An Aftershock Bigger Than the Initial Shock
OCTOBER 10, 2014 BY LARRY MCNEELY
By John Rother
Situated along the famous San Andreas fault in Northern California’s Bay Area, Gilead rattled the health care market this year by pricing its Hepatitis C treatment Sovaldi at $84,000. After months of unabated outrage from policymakers, consumer, employer, and patient organizations over the price of Sovaldi, Gilead has triggered an aftershock even more powerful than its initial shock with a new Hep C treatment priced at a staggering $94,500.
Gilead has made clear that it values Wall Street above the interests of patients, the insured, and taxpayers.
Gilead justifies its pricing by pointing out that its new formulation is priced less than the previous combination of its old therapy with other treatments. However, this argument is a bit disingenuous because Sovaldi’s $84,000 price tag constituted the bulk of the former combo drug price. Moreover, Gilead admits that it prices it products based on the preceding product in the therapeutic area rather than on any calculation of value. That’s a dangerous and unsustainable practice that can only lead to one thing: ever increasing prices.
The good news is that Sovaldi has helped start a national dialogue on how to sustain the biomedical innovation that is so important to our future. The bad news is that Gilead is severely testing the limits of this sustainability.
We had better find solutions to the sustainability question or else we risk witnessing our entire health care system crumble from “The Big One.”