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Whither Cantor and setting the price on a cure

By Steven Brill
June 17, 2014

U.S. House Majority Leader Cantor gestures as he talks about his defeat in his Virginia Republican primary election during a news conference on Capitol Hill in Washington

1. An Eric Cantor sweepstakes:

Who’s going to hire the soon-to-be unemployed but highly marketable Representative Eric Cantor (R-Va.)?

He’s got a law degree, a world-class Washington Rolodex and the kind of visibility that should make him a client magnet for K Street’s law firms and lobbying and public policy shops.

Or will he go to a think tank? That path might be more complicated because the most likely home for a conservative heavyweight, the Heritage Foundation, seems to have veered so far right that it might be awkward to welcome a guy just beaten by a candidate who attacked him from the right.

Or will he go home to Richmond, a place he might not now have to go home to had he spent more time there before the primary?

It’s not too early for a reporter to start tracking Cantor’s job hunt.

2. Drugs that save lives and annihilate budgets:

“‘This is the tip of the iceberg,’ said Steven Pearson, president of the nonprofit Institute for Clinical and Economic Review, which analyzes the effectiveness of new treatments. ‘We have about a year or two as a country to sort this out before more specialty drugs hit the market.’ ”

Person’s quote appeared in an article from Kaiser Health News last month. It was about a wonder drug called Sovaldi, which apparently cures 90 percent of patients who have potentially deadly hepatitis C.

The cure simply requires taking one pill a day for 12 weeks. There appear to be few or no side effects.

Lots has been written lately about Sovaldi and Gilead Sciences, the company that makes it. Gilead is charging $1,000 a pill, meaning the full, 12-week treatment costs $84,000.

Sarah Kliff, the former star Washington Post Wonkblog healthcare reporter who has moved on to Vox, calculated, “California … might have to spend more on buying Sovaldi for its Medicaid beneficiaries than it currently does on all K-12 and higher education.”

Or as the Kaiser Health News article pointed out, if every hepatitis C patient took the drug, the country would spend $300 billion on it — doubling the country’s current bill for all prescription drugs.

As the clamor over Sovaldi has continued, Congress has threatened to intervene, somehow, to make Gilead charge less. America’s Health Insurance Companies, the industry trade association, has issued an almost-daily volley of press releases and speeches using Sovaldi and Gilead as the poster boys for drug-industry abuses that will bankrupt the country.

Yet for all that attention, Person was right when he told Kaiser Health News that this is the “tip of the iceberg.” Sovaldi and Gilead require multiple doses of much more in-depth reporting.

For starters, can some reporter please take us into the meeting where the Gilead executives decided to charge a flat $1,000 per pill?

I’m not referring to the high price and humongous profit margin it yields. (Now that the expensive research to develop Sovaldi is over, each pill probably costs Gilead a dime to 20 cents to make and package.)

What I’m curious about first is why the folks at Gilead didn’t feel enough of a sense of accountability or sensitivity to public reaction to decide to charge, say, $989 or $1,023. That would have at least given the impression that in calculating the price they did something other than ask “Why not?”

Who are these people who are so clueless or arrogant that they seem to have picked a nice, fat round number with all the care of choosing a bagel? Only a Sovaldi spokesperson has been accessible to the press — and usually with prepared statements. Who’s going to be the first reporter to put a microphone in front of Chairman John Martin?

First questions for Martin, whom, Bloomberg reported in March, has become a billionaire because of the Sovaldi affect on his company’s stock since the drug was approved last December: Why not $2,000 a pill? Or $5,000? Should there be regulations that would stop a company from charging any price, no matter how high?

Then there’s Gilead’s argument that Sovaldi is worth the price because it allows patients to forego years of expensive care that would otherwise be necessary to control their illness. Has anyone done that math? And because Sovaldi is a new drug, how can we know its treatment will last patients a lifetime?

Speaking of math, there’s the question of whether the research and development costs that went into creating Sovaldi justify the price. Conversely, would putting a cap on the price Gilead could charge kill off the investment that produces these kinds of breakthroughs?

Drug companies and those who want to regulate them can offer widely divergent accounts of what it costs to bring a miracle drug to market. Can’t someone not on either side crunch the numbers?

