Glaxo CFO Expects ‘Many More’ Shifts in Coverage by U.S. Payers

GlaxoSmithKline Plc Chief Financial Officer Simon Dingemans said the pharmaceutical industry should expect to see “many more” shifts over which drugs U.S. insurers cover than in the past, driven by pharmacy-benefits managers.

Express Scripts Holding Co., the biggest pharmacy-benefits manager in the U.S., excluded Glaxo’s Advair and Breo lung drugs from its list of reimbursed medicines that went into effect last month, in favor of cheaper alternatives made by AstraZeneca Plc and Merck & Co. Meanwhile, Breo has attained 25 percent coverage by Medicare prescription-drug plans in the U.S., the company said today.

“What we’re certainly seeing in the U.S. is a more dynamic marketplace -- one where price is more of an issue, more competitive changes in contracting strategy, and switches across a whole range of therapy areas,” Dingemans said in an interview today at Glaxo’s London headquarters. “While we will have lost some contracts, we’ll win others.”

Express Scripts and peers such as Catamaran Corp., Aetna Inc. and CVS Caremark Corp. are pushing back against the high cost of new drugs. They’re discussing how to pit similar drugs against each other for a place on the formulary through price cuts and rebates, refusing coverage for some, or subjecting treatments to more review by outside experts.

New Drugs

Glaxo won regulatory approval for six new drugs last year and will focus on market introductions this year. As a general rule, the company is bringing in new products, as seen with its skin cancer drugs Mekinist and Tafinlar, at or below the price of existing competing products, Chief Executive Officer Andrew Witty said on a conference call with analysts today.

Express Scripts and CVS Caremark are expected to announce expansions to their “not covered” lists during the summer or early fall of this year for the 2015 plan year, Barclays Plc analyst Mark Purcell said in a note to investors yesterday. Barclays intends to closely follow developments in the respiratory and diabetes categories, according to the note.

“Express Scripts is only one player in the market,” Dingemans. “But it is indicative of the dynamic in the U.S. market where you’re going to see many more competitive shifts than perhaps you’ve seen in the past.”

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