Protonix Average Price Increases By 8% As Wyeth Cuts Medicaid Contracts
This article was originally published in The Pink Sheet Daily
Executive Summary
Focus on key managed care accounts and elimination of some state contracts has resulted in an 8% weighted average price increase compared to first quarter 2004. Protonix shows 10% total prescription growth, but posts flat sales due to 9% inventory workdown.
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Wyeth's decision to stop selling Protonix (pantoprazole) to certain state Medicaid programs has resulted in an average sales price increase of 8% compared to last year, the company said April 20. "The weighted average price has increased by 8% in the 2005 first quarter versus the 2004 first quarter," Exec VP Bernard Poussot said during Wyeth's earnings call. "Going forward, we expect to see more modest demand growth as we discontinue our participation in low-priced state Medicaid plans. At the same time, we see more growth in higher priced, key managed care accounts," he said. In January, Wyeth said that it would hold the line on Protonix discounting (1 (Also see "Wyeth Pinning Near-Term Growth Hopes On Enbrel, Prevnar" - Pink Sheet, 31 Jan, 2005.)). "The point is that we are unwilling to drop price below a certain level," Poussot said at the time. One way that Wyeth has been able to reduce the discounting has been to not sign contracts with certain states that require heavy discounting to get on their preferred drug list (2 (Also see "Wyeth More Optimistic On Medicare Rx As Plan Details Emerge" - Pink Sheet, 31 Mar, 2005.)). Sales of Protonix were essentially flat in the first quarter: the product posted $409 mil. in 2005 compared to $411 mil. during the comparable 2004 quarter. Total prescription growth was 10% "due to overall market growth and gains in managed care," Poussot said. However, those gains were netted out by a 9% unfavorable impact from inventory workdown, Wyeth noted. Worldwide pharmaceuticals sales increased by 16% to $3.72 bil. for the quarter. Ahead of the earnings release, Wyeth announced that it expected to beat analysts' expectations for the quarter (3 (Also see "Prevnar, Effexor, Enbrel Powering Strong First Quarter For Wyeth" - Pink Sheet, 22 Mar, 2005.)). Wyeth earned $1.08 bil. for the quarter. - Lee Kalowski |