Medicare opens door wide for Gilead's $84K hep C drug Sovaldi

Gilead's Sovaldi--Courtesy of Gilead

The most effective weapon to date against hepatitis C, Gilead's ($GILD) new drug Sovaldi, has raised the ire of drug-cost watchdogs worldwide with its $84,000 price tag. That's not stopping the largest U.S. government payer from giving the product a major push. The Centers for Medicare & Medicaid Services (CMS) says in a memo that it will start covering hep C screening for adults at high risk for the virus or for any of its beneficiaries who were born between 1945 and 1965.

Such testing is expected to boost prescriptions of Sovaldi, which cures most patients with 12 weeks of treatment. Ian Somaiya, an analyst at Nomura Securities International in New York, told Bloomberg he predicts the CMS action to increase the rate of hep C diagnoses. "The net of all this points to higher Sovaldi sales," he said.

CMS's decision to cover testing for the virus follows recommendations by the Centers for Disease Control and the U.S. Preventive Services Task Force. The agency's memo notes that baby boomers are most at risk for the virus, and that military veterans account for two-thirds of the patients who suffer from it.

The CMS ruling isn't likely to quell the controversy over Sovaldi's price. Last week, the product prompted a group of insurers, unions, and the AARP to demand a national dialogue on drug pricing. Their move came just days after America's Health Insurance Plans blasted Gilead for setting such a high price for the drug.

Express Scripts CMO Steve Miller

Meanwhile, Merck ($MRK), AbbVie ($ABBV) and Bristol-Myers Squibb ($BMY) are getting ready to launch rival products, prompting some payers to brace themselves for more sky-high prices. Express Scripts CMO Steve Miller--one of the most outspoken critics of Sovaldi's price--said recently that that insurers are already talking with rival drugmakers about pricing, even though the products have yet to be approved.

The controversy doesn't seem to have slowed down Sovaldi's launch, however. The drug brought in $2.27 billion in sales in the first quarter of this year alone, beating analysts' estimates by $1 billion and making it the fastest drug launch in history.

- access the CMS memo here
- here's the Bloomberg story