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Gilead Revenue Soars on Hepatitis C Drug
By ANDREW POLLACKAPRIL 22, 2014
Record sales of a new hepatitis C drug pushed the first-quarter earnings of Gilead Sciences far beyond expectations, the company reported on Tuesday, but could also heighten concerns about the high cost of the drug, known as Sovaldi, and the ability of the health care system to pay for it.
The $2.3 billion in sales of Sovaldi appears to have shattered the previous record for sales of a drug in its first full quarter on the market. It even appears to have already eclipsed the record for first-year sales, at least in the United States.
About $2.1 billion of the Sovaldi sales were in the United States. The previous record was held by Incivek, a hepatitis C drug from Vertex Pharmaceuticals, with $1.56 billion in United States sales in its first four full quarters on the market, according to EP Vantage, a news analysis service.
Sales of Sovaldi were crucial to Gilead’s first-quarter revenue of $5 billion, double that of a year ago. Net income for the quarter was $2.23 billion, well above the $722.2 million of the same period last year.
The rapid uptake of Sovaldi to some degree reflects pent-up demand, as many patients were holding off treatment until it was approved in December. The drug, a pill taken once a day, has a higher cure rate, a shorter duration of treatment and fewer side effects than previous treatments.
But Sovaldi, which has a list price of $1,000 per pill, or $84,000 for a typical course of treatment, has become a flash point in a debate over drug prices.
Paying for Sovaldi for all the patients who need it could put financial strain on insurers, state Medicaid programs, the Department of Veterans Affairs and prison systems. UnitedHealth Group, one of the largest insurers, said last week that its first-quarter earnings had declined in part because it had spent more than $100 million on hepatitis C treatments, including Sovaldi, far more than it expected.
Concerns over public resistance to soaring prices contributed to a decline in Gilead’s stock price since the beginning of March, along with those of many other biotechnology companies, though there has been a recent uptick.
Gilead shares rose nearly 2 percent to $72.86 in regular trading Tuesday and climbed further in after-hours trading following the release of the company’s results.
Gilead defends the price, saying Sovaldi can save the health system money over all.
“First and foremost, the value of a cure, I tend to think, is underestimated in terms of the overall advantage that the health care system receives from it,” John F. Milligan, chief operating officer of Gilead, said on a conference call with analysts Tuesday.
Three million to four million Americans, mostly baby boomers, may have hepatitis C. The disease can cause cirrhosis, or scarring of the liver, and liver cancer, though usually not for decades after the infection occurs.
Some organizations are now limiting use of Sovaldi to only those with more advanced disease, saying others can wait without risk because of how slowly the disease progresses.
“We are telling folks to wait for a while on less urgent cases,” said Dr. William E. Golden, medical director of Arkansas Medicaid. The Veterans Affairs Department put out guidelines saying it was “reasonable to defer” treatment for many patients.
But in many cases, the decision to hold off is being justified for reasons other than cost.
Dr. Golden said there was actually relatively little data showing Sovaldi was safe and effective for all patients. “We’d rather see more clarity before we engage in a large investment of limited resources,” he said.
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Also, newer drugs are coming that might be even better. For now, many patients must combine Sovaldi with a weekly injection of interferon, which has harsh side effects.
But clinical trial results are accumulating. And Gilead is expected by October to win regulatory approval of a one-a-day pill combining Sovaldi with another drug that will do away with the need for interferon.
“By the end of this year, it will be very hard to make a case for waiting,” said Dr. Sharon Levine, an executive at Kaiser Permanente. Once Gilead’s new pill comes out, “We will treat anyone who warrants treatment,” she said.
Dr. Levine criticized Gilead’s pricing, saying that if all of Kaiser’s members with hepatitis C were to be treated in a single year, “it would double our total drug budget for all of our nine million members nationally.”
That won’t happen because many people infected with the virus do not know they have it. And there is a limit to the capacity of doctors to treat patients.
Gilead executives said on Tuesday that 30,000 people have tried the drug so far, leaving many more left.
