How Gilead Sciences Is Gouging Hepatitis C Patients, $1,000 a Pill

Assorted pills, which hopefully don't cost $1,000 a pop like new hepatitis C drugs.

Assorted pills, which hopefully don't cost $1,000 a pop like new hepatitis C drugs.

A new wave of hepatitis C drugs is all the rage. But while these new pills boast cure rates of 90 percent in less time than their predecessors, their prices are causing rage.

Insurance companies are denying claims and lawsuits are flying, including one brought against the state by two Minnesota prison inmates over access to the drugs, which can run $1,000 a pill.

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Last year, Minnesota's Medicaid program spent nearly $9.2 million on hepatitis C drugs, up from $1 million in 2013. Specialty drugs for rare diseases often come with sticker shock. But the new hepatitis C meds' priciness is unique for a more prevalent disease.

Between 2010 and 2013, the rate of new hepatitis C cases in America reportedly doubled. At the end of 2014, more than 43,500 Minnesotans were living with hepatitis C.

"I have people that have been waiting for treatment for a couple of years," says Sherry Johnson, a nurse practitioner who runs a hepatitis C support group at St. Luke's hospital in Duluth.

In the meantime, stocks are performing magnificently. Shareholders in Gilead Sciences, Inc., the company behind wonder drugs Sovaldi and Harvoni, saw Gilead's sales more than double to nearly $25 billion.

A bottle of the digestible disease fighters runs about the cost of a low-end luxury car, with the full 12-week regimen of the newer Harvoni reaching $94,500.

"We're not exactly talking about reasonable returns on investment here," says Peter Maybarduk, of Washington D.C. think tank Public Citizen. "We're talking about extraordinarily high profit margins."

Maybarduk, who directs the group's global access to medicines initiative, argues that prices are arbitrarily high, leading to "treatment rationing" as government programs and insurance companies look to mitigate costs.

"We the public grant these companies monopoly powers that allow them to price whatever they choose -- essentially as high a price as they think they can get away with," he says. "It's a terrible situation for consumers and taxpayers."

Pharmaceutical companies often claim the price of research and development drives up costs. But Sovaldi racked up $8.6 billion in sales during its first nine months on the market. That's more than four times Gilead's total 2013 R&D budget.

When asked how its prices are determined, a Gilead spokeswoman wrote, "Unlike long-term or indefinite treatments for other chronic diseases, Harvoni and Sovaldi offer a cure at a price that reduces hepatitis C treatment costs now and will deliver significant savings to the healthcare system over the long-term. We believe the prices of Harvoni and Sovaldi reflect the value of the medicines."

Dr. Adriane Fugh-Berman doesn't doubt the increased effectiveness of new, big-ticket drugs. But the director of Georgetown University's PharmedOut project, which educates healthcare professionals on pharmaceutical marketing practices, questions whether the upgrade is worth the cost.

"Some of these new hepatitis and cancer drugs have the potential to bankrupt systems," she says.

Back in Duluth, Johnson routinely helps her patients through the paperwork nightmare of appealing to insurance companies denying coverage. While not everyone diagnosed with hepatitis C requires immediate treatment, she warns that putting it off can lead to cirrhosis or liver cancer.

"It's kind of an ethical dilemma," she says. "From the health care provider's chair where I sit, you'd like to stop things quickly. You'd like people to stay as healthy as they can. You don't want them to get worse."