to offset the effects of Symbicort and the potential onslaught of Advair generics after 2016,” the BI analysts wrote.

To contact the reporter on this story: Albertina Torsoli in Geneva at atorsoli@bloomberg.net

To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net Reg Gale

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