So the number of patients to be treated — and big sales for Sovaldi — may last years.
Other companies are working on all-oral regimens, and once their products arrive, competition might lower prices somewhat. One contender, AbbVie, said on Tuesday that it had applied for regulatory approval of its all-oral regimen, which could reach the market by early next year. Merck, Bristol-Myers Squibb and Johnson & Johnson are also in the race.
Some doctors say there is a benefit to treating even early stages of the disease, to prevent scarring of the liver.
“If cost were not a factor, we would want to treat the entire population,” said Dr. Rena Fox, a professor of medicine at the University of California, San Francisco. She said it was frustrating that “we finally get this great treatment and then we withhold it.”
http://www.nytimes.com/2014/04/23/your-money/gilead-revenue-soars-on-hepatitis-c-drug.html?_r=0
Record sales of a new hepatitis C drug pushed the first-quarter earnings of Gilead Sciences far beyond expectations, the company reported on Tuesday, but could also heighten concerns about the high cost of the drug, known as Sovaldi, and the ability of the health care system to pay for it.
The $2.3 billion in sales of Sovaldi appears to have shattered the previous record for sales of a drug in its first full quarter on the market. It even appears to have already eclipsed the record for first-year sales, at least in the United States.
About $2.1 billion of the Sovaldi sales were in the United States. The previous record was held by Incivek, a hepatitis C drug from Vertex Pharmaceuticals, with $1.56 billion in United States sales in its first four full quarters on the market, according to EP Vantage, a news analysis service.
Sales of Sovaldi were crucial to Gilead’s first-quarter revenue of $5 billion, double that of a year ago. Net income for the quarter was $2.23 billion, well above the $722.2 million of the same period last year.
The rapid uptake of Sovaldi to some degree reflects pent-up demand, as many patients were holding off treatment until it was approved in December. The drug, a pill taken once a day, has a higher cure rate, a shorter duration of treatment and fewer side effects than previous treatments.
But Sovaldi, which has a list price of $1,000 per pill, or $84,000 for a typical course of treatment, has become a flash point in a debate over drug prices.
Paying for Sovaldi for all the patients who need it could put financial strain on insurers, state Medicaid programs, the Department of Veterans Affairs and prison systems. UnitedHealth Group, one of the largest insurers, said last week that its first-quarter earnings had declined in part because it had spent more than $100 million on hepatitis C treatments, including Sovaldi, far more than it expected.
Concerns over public resistance to soaring prices contributed to a decline in Gilead’s stock price since the beginning of March, along with those of many other biotechnology companies, though there has been a recent uptick.
Gilead shares rose nearly 2 percent to $72.86 in regular trading Tuesday and climbed further in after-hours trading following the release of the company’s results.
Gilead defends the price, saying Sovaldi can save the health system money over all.
“First and foremost, the value of a cure, I tend to think, is underestimated in terms of the overall advantage that the health care system receives from it,” John F. Milligan, chief operating officer of Gilead, said on a conference call with analysts Tuesday.
Three million to four million Americans, mostly baby boomers, may have hepatitis C. The disease can cause cirrhosis, or scarring of the liver, and liver cancer, though usually not for decades after the infection occurs.
Some organizations are now limiting use of Sovaldi to only those with more advanced disease, saying others can wait without risk because of how slowly the disease progresses.
“We are telling folks to wait for a while on less urgent cases,” said Dr. William E. Golden, medical director of Arkansas Medicaid. The Veterans Affairs Department put out guidelines saying it was “reasonable to defer” treatment for many patients.
But in many cases, the decision to hold off is being justified for reasons other than cost.
Dr. Golden said there was actually relatively little data showing Sovaldi was safe and effective for all patients. “We’d rather see more clarity before we engage in a large investment of limited resources,” he said.
Continue reading the main story
Continue reading the main story
Advertisement
Also, newer drugs are coming that might be even better. For now, many patients must combine Sovaldi with a weekly injection of interferon, which has harsh side effects.
