Gilead Sciences, Inc. (NASDAQ: GILD)
Gilead Sciences has been in the midst of an interesting battle with regard to pricing of it’s HCV treatments Harvoni and Sovaldi. While the treatments have been proven to be incredibly effective, they are also incredibly expensive; limiting access to some patients that could greatly benefit from treatment. As a result, the company has received pressure from insurance companies and patients to reduce their prices. Now it seems as though the World Health Organization has decided to become part of the conversation revolving around the drugs. Today, we’ll talk about the list of medications that the World Health Organization added Gilead’s treatments to, the investor reaction we’ve seen, and what we can expect with regard to pricing moving forward.
The World Health Organization Adds Gilead Sciences To Their Essential Medicine List
As mentioned above, health insurers and pharmacy-benefits managers have been pressuring drug makers, including Gilead Sciences, to reduce the cost of hepatitis C treatments. The newest member putting on the pressure is the World Health Organization. They’ve join the ranks by adding Gilead Sciences’ HCV drugs to what’s known as the “Model List of Essential Medicines”. The list includes several new age treatments for HCV, several different cancers, and tuberculosis that the World Health Organization believes should be made more affordable by their developers. This list also includes AbbVie Inc’s (NYSE: ABBV) HCV treatment known as Viekira Pak.
Breaking Down The Pricing Issue
The World Health Organization as well as insurers and pharmacy-benefits leaders believe that the price for break-through treatments like Harvoni and Sovaldi are way too high. Currently, Harvoni alone costs $84,000 for the 12 week treatment supply. When coupled with Sovaldi, that price climbs to $94,500. When it comes to ABBV, their Viekira Pak costs $83,320 for the entire duration of treatment. Knowing these prices, it’s easy to see why some patients simply don’t have access to the treatment. After all, these treatments cost enough money to purchase a small house or an incredibly nice car!
How Investors Are Reacting To The Pricing Pressure
While price pressure could drag down profits, investors don’t seem to be too concerned. As a matter of fact, GILD is in the green today. Currently (12:02), the stock is trading at $105.12 per share after a gain of 1.22% so far today!
What We Can Expect To See Moving Forward
There’s no doubt in my mind that insurance companies, pharmacy-benefits managers, and the World Health Organization will continue to press for lower prices. After all, nearly $100,000 for the treatment of a single ailment is an incredibly large amount of money. I also believe that at some point, GILD and ABBV both will reduce their prices to an extent. However, I have to side with Gilead Sciences here; and I don’t think the price pressure will have too much of an affect on the stock. The reality is that GILD pumped billions of dollars into research to develop their HCV treatments; and when considering the fact that the treatment can literally save lives, $94,000 really isn’t much money. Nonetheless, the debate will continue and only time will tell what we’ll see!
What Do You Think
Do you think that the pressure to decrease prices will hurt GILD in any way in the long run? Let us know in the comments below!