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  • 14 July 2015
  • blog

Rising ‘Sovaldi Tourism’ to India ignites global debate on pharma price

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"How much should a miracle cost?" screamed the headline of the June issue of Bloomberg
Businessweek magazine. On the Cover was the bold equation: 1 pill/day X 12 weeks = $94,500.
The unusual Cover Story of a leading global business magazine has been provoked by recent reports of spurt in ‘Sovladi Tourism' by patients needing treatment to cure their hepatitis C infection from US, Europe, Australia and many other western nations. India is liberal with ‘medical treatment' visas and patients are flocking to the fast-growing network of high quality private hospitals in India.

Sovaldi is the miracle cure developed by Gilead Sciences in California and introduced in 2014.
A patient has to take a course of Sovaldi combined with interferon for 12 weeks for full cure.
The total cost works out to more than $84,000 or $1,000 for a pill per day. To improve access,
Gilead, on its own licensed 12 Indian pharma companies to make Sovaldi with its licensed
technology and sell it at their own prices. At least three Indian companies have introduced
Sovaldi at just about $12 per pill.

Gilead did this on its own to prevent Indian companies from seeking compulsory licensing
for Sovaldi. In fact, Gilead allowed Indian companies to sell their version of Sovaldi in 84 countries.

The unintended consequence has been the flocking of western patients to Indian hospitals
in the last few months. Even with 3-months stay and treatment in India in some of the best hospitals a patient will not spend more than $5,000. It is a win-win deal for hepatitis C patients and Indian hospitals.

What has spurred the development is the introduction of an improved version of Sovaldi
by Gilead in October 2014 called Harvoni. Harvoni combines Sovaldi with another of its
proprietary compound as a single pill without the need for interferon. This treatment costs
$94,500 for 12 weeks. A large number of 3 million hepatitis C patients in the US were denied
access to the medicine by insurers. The claims were turned down saying "it was not an essential
treatment". Insurers reimburse only when the drug administered to patients in the critical
stages of liver diseases. Preventive and early treatments are denied. A large number of cases
have been filed against the insurance companies.

Gilead continues to defend the pricing claiming that in the absence of Sovaldi, life-long
treatment of chronic hepatitis C infection would cost many time more than its price. And
other drugs don't cure the disease. Interestingly, Sovaldi was developed by a small biotech
company Pharmasset which was later bought over by Gilead for this reason. Pharmasset had
planned to introduce the drug package at about $35,000 only. The hepatitis C products have
raked in billions of dollars in sales for Gilead in the last 12 months. Gilead's market capitalization
has zoomed to $167 billion from just $29 billion in five years.

Every biotech company would now try to develop similar life-saving drugs. However, the
Sovaldi issue has rekindled the issue of pharma products pricing nearly 20 years after similar
discussions on the pricing of the cocktail of drugs to treat HIV/AIDS. The fierce debate has
started and is set to reverberate through the world in the coming weeks.

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