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How Much Can Vivus (NASDAQ:VVUS), Arena Pharma (NASDAQ:ARNA) Charge for Diet Pills?

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With two weight-loss drugs hitting the US market in coming months, pricing will be important.

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Editor's note: This story originally ran August 10. Vivus announced September 18 that it began selling its diet pill Qsymia. The drug costs roughly $4 to $6 a pill, depending on dose.

MINYANVILLE ORIGINAL Arena Pharmaceuticals (NASDAQ:ARNA) Chief executive Jack Lief told CNBC a couple of months ago that his company's newly approved diet pill Belviq would cost about the same as a Starbucks venti latte.

Though Lief has yet to elaborate, the implication is that Arena's obesity drug will cost between $3.50 and $4 a dose. Likewise, rival Vivus (VVUS) is mum about the price of its just-approved diet drug Qsymia. Both drugs are considered potential blockbusters, and CEOs of both companies have said they understand the importance of pricing their medicines competitively. Neither drug is marketed yet. Japanese drug maker Eisai will sell the drug in the US under a license agreement.

Earlier this week, Vivus CEO Leland Wilson said he was sensitive to the pricing issue as patients will likely have to pay out of pocket until insurance plans decide on whether to cover the new weight-loss treatments. (See Vivus (NASDAQ:VVUS) Diet Pill Sales May Be Slow Out of the Gate.)

Cowen & Co. analyst Simos Simeonidis uses $3.50 per pill as a base price to estimate the cost per patient taking Vivus' Qsymia. That annual cost is about $1,300 per patient. Assuming Vivus launches its drug in the fourth quarter, Simeonidis estimates Qsymia will have $159 million in sales in 2013, a number that will double by 2014. He predicts the drug will exceed $1 billion in annual sales by 2017.

Even though it was approved first, Arena's Belviq may not be sold until early next year. For one thing, the drug has to be reviewed by the US Drug Enforcement Administration because of its potential for abuse. The Food and Drug Administration recommended the DEA schedule the pill as a controlled substance. At high levels, the drug can cause hallucinations and euphoria. Arena execs made it clear on a conference call Thursday that little will be said about a sales launch until the DEA has completed its review.

Lief told investors on a conference call that his company's partnership with Eisai is one of the reasons he feels confident about his drug's chances for success. Vivus doesn't have a marketing partner, a fact that leads Simeonidis to predict a somewhat slow sales launch for that company's pill.

Shares of both companies have exploded this year. Arena's stock is up almost 300% this year to $7.26 in midday trading Friday, while Vivus more than doubled in the same period, trading at $21.46. Shares of a third diet pill maker, Orexigen Therapeutics (NASDAQ:OREX), are up almost 160% this year, trading at $4.16 Friday. Orexigen is conducting a safety study before it can seek US approval.

Twitter: @brettchase

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No positions in stocks mentioned.
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