Author Topic: Sales Soar for Pricey Hepatitis Drug Sovaldi  (Read 209 times)

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Sales Soar for Pricey Hepatitis Drug Sovaldi
« on: April 01, 2014, 09:41:48 AM »
Wall Street Journal

Sales Soar for Pricey Hepatitis Drug Sovaldi
Treatment Costs $1,000 a Day, Posing Threat to Insurers' Bottom Line

ByJonathan D. Rockoff
March 31, 2014 8:16 p.m. ET

A hepatitis C pill from Gilead Sciences Inc. that costs $1,000 a day is on track to notch among the biggest sales ever for the first year of a newly approved drug, showing just how hard it is for insurers to curb the use of pricey life-saving medicines.

The drug, called Sovaldi, is the first in a new generation of hepatitis C therapies that promise to cure more patients than older therapies. It could ring up $5 billion in U.S. sales this year if current prescription patterns hold. Some analysts say the figure might reach $9 billion. By comparison, AbbVie Inc.'s Humira, a treatment for rheumatoid arthritis, was the biggest-selling drug last year with $10.7 billion in world-wide sales.

Such heavy sales for Sovaldi, so soon after the drug's approval just last December, threaten the bottom lines of many insurers, analysts say. Several insurers could see their earnings per share hit by double-digit percentages this year, according Wells Fargo Securities analyst Peter Costa. He figures that hepatitis C treatments will cost the 10 largest publicly traded insurers $798 million more than they did in 2013.

Sovaldi carries a list price of $84,000 for a 12-week course of treatment. The cost has spurred pushback among some payers and public officials, who say the price is too high for a drug with such a broad potential market. Some 3.2 million people in the U.S. are believed to carry hepatitis C—many of whom contracted it through intravenous drug use. Chronic infections that go untreated kill 15,000 Americans each year, and are a leading reason for liver transplants in the U.S., according to the Centers for Disease Control and Prevention.

Molina Healthcare Inc. —which Wells Fargo says is most exposed among insurers because of its large business managing Medicaid for states—is trying to reserve the drug for the sickest patients and is asking the states to take on more of the cost. Pharmacy-benefits manager Express Scripts Inc. is checking with doctors on whether some patients could wait for treatment until rival drugs reach the market and help to push the price down—a first for the company.

And in March, three congressional Democrats asked Gilead to justify Sovaldi's cost; Gilead said its executives met Monday with congressional staffers to address their concerns.

Gilead says doctors and patients seeking Sovaldi have gotten "tremendous access" to the drug through their health plans, despite the concerns some insurers have voiced about the price, because the drug works so well.

Critics "have focused on the per-pill cost or per-bottle cost, but that is really not relevant here. It's how much it costs to cure your patient," said Gregg Alton, Gilead's executive vice president of corporate and medical affairs. By that measure, he said, Sovaldi's price is comparable to older therapies that don't cure as many patients, and is less expensive than liver transplants costing $175,000 or more.

Sovaldi is an especially difficult target for insurers because it is highly effective and has as of yet no rivals.

Sovaldi promises to cure 90% of its targeted patients, who would likely develop liver cancer or require liver transplants if untreated.

Absent new drugs that give them leverage in price negotiations, insurers have few tools to control spending. They can require doctors to prove that a patient truly needs the drug and impose high out-of-pocket charges on patients. But it is difficult for payers to deny coverage of a drug that a doctor says will help a patient.

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