Yet it remains unclear whether AbbVie will be able to keep prices high or be forced to offer discounts to private and public insurers that have paid for Sovaldi even as they grumble for a cheaper alternative.
Despite its effectiveness, AbbVie's therapy has some characteristics that could make it less attractive. The drug mixture requires multiple daily pills compared with one for Sovaldi, and it uses Norvir, an antiretroviral that can cause unwanted interactions with other drugs. Also, by the time it hits pharmacies, AbbVie may be facing off with Sovaldi's second iteration, a dual-drug combo that has performed well in eight-week trials.
“They have been making the case that they have produced very high efficacy rates,” says Seamus Levine-Wilkinson, a Burlington, Massachusetts-based pharma analyst at Decision Resources LLC. But now, “that's the price of entry into the hep C space.” Before Sovaldi, the best cure rates were in the 70s.
“Ten out of 10 doctors would pick Gilead in a cost-neutral environment,” says Mark Schoenebaum, the New York-based head of health care research at International Strategy & Investment Group LLC. “(Payers are arguing), 'If we get a discount for a less convenient drug, we're fine using the less convenient drug.' They need someone to play ball.”
AbbVie likely will set prices in line with Sovaldi initially, says Levine-Wilkinson, and it may be able to sustain it for a year or two, depending on how the market takes to its product. But that could change when other manufacturers such as Merck & Co. and Bristol-Myers Squibb Co. introduce their own therapies. It only takes one player to set off a price war, he says.
An estimated 150 million people worldwide are infected with hepatitis C. The bloodborne virus is spread through unsterile intravenous drug use, among other modes, and years can pass between infection and any sign of symptoms.
Sovaldi is seen as a game changer for more than its effectiveness. It's an oral therapy and, at least for some patients, can be administered without interferon, a protein with flu-like side effects.
AbbVie hasn't publicized revenue estimates for its new therapy, but analysts have been projecting roughly $800 million in sales for 2015, growing to more than $2 billion annually in the near term—blockbuster status in the pharma industry.