[NCHC] Where is the Value in Overpricing Innovative Treatments?

Jul 17, 2014

At $1,000 per pill, the price of the new hepatitis C drug Sovaldi has generated much attention. It’s certainly a breakthrough drug and the type of innovation we want  – but it’s also priced at a level that prohibits access for millions of people and undercuts the very innovation and value for which Sovaldi is touted by some.

So as we think about value and innovation in relation to Sovaldi, let’s remember three things:

1)      The price of Sovaldi is socially irresponsible. For the 3% of individuals infected with hepatitis C who will need a new liver without this cure, the value of Sovaldi is unquestioned. But for the millions of infected Americans who are asymptomatic, the $84,000 price tag will cause them to forgo the drug. With a national, concerted public campaign to eradicate hepatitis C, it could be argued that Gilead is failing its social responsibility and taking advantage of a public health crisis. Is that really bringing “value” to the system?

2)      Future cost savings projections are frequently overstated. Projections that an $84,000 drug today will save billions more 20 years from now are just that – merely projections that should not be accepted as fact. Indeed, one report estimates that in California “even at a 20‐year horizon, if all patients infected with hepatitis C are treated with the new regimens, the cost offset will only cover approximately three‐quarters of initial drug costs.”

3)      Sovaldi’s original creator intended to sell the drug at less than half of Gilead’s price. Gilead is reaping the initial investments of a company, Pharmasset, that developed the early versions of Sovaldi. According to documents released by Sens. Wyden and Grassley, Pharmasset intended to sell the drug profitably for $36,000 (133% less than what Gilead is charging.) If Pharmasset considered this price to be a just reward for its investment, then why is Gilead charging more than double that?

Gilead’s pricing of Sovaldi raises questions about how a particular drug is priced. According to a new survey, more than 6 out of 10 likely voters support more transparency when it comes to drug pricing.  Without more transparency around drug pricing and effectiveness, we can’t have an honest discussion about the value of these new drugs.  The time for that discussion is now!