As Gilead Mulls Price of Next Hepatitis C Drug, Top Activist Refutes "Bogus" Math

Sovaldi, the hepatitis C drug that costs US$1,000 a pill and US$84,000 for a full course of treatment, is about to look a little bit more reasonable by comparison. According to industry analysts, the price for Gilead's next hepatitis C drug (a combination of Sovaldi and the experimental drug ledipasvir), which the U.S. Food and Drug Administration may approve as soon as next month, could come with a price tag of US$95,000 for a course of treatment.

Sovaldi, known generically as sofosbuvir, is usually paired with ribavirin and interferon, both generic drugs. The sticker price of that regimen is US$95,000, Gilead recently told Reuters. Gregg Alton, Gilead's executive vice president of corporate and medical affairs, indicated that the new Sovaldi/ledipasvir combination pill, which has seen cure rates of over 95% in clinical trials, would be priced in line with the current Sovaldi/ribavirin/interferon regimen.

"We are going to price this fixed-dose regimen based on those costs," Alton told Reuters. "We do plan on launching a better product without having a significant premium."

Tracy Swan

Tracy Swan

Gilead has already come under intense scrutiny from international treatment activists over the price of Sovaldi, most notably in a direct conflict at the 20th International AIDS Conference (AIDS 2014) in Melbourne, Australia. Tracy Swan, the hepatitis/HIV project director for the Treatment Action Group, believes that the announcement of a possibly more expensive hepatitis C drug has put an even bigger target on Gilead's back.

In addition, Gilead recently announced that it had reached a generic licensing deal with seven drugmakers based in India that will allow cheaper versions of Sovaldi to be sold in a select group of 91 developing nations.

Swan relayed the community's frustration with the limitations of the licensing deal. "People are pretty outraged that they left out millions of people living with hepatitis C," she explained. "They left out China, where there's about 30 million people with hepatitis C; they left out Ukraine; they left out Brazil. They want to keep control of those markets themselves, but that means prices will be unaffordable for people who need access to sofosbuvir."

Why were these countries left out of the deal? "This is where they think they can make the most money," Swan said.

The Math Behind Drug Pricing -- And Checking It Twice

Many factors -- which are often theoretical and elusive to the public -- go into the initial pricing of a drug. Gilead counters critics by saying that the new drug could cost less in the long-term, as it may only require eight weeks of treatment, as opposed to the current regimen's 12-week course.

When asked about a potential lower long-term cost, Swan replied, "Lower than what?" She explained the practice of "reference pricing," whereby a company makes sure that its drug is first approved or made available in a high-income country, which forces developing countries to adopt a similarly high price.

"They'd prefer to set a price in France rather than in Eastern Europe," she said.

At AIDS 2014, Andrew Hill, Ph.D., from the Department of Molecular and Clinical Pharmacology at the University of Liverpool, presented a research poster that explored the production costs of many direct-acting antivirals and diagnostics that are used to treat hepatitis C. In his study, he estimated these costs could be US$171 to US$450 per person, depending on the treatment needed.

"We keep hearing, 'This is cheaper than this that and the other,' but that's like saying, 'It's cheaper to buy a Cadillac now than it will be to buy a Cadillac in five years,' and it has nothing to do with what it actually costs to produce the Cadillac," Swan said.

She added, "Gilead keeps talking about what's cheaper, but they're not talking about what their cost is based on, except that it's cheaper than other things. And it's fair to say that the cost should be based on how much it costs to produce something plus a margin for profit to pay back the investment they put into developing the drug, so I just think it's really bogus that they keep saying, 'Well, it's cheaper than a transplant.' People aren't automatically given a transplant when they need one; people die waiting for organs. A lot of people just will never see one."

Swan's remarks not only address the math behind the price of Sovaldi and its successor, but how reference pricing informs what low-income countries pay for the drug.

"When they keep saying the price is being discounted, and the Egypt price [is] $900 for three months of treatment -- it's like, discounted from what? The price here? That shouldn't be a benchmark. The price of Sovaldi shouldn't be a benchmark and the price of other drugs shouldn't be a benchmark."

"The more you learn, the worse it is," she said.