Lawmakers Take Interest in Hep C Drug Pricing

Multiple news outlets are reporting that a letter signed by Representatives Henry Waxman, Frank Pallone Jr., and Diana DeGette was sent last week to the CEO of Gilead asking for justification for the high price set on its new Hepatitis C medication, Sovaldi. (See this story.) The lawmakers also stressed that they expect Gilead to explain how the drug will get to patients in government funded programs, like Medicaid and Medicare.

This could be any of a number of motives here, but none are particularly good for the pharma or biotech industries.

This could be a shot across the bow to warn other manufacturers to keep pricing for new products in line with current therapies.

It could be an attempt to pressure Gilead to take massive discounts for Part D and Medicaid business.

It could be a genuine attempt to start a conversation about rational drug pricing and the measure of value in conditions that are difficult to treat, like Hepatitis C or many cancers.

Even if it’s just grandstanding, this is a manufacturer with a drug that may have better clinical effectiveness. The industry should be worried that it can be seen as such an easy target.

Headlines like this one from Reuters aren’t going to help, either:

Gilead offers Egypt new hepatitis C drug at 99 pct discount

This is a subject that’s easy to exploit and it could be a target as lawmakers look for ways to address rising health care costs. The usual free-market senators may not be much help here, once somebody educates them that there isn’t a free market in pharmaceuticals. There’s a global market, with third world countries getting free medication, European and Asian countries basically setting prices, and an American system dominated by third party (often government) payers paying significantly more than the payers anywhere else.

This conversation is only beginning.