Lawmakers Attack Cost of New Hepatitis Drug

A protest in San Francisco last month against Sovaldi’s price.
Credit...AIDS Healthcare Foundation

A new drug to treat hepatitis C that costs $1,000 a pill has caused rising concern among insurers and state Medicaid programs. It has now also spurred interest from Democratic congressmen whose queries about the drug prompted a sell-off in biotechnology stocks on Friday.

Three Democratic members of the House Energy and Commerce Committee have demanded that Gilead Sciences, the developer, justify the price of its drug, which is called Sovaldi.

“Our concern is that a treatment will not cure patients if they cannot afford it,” the congressmen said in their letter, which was sent on Thursday.

It was signed by Henry A. Waxman of California, the ranking Democrat on the committee, and Frank Pallone Jr. of New Jersey and Diana DeGette of Colorado.

Gilead’s stock fell 4.6 percent, to $72.07 on Friday. Nervous investors took down the shares of some other big biotechnology companies as well, worried that pressure on drug prices would increase. Biogen Idec and Alexion Pharmaceuticals both fell 8 percent, Vertex Pharmaceuticals 5 percent and Celgene nearly 4 percent.

“The fear that Congress may begin a program of meddling, one drug at a time, doesn’t affect just one drug,” said Andrew A. Bogan of Bogan Associates, which invests in science and technology stocks. “It kind of scares everyone.”

Still, many analysts who follow Gilead predicted that the storm would soon pass. They noted that the letter writers were in the minority party in the Republican-controlled House.

“We just look at this letter as a little bit of noise,” said Robyn Karnauskas, a biotechnology analyst at Deutsche Bank.

Gregg Alton, executive vice president for corporate and medical affairs at Gilead, said on Friday that the company would gladly meet with Congress.

“We think the price is fair,” he said in an interview. “It will save the system money long term.”

Three million to four million Americans are estimated to be infected with the hepatitis C virus. Over decades, infection can cause cirrhosis, or scarring, of the liver and liver cancer.

Sovaldi, approved by the Food and Drug Administration in December, is by most accounts a big advance. When taken with one or two older drugs, it can cure more than 80 percent of cases of hepatitis C in as little as 12 weeks — a higher cure rate with shorter treatment duration and fewer side effects than was previously possible.

But some insurers say the system cannot absorb the $84,000 price for a 12-week course of treatment — or $1,000 a daily pill. Gilead probably did not help itself by setting the price at such a round number.

“It’s unprecedented that we have a drug that is this expensive that this many patients can benefit from,” said Dr. Steve Miller, the chief medical officer for Express Scripts, the largest pharmacy benefits manager. “You have a drug that has the potential to break a lot of the payers.”

Dr. Miller said more than half of those infected were uninsured or in Medicaid, in prisons or veterans. That means the costs will fall largely on taxpayers.

He said some health plans were restricting treatment to only the most ill patients.

Gilead says Sovaldi is actually less expensive per patient cured than the previous treatments, once the lower cure rate and severe side effects of those treatments are taken into account.

Sovaldi’s price might also seem reasonable compared to cancer drugs that cost $100,000 a year but prolong lives only a few months, or H.I.V. drugs that cost $30,000 a year but must be taken for life.

Sovaldi, by contrast, is a one-time cost that cures for life. “That’s a pretty good deal,” Mr. Alton said.

But the issue is really not so much about price alone as it is about the total budgetary impact. Because the drug is so effective, many people might use it.

“The worry is that the volume is just going to overwhelm the system,” said Ms. Karnauskas.

Based on early prescribing trends, analysts predict Sovaldi sales in the United States could reach $3 billion to $10 billion this year. That would shatter the record for first-year sales of any drug and would make Sovaldi one of the best-selling drugs in the world.

Gilead argues that such an expenditure will save money over the long run because fewer people will eventually need expensive liver transplants or suffer liver cancer.

But most people with hepatitis C never experience serious liver problems. So many people will be treated who would have done fine without treatment.

A recent analysis by the nonprofit Institute for Clinical and Economic Review concluded that the extra expense of treating all patients with Sovaldi instead of older drugs would not be recouped through lower medical costs even over the next 20 years. Only if treatment were restricted to the patients with more advanced liver scarring would there be a net savings over 20 years, said the institute, which evaluates medical evidence.

Competitors are expected in the market later this year. Insurers hope eventually to play one company against the other to bring down prices.