Gilead Sciences executives were acutely aware in 2013 that their plan to charge an exorbitantly high price for a powerful new hepatitis C drug would spark public outrage, but they pursued the profit-driven strategy anyway, according to a Senate Finance Committee investigation report released Tuesday.
"Let's not fold to advocacy pressure in 2014," Kevin Young, Gilead's executive vice president for commercial operations, wrote in an internal email. ‘‘Let’s hold our position whatever competitors do or whatever the headlines."
Gilead gained federal approval for its drug Sovaldi in late 2013 and ultimately settled on the price of $84,000 for a 12-week course of treatment. To the company, that price seemed to deliver the right balance: value to shareholders while also not so high that insurers would "hinder patient access to uncomfortable levels," according to internal documents. But they also got more than they bargained for: an outpouring of outrage from the public, a backlash from government and private payers, and political scrutiny.
The 18-month Senate committee investigation reviewed more than 20,000 pages of company documents.
“The documents show it was always Gilead’s plan to max out revenue, and that accessibility and affordability were pretty much an afterthought," said Sen. Ron Wyden (D-Ore.), who co-led the investigation with Sen. Charles Grassley (R-Iowa), in a news conference.
In a statement released Tuesday, Gilead disagreed with the conclusions of the report, saying that the price was "in line with previous standards of care.” The company noted that it has programs in place to help uninsured patients and those who need financial assistance access the treatments. More than 600,000 patients around the world have been treated with Gilead’s hepatitis C drugs since 2013, according to the company.
Here are four key takeaways from the investigation:
1. It could have been priced at $115,000 for a course of treatment.
Gilead considered a range of prices for Sovaldi and weighed the value to its shareholders against the "reputational risks," meaning the potential outrage from patients, physicians and payers. The potential prices ranged from $50,000 to $115,000.
Executives believed a $50,000 price would build good will and ensure easy access to the drug because it would be covered by most plans. But it would cause "significant foregone revenue," and activists would still critique the price, even at this relatively low level.
At $115,000, executives were concerned about "external considerations" and predicted: "High levels of advocacy group criticism and negative PR/competitive messaging could be expected at $115K and it would be increasingly difficult to manage at these levels."
2. Gilead priced Sovaldi partly based on the expectation it would set a benchmark for the next drugs in the pipeline.
A company presentation noted that Gilead has "considerable pricing potential" for Sovaldi, but that future pricing for next-generation drug launches would be limited by competition -- what it referred to as a second wave of treatments.
"Wave 1 will set a price benchmark against which Wave 2 will ultimately be evaluated," the presentation stated.
"By elevating the price for the new standard of care set by Sovaldi, Gilead intended to raise the price floor for all future hepatitis C treatments, including its follow-on drugs and those of its competitors," the report states.
Its next hepatitis C drug, Harvoni, was priced at $94,500.
by Carolyn Y. Johnson and Brady Dennis, Washington Post | Read more:
Image: Gilead Sciences
"Let's not fold to advocacy pressure in 2014," Kevin Young, Gilead's executive vice president for commercial operations, wrote in an internal email. ‘‘Let’s hold our position whatever competitors do or whatever the headlines."
Gilead gained federal approval for its drug Sovaldi in late 2013 and ultimately settled on the price of $84,000 for a 12-week course of treatment. To the company, that price seemed to deliver the right balance: value to shareholders while also not so high that insurers would "hinder patient access to uncomfortable levels," according to internal documents. But they also got more than they bargained for: an outpouring of outrage from the public, a backlash from government and private payers, and political scrutiny.The 18-month Senate committee investigation reviewed more than 20,000 pages of company documents.
“The documents show it was always Gilead’s plan to max out revenue, and that accessibility and affordability were pretty much an afterthought," said Sen. Ron Wyden (D-Ore.), who co-led the investigation with Sen. Charles Grassley (R-Iowa), in a news conference.
In a statement released Tuesday, Gilead disagreed with the conclusions of the report, saying that the price was "in line with previous standards of care.” The company noted that it has programs in place to help uninsured patients and those who need financial assistance access the treatments. More than 600,000 patients around the world have been treated with Gilead’s hepatitis C drugs since 2013, according to the company.
Here are four key takeaways from the investigation:
1. It could have been priced at $115,000 for a course of treatment.
Gilead considered a range of prices for Sovaldi and weighed the value to its shareholders against the "reputational risks," meaning the potential outrage from patients, physicians and payers. The potential prices ranged from $50,000 to $115,000.
Executives believed a $50,000 price would build good will and ensure easy access to the drug because it would be covered by most plans. But it would cause "significant foregone revenue," and activists would still critique the price, even at this relatively low level.
At $115,000, executives were concerned about "external considerations" and predicted: "High levels of advocacy group criticism and negative PR/competitive messaging could be expected at $115K and it would be increasingly difficult to manage at these levels."
2. Gilead priced Sovaldi partly based on the expectation it would set a benchmark for the next drugs in the pipeline.
A company presentation noted that Gilead has "considerable pricing potential" for Sovaldi, but that future pricing for next-generation drug launches would be limited by competition -- what it referred to as a second wave of treatments.
"Wave 1 will set a price benchmark against which Wave 2 will ultimately be evaluated," the presentation stated.
"By elevating the price for the new standard of care set by Sovaldi, Gilead intended to raise the price floor for all future hepatitis C treatments, including its follow-on drugs and those of its competitors," the report states.
Its next hepatitis C drug, Harvoni, was priced at $94,500.
by Carolyn Y. Johnson and Brady Dennis, Washington Post | Read more:
Image: Gilead Sciences
