[Senate Prints 114-20, Part 2]
[From the U.S. Government Publishing Office]
114th Congress } { S. Prt.
COMMITTEE PRINT
1st Session } { 114-20
_______________________________________________________________________
THE PRICE OF SOVALDI
AND ITS IMPACT ON THE
U.S. HEALTH CARE SYSTEM
PART 2 OF 2
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Prepared by the Staffs of Ranking Member Ron Wyden and Committee Member
Charles E. Grassley
COMMITTEE ON FINANCE
UNITED STATES SENATE
Orrin G. Hatch, Chairman
Ron Wyden, Ranking Member
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
DECEMBER 2015
Printed for the use of the Committee on Finance
114th Congress } { S. Prt.
COMMITTEE PRINT
1st Session } { 114-20
_______________________________________________________________________
THE PRICE OF SOVALDI
AND ITS IMPACT ON THE
U.S. HEALTH CARE SYSTEM
PART 2 OF 2
----------
Prepared by the Staffs of Ranking Member Ron Wyden and Committee Member
Charles E. Grassley
COMMITTEE ON FINANCE
UNITED STATES SENATE
Orrin G. Hatch, Chairman
Ron Wyden, Ranking Member
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
DECEMBER 2015
Printed for the use of the Committee on Finance
______
U.S. GOVERNMENT PUBLISHING OFFICE
97-329-PDF WASHINGTON : 2015
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COMMITTEE ON FINANCE
ORRIN G. HATCH, Utah, Chairman
CHARLES E. GRASSLEY, Iowa RON WYDEN, Oregon
MIKE CRAPO, Idaho CHARLES E. SCHUMER, New York
PAT ROBERTS, Kansas DEBBIE STABENOW, Michigan
MICHAEL B. ENZI, Wyoming MARIA CANTWELL, Washington
JOHN CORNYN, Texas BILL NELSON, Florida
JOHN THUNE, South Dakota ROBERT MENENDEZ, New Jersey
RICHARD BURR, North Carolina THOMAS R. CARPER, Delaware
JOHNNY ISAKSON, Georgia BENJAMIN L. CARDIN, Maryland
ROB PORTMAN, Ohio SHERROD BROWN, Ohio
PATRICK J. TOOMEY, Pennsylvania MICHAEL F. BENNET, Colorado
DANIEL COATS, Indiana ROBERT P. CASEY, Jr., Pennsylvania
DEAN HELLER, Nevada MARK R. WARNER, Virginia
TIM SCOTT, South Carolina
Chris Campbell, Staff Director
Joshua Sheinkman, Democratic Staff Director
(ii)
INVESTIGATIVE STAFF
Senate Finance Committee Minority Senator Charles E. Grassley's
Staff Staff
PETER T. GARTRELL, Investigator JASON FOSTER, Chief Investigative
DAVID M. BERICK, Chief Investigator Counsel
ELIZABETH M. JURINKA, Chief Health RODNEY L. WHITLOCK, Health Policy
Policy Advisor Director
IAN M. NICHOLSON, Assistant to the JOSHUA FLYNN-BROWN, Investigative
Democratic Staff Director Counsel
MATTHEW A. KAZAN, Senior Health JANET TEMKO-BLINDER, Investigative
Advisor Counsel-Detailee
ANNE M. DWYER, Health Counsel KATHERINE NIKAS, Investigative
DOUGLASS V. CALIDAS, Legislative Counsel
Fellow SAMANTHA BRENNAN, Legal Fellow
JAMES P. WEISMULLER, Law Clerk
ADAM L. CARASSO, Senior Tax and
Economic Advisor
JOSHUA L. SHEINKMAN, Democratic
Staff Director
MICHAEL W. EVANS, Democratic Chief
Counsel
(iii)
C O N T E N T S
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Page
Note on the report............................................... 1
Introduction..................................................... 1
Section 1: Hepatitis C, its Human Toll, Treatment, and the Effect
of ``Warehousing'' on Pharmaceutical Markets................... 5
Section 2: Gilead's Acquisition of Pharmasset and the Final
Approval Phase for Sovaldi..................................... 13
Section 3: The Pricing of Sovaldi................................ 29
Section 4: The Financial Burden of Treating HCV and Resulting
Access Restrictions............................................ 79
Section 5: Patients' and Payers' Reactions to the Price of
Sovaldi........................................................ 99
