By Rachel Sachs
For all those who are interested in issues of global health, access to medicines, and drug pricing, yesterday Gilead formally announced its access program for enabling many developing countries to purchase its new Hepatitis C drug, Sovaldi, at low prices. This announcement is particularly noteworthy because Sovaldi represents a significant improvement over the current standard of care for Hepatitis C, as it can cure a much greater percentage of sufferers than could standard therapies, and it does so with many fewer negative side effects. Gilead’s partnership-based program will permit seven Indian generic drug companies to produce and sell the drug in 91 developing countries. The discounts are significant: although Gilead formally charges $1,000 a pill (or $84,000 for a course of treatment) for Sovaldi in the United States, it will charge just 1% of that, or $10 a pill, in India (the total cost there is estimated at $1,800, given the difference in strain prevalence).
The global health community has reacted to the announcement with mixed reviews. The 91 countries in the program include more than half of the world’s Hepatitis C patients. But tens of millions of other patients in large nations like China, Brazil, Mexico, and Thailand are left out of the program. Going forward, some of the excluded nations may seek to issue compulsory licenses in an effort to expand access to Sovaldi.
Gilead has also drawn fire in the United States for Sovaldi’s $84,000 sticker price (which, for various reasons, very few if any will actually pay), to the degree that members of both houses of Congress have asked Gilead to justify the price of the drug. Those opposing Sovaldi’s price have generally not come out publicly against the high price of many orphan drugs, which can cost $250,000-$350,000 per year. But because Hepatitis C afflicts about 2.7 million people in the US, as compared to the few thousand people with one of the relevant orphan diseases, its impact on insurers (both public and private) is likely to be much larger (as this very blog has previously noted).
Sovaldi brings into stark relief several of the most complicated issues around drug pricing and reimbursement. To name just a few, it raises concerns about innovation and access for low-income patients (Hepatitis C is more concentrated among low-income individuals), the difficulty of valuing cures (if Sovaldi can prevent a patient from needing a more expensive liver transplant or treatment for cirrhosis, it’s likely to be quite cost-effective), and the fragmentation of our health care system (incentives are misaligned if you’re asking a private insurer to pay for Sovaldi now, when it’s Medicare that will be on the hook for the liver transplant later). Stay tuned for what I’m sure will be extremely interesting public policy developments!