What would an FDA OK on AbbVie's hep C cocktail mean for payers?

When AbbVie spun off from Abbott ($ABT) two years ago, it had one giant plus in its favor: the world's top-selling drug Humira. R&D, though, hasn't been very productive in the past decade in terms of new drug approvals. After Humira's $12.5 billion contribution this year, AbbVie's number two treatment is AndroGel, a troublesome low testosterone therapy which delivered just 5% of its revenue, according to a chart from The Wall Street Journal.

So it's no wonder that analysts are closely watching the FDA's looming decision on AbbVie's ($ABBV) new hep C cocktail, which includes ABT-450/ritonavir co-formulated with ombitasvir (ABT-267), and dasabuvir (ABT-333). Excellent data from 6 Phase III studies were submitted on April 21 and the FDA had already handed out its breakthrough drug designation for the combo. An official OK could come as early as tomorrow.

The likely positive news will also be a defining moment for Enanta ($ENTA), which partnered with AbbVie on 450.

R&D consultant Bernard Munos told the Journal that a green light from regulators "will be a welcome breath of fresh air for a company that hasn't really produced anything for 10 years." And AbbVie spends about $3 billion a year on research.

One blockbuster approval can make a big difference for any company. But this news will be laced with extra meaning for a legion of payers which have been outraged by Gilead's ($GILD) new combo for hep C, which increased the already hefty cost associated with the pioneering Sovaldi.

Will AbbVie provide a substantial break, as payers are hoping? Or will they lock in a big price as well? AbbVie needs a big new blockbuster badly, which should provide a clue on pricing. -- John Carroll (email | Twitter)

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