Massachusetts official challenges Gilead's hepatitis C drug prices

(Reuters) - Massachusetts’ attorney general is studying whether prices of Gilead Sciences’ blockbuster treatments for hepatitis C violate state law, according to a letter the prosecutor sent to the California-based drugmaker.

The letter from the state’s Attorney General Maura Healey to Gilead Chief Executive Officer John Martin, dated Jan. 22, asked the biotechnology company to reconsider its pricing for Sovaldi and Harvoni, Gilead’s treatments with list prices of $84,000 and $94,500, respectively, per course of treatment.

“My office is considering whether Gilead’s pricing strategy with respect to Sovaldi and Harvoni may constitute an unfair trade practice in violation of Massachusetts law,” Healey said in the letter, a copy of which was viewed by Reuters.

Healey accused Gilead of pricing the drugs “in a manner that effectively allows hepatitis C to continue spreading through vulnerable populations, as opposed to eradicating the disease altogether,” the letter said.

Gilead spokeswoman Amy Flood said the company received Healey’s letter and requested a meeting to discuss the issues.

“We agree with the attorney general about the importance of helping all hepatitis C patients – and that the advent of safe, effective regimens means we can now consider the possibility of eradicating the disease,” Flood said.

Insurers, politicians and patient groups have denounced prices of the two treatments, which can cure well over 90 percent of patients with the liver disease.

Gilead contends that the drugs greatly reduce long-term healthcare costs by preventing liver cancer and the need for transplants. More than three million Americans are believed to have the virus.

Healey said a U.S. heroin epidemic has fueled rising hepatitis rates in the prison population as the virus can be spread by infected needles, and that state-run prisons are not eligible for discounts available to federal programs.

“When you make a deliberate business decision that maximizes profit in a way you know will limit patients’ access to that treatment ... it raises questions whether that is a fair practice under our consumer protection laws,” Healey told Reuters.

“I hope we will have productive conversations. Gilead will make record profits even at a lower price,” Healey added.

RBC Capital Markets analyst Michael Yee said the threatened action amounted to more political rhetoric.

“Since when is it a crime to have cured a global epidemic afflicting millions of patients, and the price is the same as the older drugs, which had less cure and bad side effects?,” Yee asked.

Reporting by Ransdell Pierson and Bill Berkrot in New York; editing by Jonathan Oatis, Matthew Lewis and G Crosse