An unprecedented looked at how biotech prices their drugs

Whether you’re in the biopharma industry or not, you’ve heard about the controversy surrounding the pricing of Sovaldi and Harvoni, two therapies for hepatitis C that have revolutionized the treatment of a very common and sometimes deadly disease.  The topic first came up when Sovaldi was launched December 2013, but the noise still hasn’t died down thanks to people like Martin Shkreli and companies like Valeant.

At the same time there have been a lot of views expressed about how drugs companies price drugs and how they should price drugs.  The interesting part is that very few people know how drug pricing is done today.  That shouldn’t be surprising since those types of decisions are highly confidential and no company is interested in releasing any information to the public.

That all changed last December when the Senate Finance Committee released a report on their investigation into the pricing of Sovaldi and Harvoni.  You can download the entire, 144-page report here.  When I started to go through it, my jaw dropped.  This report provides an incredible in-depth look at how Gilead priced both drugs, including: (1) market research results from physicians and payers, (2) minutes from closed-door meetings among Gilead executives that led to the final pricing strategy and (3) post-launch responses from private and public payers.

If you are at all interested in this topic, I suggest you spend a couple hours reading through the report.  I will warn you though, I thought the report did show some bias in supporting the government’s position that Gilead acted recklessly.  Regardless, it is an unprecedented look at how biopharma companies price their drugs.