Gilead CEO’s apology for drug prices are useless when no action is taken

Gilead’s CEO, John Milligan, reportedly gave statements at a healthcare summit hosted by Forbes where he expressed an apology for the high price of Sovaldi, Gilead’s lifesaving Hepatitis C drug. The apology comes after selling the medicine for $1,000 per pill since it was approved by the FDA in late 2014. The medicine and it’s counterpart, Harvoni, have brought Gilead up from a small-ish pharmaceutical company to one of the giants with over $20 billion in revenue from treating this one disease. 

As Milligan put it, the price came without having “good enough conversation” with America’s healthcare system payers. Unfortunately, this statement can be seen as summarily false — Gilead, like most pharmaceutical companies or companies of any size, had projections reported to shareholders and others, predicting the size of the market they were entering, and making projections based on what they thought the insurance market would handle — business practices as usual.

{mosads}According to Bloomberg a year ago, the price for a course of treatment was originally projected at $36,000 and was increased over time to $84,000 for the 12-week treatment. To be sure, at least according to email correspondence within the company, there was no reason to assume the high level of backlash that overtook the media cycle about the company’s prices.

Once Gilead’s $1,000 pill hit the market and started having a real effect on how even government providers had to ration care for Hepatitis C, it led to the now infamous Congressional inquiries into their research and development and for the first time in decades, real conversation in the political space around high drug prices. 

However, while Milligan tries to save face by complaining that the company should have planned better with payers in the country — he misses the point that patients, physicians, and advocacy groups have been making for years — that the business model used to land on this price is inherently flawed and leaves out those who actually need these medications to survive.

Knowledge Ecology International, headed by James Love, has been tracking and building a timeline on research and development for Hepatitis C. From this timeline it’s clear to see that Gilead was not an innovator. The company bought Pharmasset for $11 billion in 2011, and Pharmasset owned the intellectual property that would lead to Sovaldi. Less than two years later Gilead entered a New Drug Application with the FDA, received a priority review for the drug as a breakthrough therapy, and by December 2013 — Sovaldi is approved for the treatment of chronic Hepatitis C.

The system of patents and approvals is designed to reward innovating companies for their work, and encourage development of new medicines. So if you look at the history of events as Gilead likely does, you would conclude that the system is working —  but if you scrutinize it you realize that rather than innovating, Gilead only cherry picked innovation and then brought it to market for a windfall of a revenue stream. 

Who knows what Gilead could have invented if it had invested $11 billion over many years in research and development for new treatments, instead we’re left with a $1,000 pill for Hepatitis C and a meager apology to insurance companies for charging too much. If Milligan is seriously remorseful over the price, there’s a simple solution – lower it.

Justin Mendoza is a member of the North American Board of Directors of Universities Allied for Essential Medicines, a global network of students who work towards making medicines affordable and adequate for all.

The views expressed by contributors are their own and not the views of The Hill.