Depomed Comments on Recent Reports Regarding Horizon Pharma's Business Model
September 23, 2015note issued by Express Scripts, one of the largest managers of drug formularies, to its clients criticizes Horizon's price increases, comparing Horizon to Turing Pharmaceuticals, and notes that Horizon, after purchasing the rights to Vimovo and with its own product, Duexis, "soon increased the prices on these older products more than tenfold. This isn't innovation. Akin to a spike in gas and plywood prices just ahead of a hurricane, this is profiteering."
October 19, 2015article in The New York Timesdiscusses significant concerns about Horizon's Prescriptions Made Easy ("PME") program and notes that Duexis is "a combination of two old drugs, the generic equivalents of Motrin and Pepcid", which "if prescribed separately… would cost no more than $20or $40a month", however "Duexis, which contains both in a single pill, costs about $1,500a month."
As noted in
- We believe the frequency and magnitude of Horizon's price increases are unsustainable: Horizon has implemented dramatically high price increases across most of its product portfolio, including increases of over 1,500% for Rayos® and nearly 1,200% for Vimovo® since those products were acquired or launched in 2012 and 2013, respectively. We do not believe these pricing strategies are conducive to building a stable and sustainable company that will create and deliver long-term value for its shareholders.
- Many of Horizon's drugs have recently been removed from the largest PBMs: Due to Horizon's dramatic price increases and what, in our view, is a lack of meaningful product differentiation, many of Horizon's drugs have recently been removed from the largest PBM drug formularies and remain on the exclusion lists of the two largest PBMs through 2016.
We believe that as Horizon continues to increase the prices of its products well beyond the prices of competitive products, the trend of Horizon products being excluded from drug formularies may accelerate, posing further risks to Horizon's business and long-term prospects.
- In our view Horizon's Prescriptions Made Easy ("PME") drug discount program has caused significant deterioration to Horizon's realized net sales as a percentage of gross sales ("gross to net"): Horizon's drug formulary exclusions have resulted in millions of patients not having access to Horizon products through their health insurance plans. Through Horizon's PME drug discount program, Horizon covers up to 100% of the cost of its products that are not covered by such plans. Although Horizon believes that the continued expansion of its PME program will allow it to mitigate the impact of the drug formulary exclusions, we believe that Horizon's reliance on PME discounts to generate growth in prescription volumes has caused significant deterioration in Horizon's gross to net for many of its products. For example, the net sales as a percent of gross sales for each of Rayos and Pennsaid® 2% dropped from 60% to 45% and 36% to 27%, respectively, from the first quarter of 2015 to the second quarter of 2015.
Importantly, and in contrast to Horizon's standard business practices,
The Company also notes that had
Forward-Looking Statements & Other Legal Information
The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties including, but not limited to, those related to
Our solicitation of revocations in the GREEN and GOLD cards allows
Innisfree M&A Incorporated
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/depomed-comments-on-recent-reports-regarding-horizon-pharmas-business-model-300164642.html
Minimum 15 minutes delayed.