There has also been insightful reporting lately questioning whether drug companies have been losing their taste for R&D investments in favor of buying drugs that others have developed and are almost ready to bring to market. Indeed, Gilead got Sovaldi by acquiring another drug company.

I’d like to read more about the investment history of Sovaldi and, indeed, whether it makes a difference if the big companies purchase their breakthroughs rather than grow their own.

Then, of course, there are the issues that go beyond Sovaldi, the ones the California Healthcare Foundation’s website  was referring to when it called Sovaldi “a canary in the coal mine of drug policy.”

“Sovaldi and other high-priced drugs such as Lucentis, an eye medication made by Genentech that can cost as much as $2,000 per dose, are,” the website explained, “part of an expected wave of breakthroughs in new, expensive pharmaceutical treatments for a variety of diseases and chronic conditions.”

How will we pay for all of these breakthroughs? Will we continue to be alone among developed countries with no price controls on prescription drugs?

What about our at best haphazard policies about who gets priority when it comes to this kind of expensive treatment? The cost for the Sovaldi treatment in Britain is $57,000, and it is given to patients on a priority basis according to how threatening their hepatitis C is.

In the United States, there is no coherent policy. Various officials and regulators (most of them working in state agencies) have jurisdiction over insurance coverage for different patient populations. Sovaldi has now focused new attention on how these officials grapple with whether and how to limit who gets these budget-busting drugs. So far, it seems on its way to becoming an infuriatingly inconsistent patchwork, depending on which state patients live in, or even who insures them.

Does our system for doling out hearts and kidneys for implants offer any analogous solutions?

Will Sovaldi force state and federal officials to have the courage to make tough choices? Or will they be fearful of the political fallout? Remember how politicians cowered when accused of trying to set up “death panels” as part of Obamacare, when, in fact, all that they proposed was that Medicare pay doctors for the time they spent counseling patients on hospice and end of life care?

That, in fact, is the ultimate issue raise by Sovaldi. One that goes well beyond doing more by way of pricing regulation to control the predictable behavior of those making a fortune selling it.

Reporters need to start pinning down politicians and regulators who should be establishing systems for making these kinds of tough choices fairly, openly and consistently and ask them how many more Sovaldis it is going to take before they start.

 

 

 

 

 

 

Comments
6 comments so far | RSS Comments RSS

Thank you for shining more light on the greedy investors who have taken over our health care system and will not stop until they bankrupt America – unless we stop their handmaidens in the next elections. We need about 500 Senator Elizabeth Warrens to get the job done.

Posted by njglea | Report as abusive
 

Not overly worried about ole ECV finding a job, after all if the “USA Free trade Negotiators” can find well paying “Consultant” jobs with the nations they negotiated with, ole EC will soon be shifting money from unnamed sources, at all levels.

But the real question, I challenge anyone to truthfully reply, Has anyone EVER met or heard of a former elected official being in line for unemployment checks or welfare, ever? These type never had a real job and see no reason to get one now,
If in the real world, would you hire any employees who refers to on resume, “Spent half my time not at work, but raising funds to keep my job,” Only someone wanting to have government sweeten their bank accounts, would hire such folks.

Posted by chuck2 | Report as abusive
 

re. Solvaldi, this is a perfect example fo why single payer is needed to put and end to such profiteering.

Of course, Obama, Hillary & the repubs could never do that to their corporate sponsors.

Posted by upstater | Report as abusive
 

Did Mr Cantor not oversee all defense spending since the attack on 9/11, through the present – an amount of public money I can’t even imagine? I’ll bet he avoids the unemployment line. Stories I won’t likely see: What kind of baggage did the voters of Virginia perceive connected to his name, to transfer the job to an unknown?

Posted by auger | Report as abusive
 

Drug companies tell you the cost is so high because they need to recoup their R & D; in Sovaldi’s case, the purchase price of the drug. Companies must continue to do this right up until the exact moment when the patent runs out and competitors can sell the drug significantly cheaper.

Posted by JL4 | Report as abusive
 

Cantor’s goal are to high for him to turn into a lobbiest yet. I bet he runs for senator so he can have 6 years job security instead of 2 years in the house.

Posted by MarkSmith123 | Report as abusive
 

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