Senate Finance Committee Criticizes Gilead's Hepatitis C Drug Pricing

A report released by Senator Ron Wyden (D-OH) and Charles Grassley (R-IA) came to the conclusion that Gilead Sciences charged more for its blockbuster hepatitis C virus (HCV) medications Sovaldi and Harvoni than required to recoup acquisition costs, clinical research, and marketing expenditures.

The finding is not particularly surprising; one can’t be blamed if the “shocked” protestations of Casablanca’s inimitable Captain Renault come to mind. Gilead officials, for their part, disputed the main findings, pointing out that the report took into account only the list price of the medicines before negotiated discounts were considered--not including rebates offered by Gilead to purchasers such as Medicaid. The report, though not likely to lead to any specific action on behalf of federal payment programs, seems more likely to garner a fresh round of headlines decrying the high cost of medications to treat illnesses such as HCV and many types of cancer.

Still, several of the numbers in the 18-month report are sobering. In 2014, US state Medicaid programs spent $1.3 billion (before rebates) to treat fewer than 2.4 percent of Medicaid enrollees who have hepatitis C. Cost has proven to be a major obstacle to treatment for many of the 700,000 people on state Medicaid programs still awaiting treatment. In Indiana, for example, the Medicaid program spent $40 million to treat 462 people. In 2014 alone, Medicare and Medicaid combined to spend more than $5 billion on Sovaldi and Harvoni (again, before rebates), the investigation found.

In a statement, Gilead pointed to its efforts to make the drugs accessible and affordable for many, and noted that the treatments’ long-term costs represent a huge savings over liver complications that are all but inevitable if HCV isn’t effectively treated.

The Senators, noting some passages from Gilead’s internal communications outlining the company’s pricing strategy, noted that higher prices for Sovaldi, particularly before competing medications from AbbVie, Merck, and others came to market, would result in fewer patients having access to the medications. The investigators concluded that Gilead set a high initial price point for Sovaldi with the expectation that it would ensure a high price for future generations of hepatitis C drugs as they came to market, including Gilead’s own follow-on drug, Harvoni.