GILD Gilead Sciences Inc

Concluding an 18-month investigation into how drug maker Gilead Sciences Inc. set the price for its expensive new hepatitis C drug, the U.S. Senate Finance Committee said the company knew its $1,000-a-pill launch price would put the treatment out of reach of many patients and cause "extraordinary problems" for government health programs.

The 144-page committee report released Tuesday adds to a chorus of criticism of escalating drug prices from patients, doctors, insurers and some presidential candidates. U.S. congressional committees also have opened inquiries into drug-pricing practices by other companies including Valeant Pharmaceuticals International Inc., and House Democrats have formed a drug-pricing task force to explore ways to reduce costs.

The Senate committee reviewed about 20,000 pages of internal Gilead documents and a trove of data from state Medicaid health programs, the committee said. The probe primarily focused on Sovaldi, which was introduced in late 2013, but also included information about pricing of a second expensive hepatitis C drug Gilead introduced in October 2014, Harvoni.

Gilead said in a statement that it disagreed with the committee's conclusions and that the company "responsibly and thoughtfully priced Sovaldi and Harvoni."

Among the documents cited in the Senate report is an internal Gilead slide presentation from July 2013, before Sovaldi was introduced, predicting that 24% of insurers and other U.S. payers would restrict patient access to Sovaldi if it were priced at $75,000 per patient, rising to 47% if priced at $90,000. The presentation also anticipated that patient-advocacy groups and some doctors would be critical of a price around $80,000.

Another document released by the committee is an email that Kevin Young, Gilead's executive vice president for commercial operations, wrote to colleagues in November 2013, shortly before Sovaldi was cleared for sale by U.S. regulators: "Two sincere requests…Let's not fold to advocacy pressure in 2014. Let's hold our position whatever competitors do or whatever the headlines."

The company ultimately set the price of Sovaldi at about $84,000 per patient for a standard 12-week treatment.

Gilead was "fully aware that as the prices kicked up, the number of Americans treated and cured would go down," Sen. Ron Wyden, a Democrat from Oregon and ranking member of the committee, said at a news conference in Washington Tuesday. "Yet based on our investigation, the company chose to put revenue ahead of affordability, of accessibility for millions of patients."

Gilead said Tuesday that the drugs' prices were initially in line with those for older hepatitis C treatments, and now cost less because Gilead pays rebates and offers discounts to payers. The company said it provides financial assistance to help uninsured patients receive the drugs.

The committee also concluded that Gilead underestimated the degree of restrictions that health insurers would impose as a result of the price. State Medicaid programs paid $1.3 billion before rebates on Sovaldi in 2014, yet less than 2.4% of the roughly 700,000 Medicaid patients with hepatitis C were treated, according to the report.

The committee report said Gilead set the price of Sovaldi as a benchmark to "raise the price floor" for future hepatitis C drugs including Harvoni, which costs about $94,500 per patient for a 12-week treatment. In clinical trials, both drugs had high rates of curing patients infected with hepatitis C, a liver-damaging virus that is spread by contact with the blood of an infected person.

Sen. Charles Grassley, a longtime industry watchdog and member of the finance committee, and Sen. Wyden had sent a letter to Gilead Chief Executive John Martin in July 2014 requesting a wide range of documents about the company's pricing decisions. They said in the letter that while Sovaldi had potential to help patients with hepatitis C, its price was straining health-care budgets including the federal Medicare and Medicaid programs.

Together, Sovaldi and Harvoni generated $14.2 billion in global sales for the first nine months of 2015.

Gilead acquired an active ingredient shared by both drugs via its $11 billion purchase in 2011 of Pharmasset, which developed the drug.

Write to Peter Loftus at peter.loftus@wsj.com

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(END) Dow Jones Newswires

December 01, 2015 16:45 ET (21:45 GMT)

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