Gilead Sciences had a banner year. Its blockbuster drug to cure hepatitis C, Sovaldi, had sales of $8.5 billion through third quarter this year. This is the most successful pharmaceutical launch ever. The retail cost for Sovaldi is $84,000 for a 12 week regimen – or about $1,000 per pill.

Prescription drug benefit managers and insurance companies have struggled to balance their books with this expensive treatment. Gilead says the treatment is a game changer. They are right. Sovaldi has a high cure rate – and the treatment is limited to 3 months. Gilead also says the cost of treatment is less than the cost of a liver transplant. That is also correct – though most people with hepatitis C will not need – or be candidates for – liver transplantation.


Prescription drug benefit managers and insurance companies tightened their criteria for eligibility to receive the drug. Rationing.


Medicaid did the same. Prisons also. The incidence of hepatitis C in these populations is not insignificant. And hepatitis C is contagious – so there are strong public health reasons to make a cure available to the largest possible cohort.


Gilead was tone deaf to this message.


Another pharmaceutical company, AbbieVie, just received approval from the FDA for its hepatitis C drug, Viekira. That drug is also a 12 week regimen- and has similar 90% cure rates to Sovaldi. AbbieVie’s drug regimen consists of 6 pills a day. This might create compliance problems. And, its rack retail rate is $83,319.


Nonetheless, Express Scripts, which covers 25 million beneficiaries, announced they had negotiated a discounted rate with AbbieVie to use Viekira as the “treatment of choice” for hepatitis C. Express Scripts will make this recommendation to the health plans it covers, and expects most will follow its recommendation.


3 million Americans are estimated to have hepatitis C. Express Scripts says its default policy will be for AbbieVie’s drug to be made available to all hepatitis C patients, regardless of the disease’s severity.


Perhaps Gilead saw this coming and just wanted to squeeze as much revenue as possible while there was no competition. Perhaps Gilead always planned to cut Sovaldi’s price when competition entered the stage. We’ll see.