WYDEN-GRASSLEY SOVALDI INVESTIGATION FINDS REVENUE-DRIVEN PRICING STRATEGY BEHIND $84,000 HEPATITIS DRUG

18-Month Investigation Reveals a Pricing and Marketing Strategy Designed to Maximize Revenue with Little Concern for Access or Affordability

 

Report Includes Landmark Release of Medicaid Data: In 2014, More than $1 Billion Spent by Medicaid Programs on Sovaldi Treated Less than 2.4 Percent of Enrolled Patients with Hepatitis C

 

Medicare Spent More on Gilead Hepatitis C Drugs in the First Half of 2015 than in All of 2014

WASHINGTON - Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and senior committee member Chuck Grassley, R-Iowa, today released the results of an 18-month investigation into the pricing and marketing of Gilead Sciences' Hepatitis C drug Sovaldi and its second-wave successor, Harvoni. Drawing from 20,000 pages of internal company documents, dozens of interviews with health care experts, and a trove of data from Medicaid programs in 50 states and the District of Columbia, the investigation found that the company pursued a marketing strategy and final wholesale price of Sovaldi - $1,000 per pill, or $84,000 for a single course of treatment - that it believed would maximize revenue. Building on that price, Harvoni was later introduced at $94,500. Fostering broad, affordable access was not a key consideration in the process of setting the wholesale prices.

In the 18 months following Sovaldi's approval, Medicare spent nearly $8.2 billion before rebates on Sovaldi and Harvoni. Over that same span, Medicare's monthly spending on Hepatitis C treatments increased more than six-fold. In 2014 alone, Medicare and Medicaid combined to spend more than $5 billion on Sovaldi and Harvoni before rebates. That total is projected to climb in 2015. Gilead's recent financial statements show U.S. sales of Sovaldi and Harvoni, including through public programs and private payers, totaled $20.6 billion after rebates in the 21 months following Sovaldi's introduction.

Senators Wyden and Grassley will hold a press conference today at 11:15 a.m. in the Senate Radio/TV Gallery, S-325, to discuss the investigation. Details are below, including a streaming feed for media unable to attend in person. Further resources are also online and additional findings from the investigation are below.

 

"Gilead 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 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. 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. 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," Senator Wyden said. "America needs cures for cancer, Alzheimer's, diabetes and HIV. If those cures are unaffordable and out of reach to millions who need them, Congress will not have met its responsibilities to the American people. 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 will take fresh, bipartisan thinking and political independence to bring people together."

"The Finance Committee has tremendous responsibility in overseeing the federal programs paying for prescription drug coverage," Senator Grassley said.  "With that responsibility, the committee should know how the costs to the public programs and private insurance companies of a single innovative drug entering the market without competition can have major effects on which patients get the new drug and when.  This report sheds light on one example of the pricing decisions made by one company with a new prescription medicine that entered the market without competition in high demand.  This might be an example that received the most attention in some time, but it won't be the last.  I look forward to discussions with my colleagues and the public on the policy questions in the report.  I encourage everyone to read the report for the level of detail into pricing strategy that we don't often see."

Additional major findings from the investigation include :

• Gilead justified Sovaldi's high price point based on price-per-cure: Documents acquired during the course of investigation illustrate that Gilead was aware it was in a position to create clear savings for payers, but chose to pursue a "regimen neutral" price justified by "cost-per-cure" calculations that resulted in greater revenue per treatment than previous direct acting anti-virals [see page 42]. Given the increased clinical efficacy of Sovaldi, Gilead believed that it was more than justified in using the cost-per-cure pricing model [37, 46].

• Gilead set a high price for Sovaldi with an eye toward ensuring a future high price for Harvoni: The documentation reviewed shows that Gilead considered a number of factors in determining a price point for Sovaldi, including costs for the existing standard of care for Hepatitis C treatment and setting a high baseline for the next wave of drugs, such as Harvoni [32-58]. In documents obtained during the course of investigation, Gilead officials noted the "value capture opportunity is in Wave 1," and "Wave 2 access will be enhanced with a high Wave 1 price." It went on to say that "[a]t any price, access for Wave 2 improves as the price for Wave 1 is increased, suggesting that Wave 1 will set a price benchmark against which Wave 2 will ultimately be evaluated." By elevating the price for the new standard of care set by Sovaldi, Gilead intended to raise the price floor for all future Hepatitis C treatments, including its follow-on drugs and those of its competitors [44].

