Healthy Skepticism Library item: 7769

Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.

Publication type: news

Von Schaper E.
Novartis Leads Rivals in Medicare Drug Price Risk, Analysts Say
Bloomberg.com 2007 Jan 10
http://www.bloomberg.com/apps/news?pid=20601202&sid=auBoUNk2vq3I&refer=healthcare

Full text:

Jan. 10 (Bloomberg) — Novartis AG, the Swiss maker of the best-selling heart drug Diovan, is more vulnerable to pricing pressure from the U.S. Medicare program than its European peers, Citigroup Inc. analysts said.

By 2010, about 11 percent of the Basel-based company’s worldwide drug sales will be subject to prices set by insurance companies covering 40 million elderly and disabled people in the U.S. government program, Citigroup Investment Research analysts wrote in a note published today. That’s higher than the average of 7 percent for European drugmakers, the analysts said.

Plans offered by insurers such as Humana Inc. will save Medicare patients an average of 53 percent on their drug costs this year, according to the Centers for Medicare and Medicaid Services. Makers of heart and cancer treatments commonly used by the elderly, such as Novartis and AstraZeneca Plc, are more subject to these discounts than rivals, analysts said.

``Our long-held view is that Medicare Part D will be a net negative for pharma companies,’‘ Sanford Bernstein analyst Gbola Amusa wrote in a separate note today.

Novartis’s key products include Diovan for high blood pressure and Gleevec for cancer. The company had 2005 U.S. drug sales of $8.1 billion, and global sales of $20.3 billion.

Swiss rival Roche Holding AG has the least risk among European companies, as only 1 percent of its drug sales will be under pressure from Medicare in 2010, followed by France’s Sanofi-Aventis SA with 6 percent and London-based GlaxoSmithKline Plc with 8 percent.

U.S. drugmakers including Bristol-Myers Squibb Co., Pfizer Inc. and Merck & Co. will have greater risk from Medicare pricing by 2010 than Novartis, the Citigroup analysts said. On average, about 11 percent of their sales will be affected, they wrote.

Citigroup based its research on data gathered from IMS Health to determine the percentage of each company’s U.S. sales eligible for reimbursement under Part D. The estimates are ``conservative,’‘ and show the maximum risk, according to the note.

To contact the reporter on this story: Eva von Schaper in Munich at evonschaper@bloomberg.net .