But clinical trial results are accumulating. And Gilead is expected by October to win regulatory approval of a one-a-day pill combining Sovaldi with another drug that will do away with the need for interferon.
“By the end of this year, it will be very hard to make a case for waiting,” said Dr. Sharon Levine, an executive at Kaiser Permanente. Once Gilead’s new pill comes out, “We will treat anyone who warrants treatment,” she said.
Dr. Levine criticized Gilead’s pricing, saying that if all of Kaiser’s members with hepatitis C were to be treated in a single year, “it would double our total drug budget for all of our nine million members nationally.”
That won’t happen because many people infected with the virus do not know they have it. And there is a limit to the capacity of doctors to treat patients.
Gilead executives said on Tuesday that 30,000 people have tried the drug so far, leaving many more left.
So the number of patients to be treated — and big sales for Sovaldi — may last years.
Other companies are working on all-oral regimens, and once their products arrive, competition might lower prices somewhat. One contender, AbbVie, said on Tuesday that it had applied for regulatory approval of its all-oral regimen, which could reach the market by early next year. Merck, Bristol-Myers Squibb and Johnson & Johnson are also in the race.
Some doctors say there is a benefit to treating even early stages of the disease, to prevent scarring of the liver.
“If cost were not a factor, we would want to treat the entire population,” said Dr. Rena Fox, a professor of medicine at the University of California, San Francisco. She said it was frustrating that “we finally get this great treatment and then we withhold it.”
http://www.nytimes.com/2014/04/23/your-money/gilead-revenue-soars-on-hepatitis-c-drug.html?_r=0
i'm sure a lot of folks are joining the band wagon on the new treatments
for 2 simple reasons,high rate of SVR (cure) less side effects and shorter periods of taking the meds.
for 2 simple reasons,high rate of SVR (cure) less side effects and shorter periods of taking the meds.
84k is cheap...
my tx took 3 years and cost close to 400k, what with all the drugs, and the helper drugs, and the surgeries for the drug side effects, like kidney stones, etc etc etc.
let the company make back its research billions, and stop complaining people.
12 weeks vs. 150 wks like me?? and cheaper to boot, with less health issues afterwards..hmmm let me think.
sheesh.
cost is a factor because it takes years, and a hundred failed trials, or a thousand, all costing millions for each failed drug before one gets to market that works, is safe, and gets FDA approval. One which may be replaced in a year by a competitor drug.
So how are they to recoup their outlay?
The company has to pay its researchers too, they have to eat too...
their kids want ipods and gelatees' I presume
and so yes, they make a profit... if and when they do hit it right...which is HOW come they can stay in business and work on ANOTHER cure...
I just wonder if the government did to us what they do to drug companies how we would feel... they have 7 years to recoup, and then the patent expires, the cost plunges as every yokel with a lab can make and sell it...
So if we build a company, work our butts off.....risk ALL OUR MONEY
by taking a chance that the thing make take off...and low and behold after a hundred failed attempts, we finally start to make a profit on one in a thousand things we tried to create...
and then good old UNCLE SAM comes along and says, HEY, you can't do that...give US your business!! Why should you profit???
that's what they do to drug companies....any other industry would start a revolution over this.
and THAT is why the cost is what it is..
They are forced to try to make back their investment in a very short time, before they are forced not to...
and they have to try to profit sufficiently to still pay their people and to make up for all the failed attempts, all the research that goes on for years, that did not lead to a safe and effective drug has to come out of the profit margin also. (average drug trial=2 mil.) average number approved by FDA 1 in 1000)
Not a fan of drug companies here, but just saying, the government system is exactly what causes this problem. They are not the solver of this problem, their regulations and patent laws are what caused the high cost in
the first place!
Then along come the cry babies who can't add 2 and 2....
AND TO THE REST THEY SAY
THATS TOO EXPENSIVE.
GIVE IT TO US..
IN FACT
go to work...then give us your paycheck...same idea.
why is it the public now feels they are entitleD to make people work for nothing..????
