[Ip-health] Fierce Pharma: Politicians add fuel to the firestorm over Gilead's hep C drug pricing

Thiru Balasubramaniam thiru at keionline.org
Mon Mar 24 10:54:04 PDT 2014


http://www.fiercepharma.com/story/politicians-add-fuel-firestorm-over-gileads-hep-c-drug-pricing/2014-03-24
Politicians add fuel to the firestorm over Gilead's hep C drug pricing
March 24, 2014 | By Tracy Staton <http://www.fiercepharma.com/author/tracy>

The outcry about Gilead Sciences' $84,000 price for its hepatitis
C<http://www.fiercepharma.com/tags/hepatitis-c> wonder
drug, Sovaldi <http://www.fiercepharma.com/tags/sovaldi>, just got louder.
Rep. Henry Waxman and several Democratic colleagues in Congress wrote
Gilead CEO John Martin <http://www.fiercepharma.com/tags/john-martin> an
excoriating letter on Friday, demanding to know why the drug costs so
much--and whether Gilead ($GILD <http://www.fiercepharma.com/tags/gilead>)
is doing anything to make sure that poor patients get access to it.

"The costs are likely too high for many patients, both those with public
insurance and private insurance," the letter stated. Not to mention
taxpayers--the bulk of hepatitis C sufferers are either low-income patients
on Medicaid, veterans treated by the Veterans Administration, or prisoners,
whose care is government-financed.

By itself, the letter might not amount to much. As *Reuters* points out,
the signatories are minority-party types in the House of Representatives.
Some industry analysts figure the protestations are a lot of talk that will
lead to little action. The facts are these: The
FDA<http://www.fiercepharma.com/tags/fda> has
no power over pricing. Attempts to grant Medicare negotiating power have
fallen flat. And Gilead is a veteran of the pricing protest, experienced at
soldiering forward in spite of the flak.

But the letter isn't on its own. It's just the latest salvo against
hepatitis C drug prices, from public officials, healthcare experts, patient
advocates and--most importantly--payers. Pharmacy benefits managers,
including Express Scripts
($ESRX<http://www.fiercepharma.com/tags/express-scripts>),
have said they're planning to apply cost-effectiveness measures to hep C
treatments and even exclude some of the new meds. A California
cost-effectiveness board called Sovaldi a "low value" treatment because of
its high price and suggested that it be restricted to the sickest patients.

Meanwhile, some state Medicaid plans even say they'll hold off on the
expensive drugs till patients have already suffered liver damage. That's a
pledge that only makes logical sense as a negotiating ploy but illustrates
the desperation of cash-strapped payers faced with broad use of an
ultraexpensive drug.

The latest payer news came Friday from WellPoint, which said the new round
of treatments, which includes Sovaldi, may be supereffective, but they're
too superexpensive. WellPoint's commercial business is working with
regulators and drugmakers to get prices down to a "reasonable" level,
*Reuters* reports. And on the Medicaid side, the company is working with
states to determine whether to exclude Sovaldi from its Medicaid managed
care plans altogether.

Gilead figures that Sovaldi is a breakthrough cure and well worth the
price. Preventing liver-disease complications will save the healthcare
system money, EVP Gregg Alton told the *NYT*. "We think the price is fair,"
Alton said.

But one problem is that hepatitis C affects millions of patients. Very
expensive cancer drugs, on the other hand, are targeted at far fewer
people. "The worry is that the volume is just going to overwhelm the
system," Deutsche Bank analyst Robin Karnauskas said (as quoted by *The* *New
York Times*). "What is really scaring folks is the volume," ISI Group
analyst Mark Schoenebaum noted last week (as quoted by *Reuters*).
Schoenebaum himself figures this year's Sovaldi sales will mount to at
least $7 billion and perhaps as high as $12 billion. Those stratospheric
numbers beg the question of how much is enough--or too much.

As the *NYT* points out, some people with hep C would never experience
serious liver complications even if untreated. The nonprofit Institute for
Clinical and Economic Review studied the issue and determined that treating
all patients with Sovaldi rather than older drugs wouldn't save any money
even over 20 years. Restricting treatment to those with more advanced liver
scarring would, however, save money over a couple of decades, the institute
found.

Several analysts suggested that prices might come down once rival drugs
from AbbVie ($ABBV <http://www.fiercepharma.com/tags/abbvie>),
Bristol-Myers Squibb
($BMY<http://www.fiercepharma.com/tags/bristol-myers-squibb>)
and others hit the market. Payers certainly hope to use the competitive
threat as leverage to push prices down. Whatever happens, larger questions
remain: What responsibility do drugmakers bear for their pricing in a
"rich" country like the U.S.? Should Gilead (and its forthcoming
competitors) consider the size of the market--and the burden on taxpayers
and other payers--when setting prices? And can the "rich" U.S. afford to
eschew the sort of price-negotiation that other countries routinely engage
in?



Read more: Politicians add fuel to the firestorm over Gilead's hep C drug
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