Physicians who treat hepatitis C patients were hardly surprised by a recent Senate investigation that found the maker of a hepatitis C drug allegedly put profits ahead of accessibility in pricing its medication. The final wholesale price – $1,000 per pill, or $84,000 for a single course of treatment – led to $1.3 billion in spending by state Medicaid programs, but few low-income patients actually received the drug.
“Even if sofosbuvir [Sovaldi] and Harvoni were priced 50% lower, the reality is that the burden to the health care system would still be tremendous, and it would still not be possible to treat all patients with hepatitis C,” said Dr. Sean W.P. Koppe, director of hepatology at the University of Illinois Hospital & Health Sciences System, Chicago. “Large organizations, such as [Veterans Affairs], can leverage their purchasing power to force some deeper discounting of the drug, [but] until some sort of mechanism is in place to harness the purchasing power of Medicare and Medicaid to negotiate deeper discounts, this scenario is bound to repeat itself with other drugs.”
Dr. Sean Koppe
After an 18-month analysis, investigators with the Senate Committee on Finance found that Gilead Sciences pursued a marketing strategy and wholesale price of Sovaldi that would maximize its revenue with little regard to affordable access, according to a report published Dec. 1. Building on Sovaldi’s price, Harvoni was later introduced at $94,500 per treatment course under the same marketing scheme. The investigation found no evidence that research costs or the multibillion dollar acquisition of Pharmasset, the drug’s first developer, factored into how Gilead set its prices. Investigators drew their conclusions from 20,000 pages of internal company documents, interviews with health care experts, and a trove of data from Medicaid programs in 50 states and the District of Columbia.
“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,” Sen. Ron Wyden (D-Ore.), Senate Finance Committee ranking member, said in a statement. “Gilead knew these prices would put treatment out of the reach of millions and cause extraordinary problems for Medicare and Medicaid, but still the company went ahead. If Gilead’s approach to pricing is the future of how blockbuster drugs are launched, it will cost billions and billions of dollars to treat just a fraction of patients.”
In a statement, a Gilead representative said the company respectfully disagreed with the report’s conclusions.
“We stand behind the pricing of our therapies because of the benefit they bring to patients and the significant value they represent to payers, providers, and our entire health care system by reducing the long-term costs associated with managing chronic HCV [hepatitis C virus],” Gilead spokeswoman Michele Rest said in an emailed statement. “Enabling patient access to Sovaldi and Harvoni is a top priority for Gilead. We have programs in place in the U.S. to help uninsured individuals and those who need financial assistance to access our therapies, and we will continue our efforts to make the medications available to people in need in the United States and around the world.”
Medicare, Medicaid, and the Bureau of Prisons were hit hardest by Sovaldi’s price tag, according to the report. In the 18 months following Sovaldi’s approval, Medicare has spent nearly $8.2 billion before rebates on Sovaldi and Harvoni, a sixfold monthly spending increase on hepatitis C treatments for the agency. In 2014 alone, Medicare and Medicaid spent a combined $5 billion on Sovaldi and Harvoni before rebates, a number projected to climb in 2015. The cost of Sovaldi meant many states were forced to effectively ration the drugs, providing them to only the sickest patients and requiring that patients be under the care of hepatologists or other specialists prior to receiving the drugs, according to the Senate report. Data show that state Medicaid programs nationwide spent $1.3 billion before rebates on Sovaldi in 2014, but that less than 2.4% of Medicaid enrollees with hepatitis C were treated with the drug. Sovaldi was the top drug spending item for 14 state Medicaid agencies in 2014, and the second-highest spending item for 15 more states.
“What we face is not a drug cost problem, it is a drug price problem,” Lynne Saxton, director of the Oregon Health Authority, wrote in a letter to Sen. Wyden. “State Medicaid programs are limited in [their] ability to control pharmacy benefit expenditure, particularly as federal law requires us to provide a pathway to coverage for all FDA-approved drugs, no matter how minimal the likely benefit per dollar spent. While federally mandated rebates help, they provide limited relief.”