Section 6: A Competitor Drug Enters the Market................... 112
Section 7: Conclusions and Questions............................. 117
Timeline of Key Events........................................... 123
Glossary of Key Terms............................................ 126
Letter from Senators Wyden and Grassley to John Martin, CEO,
Gilead Sciences, Inc. (July 11, 2014).......................... 129
Appendix A: Medicaid Spending Data............................... 135
Appendix B: Medicaid Prior Authorization Data Compiled by Oregon
Health and Science University.................................. 153
Appendix C: Medicare Spending Data............................... 267
Appendix D: Correspondence....................................... 273
Exhibit 1: Email from Ann Walker-Jenkins, Director, Federal
Government Affairs, CVS Health Corp., to Peter Gartrell
(Mar. 9, 2015), attaching written response to investigative
staff...................................................... 274
Exhibit 2: Letter from Darin J. Gordon and Thomas J. Betlach,
National Association of Medicaid Directors, to Congress
(Oct. 28, 2014)............................................ 283
Exhibit 3: Email from Eric Kimelblatt to Christopher J.
Andrews and William Dozier, Re: Sovaldi Data (Apr. 15,
2014)...................................................... 292
Exhibit 4: Letter from Lynne Saxton to the Honorable Ron
Wyden and the Honorable Chuck Grassley (Oct. 19, 2015)..... 297
Exhibit 5: Letter from MaryAnne Lindeblad to the Honorable
Ron Wyden and the Honorable Chuck Grassley (Sept. 23, 2015) 301
Exhibit 6: Letter from Theodore Dallas to the Honorable
Ronald L. Wyden and the Honorable Charles E. Grassley (Oct.
2, 2015)................................................... 305
Exhibit 7: Letter from Charles M. Palmer to Peter Gartrell
(Feb. 9, 2015)............................................. 310
Exhibit 8: Letter from Thomas J. Betlach to Peter Gartrell
(July 17, 2015)............................................ 313
Exhibit 9: Letter from Justin M. Senior to the Honorable
Orrin G. Hatch and the Honorable Ron Wyden (Oct. 19, 2015). 316
Exhibit 10: Letter from Samantha McKinley to the Honorable
Charles E. Grassley and the Honorable Ron Wyden (Oct. 21,
2015)...................................................... 319
Exhibit 11: Letter from Andy Vasquez to the Honorable Ron
Wyden and the Honorable Charles E. Grassley (Aug. 14, 2015) 322
Exhibit 12: Letter from Coy Stout, Vice President, Managed
Markets, Gilead Sciences, Inc., to Community Partner (July
1, 2015)................................................... 330
Exhibit 13: Meeting Agenda, HCV Fair Pricing Coalition
Meeting (Oct. 3, 2013) (prepared by Cara Miller, Gilead
Sciences, Inc.)............................................ 333
Exhibit 14: Meeting Agenda, ``FPC Gilead 10-3-13 Meeting
Agenda (FOR FPC ONLY)'' (Oct. 3, 2013) (prepared by Lynda
Dee, Fair Pricing Coalition)............................... 335
Exhibit 15: ``Gilead 12-6-13 Call Notes'' (prepared by Lynda
Dee, Fair Pricing Coalition)............................... 337
Exhibit 16: Letter from Murray Penner, Fair Pricing
Coalition, to Coy Stout, Vice President, Managed Markets,
Kristie Banks, Senior Director, Business Operations &
Contract Compliance, Jim Drew, Director, Business
Operations and Contract Compliance, Amy Flood, Vice
President, Public Affairs, and Michele Rest, Director,
Public Affairs, Gilead Sciences, Inc. (Apr. 14, 2014)...... 341
Exhibit 17: Email from William Dozier, Senior Manager,
National Accounts, Gilead Sciences, Inc., to Douglas M.