.oh I know...because the ones wanting that are mostly sitting on their butts living off of other peoples paychecks already !!
ok, now I GET IT. Funny how the truly greedy (not to mention lazy) want to accuse the rest of being greedy. too bad...not goin there.
mb
my tx took 3 years and cost close to 400k, what with all the drugs, and the helper drugs, and the surgeries for the drug side effects, like kidney stones, etc etc etc.
let the company make back its research billions, and stop complaining people.
12 weeks vs. 150 wks like me?? and cheaper to boot, with less health issues afterwards..hmmm let me think.
sheesh.
cost is a factor because it takes years, and a hundred failed trials, or a thousand, all costing millions for each failed drug before one gets to market that works, is safe, and gets FDA approval. One which may be replaced in a year by a competitor drug.
So how are they to recoup their outlay?
The company has to pay its researchers too, they have to eat too...
their kids want ipods and gelatees' I presume
and so yes, they make a profit... if and when they do hit it right...which is HOW come they can stay in business and work on ANOTHER cure...
I just wonder if the government did to us what they do to drug companies how we would feel... they have 7 years to recoup, and then the patent expires, the cost plunges as every yokel with a lab can make and sell it...
So if we build a company, work our butts off.....risk ALL OUR MONEY
by taking a chance that the thing make take off...and low and behold after a hundred failed attempts, we finally start to make a profit on one in a thousand things we tried to create...
and then good old UNCLE SAM comes along and says, HEY, you can't do that...give US your business!! Why should you profit???
that's what they do to drug companies....any other industry would start a revolution over this.
and THAT is why the cost is what it is..
They are forced to try to make back their investment in a very short time, before they are forced not to...
and they have to try to profit sufficiently to still pay their people and to make up for all the failed attempts, all the research that goes on for years, that did not lead to a safe and effective drug has to come out of the profit margin also. (average drug trial=2 mil.) average number approved by FDA 1 in 1000)
Not a fan of drug companies here, but just saying, the government system is exactly what causes this problem. They are not the solver of this problem, their regulations and patent laws are what caused the high cost in
the first place!
Then along come the cry babies who can't add 2 and 2....
AND TO THE REST THEY SAY
THATS TOO EXPENSIVE.
GIVE IT TO US..
IN FACT
go to work...then give us your paycheck...same idea.
why is it the public now feels they are entitleD to make people work for nothing..????
.oh I know...because the ones wanting that are mostly sitting on their butts living off of other peoples paychecks already !!
ok, now I GET IT. Funny how the truly greedy (not to mention lazy) want to accuse the rest of being greedy. too bad...not goin there.
mb
Yes, it's sad that cost is always the big consideration.
However not everyone who has hep C will develop liver disease. Many never have any problems. Somehow their livers are able to stay health despite the virus.
To my way of thinking, the biggest reason everyone ( with hep C) should do treatment is to stop the spread of the virus.
However not everyone who has hep C will develop liver disease. Many never have any problems. Somehow their livers are able to stay health despite the virus.
To my way of thinking, the biggest reason everyone ( with hep C) should do treatment is to stop the spread of the virus.
"Some doctors say there is a benefit to treating even early stages of the disease, to prevent scarring of the liver.
“If cost were not a factor, we would want to treat the entire population,” said Dr. Rena Fox, a professor of medicine at the University of California, San Francisco. She said it was frustrating that “we finally get this great treatment and then we withhold it.”
Everyone with HCV should be able to treat whether with advanced or in early stages. I think its terrible that cost should prevent patients with early stages from treating before they progress to serious scarring of their liver. Unbelievable!
Nan
“If cost were not a factor, we would want to treat the entire population,” said Dr. Rena Fox, a professor of medicine at the University of California, San Francisco. She said it was frustrating that “we finally get this great treatment and then we withhold it.”
Everyone with HCV should be able to treat whether with advanced or in early stages. I think its terrible that cost should prevent patients with early stages from treating before they progress to serious scarring of their liver. Unbelievable!
Nan
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