Gilead Sciences placed profits before patients in pricing its groundbreaking Sovaldi hepatitis C treatment, according to the results of an 18-month US Senate investigation.
The drug maker was aware more patients could have been treated if Sovaldi were priced for less than $1,000 a pill, or $84,000 for a full course of treatment. Instead, it refused to lower the price or offer meaningful discounts in order to maximize and outmaneuver competition, the investigation found. And Gilead did the same thing with its Harvoni follow-up treatment.
“The company knew its prices would put treatment out of reach for millions of Americans,” said Senator Ron Wyden, a Democrat from Oregon who, along with Iowa Republican Senator Chuck Grassley, discussed their probe at a media briefing. “If Gilead’s approach is the future of how blockbuster drugs are launched in America, it’s going to cost billions and billions of dollars to treat just a fraction of patients in America.”
The findings come amid growing anger over the cost of prescription drugs, an issue that has popped up in the presidential campaign. For instance, about three-quarters of the American public believe that prices of brand-name medicines are unreasonable, according to a new poll by STAT and the Harvard T.H. Chan School of Public Health.
Gilead, in fact, helped spark the outrage. Although prices for some specialty medicines — notably, those for treating cancer — had been rising in recent years, the Sovaldi product launch in late 2013 made a lasting impression. Despite its hefty price tag, Gilead argued that the 90-plus percent cure rate made Sovaldi a good value compared with longer-term costs of liver disease, cancer, and transplantation.
Wyden, however, was unswayed by Gilead’s argument. “They’re going to say it’s something people should be happy about it because it’s a cure,” the senator said. “But if you can’t afford it, how can it be a good value?”
Ever since Sovaldi arrived nearly two years ago, public and private payers have called these new drugs budget-busters. In response, some state Medicaid programs began restricting access based on a number of factors. These included treating only those patients with the most advanced stage of liver disease and limiting treatment for those with a history of drug use and alcohol abuse.
Wyden said that, in the 18 months after Sovaldi became available, Medicare spent nearly $8.2 billion before rebates on both Sovaldi and Harvoni. He also noted Medicare spent more on these drugs in the first six months of this year than it did in all of 2014. And more is spent in about three weeks now than in all of 2013, when cheaper, less effective treatments were available.
The report reviewed 20,000 pages of company documents, data from Medicare, the Bureau of Prisons and all 50 state Medicaid programs and the District of Columbia. Senate investigators also reviewed international pricing, Gilead’s R&D costs, and its $11 billion acquisition five years ago of Pharmasset, which originally developed the hepatitis C treatments.
The report also details numerous meetings and internal communications in which Gilead executives suggest pricing concerns should not dissuade them. “Let’s not fold to advocacy pressure in 2014,” Kevin Young, a former executive vice president for commercial operations, wrote in an email to two other Gilead executives. “Let’s hold our position whatever competitors do or whatever the headlines.”
For its part, Gilead maintains that more than 600,000 people have been treated with its medicines, which were priced “responsibly and thoughtfully” and, initially, “in line with the previous standards of care.” The drug maker also argued that prices have dropped since it began offering rebates and discounts, which were undertaken after AbbVie (ABBV) entered the market a year ago with a rival medicine.
The trade group for the insurance industry seized on the report to argue that the findings “underscore the disconnect between drug company rhetoric and reality.” A spokeswoman for America’s Health Insurance Plans also wrote that the pricing strategy demonstrates an “unsustainable cost burden on health care.” AHIP demanded “greater transparency in pricing.”
And Jeff Myers, who is chief executive of Medicaid Health Plans of America, a trade group that represents Medicaid managed care plans, called the findings “tragic. Thousands of Medicaid enrollees could have been cured of this communicable disease if Gilead focused more on care rather than rapacious profit.”
But one Wall Street analyst disagreed. Brian Skorney of R.W. Baird wrote us that the Senators are “barking up the wrong tree. The public says they want cures for diseases, but by attacking Gilead, they are incentivizing the opposite. If pharma isn’t rewarded by quantum leaps in treatment, they’ll just focus on incremental benefits to chronic treatments.
“Industry is supposed to focus on curing diseases, but when they actually do they get publicly shamed for profiting … It’s up to us to determine where that profiteering would best serve the greater good,” he added. “We will spend far less eradicating hepatitis C in this country, thanks to Gilead, than we will buying iPhones.”