senate finance committee letter re: sovaldi pricing policy

8/10/2019 Senate Finance Committee Letter re: Sovaldi pricing policy

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332 Bleecker Street, PMB G5, New York, NY 10014

(212) 966-4873

August 6, 2014

The Honorable Ron WydenChairman

Committee on Finance

United States Senate

219 Dirksen Senate Office BuildingWashington, D.C. 20510 :

Dear Senator Wyden,

This is regarding your recently launched investigation into the pricing of the Hepatitis Cdrug Sovaldi (generic name sofosbuvir) made by Gilead Sciences, Inc. In your letter toGileads Chairman and CEO, Dr. John C, Martin, dated July 11, 2014, you request thatthe company provide a series of documents, and answer relevant questions, in order tobetter understand the rationale used to arrive at such an extremely high price for thisHepatitis C cure. You also make clear and unambiguous statements regarding the

dramatic increase in government spending, including Medicare, Medicaid, and otherfederal programs, that would result from treating all the people who would benefit fromthis drug at the price determined by Gilead.

ACT UP New York is an organization that has fought since its founding in 1987 for therights of people with HIV, many of whom are co-infected with the Hepatitis C virus. Weconsider this issue of enormous importance for people living with Hepatitis C. In thesame way we fought for access to HIV drugs at a reasonable price for all those infectedwith HIV, and for the development of special programs such as ADAP for that purpose,we are stepping up our fight to make Sovaldi, as well as all other forthcoming HepatitisC interferon-free cures, available to every person who needs it.

For that reason, we commend the Senate Finance Committee, led by you as itsChairman, for moving ahead with this investigation. We are also encouraged by asimilar investigation initiated by the Committee on Energy and Commerce of the Houseof Representatives, led by Congressman Henry A. Waxman.

It is clear that by whatever calculation Gilead used to set the price, it is simplyunacceptable. Indeed, there is a widespread consensus among many unrelated parties


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that this is the case. According to a study presented just a few weeks ago at theInternational AIDS Conference in Australia, the production cost for the full 12-weekcourse of Sovaldi, now priced at $84,000, is approximately $102 (1). Other informalsources from the health insurance industry have told us that Sovaldi is being pricedone order of magnitude too high, and yet others have noted how this drug, intended

for a mass market, was given a niche drug price. Even the drug retailing giant CVSCaremark Corp. has said that the nations health-care system likely wont be able tohandle that kind of sticker shock (2).

The way Gilead has priced Sovaldi raises serious ethical issues. As mentioned in bothyour letter and Congressman Waxmans letter, Sovaldi was approved on an expeditedbasis. As the first interferon-free regimen cure for Hepatitis C, federal authoritiesgranted the special status of Breakthrough Therapy. Priced low enough to be given toa much larger pool of people, Sovaldi is the best chance to end the Hepatitis Cepidemic. At the current price, the cure is only in use for a subset of people at anadvanced stage of the disease who are charged an enormous amount of money for it.

In other words, a public health benefit of historical proportions is being held offby nothing else but Gileads pricing scheme. Gilead pricing of Sovaldi will allowthe epidemic to continue at lower levels, while the company reaps larger financialbenefits over a prolonged period of time.

In order to end the Hepatitis C epidemic as soon as possible, we need a significant dropin the price of Sovaldi, to make it available to all Americans who need it. What good is acure that costs $102 to produce if it takes decades to implement nationwide due to highprices?

In light of the immediacy of the problem and the clear public benefit that equitablepricing would create, ACT UP New York is presenting the following demands to yourcommittee and to the federal government:

1) The government must achieve a 90% reduction in the price of Sovaldi for USconsumption, from the current $84,000 to $8,400 for the 12-week full course.Atthis price, treating 2 million people, a reasonable proportion of the 3 to 4 million peoplewith Hepatitis C in this country, would yield $16.8 billion profit for Gilead. This pricewould cover Gileads purchase ofPharmasset, provide profit for shareholders, and fundadditional research and development activities. We must note that the cost of buyingPharmasset was $11 billion, and that Gilead has already made $5.8 billion on sales ofSovaldi in just the first 6 months of 2014.

