Germany says it is unclear whether Gilead's Sovaldi prevents liver cancer

Gilead's Sovaldi--Courtesy of Gilead

Gilead Sciences ($GILD) has been trying to soothe payers, unhappy over the price of its hep C blockbuster Sovaldi, with the argument that it will save them money by preventing them from paying for transplants for patients who develop cancer. But now the U.S. drugmaker has run into Germany's Institute for Quality and Efficiency in Health (IQWiG), the toughest among Europe's drug price watchdogs, and it says the evidence for that claim is unclear.

"It is currently accepted that patients with no detectable hepatitis C virus in the blood are at lower risk of liver cancer," IQWiG said in a statement Bloomberg reports. "However, it is unclear how many cases of liver cancer can in fact be prevented by sofosbuvir."

Germany's IQWiG is notorious for its resistance to new high-priced medications, and some drugmakers have simply pulled their drugs from the market rather than accept the discounts it that result from its decisions. The agency's decisions determine whether new drugs can wear premium price tags. If the treatments aren't deemed superior to older drugs, then companies' pricing power is virtually nil.

But Germany is a large market and the government will rely on the recommendation and it will affect whether Gilead can get the €49,000 ($68,000) for a 12-week course that Gilead has put on Sovaldi (sofosbuvir) there. That is $16,000 less than it charges in the U.S. where demand has been so brisk that in its first full quarter on the market, it racked up $2.3 billion in sales.

Gilead Chief Operating Officer John Milligan

Sovaldi has been shown to cure about 90% of the patients who take it and Gilead has been using the avoidance of liver transplants as a key selling point in negotiations with payers. Chief Operating Officer John Milligan has said that they understand the big picture. "When you talk to them about the long-term benefits, they recognize they're not going to have to worry as much about liver transplants and other care they're going to have to give," Milligan told Bloomberg as rumbles over price were escalating. A new liver costs about $300,000 in the U.S., and that's before factoring in the price of drugs to make a transplant work. "For most of these plans, the risk/benefit seems to be positive, based on our conversations."

The German regulator is certainly not the first paymaster to balk at the price of the daily pill. Express Scripts ($ESRX) in the U.S. is so unhappy about the cost of the drug needed by millions of people in the U.S., that it has been trying to rally other payers around the idea of cutting Sovaldi out of the picture as soon as a competing drug from AbbVie ($ABBV), Bristol-Myers Squibb ($BMY) or others hit the market.

"What they have done with this particular drug will break the country," Express Scripts CMO Steven Miller told Bloomberg last month. "It will make pharmacy benefits no longer sustainable. Companies just aren't going to be able to handle paying for this drug."

Congressional leaders have also raised concerns about what the cost will mean for Medicaid programs in their states. An expert panel in California that assesses new treatments voted Sovaldi a "low value" treatment, not because isn't effective, just because of its $1,000-a-pill cost. But so far, Gilead has doctors and patients on its side, who have been waiting for a more effective treatment with fewer side effects to deal with the chronic condition.

- here's the Bloomberg story

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