Seeking Alpha

Gilead to price Sovaldi at $900 in India

  • Gilead Sciences (GILD -0.1%) plans to price Sovaldi (sofosbuvir) in India at the same level as Egypt ($900 for the full regimen). In addition, once the clinical trials conclude, the company has agreed to work with Indian generic manufacturers to produce the drug locally and possibly drive the price lower.
  • Indian officials say that 80% of their population lack insurance so even the bargain price of $900 (compared to the U.S.) will be beyond the means of millions of people.
  • U.S. patients have the honor of paying $84,000 for the full regimen.
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Comments (43)
  • Gregory Block
    , contributor
    Comments (203) | Send Message
     
    Is this supposed to be news, or sarcasm?
    8 Aug 2014, 11:25 AM Reply Like
  • earthtodan
    , contributor
    Comments (257) | Send Message
     
    Seeking Alpha always adds a little color.

     

    Now I understand why GILD appears so cheap. Investors don't think the price will stand.
    8 Aug 2014, 11:32 AM Reply Like
  • Zeus2012
    , contributor
    Comments (707) | Send Message
     
    Lol. $GILD is asking for it from the populist congress. Be cheaper to take a 3-month vacation in India & get treated
    8 Aug 2014, 11:28 AM Reply Like
  • sunwindgeo
    , contributor
    Comments (329) | Send Message
     
    So that is like one month's mortgage payment compared to the price of a starter home in America FOR ONE PILL.
    8 Aug 2014, 11:30 AM Reply Like
  • James McRitchie
    , contributor
    Comments (86) | Send Message
     
    Zeus2012 - I think you have it right. US insurance companies should just pay to send patients to India for their course of treatment. Airfare, five star hotel and meals + $900 is still a long way from $84,000. As a GILD shareowner, I think we can expect the price to be coming down here as well.
    8 Aug 2014, 11:34 AM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    So, with India $1500 per capita income, Gilead should price it at the same price $84K and effectively ban the drug in India and doom millions to death? Or should they price it at $900 for everyone, go bankrupt and quit producing miracle drugs?
    8 Aug 2014, 11:35 AM Reply Like
  • Non-Plused
    , contributor
    Comments (45) | Send Message
     
    Are you suggesting that the drug be priced at per capita income? The inference is there.
    8 Aug 2014, 11:39 AM Reply Like
  • jshindler
    , contributor
    Comments (11) | Send Message
     
    That actually is the basis for prices for all goods and services...
    8 Aug 2014, 11:45 AM Reply Like
  • Cleatus in Cleveland
    , contributor
    Comments (27) | Send Message
     
    Non-+'d,

     

    Many drug companies use a tiered pricing strategy based the number of people infected and their ability to pay. GILD should be applauded for their humanitarian approach.
    8 Aug 2014, 11:53 AM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    That is accepted practice by all the pharma companies in the world. That is so life saving drugs have some availability in the 3rd world. Gilead has open policy of considering per capita income as a strong factor in pricing. All companies use this sliding scale for both business and humanitarian reasons. Pricing is a complex business so there are many other factors involved, but I suggest you research this issue yourself if you want to understand it more.
    8 Aug 2014, 12:47 PM Reply Like
  • Charles Moscoe
    , contributor
    Comments (1722) | Send Message
     
    There goes the domestic pricing power, as it will find a way in to the US market from India rather easily. It never works having 2 different regional prices that are so far apart. We are talking one being 1% of the other. Don't think anybody will take advantage of this arbitrage opportunity in India?
    8 Aug 2014, 11:43 AM Reply Like
  • funky991
    , contributor
    Comments (59) | Send Message
     
    This is not new...all drug companies price this way. And as far as flying patients to India for a 3 month vacation...that might be kind of tough to tell your boss you're taking a 3 month vacation. Not practical.
    8 Aug 2014, 08:18 PM Reply Like
  • Charles Moscoe
    , contributor
    Comments (1722) | Send Message
     
    They may price this way but few if none cost $90k domestically. Why does anybody need to fly to India? You don't think anybody will be smuggling the drugs or counterfeiting?
    9 Aug 2014, 09:52 AM Reply Like
  • SivBum
    , contributor
    Comments (1878) | Send Message
     
    Fly to India or wherever prices are at 10% of our price for treatment. Pay for first class tickets and then some.
    8 Aug 2014, 11:48 AM Reply Like
  • Charles Moscoe
    , contributor
    Comments (1722) | Send Message
     