Brown, Senior Director, Pharmacy Pricing & Value Based
Solutions, Magellan Health Services (May 11, 2014)......... 344
Exhibit 18: Email from Douglas M. Brown, Senior Director,
Pharmacy Pricing & Value Based Solutions, Magellan Health
Services, to Matthew D. Lennertz, Magellan Health Services
(May 19, 2014)............................................. 347
Exhibit 19: Email from Douglas M. Brown, Senior Director,
Pharmacy Pricing & Value Based Solutions, Magellan Health
Services, to William Dozier, Senior Manager, National
Accounts, Gilead Sciences, Inc. (June 5, 2014)............. 350
Exhibit 20: Letter from John B. McCarthy, Director, Ohio
Department of Medicaid, to Peter Gartrell (Aug. 7, 2015)... 353
Exhibit 21: Email from Janet Zachary-Elkind to Kacy
Hutchison, Gilead Sciences, Inc. (Sept. 9, 2014) (attaching
Sovaldi projections chart)................................. 355
Exhibit 22: Letter from Hon. Henry A. Waxman et al., to Dr.
John C. Martin, Chief Executive Officer, Gilead Sciences,
Inc. (Mar. 20, 2014)....................................... 358
Exhibit 23: Troyen A. Brennan et al., CVS Health Corp.,
Analysis of ``Real World'' Sovaldi' (sofosbuvir)
Use and Discontinuation Rates, September 2014.............. 362
Exhibit 24: Letter from Diana S. Dooley to the Honorable Ron
Wyden and the Honorable Charles E. Grassley (Oct. 14, 2015) 369
Appendix E: Documents Produced by Gilead Sciences, Inc........... 373
Exhibit 1: Gilead Sciences, Inc., Gilead Liver Disease
Therapeutics Strategy Overview: October 2011 Board of
Directors Review (2011) (GS-0019261--GS-0019274)........... 374
Exhibit 2: Email from John McHutchison to Matthew Young, Re:
Bristol-Inhibitex (Jan. 7, 2012) (GS-0010634--GS-0010635).. 389
Exhibit 3: Pharmasset, Inc., Board of Directors Meeting,
Princeton, NJ (July 21, 2011) (GS-0004488--GS-0004612)..... 392
Exhibit 4: Gilead Sciences, Inc., Gilead to Acquire Harry
(Nov. 19, 2011) (GS-0009179--GS-0009209)................... 518
Exhibit 5: Gilead Sciences, Inc., Miscellaneous powerpoint
slides (2014) (GS-0019034--GS-0019057)..................... 550
Exhibit 6: Pharmasset, Inc., Board of Directors meeting
packet (July 21, 2010) (GS-0014970--GS-0015065)............ 575
Exhibit 7: Pharmasset, Inc., Board of Directors Memorandum
(Sept. 16, 2011) (GS-0017760--GS-0017760).................. 672
Exhibit 8: Pharmasset, Inc., Global Commercialization
Strategy Update to Pharmasset Board of Directors (2011)
(GS-0003852--GS-0003857)................................... 674
Exhibit 9: Pharmasset, Inc., PSI-7977 Phase II Clinical Trial
Data Review (Oct. 3, 2011) (GS-0011638--GS-0011734)........ 681
Exhibit 10: Gilead Sciences, Inc., Introduction to Project
Harry (July 21, 2011) (GS-0019211--GS-0019233)............. 779
Exhibit 11: Barclays Capital, Description of Fairness Opinion
(Nov. 13, 2011) (GS-0011877--GS-0011900)................... 803
Exhibit 12: Gilead Sciences, Inc., Gilead Liver Disease
Franchise: BOD Strategic Review (Oct. 2011) (GS-0019275--
GS-0019298)................................................ 828
Exhibit 13: Gilead Sciences, Inc., Harry Update (Oct. 7,
2011) (GS-0019236--GS-0019250)............................. 853
Exhibit 14: Email from Schaefer Price to Herb Conrad, et al.,
``FW: Forecast Assumptions'' (Nov. 18, 2011) (GS-0018378--
