Gilead Sciences (GILD) just did something almost unheard of in biotech circles: It priced a newly approved drug at a discount to older products.
The drug in question is Epclusa, a new pill to treat almost all forms of hepatitis C, which was approved Tuesday by the U.S. Food and Drug Administration. Gilead set the sticker price for Epclusa at $74,760 for a 12-week course of treatment.
That might seem very expensive, and it is, but not when you consider Gilead's existing hepatitis C products, Sovaldi and Harvoni, carry an undiscounted price tag of $84,000 and $94,500 per course of treatment.
It's very unusual for a biotech or drug company to set a lower sticker price for a new product, but that's just what Gilead did with Epclusa.
"Gilead believes the pricing of Epclusa will facilitate access for the U.S. population with the greatest unmet medical need -- patients with genotypes 2 and 3 who previously required more complex and costly multi-tablet regimens," Gilead spokesperson Amy Flood said, in a statement.
While Gilead certainly has hepatitis C patients in mind, let's not under-estimate the strategic and business component of the Epclusa pricing decision. Gilead has been beaten up by just about everyone about the pricing of its hepatitis C drugs, so taking the "low road" on Epclusa might take the heat off the company while also helping to secure better access and reimbursement terms with insurance companies.
Epclusa is the first all-oral, once daily, "pan genotypic" medicine approved for hepatitis C, meaning the pill can be used to treat all of the major forms of the viral liver disease. Most importantly, Epclusa is the first single-pill treatment for people with hepatitis C genotypes 2 and 3. These patients are likely to make up the bulk of Gilead's Epclusa sales since Harvoni already addresses the larger hepatitis C genotype 1 patient pool.
Each Epclusa pill contains two medicines -- sofosbuvir, already approved as Sovaldi and included in Harvoni, and a new drug, velpatasvir.Gilead shares were up 3% to $80.89 in Tuesday trading.