Gilead’s Hepatitis C Drug, Sovaldi, Is on Pace to Become a Blockbuster

Source: The New York Times

28 July 2014

Sales of the new hepatitis C drug Sovaldi reached $3.5 billion in the second quarter, a huge figure that puts it on track to become one of the world’s best-selling medicines but could intensify concerns about society’s ability to pay for it.

The sales, announced on Wednesday by Gilead Sciences, were an increase from the $2.3 billion in the first three months of the year, the first full quarter of sales since the drug’s approval in December.

The sales testify to the effectiveness of the drug, which can essentially cure more than 80 percent of patients with few side effects.

But in some cases, insurers and state Medicaid programs are starting to restrict use to those with advanced disease. They say that Sovaldi, which costs $1,000 a pill or $84,000 for a typical 12-week course of treatment, is priced almost as high as drugs for rare diseases, even though more than three million Americans have hepatitis C.

“You multiply that price by three million people and you can torpedo the whole health insurance system,” said John Rother, president of the National Coalition on Health Care, a group of insurers, medical societies, labor unions, employers and consumer groups concerned about medical costs. He said that the second-quarter sales showed that Gilead could afford to lower the price.

Sovaldi, which costs $1,000 a pill, is priced almost as high as drugs for rare diseases.

Sovaldi is on pace to exceed $10 billion in sales in 2014, becoming one of the world’s best-selling drugs in only its initial year on the market. The current best seller, AbbVie’s autoimmune disease drug Humira, had sales of $10.7 billion last year, but it has been on the market for about a decade. Pfizer’s Lipitor holds the record, with sales of $12.9 billion in 2006.

Sovaldi could become the leader in sales within the United States, since $3 billion of its sales in the second quarter and $5.1 billion in the first half were domestic. Humira had $5.2 billion in United States sales last year, and those for Lipitor in 2006 reached $7.8 billion.

Gilead says that Sovaldi’s price is in line with other drugs for hepatitis C, and that it is a better bargain than some cancer drugs that do not cure people. It says use of Sovaldi will save the health system money over all by preventing liver failure and liver cancer.

“It’s an outlier because we are curing people of a horrible disease in a very rapid time frame,” John Milligan, Gilead’s chief operating officer, said on a call with analysts on Wednesday. Company executives said that only three state Medicaid programs were not paying for the drug.

Despite possible long-term savings, some insurers are more concerned about the immediate costs.

Express Scripts, the largest pharmacy benefit manager, estimated last week that states would have to pay $55 billion to treat all their Medicaid patients and prison inmates, making the drug “a tax on all Americans.”

In a more measured commentary in the Journal of the American Medical Association, two executives of CVS Caremark, the second-largest pharmacy benefit manager, estimated that treatment of hepatitis C could add $200 to $300 a year to every American’s insurance premium for the next five years.

Two members of the Senate Finance Committee wrote to Gilead this month demanding extensive information on how the company set the price of Sovaldi. The senators, Ron Wyden, an Oregon Democrat who is chairman of the committee, and Charles E. Grassley, an Iowa Republican, cited one estimate that Sovaldi could cost Medicare Part D, the drug benefit for seniors, $6.5 billion in the next year or so, raising premiums by 8 percent.

Some of these forecasts are unrealistic, because not all people with hepatitis C will be treated. More than half the people infected with the virus do not even know they have it because it typically causes no symptoms.

Moreover, treating everybody will take years, spreading costs out over time. Even with the strong demand, only 70,000 Americans have been treated with Sovaldi so far, Gilead said.

If Sovaldi achieves $10 billion in sales in the United States this year, that would be only about 3 percent of the roughly $300 billion the nation spends on prescription drugs. And those drugs account for only about 10 percent of total health care spending.

However, spending on Sovaldi is causing a strain for health plans and state programs that did not budget for it.

Dr. Mitchell L. Shiffman, director of the Bon Secours Health System’s Liver Institute of Virginia, said most insurers were restricting reimbursement to those with more advanced liver damage, and demanding proof.

Still, there is a lot of reimbursement, judging by the sales of Sovaldi and another new hepatitis C drug, Johnson & Johnson’s Olysio, which had domestic sales of over $1 billion in the first half of the year.

Right now, some doctors say, they are so busy treating the backlog of patients with advanced liver damage that they would not have time anyway for less seriously ill patients. Also, many people with less serious disease are voluntarily holding back, waiting for even better treatments to come along.

Gilead is expected to win approval by October for a pill combining Sovaldi with another new drug.

“Come this fall, all of those people are going to show back up,” wanting to be treated, said Dr. Camilla Graham of Beth Israel Deaconess Medical Center in Boston. Over all, Gilead’s revenue in the quarter more than doubled to $6.5 billion, from $2.8 billion in the second quarter a year ago. Earnings per share, after some adjustments, were $2.36, compared with 50 cents in the same period a year ago.

Gilead’s stock closed at $90.34, up about $1 a share, but fell slightly after hours, following its earnings announcement.

Early in the day, the Food and Drug Administration approved Gilead’s drug idelalisib to treat three types of blood cancers. It will be sold under the name Zydelig.

This entry was posted in Hepatitis C, Pricing, Sofosbuvir. Bookmark the permalink.

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