[Ip-health] Steve Miller M.D. in Forbes: The Sovaldi Tax: Gilead Can't Justify The Price It's Asking For Hepatitis C Therapy

Thiru Balasubramaniam thiru at keionline.org
Wed Jun 18 03:28:47 PDT 2014


*OPINION* <http://www.forbes.com/opinion> 6/17/2014 @ 8:46AM

The Sovaldi Tax: Gilead Can't Justify The Price It's Asking For Hepatitis
C Therapy


*Steve Miller*

*Dr. Miller, M.D., is senior vice president and chief medical officer of
Express Scripts.*

A cure for hepatitis C is within reach for 170 million people around the
world — thanks to the charitable efforts of poor and sick Americans who are
picking up the tab by paying outrageous prices for their own treatment.
It’s like Robin Hood in reverse.

This is what happens when a pill is priced at $1,000 a day in the U.S., and
an entire treatment regimen of 84 of those pills costs just $900 in Egypt.
Exact same medicine, completely different pricing.

While it is a nice gesture by hepatitis C patients in the U.S. to help
people they’ll never meet, it’s truly unfortunate. Gilead Sciences, the
manufacturer of the drug Sovaldi, is generating enormous profits on the
backs of patients here and ensuring significant profits in other countries
like Egypt and India even while pricing its drug at a 99 percent discount
in those countries.

Sovaldi costs $84,000 for a course of treatment. Add in other therapies
that supplement Sovaldi, and now you’re talking about $100,000 or so to
treat a single patient. To use Sovaldi to treat each of the 3 million
hepatitis C patients in the United States, it would cost around $300
billion, or about the same amount we annually spend for all other drugs

Gilead deserves a reasonable return on their investment. Gilead did not
invent Sovaldi, but it bought the company that did for $11 billion. That
took insight and the willingness to accept risk. It also took a complete
lack of self-awareness — and unmitigated gall — to price Sovaldi the way
Gilead has.

Hepatitis C patients in the U.S. are mostly uninsured, underinsured and/or
incarcerated. Medicaid, the VA and our prison system bear the brunt of the
cost impact, and by extension so do all of us as taxpayers. Sure, we could
ask these patients to pay more, but coming up with a 10% copay is already
tough enough for drugs that cost hundreds of dollars, let alone $1,000 per

Sovaldi costs about $130 to manufacture, reinforcing how outrageous its
pricing is. Gilead claims that the pricing reflects the value of Sovaldi
and it deserves a premium because of downstream health savings. Following
that logic, all antibiotics have been vastly underpriced since the
introduction of penicillin some 60 years ago.

In Germany, the cost for Sovaldi is around $67,000 for a course of therapy.
In Canada and the U.K., it’s about $55,000. While these are no India or
Egypt cut-rate deals, these prices still represent a significant discount
to what we’re being asked to shoulder in the U.S.

Not one independent investigator can get the Gilead math to work. The most
sophisticated independent financial models demonstrate that even over a
20-year span, you can justify about two-thirds of the original cost.
Believe me, it’s not getting any better. The poorest Americans now pay more
for Sovaldi than the wealthiest Britons. Hepatitis C treatment costs will
go up about 1,800 percent by 2016.

The irrational pricing of drugs — and what has essentially become a tax on
Americans to defray the cost of treatment for the rest of the world — has
ginned up anger like I have never seen. Patient groups are protesting, and
payers of all kinds — small businesses, large businesses, health plans,
Medicaid plans, unions and government agencies — are galvanized to do
something about it. No idea is too outlandish and all of them are on the

It would be simpler if Gilead and others focused on pricing based on the
value their drugs provide, rather than just a naked attempt to line their
coffers. Gilead is on pace to recoup the full cost of its $11 billion
investment in just over one year. That is unprecedented.

Sovaldi is not the first high priced drug, and, with more than 5,400 drugs
in development in the U.S., it will not be the last. Pipelines are full of
promising therapies for terrible diseases — Alzheimer’s, cancer, diabetes,
heart disease and others. They will be priced at what the market will bear,
even though the market can’t bear much more.

Without a course correction, we’re all going to learn some hard lessons.
And a Sovaldi tax, as bad as that is, may be the least of our worries.

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