Sovaldi, a drug that helps to cure hepatitis C, is back in the news once again after the Southeastern Pennsylvania Transportation Authority (SEPTA) filed a lawsuit against its manufacturer, Gilead Sciences. According to the lawsuit, the drug’s price is exorbitant.
According to the suit, Gilead’s patent protection does not justify the drug’s steep cost: $84,000 per treatment course, or about $1,000 per pill. Gilead’s “limited rights as a patent holder do not translate into a license to price-gouge consumers,” the lawsuit reads. SEPTA has shelled out $2.4 million for Sovaldi for its employees since the drug came out last year. Gilead made $8.5 billion from sales of the drug in the first three quarters of 2014.
Sovaldi isn’t a cure-all, but the drug has been found to eliminate the hepatitis C virus in about 90 percent of patients when it is used alongside another drug. It also is better tolerated and has fewer side effects than past treatments.
Drug Pricing a ‘Pressing Social Issue’
Jim Ruble, a clinical associate professor of pharmacotherapy at the University of Utah College of Pharmacy, said he believes the case represents a very “pressing social issue.”
With drug costs rising overall, it brings many issues to the fore for politicians, drug manufacturers, and consumers. There are many sides to the story. Consumers may feel like they are being price-gauged, while drugmakers may see value in the increased cost of drugs like Sovaldi.
“To some degree I think people feel like we’re being tested as a society,” he said.
The amount of money drug companies spend on research and development needs to be more transparent, Ruble said. That could calm some of the outrage over high drug prices, he added.
Kate Greenwood, a research fellow and law lecturer at Seton Hall University, said the key is to balance drug access with the need to incentivize innovation.
“At some point, restricting the price that firms can charge for medications will reduce the number of new medications that the private sector develops,” she said.
Jason N. Doctor, a health economist at the University of Southern California’s School of Pharmacy, is not sure what will come of the lawsuit, but he says demand for the breakthrough drug will continue to rise. Insurers have budgets, though. High-priced drugs are typically supported only to treat rare diseases that affect very few people.
“Sovaldi is different,” Doctor explained. “A lot of people will require this drug and, if insurers cover it at that price, that will affect the other things for which insurers can pay.”
A Battle of Values vs. OutcomesSovaldi isn’t the first medication with a hefty price tag, Ruble noted. Provenge, a drug used to treat prostate cancer, costs about $93,000 for three cycles of therapy. For some people, it may be well worth it because it can prolong their lives. Others may not find value in the therapy or its cost.
“Is it worth it? That’s where we have a lot of conflicting values,” Ruble said.
Greenwood said she’s inclined to think Sovaldi may not be overpriced because hepatitis C is expensive for patients and for the healthcare system overall. Plus, a patient should only have to take one course of treatment to achieve a cure.
“Sovaldi is not like, say, a drug that lowers cholesterol or treats high blood pressure, which a company would expect doctors to prescribe, and patients to take, for many years,” she said.
Taking Sovaldi may mean a patient can avoid liver transplant surgery. This surgery does not always guarantee results and could lead to other complications, Ruble said.
Sovaldi costs a lot of money now, but supporters say it will save money years later when hepatitis would have otherwise damaged a patient's liver, explained Doctor.
He said it’s difficult to comprehend the value of a drug when the benefits are so far off. Plus, patients want insurers to pay for drugs that may not be cost effective if their beneficiaries later cancel their health plans.
Doctor said that the United States does not have good way to reward innovation for drugs like Sovaldi.
“Hepatitis C will have a huge social cost in the future. We have to think about that too; how can we reward the makers of this breakthrough drug and not overcharge insurers who may not directly retain the benefits?” Doctor asked.
One reason Sovaldi is controversial is because its price is much lower in other countries. But this is common, Greenwood said. America is a wealthy country with a relatively free market.
The United States spends about twice as much on drugs as countries in Europe because European nations have stricter price controls, Doctor said. In France, the drug will cost about $51,000 after negotiations, he noted.
Will the Case Against Gilead Stand?
Greenwood believes the court will dismiss the SEPTA lawsuit at an early stage.
“The first and fourth counts of the complaint, alleging unjust enrichment and breach of the duty of good faith and fair dealing, appear to boil down to a claim that the price of Sovaldi is unreasonably high, a claim that I do not believe is actionable,” she said.
Greenwood said that the second count in the complaint talks about Gilead’s monopoly, but that is explicitly authorized by a statute — the Hatch-Waxman Act — that incentivizes drug development.
The third count alleges that Gilead has discriminated against people with hepatitis C on the basis of their disability, and violates the Affordable Care Act (ACA). Even if the ACA applies to Gilead — something Greenwood questions — SEPTA did not claim that Gilead denied drug access to patients who could afford to pay for the treatment.
“It would be surprising if Gilead were to discriminate against people with hepatitis C on the basis of their disability, since people with hepatitis C are the company's customers,” she said.