Californians have a long history of being exploited by corporate pirates. Enron during the energy crisis, the banks during the recent housing crisis and now the pharmaceutical companies are taking advantage of us during our health-care crisis.
The Big Pharma pirate of pirates is Gilead Sciences Inc., based in Foster City, Calif. But if you are not one of the 3.2 million Americans suffering from hepatitis C, you might not have heard of Gilead’s wonder drug sofosbuvir (brand name Sovaldi), which cures around 90 percent of hepatitis C patients in 12 to 24 weeks, with few side effects.
There are an estimated 130 million to 150 million people worldwide with hepatitis C, a bloodborne illness that can lurk undetected for decades. It causes liver scarring and liver cancer. More than 350,000 people die from hepatitis C-related liver disease each year, according to the World Health Organization.
While patients taking Sovaldi may have few side effects, that cannot be said for those who are paying for this drug. While Sovaldi costs only about $130-$250 to manufacture, Gilead is charging Americans around $84,000 for a 12-week supply. The Institute for Clinical and Economic Review estimates that the cost for treating all Californians suffering from hepatitis C with Sovaldi would be $18 billion in a single year. This may be a wonder drug, but it is not affordable.
Perhaps Gilead spent so much time and money researching and developing this wonder drug that they deserve a fair return on their investment? Well, no. Gilead did not create the drug. Another company, Pharmasset, developed Sovaldi.
After Pharmasset conducted successful clinical trials for treating hepatitis C in 2011, their stock price soared, tripling in value. Then in November 2011, Gilead bought them for $11 billion, 89 percent higher than the stock price.
Why did Gilead pay such a premium for Pharmasset? Perhaps they wanted the right to jack up the price of the wonder drug. Pharmasset had planned to charge only $36,000 for a course of the drug. But Gilead saw the huge profit potential. And, as any good pirate knows, one should not have the same ransom price for each captive. Certain captives are worth more.
So while Gilead charges Americans $84,000, they charge the Germans $66,000 and the English $57,000. And they charge the Egyptians only $900 for a supply of the drug. While this ransom pricing has been good for Gilead stockholders, who have seen their stock rise from $20 in October 2011 to $102 last week, it has not been so good for the millions of people who are waiting to be cured of hepatitis C. Only a small percentage of the world’s population who would benefit from the drug can now afford to pay for it.
Ransom pricing instead of reasonable pricing means that many people will die needlessly. And millions will suffer. We should say “no” to the Big Pharma pirates and empower our government to regulate the pharmaceutical companies so that we can get similar prices and access to drug treatment that people in other countries do.
