332 Bleecker Street, PMB G5, New York, NY 10014

(212) 966-4873

August 6, 2014

The Honorable Ron Wyden
Chairman
Committee on Finance
United States Senate
219 Dirksen Senate Office Building
Washington, D.C. 20510 :

Dear Senator Wyden,

This is regarding your recently launched investigation into the pricing of the Hepatitis C
drug Sovaldi (generic name sofosbuvir) made by Gilead Sciences, Inc. In your letter to
Gileads Chairman and CEO, Dr. John C, Martin, dated July 11, 2014, you request that
the company provide a series of documents, and answer relevant questions, in order to
better understand the rationale used to arrive at such an extremely high price for this
Hepatitis C cure. You also make clear and unambiguous statements regarding the
dramatic increase in government spending, including Medicare, Medicaid, and other
federal programs, that would result from treating all the people who would benefit from
this drug at the price determined by Gilead.

ACT UP New York is an organization that has fought since its founding in 1987 for the
rights of people with HIV, many of whom are co-infected with the Hepatitis C virus. We
consider this issue of enormous importance for people living with Hepatitis C. In the
same way we fought for access to HIV drugs at a reasonable price for all those infected
with HIV, and for the development of special programs such as ADAP for that purpose,
we are stepping up our fight to make Sovaldi, as well as all other forthcoming Hepatitis
C interferon-free cures, available to every person who needs it.

For that reason, we commend the Senate Finance Committee, led by you as its
Chairman, for moving ahead with this investigation. We are also encouraged by a
similar investigation initiated by the Committee on Energy and Commerce of the House
of Representatives, led by Congressman Henry A. Waxman.

It is clear that by whatever calculation Gilead used to set the price, it is simply
unacceptable. Indeed, there is a widespread consensus among many unrelated parties
that this is the case. According to a study presented just a few weeks ago at the
International AIDS Conference in Australia, the production cost for the full 12-week
course of Sovaldi, now priced at $84,000, is approximately $102 (1). Other informal
sources from the health insurance industry have told us that Sovaldi is being priced
one order of magnitude too high, and yet others have noted how this drug, intended
for a mass market, was given a niche drug price. Even the drug retailing giant CVS
Caremark Corp. has said that the nations health-care system likely wont be able to
handle that kind of sticker shock (2).

The way Gilead has priced Sovaldi raises serious ethical issues. As mentioned in both
your letter and Congressman Waxmans letter, Sovaldi was approved on an expedited
basis. As the first interferon-free regimen cure for Hepatitis C, federal authorities
granted the special status of Breakthrough Therapy. Priced low enough to be given to
a much larger pool of people, Sovaldi is the best chance to end the Hepatitis C
epidemic. At the current price, the cure is only in use for a subset of people at an
advanced stage of the disease who are charged an enormous amount of money for it.
In other words, a public health benefit of historical proportions is being held off
by nothing else but Gileads pricing scheme. Gilead pricing of Sovaldi will allow
the epidemic to continue at lower levels, while the company reaps larger financial
benefits over a prolonged period of time.

In order to end the Hepatitis C epidemic as soon as possible, we need a significant drop
in the price of Sovaldi, to make it available to all Americans who need it. What good is a
cure that costs $102 to produce if it takes decades to implement nationwide due to high
prices?

In light of the immediacy of the problem and the clear public benefit that equitable
pricing would create, ACT UP New York is presenting the following demands to your
committee and to the federal government:

1) The government must achieve a 90% reduction in the price of Sovaldi for US
consumption, from the current $84,000 to $8,400 for the 12-week full course. At
this price, treating 2 million people, a reasonable proportion of the 3 to 4 million people
with Hepatitis C in this country, would yield $16.8 billion profit for Gilead. This price
would cover Gileads purchase of Pharmasset, provide profit for shareholders, and fund
additional research and development activities. We must note that the cost of buying
Pharmasset was $11 billion, and that Gilead has already made $5.8 billion on sales of
Sovaldi in just the first 6 months of 2014.

2) In the event that Gilead refuses to reduce the price to the amount indicated
($8,400) or lower, the federal government should break Gileads monopoly of
sofosbuvir. This could be attempted by voluntary means, such as a patent buyout, or
by non-voluntary means, such as a patent waiver.

A patent buyout can be justified on the basis that this patent would be more valuable to
society if the product was available at a reasonable price At the current unaffordable
price the disease is allowed to spread, consuming citizens health and societys
reserves of health capital all due to Gileads niche pricing structure. Negotiations
should start from this premise, and involve all the stakeholders, including Gilead, in
order to arrive at a reasonable price for this buyout.

If a voluntary method such as the one outlined above cannot be negotiated with Gilead,
the federal government should move ahead and waive Gileads patent on sofosbuvir
and have it produced and sold at a lower price, using the government use right
statute (3). A patent waiver is not without precedent. In 2001, during the bio-terrorist
Anthrax attacks then Secretary of Health and Human Services Tommy Thompson
threatened to seek a waiver of the antibiotic Cipro patent to allow production of a
generic version if German owner Bayer did not lower its price. After much haggling and
high profile negotiations, Bayer eventually did reduce the price of the drug. The US
government did not proceed with a request for a waiver, since the objective was
achieved by the threat of political pressure.

Also worthy of noting is the fact that fifty years ago a cure for another grave illness was
delivered free of any patent rights altogether. In 1955, Dr. Jonas Salk chose not to
patent his polio vaccine, making it more affordable for millions of people in need of it. It
is estimated that he could have made $7 billion from it; instead, polio was briskly
conquered.

In 2014, Gileads pricing of this Hepatitis C cure allows the disease to proliferate, by
pricing out millions of people that need it, thus delaying the end of a devastating
epidemic.

We must not allow this to happen. We urge you to act with the sense of urgency it
merits. Millions of lives and millions of our countrys health dollars are at stake.

Sincerely,
ACT UP New York

Contact persons:

Luis G. Santiago, santiago.luis.g@gmail.com, (917) 655-7347
Terence Roethlein, tkr2001@columbia.edu, (347) 449-2881
Timothy Lunceford, timothynyc4@aim.com,

[1] Hill A, et al. Minimum target prices for production of treatment and associated
diagnostics for hepatitis C in developing countries (Poster LBPE12). International AIDS
Conference; 2014 July 2025; Melbourne, Australia.

[2] http://blogs.marketwatch.com/health-exchange/2014/07/20/cvs-officials-say-sovaldi-
pricing-in-line-with-history-but-unsustainable/

[3] 28 U.S.C. 1498. Patent and copyright cases, Section (a).

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