Eli Lilly backs US proposal on drug rebates to lower costs

Eli Lilly on Wednesday embraced a US government proposal to end a decades-old system of rebates drugmakers make to industry middlemen, saying it could lower the cost of insulin and other prescription drugs for patients.

Lilly, along with other major insulin makers, Sanofi and Novo Nordisk, has been under mounting pressure from patients and politicians over the rising cost of the life-sustaining diabetes treatment.

"While it's still a proposal, we see this as ... a win for patients, lowering their out-of-pocket costs at the pharmacy counter with the greatest benefit realised by patients taking more highly-rebated products such as insulin," chief executive David Ricks said on a call with analysts.

Drugmakers argue they have to keep prices high because of the rebates they must pay to pharmacy benefit managers and health insurers to get products on their lists of covered drugs. In January, the administration of President Donald Trump proposed a rule that would end the rebate system or pass along the savings to patients.

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“We’ll adapt to whatever rules come out and how they get finaliSed,” Ricks said.

Lilly on Wednesday also cut its 2019 profit and revenue forecasts to account for disappearing sales of its cancer drug Lartruvo, which won conditional US approval in 2016 based on early data but last month failed to extend patient survival a confirmatory trial.

Costs related to Lilly's pending $8 billion acquisition of Loxo Oncology also contributed to the revised forecast.

The company said it now expects 2019 adjusted earnings of $5.55 to $5.65 per share, down from its prior forecast of $5.90 to $6.00. It expects revenue of $25.1 billion to $25.6 billion versus its prior view of $25.3 billion to $25.8 billion.

Excluding items, Lilly earned $1.33 per share in the fourth quarter, a penny shy of analysts’ average estimate. – Reuters