Healey questions legality of Sovaldi pricing

A correction has been added to this story.

ATTORNEY GENERAL MAURA HEALEY is warning the maker of a breakthrough hepatitis C drug that the company’s $1,000-a-pill price may constitute an unfair trade practice under Massachusetts law.

In her Jan. 22 letter to John Martin, the CEO of California-based Gilead Sciences Inc., Healey said Gilead’s drug offers a cure for hepatitis C but its pricing strategy allows the disease to continue to spread through vulnerable populations, resulting in “massive public harm.” Healey said her staff “will continue to examine this potential claim for unfair commercial conduct.”

Healey referenced the letter and the broader issue of drug pricing in a Wednesday morning breakfast speech to the Massachusetts Biotechnology Council. Officials at Gilead could not be immediately reached for comment, but a spokeswoman for the firm told other news outlets that the company looked forward to discussions with Healey.

Healey said data from the Massachusetts Department of Public Health indicate hepatitis C cases among 15 to 29-year-olds jumped 138 percent between 2002 and 2014 in large part because of injection drug use. She said the numbers will continue to rise without expanded treatment, but she said Gilead’s pricing policies for its hepatitis C drugs Sovaldi and Harvoni prevent many infected patients from using the drugs.

Healey noted Gilead sells Sovaldi for $10 a pill in Egypt and $4 a pill in India, but charges $1,000 a pill in the United States. She noted all of the nation’s Medicaid programs spent $1.3 billion on Sovaldi before rebates in 2014, allowing only 2.4 percent of Medicaid recipients believed to have hepatitis C to obtain treatment. The drug has a 97 percent cure rate. (An earlier version of this story incorrectly said the $1.3 billion in Medicaid spending on Sovaldi was just in Massachusetts.)

“Gilead clearly recognizes the enormous public health benefits and profit associated with making these drugs broadly accessible in other countries,” Healey wrote. “I urge you to be part of the solution here in the United States as well.”

The Attorney General urged the company to offer Sovaldi at a price of $10-a-pill to all “public payers in the United States serving the poorest patients with the highest rates of infection.” Her suggestion would seem to apply to Medicaid recipients and possibly inmates in prisons, where the infection rate for heptatis C is believed to be 17 times the rate in the general population. (The Massachusetts Department of Correction, which has dodged questions about its Sovaldi policies, is facing a class action lawsuit seeking increased access to the treatment.)

“At a minimum, Gilead should consider innovative approaches to pricing and payment that would expand access to Sovalid and Harvoni in the United States, as it has done in other countries,” she wrote.

Gilead in the past has defended its pricing practices, which have allowed the company to reap enormous profits. According to research by the US Senate Committee on Finance, Gilead sold $20.6 billion worth of Sovaldi and Harvoni in the first 21 months after the drugs went on the market.  Gilead in 2011 paid $11.2 billion for the company that originally developed the drug.

A year ago, Gov. Charlie Baker said his administration planned to jawbone Gilead in an effort to convince the company to lower its prices. At a press briefing on Wednesday, Baker acknowledged that effort had been unsuccessful.

“There are very few people who’ve had luck to date in jawboning in the US,” Baker said. “There’s been a lot of luck in jawboning down the price of this product in other parts of the world.”

Baker praised Healey’s letter (“she made a very compelling case”) and said his administration would try to assist her in any conversations she may have with Gilead.

As for Healey’s legal argument that Gilead’s high price for Sovaldi could represent an unfair trade act, the governor said he needed to do more research on the subject before commenting. “I’m not a lawyer,” he said.