    Sovaldi now has a much bigger margin than cocaine from the jungle to the street with no risk. Don't think this will be smuggled in to the US?
    8 Aug 2014, 11:57 AM Reply Like
  • mindthief
    , contributor
    Comments (6) | Send Message
     
    Still holding your short position from pre-earnings, Charles?
    8 Aug 2014, 03:26 PM Reply Like
  • bioguy7519
    , contributor
    Comments (138) | Send Message
     
    Shorts will all have skidmarks after Oct PDUFA as stock price explodes. Pricing issues will die with new pill.
    8 Aug 2014, 05:46 PM Reply Like
  • Charles Moscoe
    , contributor
    Comments (1722) | Send Message
     
    No. That turned in to a wash. I'll wait for the next spike before considering re-opening. For now I've focused my shorts on companies that make no money or very little compared to valuation.
    8 Aug 2014, 07:23 PM Reply Like
  • tarheelboy
    , contributor
    Comments (203) | Send Message
     
    Seeking alpha should be ashamed to have written that last sentence. It is what has happened to so called journalism; facts are facts and putting your two cents in makes us wonder about the facts in every story you write and present. It's universal that drug pricing in poor countries is totally different than in others country. Often drugs are offered free in poor countries. You politicized something that called for nothing but a factual presentation. Your knowledge of drug pricing, I would guess, is zero. Those in the industry who have great knowledge of the subject say it is priced correctly.
    8 Aug 2014, 11:57 AM Reply Like
  • zorro2828
    , contributor
    Comments (627) | Send Message
     
    Your sarcasm was noted and not appreciated.. A company has the right to sell its products at whatever level they want.. and if you do not like it.. DO NOT buy the product .. pricing is so much cheaper to cure than attempt at maintaining a life that is in terror with the disease... Call it what you may, but we live in a FREE MARKET and you choose what you buy.. not everyone can afford a Lincoln, does that mean Ford should lower their pricing so all can drive the Lincoln.. I think not... To all you bleeding hearts, grow a pair or move to Egypt / India and enjoy the experience
    8 Aug 2014, 11:59 AM Reply Like
  • Doyle3000
    , contributor
    Comments (1501) | Send Message
     
    Every time I hear a statistic out of India it makes me thankful that I don't live there. It may be the worst country in the world for quality of life. And that lousy life touches 1 billion poor souls.

     

    I was hoping to hear some improvements coming since the rise of Mumbai in the service industries, but none of that apparently is funding the government or the economy to help these people.

     

    They have much bigger issues than the price of this Hep C treatment. They need clean water and a consistent food supply!

     

    And for the 10th time, no one pays $84k for the treatments, that is the MSRP. It's usually reimbursed by insurance at less than 50% of that number in the States.

     

    Does anyone actually look up facts before they barf our their articles on SA?
    8 Aug 2014, 12:24 PM Reply Like
  • sungura2005
    , contributor
    Comments (66) | Send Message
     
    I suspect the Indian government is afraid of Gilead and will therefore prevent Americans from buying Sovaldi in India.
    8 Aug 2014, 01:27 PM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    $900 is a lot of money in India. It is over half of per capita income. It will not be tracked cavalierly. Remember Gilead has experience with this issue with what used to be its biggest earnings contributor--its HIV drug basket.
    8 Aug 2014, 01:33 PM Reply Like
  • duhaus
    , contributor
    Comments (320) | Send Message
     
    "$900 is a lot of money in India. It is over half of per capita income." And $84,000 is definitely a LOT more than half the per capita income of 99% of people here in the U.S. I'm not taking any sides here but the pricing makes no sense based on income so I would assume the pricing is based on availability of insurance as well as the insurers willingness to pay.
    8 Aug 2014, 01:41 PM Reply Like
  • Yorick
    , contributor
    Comments (560) | Send Message
     
    Must be because average income of healthcare taxpayers in the US is 84x the average Indian income...
    8 Aug 2014, 01:42 PM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    As stated above, almost no one including insurers actually pays 84K. But yes, since 80% of Indians don't have insurance that is another factor. Rate of infection is a factor. In the case of India few are screened for the disease, so just the cost of testing might be a factor. Pricing is a very complex issue and Sovaldi may well be without precedent(in the last few decades) in terms of the seriousness of the disease, how widespread it is, and that a high percentage cure is offered, and the high cost to bring it to market.
    8 Aug 2014, 02:03 PM Reply Like
  • jdadyfinance
    , contributor
    Comments (137) | Send Message
     
    I think one word sums it up.... CURE ! Not a treatment a cure. I can't recall a recent cure for anything. The price is whatever the market will bear and there is not one thing unethical about it. Solved I does not cost $84k it saves hundreds of thousands of dollars. No drugs to treat the disease over a decade, no liver transplant, no transplant rejection drugs, no life time of follow up visits to check the transplant. Of course there is controversy, Solvadi is going to destroy a huge profit center up and down the food chain.
    8 Aug 2014, 02:34 PM Reply Like
  • BTKM
    , contributor
    Comments (4) | Send Message
     
    Option 1) Price the drug lower in the US -> Sovaldi never invented, GILD makes no money, millions continue to suffer and die.

