Wyden Press Conference Remarks on Investigation into Gilead’s Pricing of Hepatitis Drug Sovaldi

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WASHINGTON – Senate Finance Committee Ranking Member Ron Wyden, D-Ore., delivered the following remarks at a press conference with Senator Chuck Grassley, R-Iowa, a senior member of the committee, following the release of their bipartisan investigation into the pricing of Gilead Sciences blockbuster Hepatitis C drug, Sovaldi. Video of the press conference can be found here. A press release with the details of the report can be found here.

Senator Grassley and I are here to discuss our bipartisan investigation into the rollout of the blockbuster Hepatitis C drug Sovaldi and its successor. Although our investigation focused on one drug – a specialty drug – we thought it was particularly important because if America is to cure Alzheimer’s, cancer, diabetes and HIV in the days ahead, these cures must not be unaffordable and beyond the reach of millions of Americans.

Cures in America must not just be for the lucky few.

In this investigation, our staffs reviewed 20,000 pages of company documents and conducted dozens of interviews with health care experts. The investigation also collected data from all 50 state Medicaid programs and the District of Columbia, as well as from Medicare and the Bureau of Prisons. This data will add significantly to the understanding of how these two drugs turned the health care system upside down.

Let me start with my bottom line. Using Gilead’s own documents, the evidence shows the company pursued a calculated scheme for pricing and marketing its Hepatitis C drug based on one primary goal – maximizing revenue – regardless of the human consequences.

There was no concrete evidence in any document – in emails, meeting minutes, or presentations – that basic financial matters such as R&D costs or the multi-billion dollar acquisition of Pharmasset, the drug’s first developer, factored into how Gilead set the price.

If Gilead’s approach to pricing is the future of how blockbuster drugs are launched, it will cost billions and billions of dollars to treat just a fraction of patients. Here is what our report found demonstrating that danger.

Gilead’s own cost analyses show they were fully aware that as the prices they considered ticked up – $50,000, $60,000, $80,000 per course of treatment – the number of Americans treated and cured of Hepatitis C would go down. Yet, based on our investigation, Gilead repeatedly chose to put revenue ahead of accessibility or affordability for millions of patients.

Gilead knew these prices would put treatment out of the reach of millions and cause extraordinary problems for Medicare and Medicaid, but still the company went ahead at $1,000 a pill for Sovaldi, equal to $84,000 for a standard course of treatment.

The documents show that Gilead planned from the beginning to use Sovaldi’s price as a platform from which to set an even higher price for the second version of the drug, Harvoni, at $94,500 for one course of treatment.

This is one of the biggest drug launches since Medicare’s prescription drug benefit began, and the huge costs will be shared by all seniors and taxpayers.

In the 18 months following Sovaldi’s approval, Medicare spent nearly $8.2 billion before rebates on Sovaldi and Harvoni, and the total is growing faster and faster. While Gilead paints an optimistic picture about costs, Medicare spent more on these drugs in the first six months of this year than it did in all of 2014.

Our report shows that Medicare now spends more on Hepatitis C drugs in about three weeks than it did in all of 2013.

Medicare is not the only program taking a hit.

Because the price was set so high, private insurers and state Medicaid programs were forced to restrict patient access to treatment in order to control costs. However, the expenditures were still enormous.

For example, despite spending more than $1 billion dollars on Gilead’s Hepatitis C drugs last year, state Medicaid programs nationwide treated less than 2.4 percent of their patients known to have the disease.

In 2014, Oklahoma’s Medicaid program spent nearly $18 million to treat 220 people infected with Hepatitis C. Indiana’s Medicaid program spent more than $40 million to treat 462 people.

Even when the widespread imposition of restrictions to access became clear – when Gilead’s own documents show it knew many patients with Hepatitis C were clearly on the outside looking in – the company still made no meaningful effort to provide discounts that would ease the burden.

Here’s the take-it-or-leave-it deal Gilead offered. Because of Sovaldi’s price, a majority of state Medicaid programs were forced to make the excruciating decision to limit access to treatment. They asked Gilead for discounts that would allow them to treat more patients and cure more Americans of Hepatitis C.

But Gilead set a precondition. The company said the only way they’d agree to give even a meager supplemental discount of 10 percent was if states dropped all of their access restrictions and took on back-breaking costs. To be clear, that is not a choice at all. Medicaid programs do not have unlimited resources to pour into Gilead’s bottom line.

It is correct that the company agreed to some discounts. However, as a number of Medicaid programs informed us as recently as a few weeks ago, the price remains a huge problem when you look at the number of people who need treatment.

Our report estimates that at the end of 2014, more than 97 percent of Medicaid patients diagnosed with Hepatitis C remained untreated. More than 700,000 Medicaid enrollees infected with Hepatitis C are waiting in line.

With Medicaid and private insurers struggling to offer widespread access to Hepatitis C treatments, Medicare could become the backstop that absorbs the huge cost of Gilead’s drugs. People with Hepatitis C might go without treatment until they qualify for Medicare, and that could represent a serious challenge ahead.

Gilead’s representatives talk often about the “cost-per-cure” and the value their drug gives patients. But Gilead knew that many Hepatitis C patients would need a longer course of treatment adding up to a total wholesale price of $168,000 or more. The company specifically chose not to offer them any discount or to consider the impact of the $1,000 per-pill price on these patients.

The documents show it was always Gilead’s plan to max out revenue and that affordability was barely an afterthought.

When the price did ignite a firestorm of access restrictions and an outcry from state officials, insurers and patient advocates, the company didn’t budge from its marketing strategy.

But that was always part of Gilead’s plan from the beginning. In an e-mail just days before the launch of Sovaldi, a senior company official wrote to his colleagues, “Let’s not fold to advocacy pressure in 2014.” He added, “Let’s hold our position whatever competitors do or whatever the headlines.”

This bipartisan investigation is a case study into the pricing, marketing and launch of one company’s product, and it does not prove this is an industry-wide approach.

The reason that a Democrat and a Republican came together to investigate into what happened in this case is because of the serious challenge that could be on the horizon.

Very quickly after Sovaldi’s rollout, the alarming consequences of the price became clear. It was a huge medical breakthrough, and it was overtaken almost immediately by the price.

Now, consider where medicine is headed in the future. America needs a cure for cancer. It needs a cure for Alzheimer’s. It needs a cure for diabetes. And it’s important to note on World AIDS Day, it needs a cure for HIV. If those cures are unaffordable and out of reach to millions who need them, the Congress will not have met its responsibilities to the American people.

There are a range of viewpoints about how to approach this problem. I reject the idea that America has to choose between soaring, out-of-reach drug prices and one-size-fits-all government policies.

Solving this challenge is going to take fresh thinking and political independence. My distinguished partner in this investigation, Chuck Grassley, who is also a former chairman of the Finance Committee, has a long, long history of tackling major issues with innovative ideas that bring people together. So with that, I’ll turn it over to Senator Grassley.

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