Close Close

Life Health > Health Insurance

Gilead plan kept up hepatitis C drug prices, senators say

Your article was successfully shared with the contacts you provided.

(Bloomberg) — Gilead Sciences Inc. (Nasdaq:GILD), whose hepatitis C drugs Harvoni and Sovaldi have sold $13.3 billion in the United States during the last year, priced the drugs to maximize revenue instead of in a way to make the treatments widely acceptable or based on how much it cost to develop them.

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 later charge a high price for Harvoni, its follow-up medicine that came to market the next year with a list price of $94,500, the lawmakers said.

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

“Gilead pursued a calculated scheme for pricing and marketing its hepatitis C drug based on one primary goal, maximizing revenue, regardless of the human consequences,” Wyden said in a statement announcing the findings. “There was no concrete evidence in e-mails, meeting minutes or presentations that basic financial matters such as R&D costs or the multi-billion dollar acquisition of Pharmasset, the drug’s first developer, factored into how Gilead set the price.”

Cara Miller, a spokeswoman for Gilead, didn’t immediately return a request for comment on the investigation. In the past, Gilead hasn’t emphasized research costs as a major factor in its pricing and has instead said that the drugs represent a significant medical advance and are far cheaper than the cost of caring for complications from the liver infection.

$11 billion deal

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 Food and Drug Administration (fda) 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 did not 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.”


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 taxpayer-funded health programs, as well as to private insurers. The company offered supplemental rebates of 10 percent to Medicaid, the state-run, federally 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.

See also: Jean Coutu slumps most in 7 years on proposed drug reform

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

—With assistance from Anna Edney and Doni Bloomfield.


© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.