Sovaldi’s price in Europe—what do we learn from the US Senate report and European government initiatives?

January 10th 2018

The US Senate Finance Committee has recently completed an 18-month investigation into the pricing of Gilead Sciences’ revolutionary hepatitis C virus (HCV) therapies Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir). The Committee’s report, which drew on 20,000 pages of internal company documents, dozens of interviews and extensive Medicaid data, concludes that Gilead pursued a “pricing and marketing strategy designed to maximize revenue with little concern for access or affordability.” Key findings are as follows:

Source: Gilead Sciences, September 2014

The US Senate Finance Committee has recently completed an 18-month investigation into the pricing of Gilead Sciences’ revolutionary hepatitis C virus (HCV) therapies Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir). The Committee’s report, which drew on 20,000 pages of internal company documents, dozens of interviews and extensive Medicaid data, concludes that Gilead pursued a “pricing and marketing strategy designed to maximize revenue with little concern for access or affordability.” Key findings are as follows:

  • Gilead used its calculations of price-per-cure to justify Sovaldi’s high price.
  • The company’s pricing strategy for Sovaldi was intended to ensure a future high price for Harvoni.
  • Despite payers’ imposition of significant access restrictions on Sovaldi, Gilead refused to cut the net price substantially until competitors entered the market, prompting leading PBMs and insurers to threaten to exclude Sovaldi and Harvoni from their formularies.
  • In 2014, Medicare and Medicaid spent more than $5 billion before rebates on Sovaldi and Harvoni.

Not surprisingly, the Senate Finance Committee’s investigation focused predominantly on the pricing of Sovaldi and Harvoni in the US, but the report also includes some fascinating insights into Gilead’s pricing strategy in other countries, especially in Europe. An internal document from September 2013 reveals that Gilead’s proposed European price corridor targeted a ceiling price for Sovaldi of $64,400 per 12-week course of therapy in Germany and a floor price of $54,200 in the UK. The company set the target price for France, Italy, Spain, the Netherlands, Belgium, Portugal and Greece, as well as Australia, at the same level as the UK target price (i.e., $54,200).

In September 2014, however, Gilead disclosed that actual wholesale prices in Europe were far more variable (see figure above). Several other European countries—Sweden, Norway, Finland and Denmark—had lower prices than the UK. The German wholesale price was close to Gilead’s target price, while the French price of $72,508 was far higher than the company’s target price. Email messages published by the Senate Finance Committee reveal that Gilead attached considerable importance to using the pricing freedom afforded by France’s compassionate use programme, known as autorisation temporaire d’utilisation (ATU; temporary authorization for use), to set a high benchmark price in that country.

In November 2014, however, France’s Comité Economique des Produits de Santé (CEPS; Economic Committee for Healthcare Products) set the price of Sovaldi at €41,000 ($54,500) for 12 weeks’ therapy, more than 25% lower than the original list price, but very close to Gilead’s target. The French Ministry of Health described the price negotiated by the CEPS as the lowest in Europe, a claim also made by some other governments.

The threat of pricing reform and new cost-containment initiatives

The cost of Sovaldi and other direct-acting antivirals (DAAs) has prompted governments across Europe, and beyond, to introduce new policies for these drugs. Several governments have established substantial dedicated funds for DAAs, but it remains to be seen if these resources will be adequate to meet demand. Among the cost-containment strategies adopted are a risk-sharing agreement in Spain, staggered increases in rebates in Germany, competitive tendering in the UK and price-volume agreements in France, Italy and Spain. Furthermore, the Spanish government has introduced draft legislation to reform its pricing and reimbursement procedures, and the German government is expected to respond to widespread criticism of the current pricing system by amending the early benefit assessment process in spring 2016.

In addition to these national measures, the French government has persuaded 13 other countries to establish a network of information exchanges to share knowledge on price trends and details of negotiations with drug manufacturers, including managed entry agreements. The Dutch and Belgian governments plan to begin a collaboration on pharmaceutical pricing in 2016, which could be expanded to include several other countries. The European Commission contemplated invoking its new Joint Procurement Agreement, intended to combat "serious cross-border threats to health," as a means of securing lower prices for innovative infectious disease therapies such as DAAs.

All of these initiatives are examples of an unprecedented willingness on the part of Europe’s politicians to work together to reduce the cost of innovative medicines. Critics assert that some manufacturers have sown the wind of unacceptably high prices for new drugs; the life sciences industry hopes that it will not now reap a whirlwind of radical pricing reform and tough cost containment.

Originally Published on 9 December 2015 by Neil Grubert

About the author

Neil Grubert

Neil Grubert

A multilingual pharmaceutical market access specialist with 27 years of experience tracking the global prescription drug and self-medication markets. Neil spearheaded the establishment and growth of Decision Resources’ international market access business. As the author of more than 150 reports covering 20 mature and emerging markets, multiple therapeutic areas and numerous industry issues, Neil has earnt a reputation for extensive knowledge of market access environments around the world. He is an effective communicator with both the written and spoken word, and an accomplished chair of international events, having delivered numerous presentations at conferences, seminars and training workshops.