FDA approval of new hepatitis C drug may temper drug prices

Patients with hepatitis C have gained a new treatment option, which may help curb the rising cost of drugs treating the virus. The FDA has approved Zepatier® with or without ribavirin for the treatment of chronic hepatitis C virus infections in adult patients. Previously, the FDA gave Zepatier a breakthrough therapy designation, which is a program designed to expedite the development and review of drugs intended to treat a serious condition after preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over currently available therapy.

Growing competition among hepatitis C drugs may help to stabilize the increasingly high prices for these products. Merck stated that including Zepatier in treatment options for patients with chronic hepatitis C virus (HCV) provides the U.S. “with an unprecedented opportunity to significantly reduce the burden of [the virus.]” Merck has set a list price for Zepatier of $54,600 for a 12-week regimen, which it believes to be in the range of net prices for other 12-week antiviral regimens used to treat HCV. Merck anticipates that its competitive pricing and its comprehensive access strategy to seek broad coverage “will help broaden and accelerate patient access to treatment and move us closer to our shared goal of reducing the burden of chronic HCV in the U.S.”

Compared with the prices of treatments from Gilead Sciences Inc., an early competitor in the market for oral hepatitis C drugs, like Sovaldi® being sold at $1,000 per pill ($84,000 for a single course of treatment) and single-tablet regimen Harvoni® with a list price of $94,500, Zepatier is expected to be a welcome addition to the market. In December 2015, the Senate Committee on Finance found, through its own investigation, a revenue-driven pricing strategy behind Sovaldi, which caused Medicare and Medicare to spend more than $5 billion on Sovaldi and Harvoni in 2014. Financial statements showed U.S. sales of the drugs through public programs and private payers totaling $20.6 billion after rebates in the first 21 months following Sovaldi’s introduction to the market.

Hepatitis C drugs Sovaldi® and Harvoni® priced to maximize revenue, not access

Gilead Sciences, Inc. priced and marketed its Hepatitis C drug Sovaldi®–$1,000 per pill or $84,000 for a single course of treatment—to maximize revenue, rather than to foster broad, affordable access of the medicine, according to an 18-month investigation by the Senate Finance Committee. Sovaldi’s price was intentionally set high so that its follow-up drug, Harvoni®, could be more expensive, $94,500. Committee members Sens. Ron Wyden (D-Ore) and Chuck Grassley (R-Iowa) discussed the investigation’s findings, including the significant burdens placed on the Medicare and Medicaid programs by the drugs’ costs.


The Hepatitis C virus (HCV) is a contagious blood-borne virus that causes a liver infection known as Hepatitis C. Some individuals only develop short-term acute hepatitis C infection, but 70 to 85 percent of people infected with the virus develop a chronic infection that can result in long-term health problems, even death. The Centers for Disease Control and Prevention (CDC) warns that the majority of infected persons—an estimated 2.7 million Americans—might not be aware of their infection.

In 2013, Gilead obtained FDA approval to market Sovaldi, an antiviral medication that prevents HCV cells from multiplying. In the 18 months following Sovaldi’s approval, Medicare spent nearly $8.2 billion before rebates on Sovaldi and Harvoni. Over that same span, Medicare’s monthly spending on Hepatitis C treatments increased more than six-fold. Harvoni, a second-wave successor to Sovaldi that adds an additional ingredient to Sovaldi’s formulation, was approved for marketing in 2014. In that year, Medicare and Medicaid combined to spend more than $5 billion on the two drugs before rebates, with that total projected to climb in 2015. According to the Finance Committee, recent financial statements from Gilead show U.S. sales of Sovaldi and Harvoni totaled $20.6 billion after rebates in the 21 months following Sovaldi’s introduction.

Investigation findings

Over 18 months, the Senate Finance Committee reviewed 20,000 pages of Gilead’s internal company documents, dozens of interviews with health care experts, and a trove of data from Medicaid programs in 50 states and the District of Columbia. According to Wyden, there was no concrete evidence that Sovaldi’s price was set based on “basic financial matters” like research and development costs or Gilead’s acquisition of Pharmasset, which first developed the drug. He said that although “Gilead knew these prices would put treatment out of the reach of millions and cause extraordinary problems for Medicare and Medicaid,” the company chose to maximize revenue, “regardless of the human consequences.”

Among the investigation’s major findings:

  • Gilead justified Sovaldi’s high price point based on “price-per-cure” calculations that resulted in greater revenue per treatment than previous direct acting anti-virals.
  • Gilead underestimated the degree of access restrictions that it expected would result from its pricing decision.
  • Despite significant access restrictions, Gilead refused to offer substantial discounts and did not significantly modify its contracting strategy to improve patient access.
  • Although state Medicaid programs nationwide spent $1.3 billion before rebates on the drug in 2014, less than 2.4 percent of the roughly 700,000 Medicaid enrollees with Hepatitis C were treated with Sovaldi.
  • After competition entered the market, prices responded, but there are still significant concerns: particularly in the public payer community, about high costs for treating millions of people in the U.S. infected with Hepatitis C, as well as the budgetary effects of a future single source innovator that might not face competition as quickly.

Pricing reform

A new poll by STAT and the Harvard T.H. Chan School of Public Health found that most Americans believe the prices of brand-name prescription drugs are unreasonably high, with 70 percent saying Medicare should be able to negotiate lower prices for all prescription drugs. An additional 13 percent support negotiations for high-cost drugs only. The poll asked participants about the reasonableness of hypothetical situations, including one based on Gilead. In that case, 92 percent of respondents responded that it would be unreasonable if “a pharmaceutical company launched an exclusive new drug to cure hepatitis C and set the price at $1,125 per pill, or about $100,000 for a full course of treatment.”

Wyden and Grassley are committed to finding a bipartisan way to deal with high drug costs. Grassley said, “This report sheds light on one example of the pricing decisions made by one company with a new prescription medicine that entered the market without competition in high demand. This might be an example that received the most attention in some time, but it won’t be the last. I look forward to discussions with my colleagues and the public on the policy questions in the report.” Wyden added, “America needs cures for cancer, Alzheimer’s, diabetes and HIV. If those cures are unaffordable and out of reach to millions who need them, Congress will not have met its responsibilities to the American people. I reject the idea that America has to choose between soaring, out-of-reach drug prices and one-size-fits-all government policies. Solving this challenge will take fresh, bipartisan thinking and political independence to bring people together.”