"SEPTA has filed a class action suit at the U.S. District Court for the Eastern District of SEPTA logoPensylvania against Gilead Sciences, Inc. related to the sale and pricing of its Hepatitis-C drug, Sovaldi.
Sovaldi is the first drug approved by the Food and Drug Administration for certain types of Hepatitis-C infections that does not need to be injected. It can reportedly cure about 90 percent of patients with the most common form of Hepatitis-C in three to six months, and can do so with relatively minor side effects compared to earlier available treatments.
Gilead has been selling a 12-week regimen of Sovaldi in the United States for approximately $84,000, or $1,000 per pill. This is significantly more than the original price projection for Sovaldi, and in sharp contrast to the prices at which the drug is being made available in other countries, the complaint says.
Gilead recently announced its intention to make Sovaldi available in 91 developing countries at deeply discounted prices, and the drug is reportedly available in Egypt for 99 percent below the U.S. price.
While there are some orphan drugs that are similarly expensive, they are typically limited to rare conditions that affect only a very small patient population. In those instances, charging high prices may be necessary to recoup amounts invested in research and development.
In the case of Sovaldi, however, there are between 2.7 and 5.2 million people in the United States infected with Hepatitis-C, and 185 million people worldwide. The complaint alleges that, if left unchecked, Gilead’s exorbitant pricing scheme has the potential to bankrupt segments of the U.S. healthcare system."
Ok, let's go through the facts again..
The total lifetime cost of treating every HCV patient absent such innovations would be $360 billion. That does not include an estimated $400 billion loss in productivity and $3 trillion in health value lost because of premature mortality.
From this perspective it is clear that new medicines almost always reduce the cost of living longer and healthier life and increase the value of such improvements. Further, it is clear that the price of new drugs, setting aside the obvious need for faster and smarter drug development costs, reflect the high percentage of social value generated by medical innovation. Assuming the $240 billion cost goes right to innovators, more than 90% of the value of the product ($360 bill + $400 bill. + $3 trillion = $3.76 trillion) goes to society.