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Gilead Reports $5.8 Billion in Sales of Sovaldi Drug Amid Pricing Flap

By Kerry Young, CQ HealthBeat Associate Editor

July 23, 2014 -- In a report certain to stir further debate on the cost of prescription drugs, Gilead Sciences Inc. recently said its profit for the first half of 2014 rose to $5.9 billion over $1.5 billion for the same period a year ago, fueled largely sales of the Sovaldi hepatitis C drug.

Gilead said that it had $5.75 billion in sales of Sovaldi, a drug with a wholesale cost of about $1,000 a pill. It has been prescribed for more than 80,000 people in the United States and Europe so far, the Foster City, California-based company said.

Gilead is seeking to make the most of a pill considered highly effective in fighting a virus that can damage and even destroy the liver. Competitors are working on rival pills with somewhat similar approaches to fighting the virus, and introductions of new medicines could potentially result in greater pressure on Gilead to lower its price.

The cost of Sovaldi has already sparked a backlash. Pharmacy benefit manager Express Scripts has estimated that states through their Medicaid and prison programs could spend a combined $55 billion on the drug, if all patients were given the therapy. The costs could strain budgets covering education, transportation and other needs.

The costs of treating hepatitis C are expanding at a rate that "is simply not sustainable," said Jeff Myers, president and chief executive of Medicaid Health Plans of America, a trade group representing insurers that participate in the state-federal program for the poor and less affluent Americans.

"The current treatments, along with the all-oral medication coming in October, threaten to drive the price to a point at which the states unfortunately will be forced to make tradeoffs to manage the very large population that is infected with this life-threatening disease," he said.

The price of Sovaldi also has caught the attention of prominent lawmakers such as Henry Waxman of California, the ranking Democrat on the House Energy and Commerce Committee, and Senate Finance Committee Chairman Ron Wyden and Sen. Charles E. Grassley, R-Iowa.

Waxman has questioned why health plans administering Medicare's Part D prescription drug benefit are unable to effectively negotiate lower prices for the treatment despite the fact that Sovaldi is available in other countries, as well as to Medicaid and the Veterans Administration at a lower cost.

The trade group America's Health Insurance Plans said Gilead should lower the drug's price.

"Gilead has delivered a tremendous breakthrough in medicine, and it should be rewarded for its investment," said spokesman Brendan Buck in a statement. "But the current price cannot be justified by development costs; it's purely a reflection of Gilead believing that it has a blank check."

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