     

    Option 2) Price the drug higher in India -> GILD takes less flak on seeking alpha, millions in India suffer and die.

     

    Option 3) Price the drug lower in India -> GILD creates a new market of ~12mm souls who have an incentive to scrape together $900 to buy their product, expanding their TAM by $10.8bn, oh and it’s the ethical thing to do saving lives and all that.

     

    And you think GILD made the wrong decision?

     

    I’ll bet Apple wishes they could sell 12mm iPhones in India at a $900 ASP.
    8 Aug 2014, 03:18 PM Reply Like
  • polecat
    , contributor
    Comments (114) | Send Message
     
    My only question is " are you aiming for a job with the New York Clueless or did you just finish at a elite journalism school, on Daddy's dime?

     

    You did manage to reinforce my investing creeds "invest in companies that liberals hate".
    8 Aug 2014, 03:38 PM Reply Like
  • hollylistens
    , contributor
    Comments (6) | Send Message
     
    I'm a liberal and GILD is my largest holding.
    8 Aug 2014, 07:47 PM Reply Like
  • Valley Outsider
    , contributor
    Comments (12) | Send Message
     
    Here are the facts on pricing, using data from the 10Q filing on 8/04/14:
    "Sovaldi was approved in the United States in December 2013 and in the European Union in January 2014. Since its launch, we estimate approximately 80,000 patients in the United States and Europe have begun treatment for HCV with Sovaldi."

     

    6 months Sales numbers ending 6/30/14:
    Sovaldi - $5,754,675,000

     

    $5,754,675k / 80k = $71,925 per patient.

     

    No one should have to pay that much, nor should.
    8 Aug 2014, 05:02 PM Reply Like
  • bioguy7519
    , contributor
    Comments (138) | Send Message
     
    VO, you are aware Sovaldi doesn't even rank in the top 10 most expensive drugs? Many others, particularly for cancers, run in the $300k-400k for a treatment, and most only extend life weeks to months. Or, look at the cost of meds for other chronic issues, like rheumatoid arthritis/autoimmune issues. Many biologic meds, (Enbrel, for example) command >$3k/month for the rest of your life. These are just a couple quick examples. I suggest you do some research before sharing your uninformed bitterness. Sovaldi will save hundreds of thousands to millions in chronic care costs for those affected (and the insurers that pay for those therapies). Never mind they are cured of a wretched disease.
    8 Aug 2014, 05:36 PM Reply Like
  • Valley Outsider
    , contributor
    Comments (12) | Send Message
     
    I am only suggesting the price is too high because EVERYONE pays when a patient is treated with Sovaldi. The costs are spread throughout the medical insurance system and they lead to higher premiums for all insureds. Gilead can go screw themselves with their record profits that they glean out of everyone's pocket. Because I too pay those ever increasing premiums and comes out of my paycheck before I even get paid, please do call me bitter.

     

    I will broker the deals with the payers and I will charter a damn jet to fly those sick people to India myself.
    8 Aug 2014, 06:36 PM Reply Like
  • bioguy7519
    , contributor
    Comments (138) | Send Message
     
