The market's reaction to Amgen (NASDAQ:AMGN) and Sanofi/ Regeneron's PCSK9 drugs (Repatha and Praluent, respectively) has been tepid at best. These drugs, earlier lauded as "blockbusters in waiting," have seen pushback from both physicians and payers -- leading to launches which have widely lagged expectations.

This was all expected to change, however, with the release of Repatha's hotly anticipated cardiovascular outcomes study. While the results of this study were encouraging, the market doesn't seem to think payers will think they were quite good enough. Amgen's new strategy? A money-back-guarantee.

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The promise of PCSK9

To understand why this issue is so important, some background is necessary. When the FDA first approved Repatha, it seemed that Amgen was on the verge of a major breakthrough in cholesterol therapy. Since the invention of statins in 1987, a class of drug which includes Lipitor, Lescol, and Crestor, to name a few, the field of cholesterol-lowering medications had yet to approve a more effective form of treatment.

In clinical studies, Repatha/Praluent showed a superior ability to lower LDL cholesterol levels in some patients as compared to traditional statin medications. These therapies were believed to be the next step in the progression toward improving the lives of patients with high cholesterol.

However, upon their approval, the label the FDA granted was just for patients with cardiovascular disease or who had a genetic cholesterol condition known as familial hypercholesterolemia. This narrower-than-expected label (most believed Repatha/Praluent would be approved for all patients who are not able to lower their cholesterol even while taking the maximum dose of statin therapy) combined with their high price tag (around $14k per year) led to sales which underperformed expectations. According to Joshua Ofman, senior vice president of value and access at Amgen, health insurance companies initially reject 75% of all requests for Repatha.

Amgen hoped to change this trajectory by proving that Repatha not only lowered cholesterol but also decreased the likelihood of a cardiovascular (CV) event (heart attack, stroke) with the release of data from its long-term FOURIER study. This two-year CV outcomes study was launched in hope that if Repatha could reduce the risk of heart attack/stroke, it would be worth the hefty price tag to offset increased medical bills in the future.

Repatha's cardiovascular results

The data from Repatha's CV outcomes study was solid; study results showed that Repatha decreased heart attack risks by 27% and stroke risks by 21% over the course of the study. Even more encouragingly, this risk reduction appears to have improved over time, with the risk of a heart attack being reduced from 19% in the first year of therapy to 33% in subsequent years.

Analysts were disappointed, however by the news that the drug only showed a 15% reduction on the Major Adverse Cardiac Events (MACE) composite primary endpoint. Analysts were hoping for a number closer to 30% to convince insurers that the drug is worth the cost.

Perhaps even more troubling, it appears Repatha had little-to-no effect on patient longevity. For patients taking Repatha, there was an average of 1.8 deaths per hundred compared to 1.7 per hundred for placebo. While this result could be chalked up to a relatively short study duration (two years is not a long time to observe longevity), Amgen will have to work hard to convince insurers Repatha is worth its price with this data.

Pay for performance

Now armed with longer-term cardiovascular data in hand, Amgen has extended a somewhat unusual deal to insurance providers: increase coverage of Repatha and Amgen will offer a money-back-guarantee for patients who suffer a heart attack or stroke.

How would such a program work? As Amgen spokeswoman Kristen Neese shared with Forbes, "There isn't a one-size-fits-all plan. Rather, contracts are negotiated payer by payer. The one requirement is that a patient must have been treated with Repatha for at least six months before being eligible for full reimbursement." Amgen hopes that this move toward value-based contracting will help alleviate some of the controversy involving increasing drug prices.

The question now is whether or not insurance providers will bite. Compared to generic statins, which cost around $250 for an annual treatment, Repatha remains an expensive option. While Repatha has proven that it reduces the likelihood of cardiovascular events, one cardiologist has calculated that at Repatha's list price, it would cost $2 million per cardiovascular event avoided. As the Nation Business Group on Health has estimated, the average heart attack incurs costs between $760,000 to $1 million -- thus making Repatha's list price seemingly unjustifiable.

There's an important distinction between list price and actual price paid. A Bloomberg Intelligence analysis estimates that 30% of Repatha's gross sales are returned to payers as discounts. Plus, for patients, Amgen offers co-pay cards and insurance coverage support through its RepathaReady™ program. Even so, I don't believe these discounts nor the money back guarantee will be enough to right the ship for Repatha. Unless Amgen significantly lowers the price for Repatha, I expect the drug to continue to underperform expectations.

David Liang has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.