Johnson & Johnson’s Pricey Best-Selling Drug Will Have to Face a 35% Cheaper Rival

July 24, 2017, 10:55 PM UTC
Photograph by Ullstein Bild via Getty Images

U.S. pharma giant Merck (MRK) and partner Samsung Bioepis are trying to take a big cut of Johnson & Johnson’s (JNJ) drug revenues. The companies have begun to market their “biosimilar” (a generic version of expensive biologic drugs) of Remicade—a copycat of J&J’s best-selling rheumatoid arthritis and immunology treatment (which garnered more than $5 billion in U.S. sales last year) and was approved by the Food and Drug Administration (FDA) in April—at a striking 35% discount to its list price.

The treatment, Renflexis, will be available at about $750 per 100 mg dose, which is significantly cheaper than Remicade’s list price. It’s also much cheaper than a previous Remicade biosimilar from Pfizer (PFE) that’s available at a 15% discount to Remicade.

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The biggest one to date for a biosimilar product in the U.S.—the treatments have only been around for a handful of years in America despite widespread and long-standing availability in Europe and other regions—Renflexis may ultimately not do much to curb health care and patient spending, as the Wall Street Journal‘s Charley Grant points out in an astute note.

One major reason is that biosimilars aren’t the same as generics of chemical drugs. They are “similar” to original products but not exactly the same. So while they’ve usually proven effective (at least in other nations), there’s a chance doctors and patients could be reticent about turning away from established brand names like Remicade.

Another reason has to do with the wildly disparate nature of the U.S. pharmaceutical system. List prices don’t represent prices paid by insurance companies and pharmacy benefits managers, which in turn don’t represent the prices ultimately paid by patients. These firms receive rebates from drug manufacturers which may, according to some analyses, actually inflate drug prices.

Thanks to this system, it’s possible that benefits managers and insurers could wind up paying a full list price for a biosimilar that’s actually higher than the price of a discounted branded drug. Still, a 35% discount is much more in line with the kinds of rate cuts seen in Europe and other regions.

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