Gilead Hepatitis C Drug Boost Seen as Medicare Plans Tests

Jun 03, 2014 4:19 pm ET

(Updates with closing shares in fifth paragraph.)

June 3 (Bloomberg) -- Medicare, the U.S. health plan for older Americans, will cover the cost of screening for hepatitis C, a decision that may further open the government’s wallet for Gilead Sciences Inc.’s $84,000 cure for the disease.

Adults at high risk for infection, including those who inject illegal drugs or had a blood transfusion before 1992, are eligible, as is anyone in Medicare ages 49 to 69, the agency said today in a memo. A hepatitis C diagnosis could lead to further use of Gilead’s Sovaldi, which costs $84,000 for a 12- week course of treatment and cures the disease.

While 2.7 million Americans may be infected with hepatitis C, health officials say many don’t know it because the virus can lay without symptoms for decades before scarring the liver, leading to cancer, organ failure and a transplant. Medicare didn’t previously cover screening, according to the Centers for Medicare and Medicaid Services, or CMS.

The decision to pay for testing “should increase the rate of diagnosis and at a minimum help CMS make informed treatment decisions,” Ian Somaiya, an analyst at Nomura Securities International Inc. in New York, said in an e-mail. “The net of all this points to higher Sovaldi sales.”

Gilead shares rose 1.2 percent to $82.55 at the close in New York and have increased 55 percent in the past 12 months. The Foster City, California-based company has said that the benefit of the medicine justifies the price.

Two spokeswomen for Gilead didn’t respond to e-mails seeking comment on Medicare’s decision.

CDC Recommendation

The decision follows recommendations in 2012 and last year by the CDC and U.S. Preventive Services Task Force that all adults be screened for the virus, particularly those born from 1945 to 1965. Baby boomers account for about two-thirds of chronic hepatitis C infections in the U.S., and military veterans are three times as likely to carry the virus, according to Medicare’s memo.

The testing “provides an opportunity for appropriate interventions to benefit the infected person by permitting for the early detection of, and potentially the prevention of, HCV- related liver disease,” the CMS memo said.

Prior to the development of Gilead’s Sovaldi, treatment of hepatitis C entailed a regimen of two or more antiviral drugs with numerous side effects. Gilead’s Sovaldi won FDA approval in December.