What are the likely manufacturing costs for sofosbuvir (Brand name: Sovaldi), the newly approved miracle drug that cures hepatitis C at a cost of $84,000 for the full 12-week course of treatment? Anywhere from $68 to $136 for the full course, according to an analysis that was published in Clinical Infectious Disease (CID) in January—which was about a month after Gilead announced how much it was planning to charge for the drug.
No wonder the pharmaceutical company has just broken the record for “sales of a drug in its first full quarter on the market,” according to Andrew Pollack of the New York Times. Indeed, Pollack calculated that the $2.3 billion first quarter sofosbuvir sales also broke the record for the first full year of any drug. (For the record, the previous record was $1.56 billion for another hepatitis C drug, telaprevir, brand name: Incivek.)
Trying to determine manufacturing costs is becoming something of a habit for me whenever a new drug is launched. I found the CID article after a quick search on the PubMed.gov website. I typed “sofosbuvir” into the search box and “cost.”
(It’s good practice to use a medication’s generic name rather than its brand name when doing any drug-related search on a medical database because that’s how most scientists will refer to it and therefore that’s what will give you the most information.)
The search returned 10 articles, including one (published in Drug Healthcare and Patient Safety) that pointed out an $84,000 price tag seems reasonable when compared with the $270,000 costs of living with chronic liver disease for 10 years or $577,100, which was “the estimated US average of billed charges per liver transplant in 2011.”
The CID article, by contrast, took a page from the successful price reduction of HIV drugs in the poorest parts of the world—where volume pricing allows manufacturers to make some money in areas where neither the population nor the health system could ever afford to pay full fare. Co-infection with hepatitis C affects between 5 percent and 15 percent of the 33 million HIV-positive individuals around the world—leading to more severe health problems, according to the World Health Organization.
The authors assumed a minimum of 1 million patients per year and a 40% margin for formulation to conclude that sofosbuvir probably costs $68 to $136 to manufacture for a 12-week supply and that large-scale manufacture would be feasible with minimum target prices of $100 to $250 per treatment course in the next fifteen years.
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