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U.S. Insulin Prices Rise as Sanofi, Novo Await Rivals

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Aug. 15 (Bloomberg) -- Sanofi raised the U.S. price of its Lantus insulin for a second time this year and Novo Nordisk A/S may follow suit before an onslaught of generics increases competition in the $35 billion diabetes market.

Sanofi raised the U.S. wholesale price of its Lantus vials by almost 15 percent to $16.64 per milliliter and of its Lantus Solostar injection pens by almost 10 percent to $18.38 per milliliter, Jack Cox, a spokesman for Paris-based Sanofi, said in an e-mail. Those increases followed a 10 percent price increase in April for both versions of Lantus, the world’s best-selling diabetes treatment.

Novo Nordisk increased U.S. prices for Levemir by 10 percent and Victoza by 8 percent during the second quarter, said spokesman Mike Rulis. Novo, based in Bagsvaerd, Denmark, last week raised its full-year sales and profit forecasts in part thanks to an unexpected revenue boost from its diabetes treatments. Victoza’s second-quarter sales jumped 25 percent.

The companies are taking advantage of a drop in costs in the world’s largest pharmaceutical market. Total U.S. drug spending declined by about 1 percent to 2 percent in the first half, caused by a faster-than-expected replacement of top-selling brand-name medicines with cheaper generic copies, Novo executives said on a conference call last week. That has reduced pressure on insurers and other payers to cut costs and leaves room for price increases, they said.

Taking Increases

“Products that are of high value and that are protected in one way or another, they have the opportunity to take price increases without sort of messing up the whole system,” Novo’s Chief Operating Officer Kaare Schultz said on the call. “And we’re seeing that at a slightly higher level than what we had been anticipating.”

The market for drugs to treat diabetes will probably soar almost 66 percent to more than $58 billion in 2018 compared with last year, according to Standard & Poor’s. Lantus, with 4.96 billion euros ($6.59 billion) in revenue last year, faces a biosimilar version being developed by Eli Lilly & Co. and Boehringer Ingelheim GmbH.

“There isn’t a focus on cost-benefit in the U.S.,” Mark Purcell, an analyst at Barclays Plc, said in an interview. “You’ve only got, effectively, two players in the market so it’s a classic supply-and-demand cycle; and the demand is huge.”

Sanofi considers the medical value of its products as well as market conditions when determining U.S. prices, Cox said.

Final Prices

“The final price an individual consumer pays is dependent upon various factors including an individual’s health insurance coverage,” he said.

Novo will probably raise insulin prices for a second time this year after the Lantus increases, Purcell said. Rulis, the Novo spokesman, declined to comment on whether price increases are planned in the U.S. or other regions, citing company policy.

“The actual price of these products vary significantly depending on the rebates that the buyers, typically managed-care organizations, are able to negotiate,” Rulis said in an e-mail. “Decisions to change prices are taken after careful analysis of market dynamics.”

To contact the reporter on this story: Trista Kelley in London at tkelley2@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net

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