Following the release of highly anticipated results from a cardiovascular outcomes study, Amgen (NASDAQ:AMGN) investors are left wondering whether cholesterol-lowering drug Repatha will finally live up to its billing as a potential billion-dollar blockbuster. Undeniably, a 15% reduction in hospitalization and major cardiovascular events, such as stroke, will save lives, but Repatha's $14,000 list price still creates roadblocks to its use.

In this video clip from the Motley Fool's Industry Focus: Healthcare podcast, analyst Kristine Harjes is joined by Todd Campbell to explain what could be next for Repatha.

A full transcript follows the video.

This video was recorded on March 29, 2017.

Kristine Harjes: Amgen had some data about their cholesterol-lowering medication, it's a PSK9 inhibitor. We said there was going to be a data readout in March. Indeed there was, so we figured we owed you guys some follow-up.

Todd Campbell: Yeah. Most people, if you look at just the raw number, they say, "Wow, that's a pretty good finding." Essentially, what they found is, using Repatha, which is a drug that helps lower bad cholesterol levels, reduced the risk of things like heart attack and stroke by about 20% versus a placebo. That's pretty significant when you think about how many millions of people are affected by heart disease.

Harjes: Right. At first glance, that's positive data, right? This is exactly what they were looking for. They did this very long-term cardiovascular risk study. There were 27,500 people in it. They waited years, until 1,630 of them had a heart attack or another cardiovascular disease-related event. And they get this number that says, definitively, statistically significantly, our drug does lower the risk. And yet.

Campbell: It was a snoozefest for investors, right? [laughs]

Harjes: Yeah! It was super interesting. So, why did that happen?

Campbell: I think really, what it came down to was, there's a couple different things. If you include hospitalization in the metric, the net benefit falls to about 15%. OK, maybe that's not as big of a needle-moving number as people would have liked to have seen. Again, huge study, and obviously, we're talking about saving people's lives, so we don't want to diminish that. That being said, if you look at news that has come out of other companies on other drugs that have also shown that they reduce the risk of cardiovascular events, it really hasn't translated into a tremendous uptick in the sales of those drugs.

Harjes: Yeah, it's kind of crazy when you look at some examples. Eli Lilly's diabetes medication Jardiance also showed a cardiovascular benefit. The drug sold just over $200 million last year, which sounds like a lot of money, but in the world of drugs, it's really not.

Campbell: Yeah, for a huge patient population, too, right?

Harjes: Yeah, exactly. The diabetic population is enormous. I think something that could be really driving the shortfall in -- for this optimism about Repatha is that it's still so expensive. It's $14,000 a year. Even with Amgen potentially thinking about doing a money-back guarantee if the drug doesn't lower your overall healthcare costs, something to keep in mind is, there's not really a reason for insurers, as far as financial incentives go, to pay upfront to try and reduce long-term risks. That's messed up, but when you look at the financials, if I have to pay $14,000 a year now, and maybe down the road you won't have a very expensive heart attack, statistically, you're probably not going to still be on that same insurer at that time. You go through a bunch of different insurers in your life. So why would one want to pay to save another one money? It's so cynical, but it's problematic.

Campbell: Yeah. A lot of these events are probably happening to people once they get into their mid to late 60s and beyond, and when they'd be on Medicare. So, that's absolutely a great point, and it's sad. I think what we need to recognize is that Amgen is going to work with payers to try and figure out some sort of a payment system that makes sense. Right now, more than 80% of prescriptions for this drug are being rejected. So, they have to figure out some way to get this drug into the hands of consumers and turn a profit on it. And I don't know if that means even more significant cuts in pricing, or like you said, these other payment schemes or whatnot. But, there's a question mark. I guess, from an investor standpoint, you're going to have to watch the next couple quarters and see whether or not there is a big pop in sales. As it stands today, I think the drug is selling around $240 million annual run rate. So, you want to watch and see whether or not that annualized run rate picks up in the next couple quarters.

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