(Adds company comment, details of Egypt price deal, updates
By Bill Berkrot and Deena Beasley
March 21 U.S. lawmakers have asked Gilead
Sciences Inc to explain the $84,000 price tag of its
new hepatitis C drug Sovaldi, which is encountering resistance
from health insurers and state Medicaid programs.
The news pushed shares of Gilead down as much as 6 percent
on Friday and sparked a sell-off among other leading biotech
names on concerns they may have a harder time pricing new
medicines. Biogen Idec fell 8 percent, Amgen Inc
dropped 3 percent and Celgene Corp lost 3.7
Some health insurers, including the government's Medicaid
program for the poor, are holding off on authorizing use of
Gilead's new hepatitis C drug. While the treatment has been
shown to cure many patients, the payors are balking at the
prospect of covering the therapy for millions of people at a
cost in the billions of dollars.
Separately on Friday, Gilead confirmed that it had agreed to
supply the new drug in Egypt - which has the world's highest
prevalence of the virus due to use of contaminated needles in
the 1970s - at around $900 for a 12-week course of therapy, or
about 1 percent of the U.S. price.
The company has proposed a system of worldwide tiered
pricing based on a country's per capita gross national income.
Sovaldi's U.K. price is about $57,000, while the price in
Germany is around $66,000, Gilead has said.
A letter to Gilead from Democrats in the House Energy &
Commerce Committee, including ranking member Henry Waxman, asks
for information on the company's pricing methodology and its
impact on public health.
Sovaldi is seen as a breakthrough in the treatment of the
serious liver disease. It has been shown to raise cure rates and
cut treatment duration with fewer side effects than older
medicines, but critics maintain that a price of $1,000 each is
too high for an easy-to-make pill needed by millions.
Gilead, in an emailed statement, said it has been working
with a number of stakeholders, including federal and state
officials, and looks forward to meeting with members of Congress
to address concerns about Sovaldi.
The drug, approved by the Food and Drug Administration late
last year, is expected to post record-breaking sales in its
first year on the market.
"What is really scaring folks is the volume," ISI Group
analyst Mark Schoenebaum said on a conference call, referring to
the fact that more than 3 million Americans are believed to be
infected with the hepatitis C virus. He said sales of Sovaldi
will total between $7 billion and $12 billion this year alone.
The head of commercial business at health insurer WellPoint
Inc said the company is working with regulators and drug
manufacturers to bring prices for hepatitis C drugs down to a
"Our concern is that a treatment will not cure patients if
they cannot afford it," the committee letter, addressed to
Gilead Chief Executive John Martin, said. It asked that the
company provide a briefing no later than April 3.
COMBO DRUG RAISES PRICE FURTHER
The letter cited a Reuters report noting that doctors are
combining Sovaldi with a newly approved drug from Johnson &
Johnson called Olysio, raising the treatment cost to
"The costs are likely too high for many patients, both those
with public insurance and private insurance," the letter said.
It added, "The extraordinarily high cost of your drug raises
additional concerns because of the role of the federal
government in speeding up its approval."
Sovaldi was approved on an expedited basis by the FDA after
being designated as a "breakthrough therapy."
Answers being sought by committee Democrats include the
methodology used by Gilead to establish Sovaldi's price and the
public health impact of insurers' and public health programs'
decisions not to cover Sovaldi for all patients with hepatitis
Sovaldi is the first in a wave of expected new all-oral
treatment regimens for the hepatitis C virus that have shown
impressively high cure rates, well in excess of 90 percent, in
The likely launch over the next two years of drugs similar
to Sovaldi, under development at companies like AbbVie,
Bristol-Myers Squibb Co and Merck & Co, could
trigger cost competition, Schoenebaum said.
"We are going to go from a monopoly to seven or eight
players," he said. "In my mind that is what will drive pricing
These new drugs are meant to replace older treatment
regimens that include the injected drug interferon, which causes
miserable flu-like symptoms that have led thousands of patients
to delay treatment and wait for the newer medicines.
The older drugs cure about 75 percent of those treated and
take 24 to 48 weeks of treatment. The new drugs have been shown
to cure patients in 12 weeks or less.
JP Morgan analyst Geoff Meacham noted that there was no such
outcry from Congress following the last wave of new hepatitis C
treatments that could cost about $100,000, cured fewer patients
and came with far worse side effects.
"Given the very high cure rates with Sovaldi, Gilead is in
position to 'guarantee a cure' to payers, thereby dramatically
reducing the downstream economic burden of a liver transplant,
risk of liver cancer or cirrhosis," Meacham said in a research
Gilead shares fell $3.46, or 4.6 percent, to close at $72.07
after being down as much as $70.85 earlier in the day. Over the
past year the stock has gained 70 percent.
(Additional reporting by Michele Gershberg and Deena Beasley;
Editing by Michele Gershberg, David Gregorio, Andrew Hay and