The list price of Sovaldi -- the one-pill-a-day, 12-week treatment for Hep C-- is nearly $100,000. Most insurance providers refuse to pay this and you won’t believe what it is doing to Medicare and Medicaid.
In case you missed it, we’ve been critical of Turing Pharmaceuticals’ CEO Martin Shkreli, who has earned the nickname “Pharma Bro” after jacking up the price of Daraprim, a lifesaving drug, from $13.50 to $750 per tablet. He is now at the center of a new federal investigation and must answer to the Senate as to why he inflated the price and still has yet to lower it to a point that is more affordable, as he claimed he would.
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However despicable one might feel Shkreli is, especially after viewing his brag-heavy, extravagant lifestyle on Twitter, he isn’t the only “Pharma Bro” out there.
Gilead Sciences is arguably just as bad if not worse. The Senate Finance Committee recently investigated the company for 18 months and found that its marketing and pricing strategy was designed to maximize revenue with little concern for patients in need of the drug Sovaldi, which is the cure for Hepatitis C.
The LA Times reports:
Gilead initially priced the hepatitis C drug Sovaldi at about $84,000 for a 12-week treatment, or about $1,000 per daily pill. That was more than twice the $36,000 the drug's developer, Pharmasset, had planned to charge before that company was acquired by Gilead in 2011 for $11 billion. It was also vastly out of line with Pharmasset's research and development costs, which the Senate Finance Committee estimated at less than $63 million in 2009-2011.
Documents acquired during the Senate Finance Committee’s investigation illustrate that Gilead was aware it was in a position to create clear savings for patients with Hep C, but chose not to.
Executives at Gilead also admitted that they could have make a significant profit by charging $55,000 per 12-week treatment for Sovaldi, but the company still decided to charge $84,000, which would deliver higher profits from the few patients who could still afford the drug.
Add to that the fact that a follow-on drug known as Harvoni, which incorporates Sovaldi, was introduced by Gilead Sciences last year at a price close to $100,000 for a full treatment, and suddenly capitalism in its purist form is a dirty word.
Gilead’s greed did come with an unexpected cost, which is how the Senate Finance Committee caught onto its shenanigans. When company executives were discussing a price increase, they expected "key opinion leaders" would be "vocal about their concerns" at a price over $80,000, but they expected insurance companies to approve the costly pill anyway.
Well, Gilead was wrong. Very wrong. Major insurers balked at the price and approved the drugs only for patients with the most severe cases of Hep C.
While insurance companies can reject the cost of a pricy drug, Medicaid rules require cardholders to be provided access to any FDA-approved drugs.
WebMD estimates about 3.2 million people in the U.S. have Hepatitis C, so it’s no surprise that the price gorging also affected Medicare and Medicaid costs nationwide. When Sovaldi’s price tag devastatingly impacted state budgets, many states were forced to ration the drugs, offering them only to the sickest patients, and then the Senate Finance Committee – which is responsible for overseeing federal programs that pay for prescription drug coverage – got involved.
The Senate Finance Committee’s full report on Gilead Sciences is available here. Essentially, the committee determined that in 33 out of 50 states, Sovaldi is now ranked as one of the five most expensive drugs Medicare and Medicaid cover. It ranks as the most expensive drug for Medicaid agencies in 14 states, and the second most expensive drug for an additional 15 states. The reasoning? People will pay any price for a cure and Gilead took full advantage of this.
As thorough as the Senate Committee’s findings were, it isn’t offering a solution at this time.
Here are a few to kick around:
1. Allow Medicare to negotiate prices with drug companies
2. Allow U.S. patients to buy drugs abroad, especially from Canada, where prices are cheaper
3. Mandate more openness in drug pricing, discounts, and rebates offered to major insurance companies.
"The public may be surprised to learn that members of Congress are forbidden by law to have access to information regarding price discounts and rebates agreed to by drug manufacturers as part of the Medicare and Medicaid programs," the Senate Finance Committee’s report states.
Of course we're surprised. Who benefits from that blindfold, except the drug companies?
The views and opinions expressed herein are those of the authors alone and do not necessarily reflect the views of Ora Media, LLC its affiliates, or its employees.
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