SAN FRANCISCO (Reuters) - The world's biggest drugmakers face a new reality when it comes to U.S. pricing for their products as insurers use aggressive tactics to extract steep price discounts, even for the newest medications.

Big Pharma executives acknowledged the depth of change this week during public presentations and interviews with Reuters at the J.P. Morgan Healthcare conference in San Francisco. Drugmakers have long relied on their ability to charge whatever they deemed appropriate in the U.S., the world’s most expensive healthcare system.

Industry advocates have defended those U.S. prices in the past as a way to recoup the billions of dollars spent on experimental drugs that fail and to offset discounts offered overseas.

"There has definitely been increased price competition ... if a product is viewed as a commodity," Derica Rice, chief financial officer at Eli Lilly & Co , said in an interview. "Our goal is clinical differentiation."

Pascal Soriot, chief executive of AstraZeneca Plc , warned investors that the pressure exerted by health insurers has expanded from medicines used to treat common maladies to the specialized fields, like cancer, where drugmakers have been able to charge their highest prices.

"Payers will try to leverage their strengths to try and get pricing concessions because those agents are very expensive," Soriot said.

Many say the tide shifted with a campaign by insurers and pharmacy benefits companies against Gilead Sciences Inc's $84,000 hepatitis C treatment Sovaldi. The drug represented the first effective cure for hepatitis C and quickly raked in billions of dollars in sales within its first few months on the market in 2014. Sovaldi's cost is based on a 12-week treatment regime and amounts to $1,000 a pill. By contrast, the treatment costs about $57,000 in the U.K.

As soon as U.S. regulators approved Sovaldi's competitor, a treatment from AbbVie Inc , last month, the country's largest pharmacy benefits manager Express Scripts Co dropped reimbursement for the Gilead drug.

Express Scripts said it had received a substantial discount from AbbVie, a departure from industry practice of pricing new competing drugs close to the incumbent for as long as possible. It didn't say how much the discount was.

Express Scripts said this week it sought similar opportunities for discounts in new cancer medications, and was looking closely at a new class of cholesterol-fighting drugs aimed at millions of patients who can't tolerate or get enough benefit from widely-used statins.

Amgen Inc and Regeneron Pharmaceuticals Inc are two of the companies racing to bring the new cholesterol treatments, which target a protein called PCSK9, to market.

"It's not a worry. It's a reality that we will deal with," Regeneron CEO Len Schleifer said of Express Scripts' goals. "I think there will be fair pricing and healthy competition in the marketplace."

A LESS CROWDED FIELD

When pressed on how they could counter the growing pressure from insurers, large drugmakers say they are relying on strategies long employed in the marketplace, focusing research on diseases that don't have adequate treatments and finding ways to differentiate their products from competitors in terms of effectiveness and convenience.

But some industry experts believe they will have to become far more selective even when entering a new treatment area. The hepatitis C example shows how insurers have been able to play just two competitors off one another to wrest a discount.

Gilead Chief Operating Officer John Milligan said that in recent weeks, more health plans are asking the company to drop its hepatitis C drug price more in line with AbbVie in order to keep both drugs on their reimbursement lists.

"Payers are starting to move beyond hand-wringing to real action," said Glen Giovannetti, head of global life sciences at Ernst & Young. "We are starting to see (pharmaceutical) companies deciding which therapeutic options they want to compete in."

Nils Behnke, a partner with Bain & Co's global healthcare and strategy practices, noted that even for the most new promising classes of medications, there are often three or four companies pursuing similar development programs.

"Companies that were heavily into specialty indications thought they were immune, but it is now clear that they are not," he said.

Merck & Co CEO Kenneth Frazier acknowledged that U.S. prices for diabetes drugs remain under pressure. "We need to identify a value proposition ... show that over time we can reduce costs," he said in an interview.

Smaller biotech Isis Pharmaceuticals Inc said it is already taking into account potential competition when deciding which research programs to pursue. CEO Stanley Crooke said the company abandoned its PCSK9 program when it became clear the drug would reach the market only after several others.

"We are working on diseases for which there are no real treatments -- Parkinson's, Alzheimer's, ALS," said George Scangos, CEO at Biogen-Idec . "In the future, we will see more correlation between value that drugs deliver and the way they are reimbursed."

By Deena Beasley and Caroline Humer

(Editing by Michele Gershberg and John Pickering)