• Gilead underestimated the degree of access restrictions that it expected would result from its pricing decision: Gilead set a price as high as it thought the market would bear before significant access restrictions would be imposed [30]. Gilead's analyses were ultimately incorrect on this point as many payers adopted substantial access restrictions at the final price of $84,000 [81-88, 96-98].

• Despite significant access restrictions, Gilead refused to significantly lower the net price: When confronted with the widespread initiation of access restrictions [99-106], Gilead refused to offer substantial discounts and did not significantly modify its contracting strategy to improve patient access. For example, Gilead offered Medicaid programs supplemental rebates of up to 10 percent; however, its offer came with the precondition that states had to drop some or all of their access restrictions [106]. For states already facing a steep financial burden, accepting that precondition in most cases would have increased the budgetary impact rather than easing it [107]. Only five state Medicaid programs reached agreements with Gilead to receive supplemental rebates in 2014 [138].

• The burdens on Medicare, Medicaid, and the Bureau of Prisons were significant: The price of Sovaldi constituted a large burden?notably among state Medicaid programs, Medicare, and the BOP?and triggered access restrictions across public and private payers, thus limiting the number of Hepatitis C-infected patients who could access the new treatment options [81-88, 96-98]. For example, state Medicaid programs nationwide spent $1.3 billion before rebates on the drug in 2014. Even with that expenditure, less than 2.4 percent of the roughly 700,000 Medicaid enrollees with Hepatitis C were treated with Sovaldi [82-87]

• Competition entered the market, prices responded, but there are still significant concerns: Three days following Viekira Pak's approval on December 19, 2014, Express Scripts Holding Co., the nation's largest pharmacy benefit manager, announced that it would make Viekira Pak its preferred treatment for Hepatitis C genotype 1 and would no longer cover Sovaldi and Harvoni for these patients [112]. Gilead responded in January and February 2015 by entering into discounting agreements for Harvoni and Sovaldi with CVS, Anthem, Humana, Aetna, and UnitedHealth Group. Cigna struck agreements with Gilead for Harvoni only [113]. Even as competition lowered prices for therapies, this report documents that concerns remain, particularly in the public payer community, about high costs for treating millions of people in the U.S. infected with Hepatitis C, as well as the budgetary effects of a future single source innovator that might not face competition as quickly [114-122].

The report in full is available here.

An executive summary is available here.

A timeline of events pertaining to Gilead, Sovaldi and Harvoni is available here.

A glossary of terms pertaining to the investigation is available here.

Letters from state Medicaid programs are available here.

Winner To Be Announced at the 2016 Fall Meeting in Dallas

WASHINGTON (December 1, 2015) - The Urban Land Institute (ULI) today announced that it's now accepting entries for its Urban Open Space Award, an annual program that recognizes outstanding examples of successful large- and small-scale public spaces that have socially enriched and revitalized the economy of their surrounding communities. The Institute will accept entries until February 22, 2015.

To be eligible for the competition, an open space project must have been opened to the public for at least one year and no more than 15 years; be predominantly outdoors and inviting to the public; provide abundant and varied seating, sun and shade, trees and plantings with attractions; be used intensively on a daily basis by a broad spectrum of users throughout the year; have a positive economic impact on its surroundings; promote physical, social, and economic health of the larger community; and provide lessons, strategies, and techniques that can be used or adapted in other communities.

The award was created through the generosity of Amanda M. Burden, former New York City planning commissioner and 2009 laureate of the ULI J.C. Nichols Prize for Visionaries in Urban Development.  In 2011, the Kresge Foundation, MetLife Foundation, and the ULI Foundation joined forces to continue the award. Last year, ULI reaffirmed its commitment to the award and announced it would expand the program to include global submissions.

