Amgen will charge $6,900 a year for a new drug that can spare migraine sufferers a few headaches each month, a price that comes in well below Wall Street expectations as the company hopes to avoid the payer backlash that has hamstrung recent drug launches.
In clinical trials, patients who took Amgen’s drug experienced about two fewer migraines per month compared to those who got placebo. Doctors have described the effect as modest, but the difference was enough to convince the Food and Drug Administration, which approved the treatment Thursday.
The drug, called Aimovig, is meant for patients who experience at least four migraines per month. There are roughly 24 million patients in the U.S. who would be candidates for treatment.
Now Amgen, which is partnered with Novartis on the drug, will work to convince payers to shell out for the injectable medicine, making the case that $575 a month—a price that does not reflect rebates and discounts—is a cost-effective expenditure.
It’s cheaper than most expected. Analysts widely predicted Amgen to charge around $10,000 a year for the medication, and an independent pricing watchdog concluded that the drug would be cost effective for patients with particularly frequent migraines even if it cost $8,500 a year.
Amgen’s decision to undercut expectations comes as the drug industry is being forced to rethink its pricing practices.
Over the past few years, pharma companies have struggled to make money on pricey injectable medicines, despite success in clinical trials. In 2015, Amgen won approval for a treatment that can dramatically lower bad cholesterol, but its list price, north of $14,000, led payers to overwhelmingly reject prescriptions. Regeneron Pharmaceuticals found itself in a similar situation with a drug for severe eczema. Despite presenting clinical data that impressed scientists and physicians, Regeneron’s treatment has fallen behind sales estimates as payers have balked at its $37,000-a-year list price.
At $6,900 a year, Aimovig would seem more likely to appease payers, but Amgen’s investors may question just how lucrative the drug will end up being. By 2019, there could be four competing migraine treatments on the market, creating a competitive environment that might force Amgen to aggressively discount its therapy to stay in insurers’ good graces.
Teva, Eli Lilly, and a small company called Alder Biopharmaceuticals are each advancing migraine treatments that target the same biological pathway as Amgen’s. Known as CGRP inhibitors, the drugs home in on a protein fragment called calcitonin gene-related peptide, which plays a role in the process that turns a misfiring neuron into a full-blown migraine.