Gilead says drug profits must stay high to pay for ‘innovation,’ but 100% of its profits went to shareholders | LA Times

With high drug prices still in the political crosshairs on Capitol Hill, pharmaceutical industry bosses are at pains to explain why a cure for hepatitis-C has to cost a budget-busting $1,000 per pill, or a promising cancer treatment should carry a list price of $373,000.

That duty most recently fell to John C. Martin, the executive chairman of Gilead Sciences, which happens to be the owner of both of those stratospherically priced drugs. In an interview published Friday in the Wall Street Journal, Martin listed a few reasons for the controversial pricing. One is that average Americans overestimate how much drug prices contribute to overall healthcare costs and how much drug manufacturers themselves pocket from list prices. Another is that drug makers need big profits so they can “continue to innovate.”

Gilead’s Martin points out that prescription drug prices generally have remained stable as a share of total healthcare costs. The industry maintains that prescriptions account for about 14% of spending year after year, growing at about the same pace as other healthcare costs. But that generalization conceals the impact of high prices for some specific treatments. Martin acknowledged that the cost of Sovaldi, the company’s wonder cure for hepatitis C that won FDA approval in 2013, was a shock to budgets. The drug, which was priced at $84,000 for a 12-week, one-pill-a-day regimen, had a cure rate of more than 90% and none of the side effects of the previous therapy, interferon.

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Gilead says drug profits must stay high to pay for ‘innovation,’ but 100% of its profits went to shareholders – LA Times.