Gilead Plan Kept Hepatitis C Drug Prices High, Senators Say

  • Senators Wyden, Grassley release report on revenue strategy
  • Harvoni, Sovaldi posted $13.3 billion in U.S. sales last year

Gilead Sciences Inc., whose hepatitis C drugs Harvoni and Sovaldi had U.S. sales of $13.3 billion in the last year, pursued high list prices for the drugs instead of trying to make the treatments widely available, two U.S. senators said in a report Tuesday.

The company set the price of its first drug, Sovaldi, at $84,000 for a 12-week course partly in order to be able to charge a higher price later for Harvoni, its follow-up medicine that came to market the next year with a list price of $94,500, the lawmakers said.

Senators Ron Wyden, an Oregon Democrat, and Charles Grassley, an Iowa Republican, released a report that they said was based on 20,000 pages of internal company documents, data from U.S. health programs and interviews with experts.

Gilead officials “were fully aware” that higher prices for Sovaldi would put the treatment out of reach for many and that, as a result, fewer Americans would be cured of the viral infection, Wyden said during a press conference in Washington.

“The documents show it was always Gilead’s plan to max out revenue and that affordability was barely an afterthought,” he said.

“We respectfully disagree with the conclusions of their report,” Michele Rest, a spokeswoman for the drugmaker, said in an e-mail. The company priced Sovaldi and Harvoni responsibly and thoughtfully, she said. Enabling patient access to its hepatitis C drugs is “a top priority” for Gilead, she said, and it has programs in place to help uninsured individuals and those who need financial assistance.

Internal Documents

In one e-mail obtained by the Senate investigators, Kevin Young, a Gilead executive vice president involved in setting Sovaldi’s price, wrote to his colleagues just a couple weeks before Sovaldi’s U.S. approval. 

“Let’s not fold to advocacy pressure in 2014.” he said. “Let’s hold our position whatever competitors do or whatever the headlines.”

Gilead declined to comment on Young’s e-mail and said he was no longer with the company.

Gilead’s hepatitis C products “were initially priced in line with the previous standards of care,” Rest said. “With the rebates and discounts now in place, the prices today are less than the cost of prior regimens, even though our therapies have significantly higher cure rates and very few side effects.”

Drug Costs

In the past, Gilead hasn’t emphasized research costs as a major factor in its pricing and instead has said the drugs represent a significant medical advance and are far cheaper than the cost of caring for complications from the liver infection.

The company’s shares fell less than 1 percent to $105.30 at 2:11 p.m. in New York.

Gilead acquired Sovaldi, which is also the backbone of the combination drug Harvoni, in an $11 billion acquisition of Pharmasset Inc. in 2012. Harvoni was approved by the U.S. Food and Drug Administration in October 2014.

The investigation found that one reason Gilead set the original price of Sovaldi at $84,000 was that it wanted to set a high benchmark that would ensure a high price for future generations of hepatitis C drugs, including Harvoni.

“Over the eight months Gilead spent determining the price of Sovaldi, the company repeatedly made clear its primary focus was outmaneuvering potential competitors to ensure its drugs had the greatest share of the market, for the highest price, for the longest period of time,” investigators said in an executive summary of the report.

‘Wave 2’

In documents obtained during the investigation, Gilead officials said that, “Wave 2 access will be enhanced with a high Wave 1 price,” according to the Senate report. “Wave 1 will set a price benchmark against which Wave 2 will ultimately be evaluated.”

Asthika Goonewardene, an analyst at Bloomberg Intelligence, said that the senators’ analysis was flawed as it often looked at the list price of the medicines before negotiated discounts were considered, and put too much weight on the amount paid just when the drug hit the market, when a large number of patients were waiting to take it.

“I foresee a bit of headline risk coming out of it if they say, ‘We need to control drug prices’ often enough,” Goonewardene said in an e-mail. “Maybe a bit bigger headline risk if Clinton, Sanders jump on the bandwagon,” he said, referring to Democratic presidential candidates Hillary Clinton and Bernie Sanders.

Taylor Harvey, a spokesman for Wyden, said in an e-mail that the senators didn’t have access to information about how much federal programs paid for Sovaldi after rebates, since federal law “restricts the release of after-rebate information to Congress and others.”

Discounts

The Senate investigation also found that Gilead initially “refused to significantly lower the net price” for Sovaldi even after insurers and other payers restricted access to the drug.

That tough negotiating applied to the U.S.’s taxpayer-funded health programs, as well as private insurers. The company offered supplemental rebates of 10 percent to Medicaid, the state-run, U.S.-funded health insurance program for the poor, the senators said. Those rebates, however, came with the condition that states had to drop some or all of their access restrictions, according to the Senate investigation. Only five state Medicaid programs reached agreements to receive extra rebates in 2014, the Senate investigation found.

Prices dropped for Gilead’s hepatitis drugs only after a competing treatment from AbbVie Inc. entered the market in December 2014. That led to the nation’s largest drug benefit manager, Express Scripts Holding Co., making AbbVie’s drug Viekira Pak the preferred treatment for the most common sub-type of the virus, according to the statement.

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