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US senators seeks answers on Sovaldi pricing

Gilead asked to justify pricing of hepatitis drug
Gilead Sciences

Two senior figures in the US Senate Finance Committee have asked Gilead Sciences to justify the price it charges for hepatitis C virus (HCV) therapy Sovaldi.

Committee chairman Ron Wyden and senior committee member Chuck Grassley want detailed information on Gilead's pricing strategy for Sovaldi (sofosbuvir), which, with sales of $2.27bn in the first quarter of 2014, has become the most lucrative pharma launch of all time.

The HCV nucleotide polymerase inhibitor was approved in the US last December and has been priced at $84,000 per standard course of treatment, equivalent to around $1,000 a day. The drug is considered a major breakthrough for the 2.3 million American patients with HCV, but Wyden and Grassley are concerned its price may not be "competitive, fair, and transparent".

"Given the impact Sovaldi's cost will have on Medicare, Medicaid and other federal spending, we need a better understanding of how your company arrived at the price for this drug," they write in a letter to Gilead's chief executive John Martin.

The letter exemplifies the frustration felt by some lawmakers in the US that the country's drug market tolerates drug prices that are much higher than elsewhere in the world and effectively subsidises medicines use in other countries.

Sovaldi's price "appears to be higher than expected given the costs of development and production and the steep discounts offered in other countries," say the senators, who add that it raises "serious questions about the extent to which the market for this drug is operating efficiently and rationally."

Specifically, Wyden and Grassley cite information from Pharmasset - Sovaldi's originator which was acquired by Gilead for $11.2bn in 2012 - that the drug could be profitable at a price point of $36,000 per course. Meanwhile, they point to FDA data suggesting some patients need longer-term treatment with Sovaldi to achieve a cure, doubling the cost to $168,000.

They are asking Gilead for a raft of information, including commercialisation forecasts and an itemised accounting of Pharmasset's total R&D costs relating to Sovaldi.

The senators' letter adds to concerns expressed by other sources, including Representatives Henry Waxman, Frank Pallone and Diana DeGette who wrote to the firm in March to say that Sovaldi's price was too high for many patients and their insurers.

Indeed, the US health insurance sector is facing a real problem if Sovaldi serves as a model for other product launches, according to some analysts, who predict Gilead's drug could have a big impact on insurers' profits this year.

With competing HCV drugs from the likes of AbbVie and Merck & Co nearing the market, some insurers are asking doctors and their patients to consider deferring treatment until rival drugs exert some downward pricing pressure, according to a recent article in The Economist.

Gilead said it would cooperate with the senators' request but insisted that Sovaldi's price was fair given the impact the drug has in reducing other healthcare costs such as doctor visits and medicines to manage the side effects of older HCV therapies such as pegylated interferon alfa.

14th July 2014

From: Sales, Regulatory

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