France uses tax to put pressure on hepatitis C drug prices

France uses tax to put pressure on hepatitis C drug prices

By Natalie Huet

PARIS Tue Sep 30, 2014 7:38am EDT
(Reuters) - France will tax drugmakers whose costly hepatitis C drugs threaten to throw off course its healthcare budget, the government has said, heaping pressure on pharmaceutical companies like Gilead Sciences to cut their prices.

The Socialist government said it had designed a "progressive contribution scheme" ensuring all patients can access new and more effective treatments against the liver-destroying virus, while limiting the burden of these drugs on state finances.

The government will selectively tax drugmakers when the total cost to the state from their hepatitis C drugs exceeds a certain amount each year, Health Minister Marisol Touraine said, as she unveiled the country's 2015 social security budget bill on Monday.

If social security spending on hepatitis C drugs exceeds 450 million euros ($567 million) in 2014, the makers of those drugs will be taxed based on the revenue they had reaped in excess of that cap, the ministry said in a presentation.

In 2015, the tax will apply beyond a 700 million euro cap, it added.

Details of the new tax should be presented to lawmakers in October and a vote on the budget is due by the end of the year.

Some 200,000 people in France are infected with hepatitis C and treatments for the virus could cost the state-run healthcare system as much as 1 billion euros this year, according to reports in newspapers Le Monde and Les Echos.

The ministry declined to comment on any estimates.

LOWER CURE RATES

With its move, France is raising pressure on U.S. biotechnology company Gilead, which obtained regulatory approval for its hepatitis C drug Sovaldi in Europe last January, but is still negotiating its official price in France with representatives of the economy and health ministries.

A representative for Gilead in Europe could not immediately be reached for comment. Gilead has argued that Sovaldi's price is comparable to older medicines that require longer treatment duration with much lower cure rates and nasty side effects.

Sovaldi cures well in excess of 90 percent of patients in as little as eight weeks of treatment. But its price has fueled sharp criticism from governments and private insurers alike.

Sovaldi currently costs around 56,000 euros ($70,000) in France and $84,000 in the United States for 12 weeks of treatment. The U.S. price works out to as much as $1,000 per pill.

Sovaldi is on track to be one of the world's biggest-selling drugs, set to rake in close to $12 billion in revenue in 2014 - its first full year on the market - according to forecasts compiled by Thomson Reuters Cortellis.

Rivals Merck & Co and AbbVie are also racing to develop next-generation hepatitis C treatments that cure most people of the virus in a shorter timeframe.

Hepatitis C virus, or HCV, is spread through blood, often via contaminated needles, and causes cirrhosis and liver cancer. Approximately 150 million people in the world live with the infection, most of them in low and middle-income countries.

(Editing by Andrew Callus and David Holmes)