Payers hit back at Gilead for $94,500 price tag on brand-new hep C combo pill

So you thought Gilead's ($GILD) Sovaldi was expensive? Get ready for Harvoni, the company's all-oral hep C combo regimen that won FDA approval on Friday. The cost? $94,500 for a 12-week course of treatment.

Courtesy of Gilead

The price for the cocktail--which combines NS5A inhibitor ledipasvir and Sovaldi, a drug that recently became the fastest-ever to reach blockbuster status--is already sparking pushback from doctors, payers and consumers alike. Many were up in arms over Sovaldi's own $84,000 price tag since that drug rolled out early this year. And some have wasted no time letting their new critiques fly.

The National Coalition on Health Care, for one, wrote to Congress to decry the price. With more than 3 million Americans living with hep C, Harvoni "threatens to impose staggering costs on our healthcare system," the letter states. And that's no exaggeration: According to pharmacy benefits manager (PBM) Prime Therapeutics, the coming prescription wave could increase the hep C cost burden on health plans by as much as 40% in 2015--and that's on top of a record-breaking 2014.

"If pharma continues to price based on what the market will bear, I promise you it's not sustainable," Steven Miller, chief medical officer at PBM Express Scripts ($ESRX), told The Wall Street Journal. "We need to start the debate about how we get to a more sustainable model" of drug pricing.

Miller threatened to take matters into his own hands a few months back with talk of a coalition that would exclude Sovaldi from formularies until rival drugs hit the market and forced prices down. He's not the only one to explore newfangled ideas for cost control. Payers' approaches to reducing the Sovaldi cost burden have so far ranged from reserving the drug for only the sickest patients to demanding financial assistance from state health agencies.

Meanwhile, Gilead has stuck by its claims that the benefits of next-gen Sovaldi prevent costlier procedures--like liver transplants--thereby saving the healthcare system money in the long run. Harvoni's efficacy may strengthen that case on its way to what analysts predict will be $10 billion-plus in peak sales: In three Phase III studies on patients with the tough-to-treat genotype 1 variant of the virus, the combo posted cure rates as high as 99.1%.

And as ISI Group analyst Mark Schoenebaum wrote in a note to investors, backing Gilead's own assertions, a big chunk of patients won't need a full 12-week course to cure the virus. While "12 weeks appears recommended for all patients without cirrhosis (naïve and experienced) and 24 weeks for all with cirrhosis," 45% of patients would likely receive 8 weeks of therapy for $63,000, the analyst said. Based on those percentages, Schoenebaum estimated an average price per Harvoni patient of about $80,000.

- get more from the WSJ (sub. req.)
- read the National Coalition on Health Care letter (PDF)
- see Prime Therapeutics' release

Special Report: The new drug approvals of 2013 - Sovaldi - Gilead