In biotech stock news, Amgen, Inc. (NASDAQ:AMGN) has entered into a agreement with Harvard Pilgrim Healthcare with a view to safeguarding Enbrel’s market share. In the most recent financial report, the drug brought in revenues totaling $5.4 billion for the drug maker. Enbrel is a drug that is used to treat rheumatoid arthritis and is one of Amgen’s best-selling treatments.
The deal will give Amgen access to Harvard Pilgrim’s customers who number around 2.7 million. In the two-year deal, payment for the drug will be done based on how it scores with patients. The patient score is based on six criteria. This includes steroid interventions, dose escalation, adding or switching therapies and patient compliance. How much Harvard Pilgrim will pay for the treatment will depend on the score meaning that the lower the score the lower the payment.
This new method of an outcome-based deal will be to Harvard Pilgrim’s favor since it will not pay based on the quantity of drugs it buys but rather on the value that patients derive from the drugs.
“By linking the ultimate cost of this drug to its real-world clinical efficacy, this agreement truly puts patients at the center of focus,” said Michael Sherman, the chief medical officer of Harvard Pilgrim.
What’s in it for Amgen?
Since the deal hugely favors Harvard Pilgrim at the expense of Amgen, the question is what the pharmaceutical company stands to benefit from in this arrangement. While the health services non-profit will incur lower costs on drugs and its patients will get better value, Amgen stands a chance of safeguarding its market share since it can negotiate with insurers with a view to convincing them to maintain Enrel as the drug therapy of choice.
This is not the first time that Amgen is getting into such kind of a deal. In late 2015, the drug maker signed a similar contract with the non-profit health services company for Repatha, a cholesterol therapy, thereby helping the drug maker safeguard its market share.
On Friday shares of Amgen Inc, one of the top biotech stocks edged up by 0.32% to close the day at $174.56.