Juries of ULI Full Members, chaired by ULI Trustees, choose finalists and winner. Jury members represent many fields of real estate development expertise, including finance, land planning, development, public affairs, design, and other professional services. They also represent a broad geographic diversity.

Finalists for the awards will be announced in the summer of 2016. The winner will be honored October 5-8, 2016 at the ULI Fall Meeting in Dallas. Online entry forms and complete information on eligibility and requirements are available at uli.org/awards.  For more information, email awards@uli.org.

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About the Urban Land Institute

The Urban Land Institute (uli.org) is a global nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has more than 36,000 members representing all aspects of land use and development disciplines.

Iowa's students, regardless of where they live, should be able to access the tools they need to succeed and prepare for the 21^st Century economy.  But kids living in rural areas don't always have the same resources as their urban counterparts, which is why I recently introduced the Restructuring Underutilized Resources for Advancing Learning (RURAL) Act.

The RURAL Act is an innovative education package that will provide rural school districts the modern resources needed to provide their students with a high quality education.  By creating incentives for teachers to come to these communities, establishing an Office of Rural Education Policy to ensure that the Department of Education doesn't leave rural schools behind, and expanding technology-based learning strategies in rural schools, the RURAL Act will make sure students across Iowa are ready to go when they graduate.

I am continuing to meet with teachers, parents, school administrators, and students living across the state to hear about the unique challenges they face.  As I continue to stand up for Iowa's rural communities, I look forward to keeping you updated.

Sincerely,

Dave Loebsack
Iowa's Second District

Hy-Vee customers donate more than $100,000 by rounding up their grocery bills

 

WEST DES MOINES, Iowa (Nov. 30, 2015) ? Earlier this month, Hy-Vee, Inc. encouraged its customers to join its Hy-Vee Homefront initiative and help serve the men and women who have served America. Through its efforts, Hy-Vee will be donating more than $216,000 to organizations that assist local veterans and their families.

The Hy-Vee Homefront initiative is comprised of several company efforts to recognize and assist veterans and their families, including complimentary Veterans Day breakfasts at all Hy-Vee stores, donations to organizations that assist veterans through the Round Up for the Homefront program, Honor Flights and veteran and military member employee recruitment.

During Hy-Vee's 2015 Round Up for the Homefront program, which occurred Nov. 5 - 15, customers at all 240 Hy-Vee stores across eight Midwestern states were able to round up their purchases to the next dollar ? or a desired dollar amount ? at the checkout to help programs that assist veterans. The effort raised $116,870, a figure Hy-Vee will match with a $100,000 donation.

"Hy-Vee customers' deserve a sincere thank you for their generous efforts to support our veterans and active military members," said Brad Waller, assistant vice president of community relations at Hy-Vee. "The donations made by our customers will go directly to assisting our country's heroes."

The more than $216,000 raised will benefit three organizations that support veterans and their families: Hope for the Warriors, Operation First Response and the Puppy Jake Foundation.

Hope for the Warriors is dedicated to enhancing the quality of life for post-9/11 service members, their families and the families of the fallen who have sustained physical and psychological wounds in the line of duty. Operation First Response helps meet the immediate personal and financial needs of wounded military members and their families. And, the Puppy Jake Foundation raises, trains and provides service dogs to veterans.

In addition to the Round Up program, Hy-Vee also commemorated Veterans Day by offering a free breakfast to all veterans and active-duty military members. A new attendance record was set this year with Hy-Vee serving 91,384 veterans and service members breakfast on Nov. 11 - approximately 8,000 more than those served during Hy-Vee's 2014 Veterans Day breakfast.

For more information about the Hy-Vee Homefront initiative, the organizations benefited and how you can get involved, visit www.hy-vee.com/homefront.

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Hy-Vee, Inc. is an employee-owned corporation operating 240 retail stores across eight Midwestern states with sales of $9.3 billion annually. Hy-Vee ranks among the top 25 supermarket chains and the top 50 private companies in the United States. Supermarket News, the authoritative voice of the food industry, has honored the company with a Whole Health Enterprise Award for its leadership in providing services and programs that promote a healthy lifestyle. For more information, visit www.hy-vee.com.