The fact that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) did not receive reimbursement approval for its new branded drug for the treatment of migraine, while its two rivals did for their two migraine drugs, disappointed investors on Wall Street yesterday, and the share price of the Israeli pharmaceutical company fell 4.81%. Express Scripts refused to provide indemnity for Teva's Ajovy, launched last month, because of its pricing. However, several analysts covering Teva, while agreeing that this is a major blow to the company, tried to soothe when it comes to the impact on Teva.
IBI's pharmaceutical analyst Steven Tepper said, "This is a blow to the company, which stays out of the game for a major number of insured patients. Despite that, in our estimation, this is not the final word and ultimately it is reasonable to assume that the negotiating tactics of the medical insurance company are to lower prices by increasing the volume of rebates that it receives from the drug companies."
Tepper also stresses that there are a large range of health insurers in the US and it can be assumed that Teva's new product will receive reimbursement approval from some of them. Regarding Express Scripts, Tepper said, "The problem can ultimately be solved by another cut in prices, even if it is not relevant for 2019."
Oppenheimer analyst Esther Rajavelu wrote that Express Scripts covers one third of all health insurance in the field of prescription drugs in the US, and that the two other big insurers have yet to decide regarding indemnity. She wrote, "We continue to believe that Ajovy can become a major treatment for chronic migraine sufferers in the US, due to its effectiveness and safety compared with the other two treatments."
Credit Suisse analyst Vamil Divan says that the fact that Teva is offering Ajovy as a quarterly treatment and not monthly, like its rivals, is not helping the Israeli company to increase sales. "Anybody following the industry need not be surprised that the difference at this level in effect is not sufficient for the drug to receive special value from Express Scripts."
Goldman Sachs analyst Jami Rubin is also not surprised. In her estimation, Teva has taken a strategic decision regarding rebates and discounts at levels that are reasonable in the company's opinion due to the possibility of an additional dosage. She stresses that the "situation is fluid" and negotiations will continue through the end of the year, and she believes that some if not the rest of the insurers will include Teva's treatment in their indemnity basket.
Published by Globes, Israel business news - en.globes.co.il - on October 18, 2018
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