Betting on hepatitis C: how financial speculation in drug development influences access to medicines

We would like to clarify a few points addressed in this week’s BMJ analysis.

First, our focus is to improve care for HCV-infected individuals. We have accomplished this by bringing to market three breakthrough therapies that offer a cure to the vast majority of patients suffering from hepatitis C, a life threatening and debilitating disease. In two and a half years, more than one million HCV patients have been treated with our HCV therapies throughout the world. We believe we have cured more patients in this timeframe than in the previous 20 years.

Second, our therapies were developed by Pharmasset and Gilead – with no funding from the NIH, the Veterans Association or Emory. Pharmasset did receive a small grant from the IRS for $244,479 under the Qualifying Therapeutic Discovery Project program for the development of sofosbuvir as a tax incentive. In addition, we continue to innovate and improve upon our own medicines. We are actively working on a third single tablet regimen being evaluated in four Phase 3 trials among patients who have previously failed direct-acting antiviral treatment.

Third, the statement that Gilead set a price based solely on internal deliberations is not accurate. Giead conducted extensive research with a broad group of private and public payers to determine a fair and reasonable price. After these discussions, Gilead set the wholesale acquisition cost (WAC) for Sovaldi at $84,000. At this price, a regimen using 12 weeks of sofosbuvir and 12 weeks of pegylated interferon and ribavirin cost $94,000, a price that was neutral to the price of the standard of care at the time (protease inhibitor, pegylated interferon and ribavirin), even though the Sovaldi regimen provided significant improvements over the prior standard of care in terms of cure rates, safety and duration of therapy. Companies set a WAC price, a list price at which wholesale distributors purchase drug products. The WAC price then serves as the basis for negotiated discounts and rebates between manufacturers and payers as competition develops in a therapeutic space. Mandatory discounts are also given to payers like Medicaid. This process is standard in the industry and in this case most payers receive substantial discounts off the list price with the steepest discounts going to government payers like Medicaid and the VA. Both the VA and Medicaid, for example, currently receive discounts in excess of 50% on Harvoni.

One point of clarity -- the statement that Pharmasset initially considered a price of $36,000 for sofosbuvir is misleading. First, the final version of the document you reference provided a range of $36,000-$72,000. Second, based on a review of Pharmasset’s materials and discussions with key Pharmasset officials, it is clear that Pharmasset anticipated initial pricing of the regimen sofosbuvir would be used in would be priced neutral to the average standard of care regimen at the time. As of late 2011, that cost was approximately $72,000 for up to a 48 week duration of therapy. Pharmasset assumed that when sofosbuvir was launched the regimen price would remain at $72,000. Therefore, if sofosbuvir was approved for use as monotherapy, it would cost $72,000. If sofosbuvir was approved for use with other agents, Pharmasset assumed sofosbuvir would merit at least 50 percent of the regimen’s value at a minimum cost of $36,000, while an additional $36,000 would cover the use of other agents. In other words, Pharmasset used the exact same methodology as Gilead for creating a pricing model for sofosbuvir. With the discounts currently in place, most payers pay well below the prices contemplated by Pharmasset.

Fourth, the analysis fails to mention that Gilead took a considerable risk when acquiring Pharmasset. At the time of the acquisition, Pharmasset only had data from Phase 2 studies in genotype 2 and 3 patients. Pharmasset did not have data on genotype 1 patients, which present 60 percent of patients who have chronic hepatitis C and by far the biggest opportunity to cure the most patients.

Finally, we stand behind the pricing of our therapies because of the benefit they bring to patients and the significant value they represent to payers, providers and our entire healthcare system by reducing the long-term costs associated with managing chronic HCV. Our medicines save the healthcare system money while curing patients of a deadly disease. Enabling patient access to our HCV therapies is a top priority for Gilead. In the U.S., most payers receive substantial discounts off the list price with the steepest discounts going to government payers like Medicaid and the VA. In Europe, we have negotiated sustainable and affordable agreements that have resulted in significantly increased treatment rates, even in countries with challenging economic circumstances. In the UK, we have established a price that NICE agrees meets the value threshold. We remain ready and willing to continue discussions with the government and NHS England to bring our HCV treatments to patients as quickly as possible.

However, drug pricing cannot be looked at in isolation, but rather must be placed in the context of a country’s healthcare system, the cost incurred to the healthcare systems with no treatment or inferior treatment, and how countries successfully incentivize and allocate research and development costs to spur pharmaceutical innovation. From 1994-2014, the pharmaceutical industry had invested $50 billion in the development of HCV drugs. The overwhelming majority of these drugs failed within the preclinical and Phase II stages of development, and only 1.9% made it to the market. This investment continues as companies look for ways to improve upon existing therapies.

It's clear that governments, healthcare providers, healthcare systems, payers and healthcare advocacy groups recognize the opportunity to treat and cure many more hepatitis C patients now that we have simple, safe, and highly effective medicines. Gilead is working together with these groups on a number of fronts with the aim of bringing all diagnosed yet untreated patients into care over time while recognizing capacity and budget constraints.

Gregg Alton
Executive Vice President
Commercial and Access Operations ALA, Corporate and Medical Affairs
Gilead Sciences, Inc.