Gilead Sciences ($GILD) has cracked the door on its pricing for the hepatitis C combo pill it's hoping to roll out next month. And here's the view: No "significant premium" to the current three-drug cocktail that includes Sovaldi, Gilead's current money-minting treatment.
The older regimen, which also includes ribavirin and interferon, runs $95,000 for one 12-week course, Gilead tells Reuters. (Sovaldi, of course, accounts for $84,000 of that.) The new pill's price will be competitive with that--and it's a better therapy to boot, a Gilead executive said.
"We are going to price this fixed-dose regimen based on those costs," EVP Gregg Alton told the news service. "We do plan on launching a better product without having a significant premium."
That means Gilead is unlikely to "break the $100,000 barrier," ISI Group analyst Mark Schoenebaum said in a note on Friday. And that's about on par with what market-watchers have been expecting. Sanford Bernstein's Geoffrey Porges has pegged its list price right at $100,000, while RBC Capital Markets' Michael Yee had been betting on $95,000.
Studies have found that the new combo--Sovaldi plus Gilead's brand-new ledipasvir--can cure up to 99% of hep C patients, with results varying by viral genotype and patients' prior treatments. As with all of the next-generation hep C fighters soon to hit the market, the pill is much easier to tolerate than previous regimens, and it's all-oral.
But the "better regimen, all-but-par price" approach contains one big, fat misdirection: The lion's share of that older protocol's cost is Sovaldi. And that $84,000 tag has payers--and patients who can't get access to it--pulling out their hair in frustration.
For the argument in a nutshell, look no further than Oregon, where state officials are aiming for new restrictions on the drug, and Gilead is lobbying hard against them. According to The Oregonian, Gilead execs jetted over to meet with officials and state lawmakers in advance of a public hearing Monday.
The Gilead argument is, as always, that the super-expensive pill is a cure that will save big money on complications down the road. But Oregon's Medicaid program is worried about its budget now. Because of a waiver it gained in a 1990s Medicaid expansion, the state's program has unusual leeway to decide which treatments to pay for, so Oregon has leverage that other states--and private insurers--don't have.
So, Gilead is wheeling and dealing there, or trying. It says it's offering Sovaldi at Canada-level prices, or about $55,000 per course. But Medicaid officials say there's a string attached to that deal: Oregon would have to cover every patient with a prescription, no prerequisites.
Gilead has offered other payer-by-payer deals; for instance, its contract with the Veterans Administration covers Sovaldi at $47,000. To win coverage in the U.K.--where cost-effectiveness watchdogs usually wring discounts from drugmakers--it priced Sovaldi at $57,000. In March, the Pennsylvania Medicaid program said it had been paying $70,000 for Sovaldi plus two other drugs; that's most likely ribavirin and interferon rather than newer and more expensive alternatives such as Vertex Pharmaceuticals' now-abandoned Incivek. That would put Sovaldi's portion at about $59,000, give or take a few.
Meanwhile, Gilead just inked a Sovaldi access deal with a handful of generics makers, who'll turn out the hepatitis C pill in developing markets at vastly discounted prices. One of the companies involved, Hetero, says it figures on a $300 "benchmark" price.
Gilead is well practiced at withstanding the slings and arrows of pricing critics, what with its experience marketing pricey HIV drugs. But with new competition on the horizon in hep C, it may find itself vulnerable. AbbVie ($ABBV) and Bristol-Myers Squibb ($BMY) could well choose to undercut Gilead's pricing to gain market share. And private insurers might put those companies' meds on their formularies--and kick Gilead's off.
Competitive price discounts wouldn't just win favor with payers, but might help with doctors and patients, too. Consider this: One Oregon patient suffering from cirrhosis fought for 9 months to get a Sovaldi prescription, and now, her insurer is balking at paying for another drug in her cocktail--and her doctor is fed up. "He just went on about how bad Gilead is, how bad insurance is," the 67-year-old Linda Harrison told The Oregonian. "He said his office doesn't have time to do the appeals."
Special Reports: The FDA's drug approvals of 2013 - Sovaldi: Gilead hits pay dirt with a breakthrough hep C drug