Henry Waxman Writes a Letter — Wipes Out $18 Billion of Biotech Market Value

The New York Times reports that Rep. Henry Waxman and three Democratic colleagues wrote a letter protesting the price of Gilead’s new hepatitis drug, Sovaldi. A twelve-week course of Sovaldi costs $84,000 — about $1,000 per pill.

iStock_000007047153XSmall“Our concern is that a treatment will not cure patients if they cannot afford it,” the congressmen said in their letter, which was sent on Thursday.

It was signed by Henry A. Waxman of California, the ranking Democrat on the committee, and Frank Pallone Jr. of New Jersey and Diana DeGette of Colorado.

Gilead’s stock fell 4.6 percent, to $72.07 on Friday. Nervous investors took down the shares of some other big biotechnology companies as well, worried that pressure on drug prices would increase. Biogen Idec and Alexion Pharmaceuticals both fell 8 percent, Vertex Pharmaceuticals 5 percent and Celgene nearly 4 percent.

Comments (22)

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  1. Linda Gorman says:

    Nice to know where those leading Democrats stand. And that investors are finally getting a clue about what government run health care does to innovation.

    Apparently they judge that it is better to let all cancer patients die, as in the UK, than let anyone live by paying out-of-pocket to be the guinea pigs for new drugs. Inequality must not be tolerated!

    Worse, if the private health sector were to show that those drugs actually work, government programs would be pressured to pay for them with the result that there will be less money to spend on cronies, green energy fads, or bridges to nowhere.

    • PJ says:

      Exactly. And what we get is a lowest-common-denominator form of equality.

    • Erik says:

      Waxman is a forward thinking Congressman. He knows that the baby boomer generation will need this pill and the cost is going to be passed on to everyone. Waxman also knows the cost of this pill is not based on R&D but the desperate need of a dying patient.

      Shame on Gilead for placing profits over people and slobbering at the public trough.

      • george says:

        Here’s your option, find a company willing to make the multi hundred million investment with no assurance of final FDA approval and I’ll support your view.

        And if I remember, Gilead is a “for profit” entity and without them there would be no innovation and progress, and no medical advances.

        Obviously, you have never made a payroll or run a for profit business but it doesn’t come without individuals willing to take significant financial risk to achieve something meaningful.

        BTW, you’re welcome to go out and get a liver transplant for $250k friend.

  2. Mary says:

    It’s situations like this that show how much we need competition.

  3. Steve says:

    I just hope the government takes a lesson from ObamaCare: No meddling. That’s not what we need.

  4. Ted says:

    “The fear that Congress may begin a program of meddling, one drug at a time, doesn’t affect just one drug,” said Andrew A. Bogan of Bogan Associates, which invests in science and technology stocks. “It kind of scares everyone.”

    As it should

    • Trent says:

      “The New York Times reports that Rep. Henry Waxman and three Democratic colleagues wrote a letter protesting the price of Gilead’s new hepatitis drug, Sovaldi. A twelve-week course of Sovaldi costs $84,000 — about $1,000 per pill.”

      He’s not wrong though

  5. Elizabeth says:

    “Sovaldi sales in the United States could reach $3 billion to $10 billion this year” – Wow. That’s…so much money.

  6. Wally says:

    I see nothing wrong with what Waxman did, it wasnt like he passed legislation. He is fully entitled to his opinion

  7. G. King says:

    This is a kind of chain reaction. If the drug does have a value of $1,000 per pill, we probably have no reason to ban it.

    • John R. Graham says:

      What is the cost versus the value?

      In my previous comment, I made a general statement that the cost of drugs is driven higher by FDA regulation.

      Sovaldi is only effective with some genotypes of the virus, and is not used alone. More specialized therapy is very valuable for these patients.

      Liver transplants are rare and expensive. Options that work for patients who are waiting are very valuable.

  8. Dennis says:

    The cost of a medication is not what you or I or Henry Waxman want it to be, it is the point at which the pharmaceutical company is willing to sell it and at which individuals are willing to pay for it. That point is determined in large part by development and production costs, a large part driven by FDA regulations,liability coverage and the like, along with price competition with other similar products (if any exist). If Waxman and colleagues succeed in forcing the price below what Gilead needs for profitability I will guarantee you that there will be insufficient supply and patients will go without. Political grandstanders can do as they will but they cannot rewrite the laws of basic economics.

    A serious approach to pharmaceutical prices would include strategies to reduce companies’ R&D costs and streamline the approval process. It would also seek to reduce price discounts to foreign countries which are subsidized by high domestic prices.

    • John R. Graham says:

      That is a very good point. FDA regulation is an important factor in driving up the cost of new medicines. And yet I have never heard one of these politicians argue for reducing the power of the FDA.