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  • by: Peter Pitts |
  • 09/21/2017
Lay down with dogs, wake up with fleas.

Now replace “dogs” with Prescription Benefit Managers” and “fleas” with lawsuits and you’ve got a pretty good idea of what’s driving the Pfizer/Johnson & Johnson story. But there’s more to it than money.


In brief, Pfizer has filed a complaint against Johnson & Johnson, claiming J&J was taking anticompetitive steps to block the sale of Pfizer’s drug Inflectra. 

(Inflectra is Pfizer's version of J&J's blockbuster drug Remicade — which treats autoimmune diseases like rheumatoid arthritis and Crohn's disease. Approved in 1998, it generated $4.8 billion in sales for J&J. Pfizer and its partner Celltrion got its biosimilar version of Remicade, called Inflectra, approved in April 2016. The two drugs are both versions of infliximab.)

At launch, Pfizer priced Inflectra at a 15% discount to Remicade's list price of $1,113 a vial.  That’s the idea behind biosimilars right, safety, efficacy – and competition to drive down costs. Keep reading.

Per Pfizer’s lawsuit, Remicade still retains 96% of the market. Pfizer’s assertion is that’s because of contracts between J&J and health insurers that require Remicade — as opposed to Inflectra — to be used first before trying other treatments for new patients.

Anti-competitive? That’s for the court to decide. But should insurers be able to block patient access for profit-driven purposes– by contract? Optimizing best practice is one thing. Venality is something else.

Wait, it gets worse. As part of the J&J contract, insurers had to commit to not reimbursing for Inflectra. And since insurers won't cover Inflectra, hospitals (according to Pfizer) don't want to keep it in stock.

Anti-competitive? Per Pfizer, “… due to J&J’s exclusionary conduct, competition has been foreclosed. J&J maintains its monopoly and has continued to capture over 96 percent of infliximab sales even while maintaining prices far above competitive levels."

Inflectra originally came out at 15% discount to Remicade but Pfizer has cut the price as the market has changed. A Pfizer spokesman said last week that the product is now priced at a 35% discount to Remicade’s wholesale acquisition cost. Also the Average Sales Price (ASP --the net price) for Inflectra and Remicade are trending in opposite directions, since launch of Inflectra ASP for Remicade has gone up while ASP for Inflectra is trending down.

As we debate drug pricing, consider this, CMS could save $140 million annually if most of their eligible patients used Inflectra rather than Remicade. It’s important to note that Inflectra has been not been approved as interchangeable with Remicade, but it does not mean (in a regulatory sense) that one product is in any way superior (in a therapeutic sense) to the other. So, why are payers so willing to block the less expensive, clinically equivalent product for new patients? The answer seems to be … because insurers can make more money by effectively maintaining a Remicade monopoly.

Is an insurer-driven monopoly good for patients? Will it lower the co-pay or co-insurance for a single patient? Sadly, these are rhetorical questions.
Is it sounding anti-competitive yet? What about anti-patient? At a time when we are debating both the price and the value of medicines, what’s wrong with this picture?

Here’s what Dominic Caruso, Johnson & Johnson’s Chief Financial Officer said at the Morgan Stanley Healthcare Conference on September 13th:

“ … relatively speaking, the economic incentive is small because the biosimilars … indicated 35% off list. And with Remicade being in the market already for many, many, many years, the way rebates go in the pharmaceutical market, we’re already there.”

But, in terms of “doing the right thing,” is “there” where we really want to be?

J&J’s response to the Pfizer lawsuit, "We are effectively competing on value and price and to date.”

But how do you “compete” if you don’t allow the other team on the field?

At the end of the day, the most important question is, will this lawsuit help or hurt patients? In the long term it will help if it reveals the venality of a rebate-driven reimbursement system. That way we can aggressively (and a lot more honestly) commence the conversation about pricing medicines based on real world value.

Oyez, Oyez.

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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