Maker of Hep C Drugs Put Profit Before Patients, Report Says

December 01, 2015

The maker of the breakthrough drug sofosbuvir (Sovaldi) for chronic hepatitis C virus (HCV) infections initially priced it at $84,000 for a 12-week course of treatment knowing that many patients wouldn't be able to afford it, according to a bipartisan investigation by the Senate Finance Committee.

Gilead Sciences set the price for sofosbuvir "based on one primary goal —maximizing revenue — regardless of the consequences," Sen. Ron Wyden (D-OR), the committee's ranking member, said at a news conference today. "Affordability was barely an afterthought."

Wyden warned that unless the nation gets a grip on runaway drug prices, future cures for cancer, diabetes, Alzheimer's, and other diseases will go the way of sofosbuvir and remain out of reach for millions of people.

"Cures in America must not just be for the lucky few," he said.

The committee's 144-page report on its investigation, released today, said that Gilead Science's pricing strategy was to prepare the market for an even more expensive HCV drug called ledipasvir/sofosbuvir (Harvoni). Unlike its predecessor, ledipasvir/sofosbuvir does not require concomitant ribavirin for HCV genotypes 2 and 3, or ribavirin and interferon for genotypes 1 and 4. The company introduced the second HCV drug at nearly $95,000 for a course of treatment.

A first-in-kind nucleotide analog inhibitor, sofosbuvir produces high cure rates in just 12 weeks. It initially was developed by Pharmasset, which Gilead Sciences acquired in 2012 for $11.2 billion. Gilead Sciences spent millions more to wrap up clinical trials and win approval from the US Food and Drug Administration (FDA) in December 2013. However, in combing through 20,000 pages of company documents, investigators said they uncovered "scant evidence" that Gilead Sciences calculated sofosbuvir's $84,000 price as a return on its investments, which is how drug companies usually justify what they charge.

Instead, the company set the price just below the point at which, in its opinion, public and private payers were likely to restrict patient access to the drug in a major way, according to the committee report. It also projected how patient advocacy groups, prescribing physicians, and Congress would respond to various price points. Once it decided on $84,000, Gilead Sciences braced itself for a level of blowback that it considered tolerable.

"Let's not fold to advocacy pressure in 2014," one company vice president wrote to his colleagues in an email obtained by investigators. "Let's hold our position whatever competitors do or whatever the headlines."

Company Stands Behind Its Drug Pricing

As it turned out, public and private payers reacted more negatively to sofosbuvir's opening price than Gilead Sciences anticipated, according to the Senate Finance Committee report. More than half the country's state Medicaid programs limited the drug's use to only the sickest patients. Private insurance companies adopted their own controls.

Gilead Sciences offered minor discounts and rebates in the face of payer resistance, the report stated. Significant price breaks — estimated at roughly 40% — came this year only after the FDA approved a rival HCV drug consisting of ombitasvir, paritaprevir, and ritonavir tablets copackaged with dasabuvir tablets (Viekira Pak, AbbVie) in December 2014 that slightly undercut sofosbuvir on cost.

Despite a rocky reception, the two new HCV drugs from Gilead Sciences have performed like blockbusters. Sofosbuvir and ledipasvir/sofosbuvir racked up domestic sales of $10.1 billion in the first 9 months of 2015, almost more than what was spent on all HCV treatment in 2014, according to the committee report.

In the process, the two drugs are straining the already imperiled budgets of Medicare and Medicaid. Medicare spent almost $8.2 billion before rebates on the new drugs in the first 18 months since sofosbuvir was approved, the report stated.

"Medicare now spends more on Hepatitis C drugs in about 3 weeks than it did in all of 2013," Wyden said at today's news conference.

For 29 state Medicaid programs, sofosbuvir is now the number-one or number-two most costly drug. Yet because of tight controls, only 2.4% of Medicaid enrollees believed to have HCV in 2014 were treated for the condition. Wyden said these individuals may go untreated for years until they qualify for Medicare, "and that could represent a serious challenge ahead."

Asked to respond to the Senate Finance Committee report, Gilead issued a statement disputing the investigation's conclusions.

"We stand behind the pricing of our therapies because of the benefit they bring to patients and the significant value they represent…by reducing the long-term costs associated with managing chronic HCV," the company said.

The drugs' initial prices were "in line with the previous standards of care," and they have fallen as a result of rebates, discounts, and a shorter 8-week therapy period, according to Gilead Sciences. It also pointed to company programs that help the uninsured and financially needy obtain the drugs.

A copy of the report on sofosbuvir is available on the Senate Finance Committee website.

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