At $594 Per Dose Gilead Sciences, Inc. (GILD) Hepatitis Drug Is Too Costly For Veterans Affairs Department

Gilead Sciences, Inc. (NASDAQ:GILD)‘s hepatitis C drug Sovaldi, which comes at a cost of $1,000 a pill, has proved to be a breakthrough that reduces treatment time to 12 weeks and at reduced risk compared to a year-long treatment option available. However, this heavily-priced therapy has raised concerns and criticisms across the U.S. by payers and consumer support groups.

To consider the impact of Sovaldi’s $84,000 12-week treatment cost, the Veterans Affairs Department provides this therapy only to the sickest patients who need it. The Department is the largest single provider of hepatitis C care in the U.S., which enabled it to negotiate more than 40% discount to the $594 per-dose price with Gilead.

VA and Hepatitis C Care

The Veterans Affairs Department added Sovaldi to its formulary in April 2014. It treated around 5,400 veterans at a cost of $370 million with Sovaldi in fiscal 2014, and has asked Congress for $1.3 billion to treat another 30,000 patients with Sovaldi and other new hepatitis C drugs.

But it would be “cost prohibitive” for the Veterans Health Administration to treat all of the 174,000 hepatitis C patients in its health system. Hence, the VA Department favors a conservative approach of reserving Sovaldi and Olysio only for those needing a transplant or with advanced liver disease. The VA has negotiated a price of $413 per pill of Olysio with Janssen Therapeutics.

The Pricing Concerns

Gilead Sciences, Inc. (NASDAQ:GILD) has also been accused by the U.S. lawmakers and advocates for significant price differences in overseas territories. A 12-week Sovaldi treatment costs $55,000 in Canada and $66,000 in Germany. Meanwhile, Gilead has also been reported of pursuing talks to make the generic versions available just for $2,000 in India.

Amid criticism, the company maintains that Sovaldi cures a life-threatening disease, eliminating the need for traditionally available long-term therapies for other chronic diseases and also saves significant post-operative expenses after liver transplants. The treatment is priced similar to year-long hepatitis C regimens.

Lisa Ray

Lisa Ray primarily covers Retail and Healthcare. Lisa Ray has completed her MBA (Finance) and an avid market tracker. She is a stock market analyst who closely tracks US markets along with other global markets like India. She has been expressing her views for years about markets and also advises various clients.

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