In our last post, we wrote about why Sovaldi has the potential to have an enormous impact on healthcare in America and wanted to talk more about its pricing here. We think that there are three important factors that could greatly impact American consumption of Sovaldi:
3. Medical Tourism. It’s no secret that Americans pay more for medications than patients in any other country. Sovaldi costs a fraction of its American price of $1,000 per pill in developing countries. With third-party payers reluctant to authorize treatment and Sovaldi available for under $1,000 per regimen in developing countries, patients could choose to forgo the stressful search for financial assistance or authorization and look abroad.
2. Competition. AbbVie and Merck reportedly have worthy competitors to Sovaldi on their way to market. While there has been no indication that either company will look to undercut Sovaldi, there has been no indication that any of the three medications are more effective than the other two. AbbVie, Merck, and Sovaldi’s manufacturer Gilead Sciences might be forced to come off of Sovaldi’s $84,000 per regimen price to differentiate their medication from competitors.
1. Third-party payers. This Wall Street Journal article talks about the Oregon Health Authority’s willingness to wait for competing drugs before treating the majority of their Hepatitis C patients. In our last post, we mentioned that an estimated 50% of hepatitis C patients receive some form of government assistance. Large, cost-sensitive payers will have the motivation and leverage to negotiate with manufacturers.