Pharma Company 'Price Gouging' VA on Hepatitis Medicine: Lawmaker

The chairman of the House Veterans Affairs Committee is slamming an American pharmaceutical company for "price gouging" by charging upwards of $40,000 for a nine-week course of Hepatitis C medicine for veterans -- about 45 times what it charges for the same treatment in Egypt and elsewhere.

The medicine, called Sofosbuvir, has already prompted Congress to add an additional $2.7 billion to the Veterans Affairs Department's budget in order to "prevent the department from having to ration veterans' access to the drug," Rep. Jeff Miller, a Republican from Florida, said in an op-ed posted Wednesday on CNN.com.

The target of Miller's wrath is Gilead Sciences of Foster City, California, which Miller said earned about $10 billion in the first year its treatment for chronic liver disease hit the market in 2012.

"Gilead's tone-deaf pricing strategy also fails to take into account the fact that without the Department of Veterans Affairs, the drug at the center of this debate would not even exist," Miller wrote. "Sofosbuvir was invented by a team led by a VA doctor, who sold the company that developed the drug to Gilead in 2012."

Gilead Sciences did not respond to Military.com's request for comment.

He said more than 3.2 million Americans are affected by the disease, with at least 200,000 of them veterans.  A CBS News report in December said most veterans in need of medicine treatment are Vietnam vets who contracted Hepatitis C while in country, where it was spread by battlefield blood transfusions and vaccinations.

Miller will be following up his CNN broadside next week with a hearing on Capitol Hill, where he will hear from a VA senior research scientist who helped invented the drug.

The hearing, "Lost Opportunities for Veterans: An Examination of VA's Technology Transfer Program," is scheduled for February 3rd.

The VA receives no revenues from the sale of Sofosbuvir even though the VA's Technology Transfer Program is reportedly supposed to ensure the department receives credit and revenue for medical advancements developed using its personnel and resources.

Among the witnesses invited to testify is Dr. Raymond F. Schinazi of the Atlanta, Georgia, VA Medical Center. In addition to his career at VA, he founded and operated several biotech companies over the years, including Pharmasset -- the one that developed Sofosbuvir -- which he sold in 2011 to Gilead for $11 billion.

But a source with knowledge of the upcoming hearing said VA informed the committee that Schinazi is retiring, effective Feb. 1.

Schinazi, who holds more than 90 U.S. patents, earned about $440 million from the sale of Pharmasset, according to a 2011 report in FierceBiotech, a trade publication for the biotech industry.

Miller, in his op-ed, suggested that Gilead would offer "a twisted" defense of its "exploitation of our veteran community" by stating that it already provides the department a 50-percent discount on the drug.

That's what brings the treatment price down to about $40,000, which Miller calls "a paltry price reduction [that] pales in comparison to the deal Gilead is giving hepatitis sufferers in other countries."

He said, "The government shouldn't be in the business of telling private companies what to charge their customers. But by the same token, companies such as Gilead shouldn't price-gouge one group of consumers to subsidize its preferential treatment of another."

According to a report on CBS News in December, most veterans in need of the Sofosbuvir treatment are Vietnam vets who contracted the disease in country, as it was spread by battlefield blood transfusions and vaccinations.

-- Bryant Jordan can be reached at bryant.jordan@military.com. Follow him on Twitter at @bryantjordan.