2) In the event that Gilead refuses to reduce the price to the amount indicated($8,400) or lower, the federal government should break Gileads monopoly ofsofosbuvir. This could be attempted by voluntary means, such as a patent buyout, orby non-voluntary means, such as a patent waiver.

A patent buyout can be justified on the basis that this patent would be more valuable tosociety if the product was available at a reasonable price At the current unaffordable


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price the disease is allowed to spread, consuming citizens health and societysreserves of health capitalall due to Gileads niche pricing structure. Negotiationsshould start from this premise, and involve all the stakeholders, including Gilead, inorder to arrive at a reasonable price for this buyout.

If a voluntary method such as the one outlined above cannot be negotiated with Gilead,the federal government should move ahead and waive Gileadspatent on sofosbuvirand have it produced and sold at a lower price, using the government use rightstatute (3). A patent waiver is not without precedent. In 2001, during the bio-terroristAnthrax attacks then Secretary of Health and Human Services Tommy Thompsonthreatened to seek a waiver of the antibiotic Cipro patent to allow production of ageneric version if German owner Bayer did not lower its price. After much haggling andhigh profile negotiations, Bayer eventually did reduce the price of the drug. The USgovernment did not proceed with a request for a waiver, since the objective wasachieved by the threat of political pressure.

Also worthy of noting is the fact that fifty years ago a cure for another grave illness wasdelivered free of any patent rights altogether. In 1955, Dr. Jonas Salk chose not topatent his polio vaccine, making it more affordable for millions of people in need of it. Itis estimated that he could have made $7 billion from it; instead, polio was brisklyconquered.

In 2014, Gileads pricing of this Hepatitis C cure allows the disease to proliferate, bypricing out millions of people that need it, thus delaying the end of a devastatingepidemic.

We must not allow this to happen. We urge you to act with the sense of urgency itmerits. Millions of lives and millions of our countrys health dollarsare at stake.

Sincerely,ACT UP New York

Contact persons:

Luis G. Santiago,[email protected],(917) 655-7347Terence Roethlein,[email protected],(347) 449-2881Timothy Lunceford,[email protected],

[1]Hill A, et al. Minimum target prices for production of treatment and associateddiagnostics for hepatitis C in developing countries (Poster LBPE12). International AIDSConference; 2014 July 2025; Melbourne, Australia.

[2]http://blogs.marketwatch.com/health-exchange/2014/07/20/cvs-officials-say-sovaldi-pricing-in-line-with-history-but-unsustainable/

[3] 28 U.S.C. 1498. Patent and copyright cases, Section (a).
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cc. John D. Rockefeller IV, West Virginia

cc. Charles E. Schumer, New York

cc. Debbie Stabenow, Michigan

cc. Maria Cantwell, Washington

cc. Bill Nelson, Florida

cc. Robert Menendez, New Jersey

cc. Thomas R. Carper, Delaware

cc. Benjamin L. Cardin, Maryland

cc. Sherrod Brown, Ohio

cc. Michael F. Bennet, Colorado

cc. Robert P. Casey, Jr., Pennsylvania

cc. Mark R. Warner, Virginia

cc. Orrin G. Hatch, Utah

cc. Chuck Grassley, Iowa

cc. Mike Crapo, Idaho

cc. Pat Roberts, Kansas

cc. Michael B. Enzi, Wyomingcc. John Cornyn, Texas

cc. John Thune, South Dakota

cc. Richard Burr, North Carolina

cc. Johnny Isakson, Georgia

cc. Rob Portman, Ohio

cc. Patrick J. Toomey, Pennsylvania

senate finance committee letter re: sovaldi pricing policy

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