Maker of $1,000 hepatitis C pill put profit before patients: U.S. Senate

Gilead Sciences Inc. headquarters in Foster City, Calif., is seen in this 2009 file photo. (AP Photo/Paul Sakuma)

WASHINGTON -- The makers of a breakthrough drug for hepatitis C put profits before patients in pricing the $1,000 pill that cures the liver-wasting disease, Senate investigators said Tuesday.

A bipartisan report from the Senate Finance Committee concluded that California-based Gilead Sciences was focused on maximizing revenue even as the company's own analysis showed a lower price would allow more patients to be treated.

Although the report focused on just one drug that has made headlines in the last few years, the lawmakers who led the investigation said their findings are a warning about what's to come with other high-priced treatments for cancer, diabetes, Alzheimer's and HIV.

"I'm telling you, this is the future," said Sen. Ron Wyden, D-Oregon. "The future is going to be about specialty drugs."

In a statement, Gilead said it disagreed with the report's conclusions.

The company's first breakthrough pill was called Sovaldi; priced at $1,000 per pill, or $84,000 for a full course of treatment. Gilead has since introduced a more expensive next-generation pill called Harvoni, which is highly effective and simpler for patients to take. That one is priced at $94,500 for a course of treatment.

"Gilead responsibly and thoughtfully priced Sovaldi and Harvoni," said the company's statement, noting that more than 600,000 patients have been treated worldwide since the introduction of Sovaldi two years ago.

But Wyden and Sen. Chuck Grassley, R-Iowa, said their 18-month investigation found that the high price tag significantly limited patient access and heaped huge costs on federal and state health care programs. At least 27 state Medicaid programs restricted Sovaldi's use for only the sickest patients.

Hepatitis C is a viral infection that affects some 3 million people in the U.S. and claims more lives here than AIDS. Patients say the disease feels like a bad flu that never goes away. While the illness advances gradually, it can ultimately destroy the liver, requiring a transplant to save the patient's life. The virus is primarily spread by contact with infected blood.

More than three out of four infected adults are baby boomers, the age group now entering Medicare. That program will spend will spend more than $9 billion this year on drugs for hepatitis C, according to government estimates released prior to the Senate report.

Although professional medical societies recommend the Gilead drugs as first-line treatments for anyone with hepatitis C, the report found that the high cost resulted in less than 3 per cent of the potentially eligible Medicaid beneficiaries getting treatment in 2014. Medicaid is the federal-state health program for low-income people.

Other conclusions from the report:

-- Gilead priced its first hepatitis C drug -- Sovaldi -- with an eye toward maximizing future returns from its follow-on medication, Harvoni.

-- Gilead offered only meagre supplemental discounts to state Medicaid programs, and conditioned those on the states' dropping any restrictions on patient access. The supplemental discounts of around 10 per cent would have been on top off other discounts that Medicaid programs get by law.

"The evidence shows the company pursued a calculated scheme for pricing and marketing its hepatitis C drug based on one primary goal - maximizing revenue - regardless of the human consequences," said Wyden.

The price of drugs is the public's top health care concern in opinion polls, and the 2016 presidential candidates are increasingly paying attention. Wyden and Grassley steered clear of policy recommendations but said it's an issue the Senate must grapple with. The Finance Committee, of which both senators are senior members, oversees government health care programs.

The pharmaceutical industry says the high price of new drugs reflects the cost of research and development. Although innovative medications are expensive, they can reduce future medical costs by helping patients avoid hospitalization and surgeries. Gilead, in explaining its pricing for Sovaldi, has said it compares favourably on a "cost per cure" basis with older drugs that were much less effective in eliminating the disease.

The cost pressure from hepatitis drugs on private insurers and government programs is expected to ease as competitor drugs gain a footing in the market. However, Grassley and Wyden said the same sort of financial crisis is likely to arise with other new medications.

One approach that may find support from Republican and Democratic policymakers is requiring greater disclosure from drugmakers about their costs and pricing. That could be coupled with research on the benefits of the newest drugs, to get a better idea of their real value.

Grassley said he hoped the investigation would lead to a policy discussion. As far as the pharmaceutical industry, he said drug makers need "to think about things other than pricing."