AHF Supports AHIP’s Labeling of Sovaldi Pricing as “Unsustainable,” Reaffirms Call for Exclusion from Medicaid

  AHF Supports AHIP’s Labeling of Sovaldi Pricing as “Unsustainable,”
  Reaffirms Call for Exclusion from Medicaid Formularies

 AIDS Healthcare Foundation (AHF) again urges exclusion of pricey Hepatitis C
 medication Sovaldi (sofosbuvir) from Medicaid formularies following a May 20
  outcry from leading insurance trade group American Health Insurance Plans
 which pinpointed the drug – which will cost $84,000 for a 12-week course of
 treatment and was purchased by Gilead Sciences from rival company Pharmasett
   for $11 billion cash in 2011 – as the primary example of pharmaceutical
companies gouging drug prices to unsustainable levels that cause detriment to
                   patients and pharmacy benefits managers

  Priced at $1,000 per pill, which pharmacy industry sources say suggests a
  retail markup of 279,000% over production costs – AHF once again calls on
        Medicaid to exclude the pharmaceutical from state formularies

Business Wire

WASHINGTON -- June 12, 2014

In a series of letters to be sent to state Medicaid directors this week, AIDS
Healthcare Foundation (AHF) President Michael Weinstein will ask the state
directors to block Gilead Sciences’ new $1,000-per-pill Hepatitis C drug
Sovaldi (sofosbuvir) from inclusion on their respective state Medicaid and
other drug formularies. The drug was approved by the FDA on December 6, 2013,
and Gilead immediately announced that it would price the drug at $84,000 for a
twelve-week course of treatment – or $1,000 per tablet – making it one of the
most expensive drugs ever marketed. Suggested treatment guidelines also
require that Sovaldi be used with another drug, ribavirin (a nucleoside
inhibitor), further adding to the cost of the prohibitively expensive course
of treatment.

AHF first implored Medicaid to leave the costly drug off its formularies in
January, after which a multitude of articles were published analyzing the
questionable need – and detrimental impact on the public – of the drug’s
gouged price. Most notably, leading insurance trade group American Health
Insurance Plans pinpointed the pricey Sovaldi – approved for treatment of the
Hepatitis C virus last December – as the primary example of pharmaceutical
companies gouging drug prices to unsustainable levels that cause detriment to
patients and pharmacy benefits managers. The May 20 blog post states: “Sovaldi
has shown tremendous results, and it’s the kind of medical innovation we need
to sustain. Unfortunately, the drug’s maker – taking advantage of a lack of
competition – has priced it at an astronomical level that is not sustainable
for consumers, innovation, or society.”

“When is enough, enough? At $1,000 per pill, Sovaldi is priced 1,100% more
than Gilead’s most expensive AIDS drug, Stribild, its four-in-one AIDS drug
combination, which was priced at $80 per pill a year ago when it came to
market,” said Michael Weinstein, President of AIDS Healthcare Foundation. “At
that time, Stribild’s price was 35% more than Atripla, the company’s
best-selling combination HIV/AIDS treatment, and made Stribild the highest
priced first-line combination AIDS therapy. Now, Gilead has set a new
benchmark for unbridled greed with its outrageous price for Sovaldi – a price
that some pharmacy industry sources suggest represents a retail markup of
279,000% over the cost of actually producing the drug.”

In his letter to state Medicaid directors, Weinstein wrote, “Gilead is
charging a higher price for this drug even though the cost to produce it is
small. According to industry reports, Gilead produces Sovaldi for
approximately $1.00 per gram (with only 10 to 30 grams needed to successfully
treat patients with Hepatitis C).^1 This represents a retail markup of over
279,000%. (NOTE: With only 10 to 30 grams of Sovaldi needed for successful
treatment, the difference from the $30 production cost for Gilead’s full
course of treatment – 30 grams x $1.00 per gram – to$84,000 for the 12-week
treatment program represents a retail markup of 279,000%.)

