Ranking Members Waxman and DeGette Call for Hearings on Medicare Part D Impact of High Costs of Sovaldi

Jun 19, 2014

Today Ranking Members Henry A. Waxman and Diana DeGette sent a letter to Chairmen Fred Upton and Tim Murphy to request hearings on the implications to seniors, taxpayers, Part D drug plans, and the Medicare program of the high costs of Sovaldi, the new Hepatitis C drug manufactured by Gilead Pharmaceuticals.  The drug costs $84,000 for a course of treatment and a new analysis by researchers from Georgetown University and the Kaiser Family Foundation finds that Medicare Part D coverage for Sovaldi alone will increase Medicare drug spending by $6.5 billion - 8%- in 2015. 

In the letter the members wrote, “Hearings before the Committee could help us understand the implications of Sovaldi’s high cost on the Medicare Part D program and on seniors and taxpayers.  We could seek to understand Gilead’s pricing strategy and examine why Part D plans are unable to effectively negotiate for lower prices despite the fact that Sovaldi is available in other countries, under Medicaid, and to the VA at a significantly lower cost.  We could also examine legislative solutions, like the Medicare Drug Savings Act (H.R. 1588), which would require drug manufacturers to provide Part D drugs to low income individuals at the same low prices they provide to Medicaid.”

The members concluded, "It is not too late for Congress to take action to ensure that Part D premiums and costs are not adversely impacted by the high costs of Sovaldi.  We therefore ask that you hold these hearings as soon as possible."

The text of the letter is available online here and below.

June 19, 2014

The Honorable Fred Upton
Chairman
Committee on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515

The Honorable Tim Murphy
Chairman
Subcommittee on Oversight and Investigations
2125 Rayburn House Office Building
Washington, DC 20515

Dear Chairman Upton and Chairman Murphy:

We are writing to ask that you hold hearings on the implications to beneficiaries, taxpayers, Medicare Part D drug plans, and the Medicare  program as a whole of the costs of Sovaldi, the new Hepatitis C drug manufactured by Gilead Pharmaceuticals.

A new analysis by researchers from Georgetown University and the Kaiser Family Foundation finds that Medicare coverage for Sovaldi – which is sold for $1,000 per pill and $84,000 for a 12-week course of treatment – will increase Medicare Part D drug spending by up to $6.5 billion in 2015.  This is an astonishing amount.  Medicare coverage of just this one drug would raise overall Medicare Part D drug spending by as much as 8%.  These spending increases will be reflected in higher out-of-pocket costs and premiums for seniors and higher taxpayer costs.

In March 2014, we wrote to Gilead to ask for a briefing on the high cost of Sovaldi.  The company provided this briefing, but did not provide a compelling justification for the high price they are charging for most patients in the United States.  Gilead indicated that the company provides substantial discounts on the drug in several other countries, and public reports indicate that the VA and Medicaid programs will also receive substantial discount on Sovaldi.  

Regrettably, these discounts are not available to Medicare Part D plans.  According to the new study’s authors, “it is likely to be hard for [Part D] plans (and thus for Medicare) to have an impact on the price in the case of Sovaldi. … Part D sponsors have little negotiating power.” 

Hearings before the Committee could help us understand the implications of Sovaldi’s high cost on the Medicare Part D program and on seniors and taxpayers.  We could seek to understand Gilead’s pricing strategy and examine why Part D plans are unable to effectively negotiate for lower prices despite the fact that Sovaldi is available in other countries, under Medicaid, and to the VA at a significantly lower costs.  We could also examine legislative solutions, like the Medicare Drug Savings Act (H.R. 1588), which would require drug manufacturers to provide Part D drugs to low income individuals at the same low prices they provide to Medicaid.  

            Medicare Part D plans have submitted their plan bids for 2015, and premiums will be made public in August.  It is not too late for Congress to take action to ensure that Part D premiums and costs are not adversely impacted by the high costs of Sovaldi.  We therefore ask that you hold these hearings as soon as possible.

Sincerely,           

Henry A. Waxman                           Diana DeGette
Ranking Member                             Ranking Member
                                                         Oversight and Investigations Subcommittee