Developing Countries Seek Lower Cost for Sovaldi

Apr 11, 2014 4:39 am ET

(Corrects second paragraph to show Gilead has agreed on pricing with Doctors Without Borders, not countries.)

April 11 (Bloomberg) -- Developing countries are seeking to pay as little as 1 percent of the $84,000 price Gilead Sciences Inc. is charging U.S. patients for its new hepatitis C drug. Wealthier countries such as Ukraine and China may not be so lucky, according to Doctors Without Borders, the nonprofit international aid group.

While Gilead said it has reached agreement with Egypt on the discounted price for its pill, Sovaldi, in countries such as Kenya, Mozambique, Myanmar and India, Doctors Without Borders will also be able to procure the drug at $900 for a 12-week course of the medicine, Isabelle Meyer-Andrieux, an adviser at Doctors Without Borders, said yesterday at a liver disease meeting in London. Governments of these countries may negotiate for this price as well, she said.

Gilead spokeswoman Amy Flood said the company has reached such a discount agreement at a national level only with Egypt. Flood declined to comment yesterday on the status of negotiations with other countries.

Egypt has one of the world’s highest rates of infection of hepatitis C and has treated more than 350,000 patients at the government’s expense over the last six years, said Wahid Doss of the National Hepatology and Tropical Medicine Institute in Egypt. While Gilead asked Egypt for a higher price at first, the country was able to win better terms, Doss said.

“Egypt’s example shows the power of a public health approach and its large scale,” said Stefan Wiktor, who leads the World Health Organization’s global hepatitis program. “One of the reasons they were able to negotiate a lower price is because they have a big program.”

Cost Concerns

“We are learning a lot from Egypt,” Meyer-Andrieux said. “But this is only a start. A major concern for us is the price for middle-income countries” such as China and Ukraine, where 75 percent of the global population lives today.

About 150 million people worldwide are infected with the hepatitis C virus, according to the WHO, with about 2.7 million in the U.S. The disease is transmitted through the blood and can be symptomless for years before it begins to scar the liver, leading to cancer, organ failure and, eventually, a transplant.

Gilead’s pricing strategy is modeled after its past experience with HIV medicines, where pricing in the U.S. and Europe has been different to what is charged in the developing world, said Gregg Alton, executive vice president of corporate and medical affairs at Foster City, California-based Gilead, the world’s biggest maker of HIV medicines.

“Gilead’s global pricing model is based on a country’s ability to pay,” Alton said in an e-mail response to questions last month.

Fair Price

In a separate interview last month, Alton said, Gilead is “very committed to making sure patients everywhere have access. As for the cost in the U.S., ‘‘we think the price is fair. It’s a one-time cost that is your lifetime cost.’’

The WHO yesterday called for ‘‘a concerted effort’’ by various stakeholders to lower the cost of the drug. In addition to tiered pricing, voluntary and compulsory licensing, where generic-drug makers are given permission to produce more affordable versions of a medicine, can also help achieve affordability, the WHO said.

Gilead has been criticized in the U.S. for the price of the new medicine, with pharmacy benefit managers and insurers seeking to reduce the cost and members of Congress calling on the company to justify its price structure.

--With assistance from Drew Armstrong in New York.