The United States Senate Finance Committee is questioning Gilead Sciences Inc. for the extremely high cost of its new drug treatment Sovaldi for Hepatitis C that is about $84,000 for 12-week treatment or $1,000 a pill, setting the highest record in history.
In a letter sent to Dr. John Martin, chairman and chief operating officer at Gilead, two senators, Charles Grassley and Ron Wyden, announced the ongoing investigation and requested the company to provide several documents that would justify the price of the drug in question.
Grassley is a member of the Finance Committee and a longtime watchdog of the drug industry, while Wyden is the chairman of the committee.
"Although Sovaldi has the potential to help people with HCV, at $1,000 per pill, its pricing has raised serious concerns about the extent to which the market for this drug is operating efficiently and rationally," the senators wrote [pdf]. "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."
The letter stated that the price of Sovaldi seems to be higher than what’s expected, considering the costs of production and development as well as the discounts being offered by Gilead in other nations. For instance, Sovaldi is offered in Egypt at a 99 percent discount to the price in the U.S.
The senators sought answers, but in the form of official documents, to their 21 questions. The questions include the 2011 agreement of Gilead to acquire Solvaldi’s drug developer Pharmasset for $11 billion and the latter’s earlier pricing assumptions for the said drug.
In 2011, Pharmasset filed with the Securities and Exchange Commission a base price of $36,000 for every treatment course as stated in its financial forecast document.
The letter also stated the senators’ request for copies of Gilead’s written communications with its banker, Bank of America Merrill Lynch and Barclays, about the acquisition deal with Pharmasset in terms of the latter’s valuation and the price estimates for Sovaldi. Research says both banks declined to comment.
The senators also requested for research costs of Gilead on Sovaldi as well as possible conflicts of interest.
The documents requested from Gilead should be produced within two weeks after the receipt of the letter from the Finance Committee and to finalize the request in two months time.
Gilead is said to have come to defense of its pricing, emphasizing the benefits of the Sovaldi, and its ability to prevent side effects incurred from other Hepatitis therapies.
Although the senators acknowledged the potentials of the drug in treating Hepatitis C, they noted that the price of the drug would raise considerably the costs for Medicaid, Medicare and other state health programs.
Recall that Gilead was similarly on the same incident for the cost of its Sovaldi. Three Democrats from the House of Representatives, led by Rep. Henry Waxman, sent a letter to Gilead in March, questioning the price just the same.
A spokeswoman for Gilead, meanwhile, acknowledged the receipt of the letter and said the company will cooperate with the request of the senators.
