Now that the FDA has given Merck & Co. (MRK 1.23%) a green light to market its new hepatitis C drug Zepatier, billions of dollars in sales at Gilead Sciences (GILD 2.16%) could be up for grabs. Can the latter company's top selling hep C drug Harvoni fend off Merck & Co.'s threat? Our analysts discuss the battle in this clip of Industry Focus: Healthcare.
Listen to the full podcast by clicking here. A transcript follows the video.
This podcast was recorded on Feb. 3, 2016.
Kristine Harjes: The stock took a pretty big tumble recently when Merck got approval of its new hepatitis C drug. Michael, do you want to touch on that a little bit?
Michael Douglass: Sure. That drug is -- I'm going to butcher it.
Harjes: Zepatier?
Douglass: Zepatier. If any listener happens to know or has actually heard someone say it in person, I would love to hear that.
Harjes: (laughs) Please send us a sound byte or something.
Douglass: Yeah, [email protected]. Because, it's sort of like .. I used to read a lot more than I talked to people. Maybe that's still the case, I don't know. But the first time I read the word 'egotistical,' the first time I said it, I said 'egostical,' because that's how I read it. And then, I was promptly informed by other people that that's not how you said it. So, same deal here in healthcare. We read about these drugs all the time, but sometimes it's kind of hard to get a good name for it.
Harjes: At least we're not using the chemical names. (laughs)
Douglass: Yeah (laughs), because those are just completely difficult. So, one of the interesting things, this was addressed in the call, and they basically said, to summarize what Gilead's management said, it was essentially, "Hey, we've got a pan-genotypic hep C drug potentially coming on the market, and the second quarter, beginning of third quarter, is the PDUFA date June 28th, 2016. So, that could change things significantly.
Also, we feel pretty good about the price where it is, and we're prepared to draw a line in the sand around the prices we have, because we've got real-world data, a lot of it, showing this is a very safe drug. So, when you think about this from a doctor's perspective, why would they prescribe a drug when they've got another one that's got hundreds of thousands of people who've been treated with it, and they know there's no weird things that came up in the phase 3?
The other thing is they also pointed out listen, Viekira Pak, a lot of payers jumped on this as, like, "Oh! This is our opportunity to go ahead and cut prices!" And then it got a warning added to the label, and then it got all these other issues that have come up with Viekira Pak. So, insurers and payers are taking a more measured approach in approaching the Merck drug, because you just had this Gilead drug that's got a great label, and they've been a little bit burned when they've tried to go with a competitor.
Todd Campbell: Yeah, it's almost like Merck is raising up its hands and saying, "Me too me too!" Their drug is solid -- Zepatier, we'll call it, why not -- the drug is solid, it's 95%-plus efficacy curates. That's fine, that's great, that matches up very nicely to Harvoni. It's arguably as good, possibly better, in safety. It doesn't require as much dose adjustment, depending on if you're co-infected with HIV or some other things. But there are some real hurdles, I think, that could keep doctors from prescribing it. If you look at the label, there's some testing that needs to be done ahead of time to see if there's some polymorphisms, because Zepatier didn't work very well within patients that had those polymorphisms. There's some testing that needs to be done on the liver during the course of treatment that could increase costs. So, there are some reasons why doctors would, like you said, Michael, just simply go, "You know what? Harvoni works, I'm sticking with it."
Harjes: Indeed. And you don't get the sense that the company is truly concerned about this competitive threat. Obviously, it's on their radar. They're going to do what they can not to lose any market share. But I don't think it's something that investors need to be truly concerned about.
