U.S. FDA Approves Gilead's $94,500 Hepatitis C Drug

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U.S. regulators on Friday approved a new hepatitis C pill from Gilead Sciences Inc (GILD), which said it will charge $94,500 for an improved 12-week course of treatment to rid patients of the liver-destroying viral infection.

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The daily pill, to be sold under the brand name Harvoni, combines Gilead's $84,000 pill Sovaldi with another drug, ledipasvir, and eliminates the need for two older, side-effect-laden treatments that needed to be taken along with Sovaldi.

Gilead, which has faced a backlash from health insurers over the high cost of its hepatitis C treatments, said the current regimen of Sovaldi plus the older drugs, interferon and ribavirin, has a cost of $94,726.

The company emphasized that the price of the new drug is less than the current regimen, but insurers and other payers said it is still unsustainable.

"Unfortunately, we believe that the price being demanded is still inappropriately high for a product targeting such a large group of patients," said David Whitrap, spokesman for Express Scripts Holding Co, the largest manager of pharmacy benefit programs in the United States. "New innovations do not always require inappropriate, premium pricing."

Hepatitis C, estimated to infect about 3.2 million Americans, is a viral disease that causes inflammation of the liver that can lead to liver failure.

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Gilead said nearly half of patients infected with the most common type of hepatitis C - previously untreated, healthier individuals - can be cured after eight weeks of taking Harvoni, compared with 12 weeks for the current Sovaldi regimen.

The cost of treating those patients with the new pill for eight weeks is $63,000.

Wall Street analysts note that the price of Harvoni is lower than the $130,000 or more now needed to treat certain hepatitis C patients with Sovaldi and Olysio, a newer antiviral drug sold by Johnson & Johnson.

"The price of $94,000 is very attractive," said RBC Capital Markets analyst Michael Yee. "At eight weeks of therapy, the cost is about $63,000, which is 30 percent cheaper than Sovaldi."

Deutsche Bank analyst Robyn Karnauskas said Harvoni's pricing came in slightly below her expectations, but is "rational and strongly supportive of sustained market share."

Bristol-Myers Squibb Co said on Tuesday it is no longer seeking U.S. approval for an oral two-drug combination to treat hepatitis C because of competition from rival drugs.

AbbVie Inc is slated to hear from the FDA later this year on its application to market an all-oral hepatitis C regimen.

"As the additional hepatitis C drugs are approved over the next few months, we're looking forward to driving more competition in this space," Express Scripts said.

Gilead is expected to reap nearly $12 billion in hepatitis C drug sales worldwide in 2014. Sovaldi sales have been unprecedented for any first-year drug.

Gilead shares closed 2 percent lower at $103.73 on Friday. 

(By Deena Beasley; Additional reporting by Bill Berkrot in New York; editing by Tom Brown and Matthew Lewis)