Ever since the FDA approved Sovaldi (sofosbuvir), and its price was announced – $1,000 per pill – healthcare advocates, health insurance companies, pharmacy benefit managers, consumer groups, and politicians have been up in arms. Its cost, for the usual prescription of 84 pills, is about $31,000 more than the median annual household income in the United States, which is about $53,000. How could a 12-week drug treatment plan cost $84,000?! Well, the manufacturer of Sovaldi, Gilead Sciences, can charge whatever it wants since there is no equivalent brand drug or generic on the market and the U.S. government, by law, cannot legally negotiate drug prices for Medicare.

The costs to treat Hep C don’t stop with Sovaldi by the way. Depending on the genotype of a person’s Hep C, Sovaldi is prescribed as part of a medication cocktail that also includes either ribavirin or ribavirin and an Interferon treatment. Total prices for treatment can reach $160,000 but we’ll just focus on Sovaldi so as not to bite off more than we can chew.

This Twilight Zone approach to pricing Sovaldi and other specialty medications pumps up the rage volume to a frightening anti-pharma crescendo, but now a moment of silence: Thank you scientists, medical researchers, and dedicated people at Gilead for developing this truly awesome medication and bringing it to market. Sovaldi actually cures Hepatitis C, a disease that afflicts about 3.2 million Americans! Rock on Gilead! Gilead and its shareholders should and shall be rewarded handsomely.

Despite this, Gilead and the Big Pharma Gang should not be allowed to threaten the American healthcare system with obscene prices, even for their wonder drugs. Is Gilead really expecting to be paid $84,000 to treat 3.2 million people: a cost of $268 billion? That is more money than the gross national products of 150 countries! Finland’s annual economic output in 2013 was $257 billion. On to the dirty dollar details…

Cash Price of Sovaldi

How many Americans will pay cash for Sovaldi?

I know what you’re thinking: most people will not have to pay the cash price of Sovaldi because they have health insurance. Not so fast. Some insured Americans will find Sovaldi is not covered, or face high co-pays and co-insurance. Still, as you suspected, health insurance will often keep costs manageable for insured patients, but we’ll explore that next week. For now, let’s remember that, despite improvements in coverage due to Obamacare, about 48 million Americans still do not have health insurance. About 1% of the population has Hepatitis C. Let’s then estimate that 480,000 uninsured Americans have Hepatitis C. Most of them will be able to take advantage of Gilead’s Sovaldi prescription assistance program, which helps people with family incomes of $100,000 or less. About 20% of American households take in over $100,000. While I’m playing a little fast and loose with numbers, it’s reasonable to estimate that there are at least 100,000 Americans with Hepatitis C potentially facing out-of-pocket Sovaldi drug prices. What costs will they face?

Pharmacy and online pharmacy prices

The $1,000 per pill figure, in a macabre-funny sense, actually underestimates the out-of-pocket Sovaldi costs. The $84,000 treatment is the average wholesale cost for 84 pills. What happens if you go up to your local counter with a prescription for Sovaldi? If the pharmacist at Walgreens or CVS can actually muster the courage, they will tell you that the 12 week treatment of Sovaldi is about $110,000 (more than double the average median household income). That’s $1,309.52 per pill. According to GoodRx.com a coupon will save you about $20,000. Not bad! Using CVS’s lower price we’re dealing with $1,087.65 per pill.

Source: GoodRx

Can online pharmacies help? The answer is, as my 5-year old son Casper says, multidimensional. First, you should avoid (like the plague) any online pharmacy that offers you a really cheap price on Sovaldi, like the 87% discounts you can find on many regular, but still expensive drugs. It will very likely be a rogue online pharmacy. In fact, as we discussed a few weeks back, online savings options are at present few and far between when it comes to specialty drugs. As the supply pipeline for Sovaldi expands globally, this may change.

That said, if you have to pay cash, Sovaldi is approved in Canada and the price is considerably cheaper – a “mere” $66,000 for 84 pills was found when comparing Sovaldi prices on PharmacyChecker.com. If you want to purchase it in person in Canada, I’d recommend a trip to Vancouver, which was recently voted the most livable city.

Fortunately, for the 85% of Americans who do have health insurance, Sovaldi is covered on many prescription drug lists already. However, many health insurers will require your doctor’s prior authorization before they foot the bill, meaning your doctor will have to defend the need to prescribe Sovaldi vs. other less expensive but potentially less effective treatments, and they won’t always succeed. But we will save that discussion for Part 2, which will tackle Sovaldi coverage among health insurance companies.