Biotech Values

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Why does Gilead's Sovaldi cost $84K in the U.S. and $57K in Britain?

http://www.fiercepharma.com/story/why-does-gileads-sovaldi-cost-84k-us-and-57k-britain/2014-05-29

In Germany--which launched a strict pricing program as part of budget cuts--Sovaldi costs $66,000 for a 12-week treatment course, Whitman said. In Britain, where the National Institute for Health and Care Excellence (NICE) measures the cost-effectiveness of new treatments, it's $57,000, she said.

In the U.S., drugs are priced by companies, subject to mandatory Medicaid rebates and negotiated discounts with private insurers. But the negotiating power only goes so far; insurers have to cover new treatments if they're significantly better than older ones, so drugmakers have the upper hand. In a way, insurers were blindsided by Sovaldi's price and its speedy uptake.

Not so with the next round of hep C approvals. Express Scripts CMO Steve Miller tells Reuters that payers are already talking with rival companies about their pricing--months before approval. That's a once-unheard-of step.

If those pricing talks don't work--and Merck ($MRK), at least, has said it's not interested in a price war--then insurers' only recourse will be to limit volume, Reimbursement Intelligence's John Whang told the news service. That presumably means strict prior authorization policies to direct expensive hep C drugs only to the sickest patients.