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Gilead's hepatitis C drug to boost Medicare spending up to 6.5 billion

Kathleen Blanchard's picture
Sovaldi would boost Medicare spending by 8 percent

In response to concerns over the exorbitant cost of Gilead's hepatitis C drug Sovaldi, two top ranking Congressman are demanding an explanation from the drug company.

In a letter sent to the House Committee on Energy and Commerce, Representatives Henry Waxman (D-CA) and Diana DeGette (D-CO) are asking for a congressional hearing to understand the $84,000 cost of Sovaldi that a new analysis shows would boost Medicare spending up to $6.5 billion in 2015.

The drug that hit the market in January is considered a "groundbreaking" treatment for the most common forms of hepatitis C - genotypes 1, 4, 5 and 6 and is the first oral treatment for the disease.

The disease currently affects 3.2 million people in the US, according to the CDC. Recent recommendations are to boost screening for those at risk - primarily baby boomers. I June, the Centers for Medicare & Medicaid Services (CMS) announced they would cover screenings for Medicare beneficiaries at high-risk, but more needs to be done to resolve the high-cost of Sovaldi and other specialty drugs for chronic medical conditions including diabetes.

There has been much consternation over the availability of the drug.

To date, Gilead has not been able to justify the price tag of the treatment. The company failed to deliver any compelling reasons for the high cost of the medication at a House briefing in March.

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Waxman and DeGette are expressing concerns over the impact of Sovaldi on Medicare spending that would increase by 8 percent, based on new research from Georgetown University and the Kaiser Family Foundation.

The drug is available at a much lower cost in other countries, under Medicaid and through the VA. The Congressmen are seeking to understand why Medicare part D has been unable to negotiate a cost reduction for the treatment. They also want to ensure Sovaldi would be available at a lower cost for those with Medicaid in the US and who are receiving low income subsidy "as soon as possible," before Medicare premiums are made public in August. You can read the letter here.

Private insurers and the medical community have also railed in response to the $1000 a pill price tag.

America's Health Insurance Plans has called the price of Sovaldi "astronomical", saying it is not sustainable for consumers or society. The group claims Gilead is merely taking advantage of a lack of competition. Gilead's first-quarter profits exceeded expectations from sale of the drug.

Lili Gevorkian, writing for the Georgetown Health News, believes there may be no justification for the the price of the treatment. She writes: "...statistics show $8 million dollars being pulled in 2013 bonuses by the company’s top five officers.". Gevorkian who is a biological science major at Cal Poly San Luis Obispo went on to say "...the fat profit margin remains questionable."

In the meantime, Bristol-Myers Squibb Company is working on a similar hepatitis C drug that combines Sovaldi with two other drugs and is a 4-week treatment. Who knows how much it would cost?

Image credit: Wikimedia Commons

Updated August 12, 2014