“Gilead Sciences, the leading maker of drugs for HIV and hepatitis C, made an expensive and gutsy move into the cutting edge of cancer treatment this morning, spending $11.9 billion in cash to buy Kite Pharma, the developer of a treatment that attacks tumors by genetically modifying patients’ own white blood cells.
“The deal recasts both Gilead, a company focused on viruses and tumors, and the field of cell therapy for cancer, which now will be guided not by start-ups but by larger, established pharmaceutical firms. (Kite’s closest competitor: Novartis.) It also sets the stage for a dramatic few months during which both the Kite product and the Novartis one are expected to reach the U.S. market at an extraordinary price. The treatments are expected to cost hundreds of thousands of dollars per patient, and to conform to the unavoidable narrative of pharmaceutical innovation: medical breakthroughs at sky-high prices.”
Robert Reich writes that Gilead has used this strategy before to overprice lifesaving drugs. In 2011, the company purchased drug maker Pharmasset to obtain the rights to a new medication for hepatitis C. Gilead then proceeded to price the medication, Sovaldi, at $1,000 a pill, generating $12 billion in the first year. A congressional inquiry later found that Gilead executives priced the drug well above what was necessary to make a profit. Those involved in the pricing decision were focused on how much they could gouge patients and health plans, not the cost of manufacturing.
Yet, despite public outcry and attention from Congress, nothing has changed. There are still essentially no controls on drug prices in the United States and Gilead could set whatever price it wants for Kite's new cancer drug. We must rein in Big Pharma.
By Matthew Herper
