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Gilead Sciences' $84,000 price for hepatitis drug is scrutinized

BusinessCrime, Law and JusticeJustice SystemInsuranceMedicaidHenry A WaxmanGilead Sciences Inc.

U.S. lawmakers have asked Gilead Sciences Inc. to justify the price of its new $84,000 drug for hepatitis C patients amid growing concern about the high cost to taxpayers and consumers.

In a letter to the Foster City, Calif., company, Rep. Henry A. Waxman (D-Beverly Hills) and two other Democratic lawmakers asked Gilead Chief Executive John C. Martin to explain the rationale for selling Sovaldi for $1,000 per pill.

Medical experts say previous therapies for hepatitis C helped only about half of patients and had numerous side effects, such as flu-like symptoms, anemia and depression. In comparison, clinical trials of Sovaldi have shown cure rates approaching 90% with far fewer complications.

The lawmakers noted those potential benefits for patients, but they said the expensive medication could impose substantial costs on taxpayer-funded Medicaid programs and lead to premium increases for those with employer or individual health coverage.

Chronic hepatitis C infection affects about 3 million people in the U.S., and more Americans are expected to find out they have the disease as screening becomes more common. Left unchecked, some hepatitis C infections result in liver damage, liver cancer or death.

In their letter sent Thursday, Waxman, Rep. Frank Pallone Jr. (D-N.J.) and Rep. Diana DeGette (D-Colo.) said, "our concern is that a treatment will not cure patients if they cannot afford it."

The lawmakers said they wanted a response from the company by April 3.

Gilead has defended its pricing and said that Sovaldi represents a major advance over existing treatments for hepatitis C. The company has said the new therapy can avoid the long-term medical expenses related to liver failure, cancer and transplants.

"We had heard the concerns raised in the letter and had reached out to a number of members of Congress prior to this letter to address those concerns," said Gilead spokeswoman Cara Miller. "We look forward to the opportunity to meet with them."

The news of the lawmakers' request sent shares of Gilead tumbling $3.46, or nearly 5%, to $72.07 in trading Friday. Some other drug company stocks also fell Friday, partly on concerns that Congress might take a closer look at industry pricing overall.

Analysts estimate Sovaldi could reach up to $8 billion in sales this year, which would make it one of the top-selling pharmaceutical drugs worldwide.

Beyond this new hepatitis C drug, employers and insurers are concerned about a growing number of expensive specialty medications that are coming onto the market. They say the wide adoption of these drugs could undermine efforts to rein in soaring medical costs.

"This is a harbinger of things to come," said Steven Pearson, president of the Institute for Clinical and Economic Review, a nonprofit research group in Boston. "Other specialty drugs are being priced in this range."

A recent report by that institute estimated the annual cost could top $18 billion if half of all California patients with hepatitis C received Sovaldi, which costs $84,000 for a 12-week course, or another new drug, Olysio, which costs about $66,000.

Olysio is a product of Janssen Therapeutics, a unit of healthcare giant Johnson & Johnson.

This month, a panel of California medical experts met to discuss those estimated costs and determined that Sovaldi was a "low-value" treatment in light of its high price tag. But patient advocates have pushed for full access to the new drugs given their high cure rates.

Officials at Medi-Cal, the state's Medicaid program for lower-income residents, said they don't know yet how many patients may need these new drugs. More than 1,500 Medi-Cal patients are prescribed drugs for hepatitis C now.

 

Nationwide, health insurers that run Medicaid managed-care plans for states have sought additional government reimbursement to cover these new hepatitis C drugs. Insurance companies say their previously negotiated rates don't account for these potentially higher costs.

chad.terhune@latimes.com

Twitter: @chadterhune

Copyright © 2014, Los Angeles Times
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BusinessCrime, Law and JusticeJustice SystemInsuranceMedicaidHenry A WaxmanGilead Sciences Inc.
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