    VO, I appreciate the response and now I have a question I'm hoping you're willing to answer. This is a genuine curiosity and a question I know many others ho post here share. It's understandable many people, particularly those unfamiliar with the drug development/marketing process, are angry with the cost of meds and our rapidly rising healthcare premiums. I get that. I pay as much or more than most. But virtually all drug development companies charge similarly outrageous prices with profit margins similar to GILD. Why, then, does GILD (specifically) make people so angry? Here's my point and the premise of my question. I will again use Enbrel (or any other biologic, they're very similar) as a comparison because I have been on it for many years. At ~$3200/month ($38k/yr), I'm 40 yrs old and hoping to live another 40. If I do live to 80, Amgen will make 12monthsx40yrs =480 months x $3200 = 1.536 million just for a maintenance med. Insurance is also ponying up for regular check ups and additional oral or topical meds for flare ups, etc. So, given Amgen will earn >1.5 million off just me, and there are ~62 million RA or Psoriasis patients in the US who are also potential Enbrel users, why is there no outrage at AMGEN for making ridiculous margins on a chronic, outrageously priced medication? A common med costing 15x the MSRP of Sovaldi (40 yr lifetime treatment cost), yet no one wants Amgen (or others) strung up at the gallows. Compare that with GILD, which offers what is essentially a cure. Yes, the potential for up to $84 k is a big up-front payment, but it's going to save you probably 10x that, or more, in chronic care. Much more than that if transplant is involved. That's a lot of savings for your long-term premiums! Anyway, I won't keep you any longer, but I don't understand the anger directed at GILD and I would love to hear from you (or anyone) with your perspective, which I am trying to understand. Happy trading to all!
    8 Aug 2014, 08:18 PM Reply Like
  • funky991
    , contributor
    Comments (59) | Send Message
     
    It's amuses me to see time and time again someone put a price on a cure. Cure's don't come along very often and when they do, they are expensive to bring to market. A profit has to be made and a big one at that. No profit = no incentive to fund research = no cure. It's that simple. Like it or hate it, that is how America was built and we are all the better for it. If you don't like, go move to Europe where they put price caps on everything. You'll feel right at home.
    8 Aug 2014, 08:25 PM Reply Like
  • funky991
    , contributor
    Comments (59) | Send Message
     
    Are you going to pay their salaries for missed work for 3 months as well?
    8 Aug 2014, 08:26 PM Reply Like
  • mapodga
    , contributor
    Comments (3954) | Send Message
     
    Interesting questions.

     

    Probably answer is... Because people always get more fascinated when you have a pile of money together, then if you stretch this over decade.

     

    If GILD would say... That everybody, which will be cured with this cure have to pay ever month of his remaining life 200$ would be probably less problematic.
    8 Aug 2014, 08:27 PM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    The reality is they have not made a profit yet. They invested earnings from their other drug profits for years to acquire (11B) and develop (more B's) Sovaldi. This was not without risk (no FDA approval they lose the money, other competitors field better products or come to market sooner, they lose money, etc). Until Gilead at least recovers their cost and risk of development pricing criticism is both unwarranted and illogical.
    9 Aug 2014, 07:58 AM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    Just one other observation...these drugs have limited time before they go generic. So one reason for pricing is the profit window is finite. That goes doubly for a cure whereby the market is eroded with each and every cure. Also, with the Hep C cure you get the benefit of reducing infection rates as more people are cured.
    9 Aug 2014, 08:03 AM Reply Like
  • brthesac
    , contributor
    Comments (100) | Send Message
     
    That charter will cost you about 84k.
    9 Aug 2014, 03:59 PM Reply Like
  • derrickthms182
    , contributor
    Comments (445) | Send Message
     
    BioGuy thank you for providing real facts on these type of high cost preventative drugs. I feel for you having to pay these costs (not sure how much you actually pay vs insurance coverage) but you basically destroyed all arguments against GILD's price of Solvadi. If congress somehow acts to reduce prices for Solvadi it will set a scary precedent. It's an emotional subject since it deals with life and death. Hard to compare to a product like the iphone or electric car. What would we do without Solvadi? What if it never had been invented? Would anyone care? Why hasn't Russia, China, India invented anything relevant in the last 100 years? Socialism? Dictators?
    America Wins.
    11 Aug 2014, 01:03 AM Reply Like
  • J8
    , contributor
    Comments (25) | Send Message
     
    Gilead prices the drug according to the money SAVED by curing the patient. They are on record as saying that. Their cost price is ONE dollar per pill.

     

    The new Ledipasvir/Sovaldi combination is only weeks from approval and is one step better again.

     

    I wonder how long it will be until generic versions appear online.
    8 Aug 2014, 07:48 PM Reply Like
  • 13302632
    , contributor
    Comments (724) | Send Message
     
    The first pill cost 13B+ not factoring in the risk which should probably be a 2-4 times multiple on that. I get so tired of people saying the cost is what it cost to manufacture. If that were true all software should cost the pennies it cost to download. The DEVELOPMENT, TESTING, RISK OF CAPITAL define true cost. You have to pay all those FDA bureaucrats as well. Imagine spending all your income for 10 years to develop some software and when you go to sell it, people demand to acquire it for the cost to download.
    9 Aug 2014, 08:09 AM Reply Like
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