Eric Peterson

Politicians have been trying to provide affordable prescription drugs for more than a decade. Before the Patient Protection and Affordable Care Act, also known as Obamacare, there was Medicare Part D seeking to lower costs for senior citizens. Unfortunately for politicians, breakthrough new drugs often take billions of dollars and millions of man hours to produce and higher prices are needed to recoup these costs; such is the situation with the new Hepatitis C cure courtesy of Gilead Sciences.

Currently, around 3.2 million American’s are infected with Hepatitis C and over 80,000 individuals a year die worldwide because of the disease’s effect on the liver. For years the only “cure” had been a liver transplant, which could run close to a half million dollars, provided an individual could find a matching donor. The new drug Sovaldi, however, cures the virus in 9 out of 10 patients over a 3 month treatment period with few of the side effects that come from liver transplants, such as rejection. Considering a patients previous option, a three month treatment to completely cure the disease is a steal at $84,000.

Despite the clear advantages to Sovaldi over the previous treatment options, many are questioning thecompany due to the perceived high cost of the drug. This includes members of the Senate Finance Committee Ron Wyden and Republican Chuck Grassley who requested pricing data from Gilead writing, “[g]iven the impact Sovaldi’s cost will have on Medicare, Medicaid and other federal spending, we need a better understanding of how your company arrived at the price for this drug.” Even more troubling than the government getting into the business of price setting is that many state governments are balking at the prospect of making this product widely available and instead are moving towards a rationing approach.

Eric Peterson

Eric Peterson is a graduate of Tulane University with a degree in Economics and Political Economy. Eric is a Policy Analyst at Americans for Prosperity where he began in January 2014.