GS-0018378)................................................ 869
Exhibit 15: Pharmasset, Inc., ``Adjustments to Forecast
Assumptions, Based on Learnings from AASLD'' (Nov. 18,
2011) (GS-0018379--GS-0018380)............................. 871
Exhibit 16: Morgan Stanley, Project Royal Discussion
Materials (Nov. 18, 2011) (GS-0018382--GS-0018403)......... 874
Exhibit 17: Morgan Stanley, Project Royal Discussion
Materials (Oct. 6, 2011) (GS-0002762--GS-0002773).......... 897
Exhibit 18: Pharmasset, Inc., Untitled Presentation by
Pharmasset Executives (Sept. 2011) (GS-0011557--GS-0011636) 910
Exhibit 19: Barclays Capital, Revenue/Valuation Models:
Project Harry (Nov. 13, 2011) (GS-0013466--GS-0013479)..... 991
Exhibit 20: Email from John McHutchison to Jonathan Piazza,
Re: Project Pyramid Assumptions (June 21, 2011) (GS-
0004809--GS-0004814)....................................... 1006
Exhibit 21: Gilead Sciences, Inc., Project Harry--Model
Discussion (Aug. 16, 2011) (GS-0005511--GS-0005549)........ 1013
Exhibit 22: Gilead Sciences, Inc., Project Harry--Barclays
Deck Backgrounder (July 20, 2011) (GS-0000207--GS-0000228). 1053
Exhibit 23: Gilead Sciences, Inc., Hepatitis C and GS-7977
Development Update (Nov. 5, 2012) (GS-0019442--GS-0019506). 1076
Exhibit 24: Gilead Sciences, Inc., 2012-2018 Financial
Forecast (Nov. 2012) (GS-0019394--GS-0019413).............. 1142
Exhibit 25: Pharmasset, Inc., Board of Directors Packet (Oct.
11, 2011) (GS-0017925--GS-0017991)......................... 1163
Exhibit 26: Gilead Sciences, Inc., Harry Update: Board
Meeting (Oct. 24, 2011) (GS-0019309--GS-0019319)........... 1231
Exhibit 27: Email from Cara Miller to Gregg Alton (Nov. 22,
2013) (GS-0020826--GS-0020827)............................. 1243
Exhibit 28: Gilead Sciences, Inc., Sofosbuvir Pricing and
Market Access Assessment, Final Recommendations--July 31st,
2013 (July 31, 2013) (GS-0014018--GS-0014058).............. 1246
Exhibit 29: Gilead Sciences, Inc., Gilead HCV US BPOA (Oct.
2012) (GS-0013489--GS-0013502)............................. 1288
Exhibit 30: Gilead Sciences, Inc., Sofosbuvir US Pricing &
Contracting Strategy, SVP Briefing (March 25, 2013) (GS-
0019128--GS-0019184)....................................... 1303
Exhibit 31: Gilead Sciences, Inc., U.S. HCV Launch Update to
Board of Directors (Aug. 1, 2013) (GS-0014059--GS-0014078). 1361
Exhibit 32: Gilead Sciences, Inc., 2013-2015 HCV Launch
Commercial Plan (April 4, 2013) (GS-0013503--GS-0013546)... 1382
Exhibit 33: Email from Jim Myers to David L. Johnson, et al.,
Characterization of SOF pricing at Launch (Nov. 8, 2013)
(GS-0020772--GS-0020773)................................... 1427
Exhibit 34: Gilead Sciences, Inc., Sofosbuvir Pricing &
Contracting Strategy Working Team, SVP Check-in II (May 10,
2013) (GS-0013972--GS-0014017)............................. 1430
Exhibit 35: Gilead Sciences, Inc., Minutes of Regular Meeting
of Board of Directors (Aug. 1, 2013) (GS-0019671--GS-
0019674)................................................... 1477
Exhibit 36: Gilead Sciences, Inc., Sofosbuvir Pricing and
Market Access Assessment: Response to Follow Up Questions
(Aug. 26, 2013) (GS-0013857--GS-0013887)................... 1482
Exhibit 37: Gilead Sciences, Inc., Sofosbuvir Pricing and
