Gilead reveals deeper discounts in US for Sovaldi, Harvoni, above expectations

Gilead Sciences revealed that discounts in the US for its hepatitis C therapies Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir) will climb to an average of 46 percent this year from 22 percent in 2014. RBC Capital Markets analyst Michael Yee said the average discount "took investors by surprise and is higher than consensus of 25 to 30 percent or so." Sanford Bernstein analyst Geoffrey Porges called the announcement a "shock" as Gilead had been "fairly outspoken about its ability to maintain price due to its differentiated product and strong position with physicians."

Sovaldi, which was cleared in the US in December 2013, and Harvoni, which was approved by the FDA in October last year, were launched at prices of $84 000 and $94 500, respectively, for a 12-week course of treatment.

Gilead said that rebates for Medicaid and the Veterans Administration exceed 50 percent. The drugmaker however noted that the discounts would be offset by higher volumes, adding that it was "confident a substantially higher number of patients will be treated in 2015."

In December last year, AbbVie won FDA approval for its hepatitis C treatment Viekira Pak, which combines Viekira (ombitasvir/paritaprevir/ritonavir) and Exviera (dasabuvir), while Merck & Co. recently confirmed plans to submit its once-daily hepatitis C therapy combining grazoprevir and elbasvir for FDA approval in the first half of this year.

Gilead has received criticism from US lawmakers concerning the prices of its hepatitis C drugs, with the US House Energy & Commerce Committee requesting a briefing on how pricing was determined. Pharmacy benefit manager Express Scripts later excluded Gilead's therapies for most therapies after AbbVie agreed to discounts on Viekira Pak.

Meanwhile, CVS Health awarded Harvoni and Sovaldi exclusive coverage on its commercial plans and formularies, with Anthem disclosing that Harvoni has been designated as the primary treatment option for patients infected with genotype 1 hepatitis C virus. For related analysis, see ViewPoints: Gilead reveals the extent of AbbVie's pricing war in hepatitis C and ViewPoints: Gilead hits back in HCV price war – but at what cost?

"If there is this much discounting when there are just two competitors in the market, everyone will be asking what happens when there are three," Porges commented. Shares in Gilead fell as much as 9.7 percent on the news, while those of AbbVie declined as much as 6.3 percent.

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