[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

                               ----------                              

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 
-----------------------------------------------------------------------
  For sale by the Superintendent of Documents, U.S. Government Publishing 
  Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
         DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
                          Washington, DC 20402-0001
















                          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

                              ----------                              

                                                                   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



      

=======================================================================


                         Appendix E--Continued

=======================================================================


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

=======================================================================


                               Appendix F

=======================================================================


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]