Gilead is not the original developer of Sovaldi, its new Hepatitis C medication that will cost $84,000 for a 12-week course of treatment; instead, it bought the drug developer, rival company Pharmasett, for $11 billion cash in 2011. Gilead now seeks a bonanza on a financial investment by gouging cash-strapped government programs, treating states like Gilead’s own private—rigged—stock market.
At $1,000 per pill, Sovaldi price is 1,100% more than Gilead’s AIDS drug combination Stribild ($80 per pill); pharmacy industry sources say Solvaldi’s price suggests a retail markup of 279,000% over production costs.
WASHINGTON (January 29, 2014) In a series of letters to be sent to state Medicaid directors starting today, AIDS Healthcare Foundation (AHF) President Michael Weinstein will ask the state directors to block Gilead Sciences’ new $1,000-per-pill Hepatitis C drug Sovaldi (sofosbuvir) from inclusion on their respective state Medicaid and other drug formularies. The drug was approved by the F.D.A. on December 6, 2013 and Gilead immediately announced that it would price the drug at $84,000 for a twelve-week course of treatment—or $1,000 per tablet—making it one of the most expensive drugs ever marketed. Suggested treatment guidelines also require that Sovaldi be used with another drug, ribavirin (a nucleoside inhibitor), further adding to the cost of the prohibitively expensive course of treatment.
“When is enough, enough? At $1,000-per-pill, Sovaldi is priced 1,100% more than Gilead’s most expensive AIDS drug, Stribild, it’s four-in-one AIDS drug combination, which was priced at $80 per pill a year ago when it came to market,” said Michael Weinstein, President of AIDS Healthcare Foundation. “At that time, Stribild’s price was 35% more than Atripla, the company’s best selling combination HIV/AIDS treatment, and made Stribild the highest priced first-line combination AIDS therapy. Now, Gilead has set a new benchmark for unbridled greed with its outrageous price for Sovaldi—a price that some pharmacy industry sources suggest represents a retail markup of 279,000% over the cost of actually producing the drug.”
In his letter to state Medicaid directors, Weinstein wrote, “Gilead is charging a higher price for this drug even though the cost to produce it is small. According to industry reports, Gilead produces Sovaldi for approximately $1.00 per gram (with only 10 to 30 grams needed to successfully treat patients with Hepatitis C). This represents a retail markup of over 279,000%. (NOTE: With only 10 to 30 grams of Sovaldi needed for successful treatment, the difference from the $30 production cost for Gilead’s full course of treatment—30 grams x $1.00 per gram—to $84,000 for the 12-week treatment program represents a retail markup of 279,000%.)
Weinstein’s letter to state Medicaid directors also reminds them that, “Gilead did not pay to research and develop Sovaldi. In 2011, it purchased Pharmasset, the company that had already developed the drug, for $11 billion in cash. The pricing of Sovaldi is being driven by Gilead’s desire to recoup its investment in Pharmasset, and assumes it can accomplish this by charging Medicaid and other taxpayer-funded programs whatever it wants.”
“Gilead is now seeking a bonanza on a financial investment—not on its R&D costs of a drug—by gouging cash-strapped government programs, essentially treating states like its own private—rigged—stock market,” added Weinstein. “With regard to Sovaldi, it’s time we stopped thinking of Gilead as a drug company and recognize them for what they are here: a pharmaceutical hedge fund bent on exploiting government-funded drug programs like Medicaid and ADAP at the expense of the American taxpayer.”
AHF’s letter to State Medicaid Directors on Gilead’s Sovaldi:
Re: Formulary Status of Sovaldi and Forthcoming Hepatitis C Medications
AIDS Healthcare Foundation (AHF) is deeply concerned about the fiscal impact of new FDA approved Hepatitis C medications on your Medicaid program, and the effect of that impact on the health care of people in your state. The first of these new medications, Gilead Sciences’ Sovaldi, is exorbitantly priced at $1,000 per pill.
While the approval of Sovaldi and similar treatments is a welcomed advancement for people in need of better treatment for Hepatitis C, the unjustifiably high price manufacturers are seeking to charge for these medications will unnecessarily drive up health care costs and limit access to potentially lifesaving care. Therefore, AHF urgently requests that your Medicaid program deny Sovaldi and other new Hepatitis C medications from being added to your state formulary until these drugs are made affordable.
AHF believes that the price Gilead is charging for Sovaldi is not remotely justified. For one, it is exponentially more expensive than medications for other severe chronic conditions. For example, Gilead’s own Stribild, a costly new four-in-one combo treatment for HIV/AIDS is $80 per pill. At $1,000 per pill, Sovaldi costs 1,100% more than Stribild, the most-expensive AIDS combo drug on the market.
In addition, Gilead is charging a higher price for this drug even though the cost to produce it is small. According to industry reports, Gilead produces Sovaldi for approximately $1.00 per gram (with only 10 to 30 grams needed to successfully treat patients with Hepatitis C). This represents a retail markup of over 279,000%.
Finally, Gilead did not pay to research and develop Sovaldi. In 2011, it purchased Pharmasset, the company that had already developed the drug, for $11 billion in cash. The pricing of Sovaldi is being driven by Gilead’s desire to recoup its investment in Pharmasset, and assumes it can accomplish this by charging Medicaid and other taxpayer-funded programs whatever it wants.
Private drug plans have taken notice of these facts – along with community outrage over the cost of Sovaldi –and have delayed paying for the drug until Gilead agrees to significantly lower the price. For example, Express Scripts, CVS Caremark, Catamaran Inc., and Aetna are all taking steps to block or delay the use of Sovaldi. Given this, AHF believes it is imprudent for your state to cover this medication until a better price is available.
Most critically, by taking action to ensure a better price your state will not be putting patient health at risk. There are alternative (and less expensive) treatments for Hepatitis C already available. In addition, Gilead’s patient assistance program provides the treatment for free to people making less than $100,000 a year who cannot access it elsewhere. These steps, while not ideal, will ensure patients continue to receive the care they need until newer medications are made affordable.
Once again, AHF urgently requests you to take action on this matter by denying Sovaldi and other unjustifiably high-priced Hepatitis C medications from your drug formulary until an affordable price is available.