The latest salvo in the pharmaceutical price wars is being launched from an unlikely outpost, but one that represents the struggle to pay for the year's most successful drug.
The Southeastern Pennsylvania Transit Authority, the mass transit provider for greater Philadelphia, is suing Gilead Sciences, the maker of the Hepatitis-C drug Sovaldi, for excessive pricing -- the first such lawsuit.
Sovaldi costs around $84,000 per treatment course, and cures most patients with minimal side effects, unlike previous medications. That price tag, though, has made Sovaldi a poster child for high drug prices and led to defacto rationing, especially among Medicaid programs, as some payers try to wait for the price to come down and hold off covering the drug for non-symptomatic patients, in whose livers the virus is present but not yet actively damaging.
The Southeastern Pennsylvania Transit Authority, or Septa, has a workforce of around 9,000, with many more covered in a health plan for retirees, and says it has spent $2.4 million on Sovaldi through the first 11 months of the year.
Gilead has charged far more than it needs to, argue lawyers for Septa, from the firm Chimicles & Tikellis. The drug company is attempting "to exploit the patent laws by selectively charging exorbitant prices," they wrote in a complaint filed in federal court in Philadelphia.
Septa is seeking a class action status for the suit, on behalf of any individual or organization that has "paid exorbitant prices for Sovaldi" or was unable to obtain the treatment, asking the court to order Gilead to provide unspecified changes and monetary relief.
Septa's lawyers argue that Gilead's pricing practices violate an array of federal anti-trust laws and section 1557 of the Affordable Care Act, the non-discrimination provision for federally-funded health programs, as well as "good faith and fair dealing" in third party benefits contracting.
"Gilead's price gouging was not done in good faith and, under the circumstances, a reasonable factfinder could conclude that it would be unjust for it to retain the benefit of those excessive charges," Septa's lawyers wrote in the complaint. "Among other things, the prices charged by Gilead for Sovaldi were unreasonable, excessive, arbitrary, discriminatory, inflated, exorbitant and inflated."
San Diego-based Gilead has not commented on the lawsuit, but defends its pricing on the grounds that the treatment is worth the long-term benefits of a curative therapy that avoids so many other costs -- liver transplants, liver cancer treatments, and marginally successful, longer courses of interferon, the previous standard treatment.
This is the first lawsuit against Gilead related to Sovaldi's pricing, by any kind of health plan or program, and could turn out to be a test of whether the courts will intervene in what some see as a market dispute.
In other markets, in other countries, the drug is being sold for less than it is in the U.S. Some 80 middle income countries, including India and Thailand, will be able to access the drug for a fraction of the $84,000 price under licensing negotiations still in development. In Europe, government and private payers will still likely face high prices, but below those on the other side of the Atlantic. France's Health Ministry has secured an approximately $51,000 per-treatment reimbursement, while the United Kingdom is set to pay about $58,380. Others are still examining the costs and benefits.
Even with certain limitations by payers like Medicaid, Sovaldi has been the most successful prescription drug launch in history in terms of revenue, with almost $9 billion in sales for the first three quarters of 2014. Gilead is also selling a recently-approved all-oral version of the drug, called Harvoni, priced at about $94,000.
Whatever the outcome of Septa's lawsuit, the debate over Sovaldi and other high-priced drugs is bound to continue, as payers, patients and policymakers put pressure on Big Pharma to justify their drug pricing, if not legislate new price controls. This past summer, the Senate Finance Committee launched an investigation into Sovaldi's price, asking Gilead to show its criteria for the $84,000 average charge.