Wednesday, April 16, 2014

Hep C drug Sovaldi costs $1000 a day: drug maker can charge monopoly pricing; US Congress bitches about that but also wont do anything to change patent system


"The Sovaldi controversy reached fever pitch in March, when U.S. Representative Henry Waxman, a Democrat from California, and several of his colleagues in Congress wrote Gilead CEO John Martin a searing letter demanding to know why the drug costs so much. Shortly thereafter, Steven Miller, the chief medical officer of St. Louis, Mo.-based Express Scripts, said his company was putting together a coalition to refuse to cover Sovaldi after lower-priced competitors hit the market, which could happen later this year. And administrators for some Medicaid plans are so worried they won't have enough resources to pay for any of the new treatments that they are pleading for financial assistance from their state legislators.

It may be tempting to pronounce Gilead guilty of prioritizing profits over patient need, but many Wharton experts say the blame for high drug prices should be placed on the U.S. health care system instead. "Companies obviously have an obligation to their shareholders to maximize profits," says Patricia Danzon, Wharton professor of health care management. "That generally means doing the best that you can within the reimbursement environment that exists in any particular country. In the U.S., we have established a system of reimbursement for pharmaceuticals that unfortunately puts absolutely no limits on the prices that companies can charge."

Gilead declined to be interviewed by Knowledge@Wharton but said in a statement: "We believe the price of Sovaldi reflects the value of the medicine. Sovaldi represents a significant therapeutic advance over other available therapies, as it has shortened the duration of treatment to as little as 12 weeks and has reduced or completely eliminated the need for interferon injections, depending on the patient's genotype." The company added that the price of Sovaldi plus interferon and ribavirin (which are used in conjunction) is consistent with that of protease inhibitors that are often used to treat hepatitis C."

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