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Hepatitis C drugmaker's high prices ignored consequences: Senate panel


Pharmaceutical company Gilead Sciences Inc., which makes expensive hepatitis C drugs that have driven up employers' pharmacy benefit costs, priced its drugs to maximize its profits and not increase patient access, according to a U.S. Senate committee report.

The Senate Finance Committee's 18-month investigation into Foster City, California-based Gilead's pricing strategy of hepatitis C drugs Sovaldi and successor Harvoni found that providing affordable access was not a consideration while pricing Sovaldi, nor were research and development costs, according to the report released Tuesday.

Instead, Gilead priced the drugs targeting the hepatitis C virus “as high as it thought the market would bear before significant access restrictions would be imposed,” the report states.

Gilead was wrong, however, as many payers restricted access to the drugs, according to the report.

Approved for use in 2013, Sovaldi's wholesale price is $1,000 per pill, or $84,000 for a single course of treatment, while Harvoni, introduced in October 2014, costs $94,500 for a course of treatment, according to the report.

Gilead's sales of Sovaldi and Harvoni totaled $20.6 billion after rebates in the 21 months following Sovaldi's introduction, according to the Senate committee.

“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., ranking member of the Senate Finance Committee, said in a statement. “There was no concrete evidence in emails, meeting minutes or presentations that basic financial matters such as R&D costs or the multibillion-dollar acquisition of Pharmasset Inc., the drug's first developer, factored into how Gilead set the price.”

In a statement provided by a company spokeswoman, Gilead said it disagrees with the conclusion of the Senate committee's report and that patient access is a priority.

“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,” the statement reads.

Gilead also said in the statement that the price of its Hepatitis C drugs is lower today due to rebates and discounts now in place, and a reduction in the length of the treatment course.

The Senate committee's report comes amid a growing debate on the rising cost of specialty drugs and how employers, insurers and consumers can manage them.

While the payers who shoulder the costs question drugmakers' pricing strategies, pharmaceutical firms argue the high prices are necessary to the continuing development of valuable treatments.

Gilead has repeatedly argued that its hepatitis C drugs are worth the price because they cure the disease and require large funding to develop.

“Price is the wrong discussion. Value should be the subject,” Gregg Alton, Gilead's executive vice president for corporate and medical affairs, told Bloomberg L.P. in June.

Despite the promises of cures that some specialty drugs bring, employers are struggling to manage their hefty price tags.

According to a national survey released in March by pharmacy benefit manager Express Scripts Holding Co., spending for specialty drugs increased 30.9% in 2014, the highest increase ever recorded.

And while specialty drugs represent only 1% of total U.S. prescriptions, they made up 31.8% of total spending on prescription drugs last year, Express Scripts found. Sovaldi and Harvoni, as well as Janssen Therapeutics L.P.'s hepatitis C drug Olysio, made up 11.8% of total specialty drug spending, according to Express Scripts.

Government programs are also buckling under the weight of hepatitis C drug prices: According the Senate committee report, Medicare and Medicaid spent more than $5 billion on Sovaldi and Harvoni before rebates in 2014.

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