Market Access Recommendation (Nov. 2013) (GS-0014079--GS-
0014082)................................................... 1514
Exhibit 38: Email from Kevin Young to John Martin, et al.,
Re: COMPANY CONFIDENTIAL (Nov. 18, 2013) (GS-0020800--GS-
0020800)................................................... 1519
Exhibit 39: Email from John Martin to Kevin Young, Re:
CONFIDENTIAL (Nov. 24, 2013) (GS-0020946--GS-0020947)...... 1522
Exhibit 40: Email from Kevin Young to Jim Meyers et al., Re:
ADAP and Sofosbuvir (Nov. 19, 2013) (GS-0020802--GS-
0020804)................................................... 1525
Exhibit 41: Gilead Sciences, Inc., ``EAME SOF Price
Recommendations'' (Sept. 11, 2013) (GS-0019913--GS-0019919) 1529
Exhibit 42: Email from Kevin Young to Jim Meyers and Derrell
Porter (Oct. 19, 2013) (GS-0020285--GS-0020288)............ 1537
Exhibit 43: Email from Paul Carter to Cara Miller (Oct. 11,
2013) (GS-0020212--GS-0020213)............................. 1542
Exhibit 44: Gilead Sciences, Inc., Canadian Sofosbuvir
Pricing Considerations (Sept. 30, 2013) (GS-0020086--GS-
0020094)................................................... 1545
Exhibit 45: Gilead Sciences, Inc., 2015-2016 HCV Commercial
Plan (April 22, 2014) (GS-0014083--GS-0014110)............. 1555
Exhibit 46: Gilead Sciences, Inc., Topics for Discussion--
LDV/SOF US Pricing (Aug. 4, 2014) (GS-0019000--GS-0019033). 1584
Exhibit 47: Gilead Sciences, Inc., US HCV Pricing Update, SVP
Update Meeting (July 21, 2014) (GS-0018861--GS-0018953).... 1619
Exhibit 48: Gilead Sciences, Inc., 2014-2015 US HCV Franchise
BPOA (Draft) (June 2014) (GS-0014143--GS-0014171).......... 1713
Exhibit 49: Gilead Sciences, Inc., Updated Slides--Wave 2
Pricing (GS-0018965--GS-0018999)........................... 1743
Exhibit 50: Gilead Sciences, Inc., Managed Markets Hepatitis
C Virus (HCV) Payer Advisory Board Final Report (Oct. 14,
2014) (GS-0018760--GS-0018814)............................. 1779
Exhibit 51: Email from Mark Schoenebaum to Robin Washington,
FINAL data from gild/bmy (and sort of MRK/ROG) buy-side
survey (Oct. 31, 2013) (GS-0020496--GS-0020512)............ 1835
Exhibit 52: Gilead Sciences, Inc., HCV Wave 2 Contracting
Recommendations (Sept. 9, 2014) (GS-0019058--GS-0019127)... 1853
Exhibit 53: Email from Cara Miller to Gregg Alton, FW: FPC Ad
Board Feedback (Oct. 4, 2013) (GS-0020133--GS-0020135)..... 1924
Exhibit 54: Email from Jim Meyers to David L. Johnson, et
al., Synopsis of feedback from top HCV advisors at AASLD
(Nov. 5, 2013) (GS-0020776--GS-0020780).................... 1928
Exhibit 55: Email from Jim Meyers to John Milligan, Synopsis
of feedback from top HCV advisors at AASLD (Nov. 8, 2013)
(GS-0020765--GS-0020769)................................... 1934
Exhibit 56: Email from Jim Meyers to Norbert Bischofberger,
Synopsis of feedback from top HCV advisors at AASLD (Nov.
7, 2013) (GS-0020753--GS-0020759).......................... 1940
Appendix F: Narrative answers from Gilead Sciences, Inc., in
response to questions in the July 11, 2014 letter from Senators
Wyden and Grassley............................................. 1949
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Appendix E--Continued
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Appendix F
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