Senators question cost of $1,000 hepatitis drug

Two high-ranking senators have lent their voices to the chorus demanding to know why Gilead’s new hepatitis C drug Sovaldi costs $1,000 a pill.

Sens. Ron Wyden (D-Ore.), chairman of the Senate Finance Committee, and Chuck Grassley (R-Iowa), the Judiciary Committee’s ranking member, are asking the specialty drugmaker how they justify the high price of the medication, which can cost more than $84,000 per treatment.

“Given the impact Sovaldi’s cost will have on Medicare, Medicaid and other federal spending, we need a better understanding of how your company arrived at the price for this drug,” they wrote in a Friday letter to Gilead.

Wyden and Grassley point to recent Securities and Exchange Commission documents that show Sovaldi’s original creator had planned to sell treatments of the drug at $36,000 and want to know why Gilead has decided to more than double that pricing.

The top drug lobby group, the Pharmaceutical Research and Manufacturers of America (PhRMA), says specialty drugs such as Sovaldi are priced to recoup research and development costs. It also argues treating people with Sovaldi means fewer patients will need liver transplants when their disease becomes critical, saving the healthcare system billions.

However, critics say Sovaldi is priced unjustifiably high considering the size of the population the disease affects: 3.2 million people in the U.S.

{mosads}They also accuse Gilead of taking advantage of the fact that there currently are no better treatments for hepatitis C on the market.

“The large patient population combined with the high price of each individual treatment creates a question as to whether payors of health care, including Medicare and Medicaid, can carry such a load,” said Wyden and Grassley.

They note Sovaldi could increase Medicare spending by $2 billion between 2014 and 2015 if just 25,000 people on Medicare Part D received treatment.

Sovaldi was acquired by Gilead when it bought drug-maker Pharmasset back in 2012.

Top House Democrats have also written to Gilead asking the company to explain its pricing and have asked Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, to hold a hearing on the issue.

Leading the effort in the House, Rep. Henry Waxman (D-Calif.), has also said the Department of Health and Human Services should be able to negotiate down the price of Sovaldi but is currently banned from doing so by law.

While Gilead is not a PhRMA member, the issue has sparked a turf war between PhRMA and the top insurance lobby group America’s Health Insurance Plans (AHIP).

AHIP argues the cost of Sovaldi threatens to put families and businesses into bankruptcy, but PhRMA has fired back, saying AHIP’s high co-pay for prescription drugs is the real reason why healthcare costs are rising.