Weinstein’s letter to state Medicaid directors also reminds them that, “Gilead
did not pay to research and develop Sovaldi. In 2011, it purchased Pharmasset,
the company that had already developed the drug, for $11 billion in cash. The
pricing of Sovaldi is being driven by Gilead’s desire to recoup its investment
in Pharmasset, and assumes it can accomplish this by charging Medicaid and
other taxpayer-funded programs whatever it wants.”

“Gilead is now seeking a bonanza on a financial investment – not on its R&D
costs of a drug – by gouging cash-strapped government programs, essentially
treating states like its own private – rigged – stock market,” added
Weinstein. “With regard to Sovaldi, it’s time we stopped thinking of Gilead as
a drug company and recognize them for what they are here: a pharmaceutical
hedge fund bent on exploiting government-funded drug programs like Medicaid
and ADAP at the expense of the American taxpayer.”

AHF’s reaffirmation letter to State Medicaid Directors on Gilead’s Sovaldi:

Re: Formulary Status of Sovaldi and Forthcoming Hepatitis C Medications

AIDS Healthcare Foundation (AHF) previously wrote to your office (in a letter
dated January 26, 2014) requesting that your Medicaid program deny Gilead
Sciences’ Sovaldi from being added to your formulary until it is priced
affordably. Since that time, additional information has come to light that
further undermines Gilead’s pricing of this drug at $1,000 per pill.

Last month, the Center for Evidence-Based Policy released results of a study
on Sovaldi, which concluded that, “there is not yet clear evidence that this
drug should be used routinely to treat patients.” On May 20, in response to
these findings, the National Association of State Medicaid Directors (NAMD)
called for “careful consideration of how to responsibly decide how to best use
this new treatment option,” and that “[h]owever exciting these new treatments
are, the unprecedented nexus of cost and widespread demand threaten to disrupt
the health care landscape in the near term.”

AHF strongly supports the position of NAMD. In addition, the findings of the
Center for Evidenced-Based Policy is only the latest example that drastic
action to obtain a better price for Sovaldi is necessary and will not be
putting patient health at risk. As noted in our previous letter, Gilead is
charging a higher price for Sovaldi even though the cost to produce it is
small. According to industry reports, Gilead produces Sovaldi for
approximately $1.00 per gram (with only 10 to 30 grams needed to successfully
treat patients with Hepatitis C).^2 This represents a retail markup of over
279,000%.

In addition, Gilead did not pay to research and develop Sovaldi. In 2011, it
purchased Pharmasset, the company that had already developed the drug, for $11
billion in cash. The pricing of Sovaldi is being driven by Gilead’s desire to
recoup its investment in Pharmasset, and assumes it can accomplish this by
charging Medicaid and other taxpayer-funded programs whatever it wants.

Once again, AHF urges you to take action on this matter by denying Sovaldi
from your drug formulary until an affordable price is available.

About AIDS Healthcare Foundation

AIDS Healthcare Foundation (AHF), the largest global AIDS organization,
currently provides medical care and/or services to more than 300,000
individuals in 32 countries worldwide in the US, Africa, Latin
America/Caribbean, the Asia/Pacific Region and Eastern Europe. To learn more
about AHF, please visit our website: www.aidshealth.org, find us on Facebook:
www.facebook.com/aidshealth and follow us on Twitter: @aidshealthcare.

^1 NPR,"$1,000 Pill For Hepatitis C Spurs Debate Over Drug Prices”. December
2013.
http://www.npr.org/blogs/health/2013/12/30/256885858/-1-000-pill-for-hepatitis-c-spurs-debate-over-drug-prices

^2 NPR,"$1,000 Pill For Hepatitis C Spurs Debate Over Drug Prices”. December
2013.
http://www.npr.org/blogs/health/2013/12/30/256885858/-1-000-pill-for-hepatitis-c-spurs-debate-over-drug-prices

Contact:

AIDS Healthcare Foundation, Los Angeles
Ged Kenslea
Communications Director
+1-323-791-5526 [mobile]
+1-323-308-1833 [work]
gedk@aidshealth.org
or
AIDS Healthcare Foundation, Washington, DC
Tim Boyd
Director of Domestic Policy
+1-213-590-7375 [mobile]
timothy.boyd@aidshealth.org
 
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