Gilead faces legal action in Massachusetts if it doesn't cut hep C prices: State AG

Gilead Sciences ($GILD) is facing more hepatitis C pushback from state officials. The Massachusetts attorney general is warning that it will take legal action against the California-based company if it doesn't cut the price of its blockbuster antivirals Sovaldi and Harvoni.

Massachusetts Attorney General Maura Healey

As the Boston Globe reports, Attorney General Maura Healey wrote Gilead CEO John Martin last week, saying that Sovaldi's list price of $84,000 and Harvoni's $94,500 "may constitute unfair trade practice" that violates state law.

The AG's office is considering a lawsuit alleging unfair commercial conduct, the letter warns.

State officials around the country have protested the prices on Gilead's highly effective hep C meds since the drugs first hit the market. Medicaid patients and prison inmates make up large segments of the hep C population, putting state governments on the hook for millions in new spending.

Many cash-strapped Medicaid plans have set strict limitations for access to the meds, sometimes limiting reimbursement to the sickest patients. Some states, such as Texas, have refused to pay for the drugs altogether.

Meanwhile, federal lawmakers have slammed Gilead for the hep C costs, saying that the company put its profits ahead of patients' access to treatment. Sen. Bernie Sanders (I-VT), now a presidential candidate, actually called on the FDA to break Gilead's hep C patents and allow generics makers to make or import knockoffs for government use.

Though Gilead and fellow drugmakers point to R&D spending and investment as justification for high drug prices, the report stated, Gilead's considerations in pricing Sovaldi were different. The company focused on pent-up demand for hep C treatment, and it wanted to set a "floor" for the follow-up products it was planning, including Harvoni and a late-stage follow-up combo med, the report said.

"[I]t was always Gilead's plan to max out revenue," Sen. Ron Wyden (D-OR) said in releasing a Senate Finance Committee investigation of Gilead's pricing. "[A]ccessibility and affordability were pretty much an afterthought."

The Massachusetts threat is the first from a state attorney general to suggest actual legal action against the company, however. Healey contends that Gilead's pricing on its meds--which amount to cures for more than 90% of patients--is keeping the treatment out of the hands of patients who need it most. And that, in turn, is a big threat to public health.

The drugs' costs essentially allows hep C "to continue spreading through vulnerable populations, as opposed to eradicating the disease altogether," Healey wrote. And that, in turn, "results in massive public harm."

Gilead has consistently maintained that its drugs are priced fairly, because they save the healthcare system much more money in the long run, by preventing liver transplants and cancer. "Gilead responsibly and thoughtfully priced Sovaldi and Harvoni," a spokeswoman said when the Senate report was released. The company also has assistance programs to help uninsured patients get the drug, she said.

Also, it's worth noting that the drugs' list prices are just that. Though Gilead had considerable pricing power when Sovaldi and Harvoni were first approved, when a rival cocktail from AbbVie ($ABBV) came to market, payers pitted the two companies against each other for discounts. Analysts have estimated rebates of up to 40% off the list prices.

Gilead did consider pricing Sovaldi quite a bit higher, the Senate found in its investigation. It weighed prices ranging from $54,000 to $115,000. It backed off the higher end on worries about an outcry from patient advocates and other public groups.

- see the Boston Globe story

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