Why does Sovaldi cost $84,000? Gilead Sciences being pressed hard for an answer

Gilead's Sovaldi--Courtesy of Gilead

Payers, politicians and some regulators have been balking at the $84,000 price tag on Gilead's ($GILD) hepatitis C treatment Sovaldi ever since it hit the market in January. Now two top members of Congress are demanding that the company appear at a congressional hearing to explain the product's high price.

In a letter sent yesterday to the House Committee on Energy and Commerce, Representatives Henry Waxman (D-CA) and Diana DeGette (D-CO) expressed concern that Sovaldi (sofosbuvir) will be too big a drain on Medicare. They cited new research from Georgetown University and the Kaiser Family Foundation that found that Sovaldi will increase Medicare Part D drug spending by as much as $6.5 billion in 2015 alone. That would cause overall Medicare drug spending to rise by 8%.

"These spending increases will be reflected in higher out-of-pocket costs and premiums for seniors and higher taxpayer costs," the representatives wrote.

In March, Waxman and other House members asked Gilead to attend a briefing, which it did, but the legislators did not find the company's justification for Sovaldi's price "compelling," according to Waxman and DeGette's letter. Gilead did report that it provides substantial discounts on the drug overseas, and public records show that Medicaid and VA health programs also pay less for the drug. "Regrettably, these discounts are not available to Medicare Part D plans," Waxman and DeGette wrote.

Gilead has not yet responded publicly to the request, but the company has remained steadfast in defending Sovaldi's price, even as protests continue to emerge around the world. Earlier this week, the U.K.'s National Institute for Health and Care Excellence (NICE) said that it's leaning toward not recommending Sovaldi for routine use until Gilead provides more complete evidence of the drug's effectiveness, particularly in certain subgroups of patients with hepatitis C. A final decision is expected in October.

And private insurers in the U.S. continue to speak out against Gilead's pricing strategy. In May, the insurance industry's leading trade group, America's Health Insurance Plans, blasted Sovaldi's cost as "astronomical" and "not sustainable for consumers, innovation or society." Pharmacy benefits manager Express Scripts ($ESRX) is even trying to organize payers against using it when a competitor hits the market, saying at the current price the drug "will break the country."

The controversy hasn't slowed down Sovaldi's takeoff, however. In the first quarter of this year, Gilead recorded $2.3 billion in Sovaldi sales--$1 billion more than analysts had expected. It was the fastest drug launch ever, and it helped drive Gilead's total first-quarter revenues to $5 billion, up from $2.5 billion in the same quarter a year ago.

- access Waxman and DeGette's letter here
- read more at Bloomberg

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