The maker of an expensive hepatitis C drug was motivated primarily by profit and getting ahead of the competition when it set the price at $1,000 a pill, according to a bombshell report from senate investigators.
Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., started an investigation into the price of Gilead Sciences’ Sovaldi 18 months ago. Since then, investigators with the Senate Finance Committee, where Wyden and Grassley sit, reviewed about 20,000 documents from the company and combed through information from state Medicaid directors.
The 144-page report’s main argument is that Gilead sought to price Sovaldi, a breakthrough hepatitis C cure that went on sale in late 2013, at a point where it knew it would be criticized, but did not care.
“Let’s not fold to advocacy pressure in 2014,” reads an e-mail from Kevin Young, executive vice president of commercial operations, to other company executives. “Let’s hold our position whatever competitors do or whatever the headlines.”
Gilead in many ways was the first drug company to put prices on the map, back when Sovaldi first hit the market in 2013 and cost $84,000 per regimen. Since then the company has come out with another hepatitis C drug called Harvoni, which can cost nearly $100,000.
Since 2013, scrutiny of the pharmaceutical industry has increased, on brand name prescription drugs as well as generics. Major presidential candidates in both parties have came out against the practice.
A poll released Tuesday from the Boston Globe’s Stat news service and Harvard T.H. Chan School of Public Health found that 76 percent of Americans believe that drug prices are too high. It is the latest poll to show drug prices are a top public policy concern.
The report describes how Gilead got to the price for Sovaldi, which the company acquired from another biotechnology firm called Pharmasset in 2011. Financial filings detailed in the report note that Pharmasset originally projected to sell Sovaldi for $36,000 for an entire regimen.
The drug maker’s attorney told the committee that it projected a higher selling price of up to $72,000 for U.S. customers. Other financial presentations show the drug maker was considering a range of $55,000 to $75,000.
Gilead did not provide the complete research and development costs for getting Sovaldi approved by the FDA. Instead, it gave the senators data on any compound it was studying that included sofosbuvir, the active ingredient in Sovaldi.
The company said the estimated costs for developing such regimens was $880.3 million from 2012 to 2014. The majority of that money, about $616 million, was for clinical trial costs.
The company told the committee that it also planned for additional costs for post-market studies, but didn’t disclose that expense.
High research and development costs are a common defense from pharmaceutical companies to justify high prices. Without the high prices, the companies can’t recoup their investment and the result would chill innovation, they say.
Gilead’s pricing team eventually settled on a price of as much as $85,000 and debated the prospect of congressional hearings or letters concerning the price of Sovaldi, according to the report.
Other concerns was the timing of competitor drugs, namely AbbVie’s Veripak, which had yet to be approved but has turned into a competitor for Sovaldi. The report concludes that a potential price for AbbVie, which could come in at a higher price, was a “building block” for the price for Sovaldi.
Gilead settled on a final price for Sovaldi in 2013, and the drug reached the market later that year.
While the company thought the price wouldn’t restrict access for most patients, the report contends that is what happened as “many payers adopted access restrictions at the final price of $84,000.”
Last year, Medicare and Medicaid spent more than $5 billion on Sovaldi and Harvoni before rebates.
The company’s U.S. sales of Sovaldi and Harvoni totaled about $20 billion after rebates in the 21 months following Sovaldi’s launch, the senators said.
Gilead “respectfully disagreed” with the senators’ report and that it stands behind the pricing of the therapies “because of the benefit they bring to patients,” according to a statement from the company.
“Enabling patient access to Sovaldi and Harvoni is a top priority for Gilead,” the company said. “We have programs in place to help uninsured individuals and those who need financial assistance to access our therapies and we will continue to make the medications available to people in need in the United States and around the world.”
The drugmaker has been hit with several lawsuits from unions that are worried about how to cover Sovaldi in their healthcare plans.
