The Wyden-Grassley report on Gilead GILD has caused quite the stir; the 18-month investigation into the pricing and marketing of Gilead’s HCV regimen highlighted that [i] Sovaldi’s $1,000 per day pill or $84,000 per regimen treatment was designed to maximize revenue, [ii] affordable access was not a key consideration in setting Sovaldi’s price and [iii] there was no concrete evidence “that basic financial matters such as R&D costs or the multi-billion dollar acquisition of Pharmasset, the drug’s first developer, factored into how Gilead set the price.”

I found the allegation that Gilead’s HCV pricing was divorced from R&D costs the most troubling. First of all, that was a basic argument by GILD longs to justify the pricing. Secondly, if R&D costs or the cost of acquire Pharmasset were not factors in setting the price, then what separates Gilead from Turing Pharmaceuticals or Valeant VRX?

Longs Are Apoplectic …

Longs are apoplectic over the Wyden-Grassley report. Criticisms have ranged from the government singling out Gilead, to socialism, to election year saber rattling. Commenters on my previous article had the following to say:

Commenter 1: This is not about economics or fairness. This is just headline risk in the worst possible environment of an election year.

Commenter 2: Shock Exchange are you a capitalist or socialist? Does public good always translate to socialized medicine with a single (government) payer? So which is for better social good … paying $240K to prolong merely two months life of a terminal cancer patient or paying $84K to CURE a HCV patient?

Commenter 3: There are two threads to this conversation. The first is the presumption that Gilead has outrageously priced their HCV treatment and is supported by demagoguing politicians and backed by (mostly liberal) anti-business media. This meme has a life of its own now after being popularized by the mainstream media and these grandstanding politicians … Pharmaceutical and biotech companies are just the latest hated capitalist company sector somewhat replacing oil companies, and banks.