It seems every aspect of our world, including the economy and healthcare industry, has been turned on its head in 2020.
The entire world has remained — rightfully so — focused on the development of a COVID-19 vaccine and therapeutics, putting wider trends in the pharmaceuticals market and pressures facing its leaders on the temporary back-burner of people’s minds.
Besides from the unprecedented speed at which major manufacturers and governments have been researching for the coronavirus vaccine like Pfizer and AstraZeneca, the U.S. pharma market has seen some breakthroughs this fall as well as some disappointments.
Mixed season for top manufacturers
Gilead Sciences — manufacturer of the U.S.’s only HIV prevention therapy (PrEP) Truvada and Descovy — now faces the possibility of its dominance in the HIV PrEP market being challenged by results of a study of an HIV PrEP vaccine being more effective in preventing HIV infection in women than Truvada. The manufacture of the vaccine — ViiV Healthcare — is an attempt by rival GlaxoSmithKline to break into the HIV therapeutics market and will likely yield results to the detriment of Gilead.
On the other hand, Gilead has had tremendous success in its production of remdesivir, reporting last month that it had raked in $873 million in revenue from the sale as an emergency COVID-19 therapeutic. This will likely result in remdesivir becoming Gilead’s second top-selling drug this year, only behind the HIV drugs where Gilead has dominated for years.
Despite the U.S. Food and Drug Administration granting emergency use authorization for pharmaceutical giant Eli Lilly’s COVID-19 antibody therapy this month, investors and market observers were skeptical of Lilly’s performance this fall as many of its competitors drew closer to a vaccine.
Lilly missed its profit expectations in the third quarter and still faces many challenges from weaker-than-expected sales of its blockbuster diabetes drug Trulicity, with softer drug sales likely well into 2021.
Biogen faced a major disappointment this month with the FDA declining to endorse its Alzheimer's drug aducanumab, citing unconvincing evidence of its effectiveness.
The rejection dealt a major blow to Biogen’s investors and others who had hoped that aducanumab would become the newest Alzheimer's drug in years — many of whom are now filing securities suits against the struggling manufacturer after a 28% drop in share prices after the announcement.
Drug prices remain high for most despite weak sales, inviting regulation
As with Lilly’s struggle with sales of many of its major revenue-generating drugs, the overall pharmaceutical market is still not at pre-pandemic levels. Despite this, prices for many of the newer brand-named drugs for chronic and rare diseases for U.S. patients remains at pre-pandemic prices — even with rebates.
During this past presidential election, both incumbent President Donald Trump and President-Elect Joe Biden offered plans to help reign in the rising costs of prescription drugs via regulatory oversight of pricing, which would cut into profits of pharmaceutical companies.
While it’s not likely that any meaningful legislation will be enacted during Biden’s upcoming administration, there will be cause of unease among major manufacturers at the growing scrutiny over prices persists among consumer advocacy groups.
The late Rep. Elijah Cummings (D) from Maryland’s Lower Drug Cost Now Act was introduced to much unease among pharma leaders, which would enable Medicare to negotiate prices for its beneficiaries, and now has a greater chance of passing — albeit still low — under a Biden administration, according to Fitch Ratings.
Another reason for increases in drug prices over the past few months is the growing boon that pharmacy benefit managers like CVS Health and Cigna have witnessed in wake of major mergers over the previous years. CVS Health purchased Aetna in 2018, which has allowed for CVS to gain a considerable advantage in drug pricing with little competition.
Overall, the pharmaceutical market has been faced with challenges in maintaining strong financial positions this fall with a new surge in COVID-19 cases. These headwinds are likely to continue and intensify come January with the incoming Biden administration’s desire to negotiate drug prices for Medicare recipients.
Andrey Chun is a senior international affairs and economics double major. Contact Andrey at firstname.lastname@example.org.
Disclaimer: I have no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours. Madison Business Review editor James Faris is a long-term investor in Gilead Sciences. I wrote this article myself, and it expresses my own opinions. I’m not receiving compensation for it, and I have no business relationship with any company whose stock is mentioned in this article.