Over the past century, immense investments in medical research have greatly enhanced public health, leading to an era in which many serious communicable diseases have a treatment, cure, or even a vaccine to prevent them entirely. How fortunate we are to live at a time when we can enjoy the benefits of such medical innovation. Today, however, we stand at a crossroads in drug discovery. We can either continue down a path of widespread access to life-saving drugs or go down a road where the prices of some new drugs are so unsustainably high that it may render their existence nearly meaningless for many of us. Perhaps nowhere is the threat of following the latter path more obvious than with Sovaldi, a new treatment for hepatitis C.
Sovaldi, which is made by Gilead Sciences Inc., costs $1,000 per pill or $84,000 for a typical 12-week course of treatment. The drug offers some clear advantages over previous medications available to patients with hepatitis C, including a higher cure rate and reduced side effects. But its high price is forcing unprecedented tradeoffs. Some patients who stand to benefit from the drug may not be able to access it, and health care budgets are buckling under the mounting costs of treatment, leaving taxpayers on the hook. If every American with hepatitis C had been treated with Sovaldi last year, the cost would have exceeded the total amount spent on all other brand name drugs combined in the U.S.
Outstanding new discoveries in medicine should be rewarded, and the U.S. is unmatched in its willingness to pay handsomely for the best new medications. I support strong intellectual property protection, but at the same time we should recognize that some manufacturers are abusing their power. Prices for new medications for rare diseases are often priced steeply, as it is difficult to recoup the costs of research and development for medications that will only be used by a small group of people. But with an estimated 3.2 million people infected with hepatitis C in the U.S., Sovaldi’s target population is relatively large. In the first quarter of this year, Sovaldi accounted for $2.3 billion in revenue – beating analysts expectations by over $1 billion, and making it by far the most lucrative drug launch ever.
While Gilead’s pricing represents a windfall for its investors, health care payers and patients are in dire straits, struggling to find ways to pay for the high costs of treatment. States – which must balance budgets annually – are having to take unprecedented actions to accommodate Gilead’s insular pricing decision. For instance, Oregon recently decided that it would evaluate a policy to limit availability to Sovaldi to only those Medicaid patients who face serious liver damage. If it moves forward with this approach, Oregon would reduce its costs from roughly $168 million to $40 million for the coming year. Oregon isn’t the only state faced with these hard choices. Utah and Arizona are each projected to spend 10 times more providing medication to a state-funded hepatitis C patient than what they spent last year educating a public school student, according to a new report by Express Scripts.
As disturbing as these figures are, they only represent the impact of one drug’s high pricing. In a robust drug development pipeline that is increasingly populated with specialty medications commanding high prices, we are truly just one high-priced breakthrough drug away from breaking the bank. A recent poll conducted by The Morning Consult, and sponsored by the nonprofit organization that I lead, the National Coalition on Health Care, found that 6 in 10 voters think there is not enough transparency when it comes to prescription drug prices. According to the same survey, 4 out of 5 people think the price for Sovaldi is unacceptable and that higher prices for specialty drugs mean they may not have access to them in the future.
I agree. If we keep walking down this path of unsustainable drug pricing, one of these days we may find that we have nothing left to pay for even the most remarkable new drug discoveries. It is absolutely critical that we take steps now to address the danger of abusive pricing and push for greater transparency, especially where taxpayers are footing the bill.
Rother is president and chief executive of the National Coalition on Health Care, a nonprofit organization that recently launched The Campaign for Sustainable Rx Pricing (www.csrxp.org), which aims to foster a national dialogue on the pricing of new high cost drug therapies.