Two U.S. senators - one Republican, one Democrat - said in a report Tuesday that Gilead Sciences had priced its groundbreaking hepatitis C medicines to maximize profit and "broad, affordable access was not a key consideration" in setting prices.
Sen. Ron Wyden (D., Ore.) said that the cost to taxpayers for high-priced drugs was "unsustainable," and that Gilead's "calculated scheme" for pricing had no relation to research costs and was based only on what the market would bear "regardless of the human consequences."
Sovaldi, the first drug that cures some forms of hepatitis C, was priced at $1,000 per pill, or $84,000 for a once-a-day, 12-week course of treatment. The drug Harvoni, which followed and cures more forms of the liver-damaging disease, was priced at $94,500 for the course of treatment. In the first nine months of 2015, Gilead reported $10.1 billion in sales of the two drugs in the United States.
Sen. Chuck Grassley (R., Iowa), finance committee chairman and coauthor of the report, said he hoped greater price transparency would lower costs and improve access. "In the case of Sovaldi, the marketplace reacted very badly," Grassley said.
Hepatitis C affects about 5.2 million Americans and 140 million people worldwide. Gilead justifies its prices by saying its cure is cheaper and better than previous treatments for a disease that often leads to death.
"We respectfully disagree with the conclusions of their report. . . . Gilead responsibly and thoughtfully priced Sovaldi and Harvoni," Gilead spokeswoman Michele Rest said.
Gilead's stock price has risen from $73.06 on Dec. 6, 2013, the day Sovaldi received approval from the U.S. Food and Drug Administration, to Tuesday's closing price of $105.85. Gilead stockholders might view its pricing decisions the same way they might view Apple's pricing for iPhones, because each company's fiduciary duty is to maximize profits.
However, many people view health care differently from smartphones. Patients and taxpayers pay much of the cost of drugs through Medicare and Medicaid, and fund basic research through the National Institutes of Health.
"Gilead is not a quasi-public, quasi-charitable organization," said Erik Gordon, a University of Michigan business professor who follows the pharmaceutical industry. "Nobody should be surprised that a for-profit firm seeks to maximize its revenue from the projects that are successful."
Gilead bought Pharmasset Inc. for $11 billion in 2011 to get its hepatitis compounds. One of the inventors of Sovaldi is Bucks County researcher Michael Sofia, who helped found Arbutus Biopharma after leaving Gilead.
The Senate report said that in the 18 months after Sovaldi's approval, Medicare spent nearly $8.2 billion before rebates on Sovaldi and Harvoni, with monthly spending increasing more than sixfold.
Drug companies are among the biggest spenders on lobbying of federal politicians, which is part of why Medicare, which covers health care for seniors, is prohibited by law from negotiating for lower drug prices.
Medicaid, which provides health insurance for lower-income citizens and is jointly administered by states, can negotiate prices. But Gilead's prices - and resistance to discounts - prompted state officials to cover only 2.4 percent of the more than 700,000 Medicaid patients who might have benefited from the drug, according to the Senate report.
Included in the Senate report were letters from 10 states' Medicaid officials.
Theodore Dallas, secretary of Pennsylvania's Department of Human Service, wrote that Gilead's resistance to price cuts prompted the state's Medicaid plan to list AbbVie's competing product as the preferred drug and allowed Sovaldi or Harvoni to be prescribed "only when medically necessary."
Still, from Jan. 1, 2014, through Aug. 8, 2015, the cost to the state to treat 2,041 recipients of all hepatitis C medicines was $186.1 million.