Wonder Drug Sovaldi Nets Gilead Billions in Revenue

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Wonder Drug Sovaldi Nets Gilead Billions in Revenue

Wonder Drug Sovaldi Nets Gilead Billions in Revenue, that’s a cool $2.3 billion.

That’s how much one drug generated in revenue for one pharmaceutical company in just three months.

On Wednesday, California-based Gilead Sciences reported $5 billion in revenue for the first quarter of this year. Half of that profit was generated from the drug Sovaldi, a hepatitis C regimen the company sells for $1,000 a pill.

The 12-week regimen, which went on sale last December following approval by the Food and Drug Administration, was the company’s highest-grossing antiviral drug, generating almost half of Gilead’s first quarter revenue and blowing analyst estimates way out of the water.

While Tuesday’s news was music to the ears of Wall Street analysts — many had predicted $3 billion in revenue, not $5 billion — the overwhelming early success of Gilead’s miracle drug is almost certainly going to raise questions by insurance companies and lawmakers already scrutinizing the pharmaceutical company over the high cost of Sovaldi.

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In March, Representative Henry Waxman (D-Calif.) asked Gilead to justify the high cost of the drug, concerned that the 3 million Americans living with hepatitis C — many who are low income and likely to not have adequate insurance — would not be able to afford the drug, especially considering many doctors were prescribing Sovaldi in tandem with another drug, driving the cost of the regimen upwards of $150,000.

“These costs are likely to be too high for many patients, both those with public insurance and those with private insurance,” Waxman wrote. “Even in cases where public or private insurers pay for the medication, it will impose substantial costs on taxpayers and could cause premium increases for those with employer or individual coverage.”

Gilead asserts that the cost of the drug isn’t much different from similar regimens offered by others, and the company is quick to note that Sovaldi has a higher cure rate with less side effects than comparable treatments.

“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,” Gilead’s chief operating officer, John Milligan, said on the company’s earnings call on Tuesday.

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In other words, Gilead’s position is that consumer and industry focus on the high price of Sovaldi is misappropriated given the drug’s overall benefit in effectively curing a patient with hepatitis C. Almost $2.1 billion of the company’s $2.3 billion in sales of Sovaldi came from the United States alone, indicating Sovaldi had been distributed to around 20,000 patients — or approximately 0.0009 percent of those living with hepatitis C in America.

Sales of Sovaldi overseas generated significantly less revenue for the company. According to Gilead’s quarterly earnings, Sovaldi brought in just $163 million in European sales and $12 million elsewhere. The 12-week regimen sells for $900 in Egypt, and the drug is expected to be distributed in other developing countries for the same price under an agreement reached between Gilead and Doctors Without Borders.

The high cost of the drug in the United States has already prompted some health industry officials to encourage hospitals to use cheaper alternatives until a comparable drug can make it to market. The expectation there is that once an alternative is introduced — perhaps as soon as the end of this year — it will start a price war between Gilead and another company, possibly driving down the price of Sovaldi.

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Others are suggesting Sovaldi only be distributed to patients who are absolutely in need of the drug. Some insurance companies have already started putting hepatitis C patients on a waiting list for Sovaldi, approving only those who are in dire need of the treatment.

Still, Tuesday’s news could not have been more welcome for Gilead’s investors. Analysts on the company’s earning call were quick to congratulate Gilead executives on the most-profitable drug launch in history. The reaction from Wall Street was comparable: after a short halt in trading, Gilead’s stock price shot up more than two percent in after-hours trading, and the company opened up more than three percent on Wednesday.

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