UPDATE 1-GSK gets a lift as Express Scripts reinstates lung drug Advair

Mon Aug 4, 2014 11:00am EDT

* Advair restored to Express Scripts 2015 formulary list

* Move may boost use but prices still seen under pressure

* GSK diabetes drug Tanzeum not included in Express list

* GSK shares up 1.2 percent (Adds further comment from Express Scripts on Advair move)

By Ben Hirschler

LONDON, Aug 4 (Reuters) - GlaxoSmithKline received a boost on Monday from a decision by Express Scripts, the largest U.S. pharmacy benefit manager, to reinstate its top-selling lung drug Advair as an approved drug in 2015.

The British company's business has suffered since January after the inhaled medicine Advair was dropped from various formulary lists - including that of Express Scripts - while it fights growing price competition from rival products.

Drugs excluded from such lists have to be paid for out of patients' pockets, hitting their use. Pharmacy benefit managers administer prescription drug benefits for employers and health plans.

Express Scripts said the decision followed GlaxoSmithKline's (GSK) willingness to offer the 15-year-old respiratory drug at a highly competitive price.

"We have changed the formulary status of Advair in 2015 due to the improved pricing we were able to negotiate for our clients," said spokesman David Whitrap.

Disappointing U.S. sales of Advair were largely to blame for GSK's worse-than-expected second-quarter results, which prompted the company to cut its 2014 earnings outlook last month.

Advair makes up nearly a fifth of GSK's sales but demand is eroding both in Europe, where it faces competition from copycat versions, and in the United States, due to lack of formulary cover and keen competition from AstraZeneca's Symbicort.

U.S. sales of Advair, which is used to treat asthma and chronic lung disease, tumbled 19 percent in the second quarter in constant currency terms.

Even after the Express Scripts change, however, Advair will still be at a disadvantage, according to Credit Suisse analysts, since it is not listed as a preferred treatment, unlike Symbicort and Merck & Co's Dulera.

The analysts believe Advair prices are likely to remain under heavy pressure as GSK strives to secure market share.

The decision to move Advair from "excluded" to "non-preferred" means that while GSK's drug will be covered, patients will face a higher co-payment when filling Advair prescriptions than for preferred brands in the same therapy class.

Furthermore, GSK's new lung drug Breo remains excluded from the Express Scripts formulary, along with its new injectable diabetes drug Tanzeum, which belongs to the same so-called GLP-1 class as Novo Nordisk's Victoza.

Victoza was already excluded from the list but GSK has been hoping to win business for its rival medicine by pricing Tanzeum at a discount to Victoza.

GSK shares were 1.2 percent higher by 1445 GMT.

Express Scripts also said late on Friday it would drop two key anaemia drugs, Epogen and Aranesp, sold by Amgen.

(Editing by David Holmes and Sophie Walker)

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article