Vertex's $75,000 Question

Drug pricing pressure under a Democratic administration be darned. $75,000.

That's not a salary figure. That's the price one biotech analyst says Vertex Pharmaceuticals and its partner Johnson & Johnson might be able to charge--possibly even more--for their Hepatitis C drug.

Shares of VRTX appear to be rallying on that call.

In a research note to clients Bernstein's Geoffrey Porges says after doing a detailed pharmacoeconomic (boy, is that a mouthful) analysis he estimates the companies could charge as much as 75-grand per course.

The drug is in late-stage development. VRTX and JNJ are in a race with Schering-Plough to bring a new Hep-C drug to market. Currently available drugs don't work on a lot of patients and even if they do work they make some people feel so sick they can't stay on them. So, there's a big unmet medical need and untapped drug market here.

The $75,000 estimate is $35,000 higher than Porges' previously increased calculation. He's basing the bullish pricing forecast on newer scientific evidence about how well the drug appears to work.

But he cushions the number a bit by writing, "Our model suggests that Vertex could still make a cost effectiveness argument in favor of telaprevir (that's the name of the drug) up to or above $75,000 per patient, though we think it is highly unlikely Vertex will price (it) that high."

A Vertex spokesman says, "We simply do not comment on price at this stage in development."

Vertex is often on the list of usual suspects of biotechs that could be bought.

Bernstein makes a market in VRTX. And someone in Porges' family owns VRTX stock.

Last August Porges predicted Roche might pay as much as $130 a share for Genentech, but that was before the credit crisis hit and the markets tanked.

Questions? Comments?