The Price of a Cure

Gilead Pills. Source:

Gilead Pills. Source:

Big pharma giant targets, positions and scores big time with hep C drugs

Imagine finding out you have a life-threatening illness. How much would you pay for a cure?

For the 150 million people worldwide who are infected with hepatitis C, there is a cure! But it comes at a cost, a very big cost of US$96,500 per treatment course. For pharmaceutical drug company Gilead Sciences, the hep C drug market segment is a no-brainer – hep C-infected patients. Analyse that segment further and you find 70% live in poor countries and many are not going to afford the cure. An analysis of the US segment of the market revealed that 60-70% of hep C sufferers are people who inject drugs, many of whom come from low socioeconomic backgrounds. Again, they are not going to afford the cure either.

Gileads 2015 Revenue and Sales Figures. Source: Gilead Annual Report 2015 -

Gileads 2015 Revenue and Sales Figures. Source: Gilead Annual Report 2015 –

So how is it possible that big pharma giant Gilead is able to make record sales 3 years in a row, raking in a total revenue of $32.6 billion in 2015? The answer is all about positioning….

Patients’ attitude to previous hep c treatment

Imagine having flu-like symptoms for months, aches and pains, fatigue, headaches, insomnia, anxiety and/or depression, paranoia and even suicidal tendencies. These are the many side effects of interferon therapy which was the gold standard for treatment having only 50% chance of clearing hep C. No, thanks – with symptoms like this, it is not surprising that most patients give up treatment due to the impact on their quality of life.

The game changer

Sovaldi was the first of Gilead’s blockbuster hep C cures, claiming up to 90% cure rates and very few mild side effects.

Gilead’s “Forget me not” marketing campaign was aimed at the hep C sufferers who were waiting for that cure to come along and directs them to seek help from their doctor. But there was a catch – it came with a US$84,000 price tag. And for those who had private insurance, why not make the insurance companies pay for it? Insurance companies were feeling the squeeze and so hit back at Gilead for their high costs.

Gilead was not going to be deterred as they had another card up their sleeves. Enter Harvoni – Gilead’s next blockbuster miracle cure for hep C with claims of up to 99% cure rate covering all 6 genotypes of HCV. Taken as a drug on its own, consumers do not need the drugs of old and can say goodbye to the horrible side effects that came with interferon injections. Gilead’s positioning is in “improving lives”. And of course, customers see Harvoni as the saviour in their lives. Gilead has opted for the big guns – a direct-to-consumer advertising in their “I am Ready” marketing campaign, a multi-million dollar marketing campaign for a $1000 per pill product.

“Patients have Harvoni on the mind because of these TV commercials,”

Generally, pharmaceutical companies advertise to doctors since they prescribe and recommend drugs to patients and prescription drugs are not usually displayed in pharmacies (Spiller, Wymer and Walter, 2002). It is a bold move by Gilead to market a prescription drug direct to consumers but one that has reaped rewards with Gilead’s 2015 sales for Harvoni exceeding US$4 billion.

“Patients have Harvoni on the mind because of these TV commercials,” said Mount Sinai Hospital hepatologist Dr. Douglas Dieterich. The ad features all the benefits of Harvoni that consumers would value – positioning the drug as restoring one’s quality of life. The ‘I am Ready’ ads have been aired on all the major TV networks in the US including FOX, CBS and ABC targeted at baby boomers aged 50-70 year olds who are 5 fives more likely to carry hep C. The US baby boomers are also more likely to have more advanced stages of liver disease and more likely to afford the drugs via their private insurers who are only reimbursing clients with evidence of liver scarring.

The competition emerge but will it drive down prices?

“Never before have drugs been priced so high to treat such a large population”

Gilead can get away with the huge price tag but for how long? “Never before have drugs been priced so high to treat such a large population” says Steve Miller, Chief Medical Officer at Express Scripts, US’s largest manager of drug benefits for employers and insurers. And consumers are queuing up to pay the cost because it is cheaper than a new liver.  Gilead’s competitors are Bristol-Myer-Sqibb’s Daklinza, AbbVie’s Viekira Pak and Merck’s Zepatier. These new drugs entered the market after Gilead and are therefore cheaper than Gilead’s Harvoni but can they steal Gilead’s thunder. Gilead has given many Indian companies licenses to make generic versions of their hep C drugs and selling them for under $5 a pill. Does this mean Gilead will reduce their price in the US? Currently there is no need – Gilead’s strong product together with aggressive marketing strategy has forced their competitors to choose other niche perhaps less profitable markets. Merck for example, have decided to focus on a niche hep C market targeting difficult to treat patients. 

Australia: small segment, big buying power

Australia is a small market segment with only 200,000 people infected. In December 2015, the Australian Federal Government announced that it was going to spend $1 billion dollars over the next 5 years towards cheaper drugs for hep C. On 1st March, 2016, both Sovaldi and Harvoni appeared on the Pharmaceutical Benefits Scheme (PBS) making Gilead’s drugs much more affordable to consumers for as little as $6.10.

Exploiting the buying power of governments for a smaller market is a clever strategy allowing Gilead to address smaller segments and still be profitable. It seems taxpayers aren’t complaining because experts are saying they could be eliminating hep C in Australia in the next 10-15 years.

Advancing therapeutics, improving lives if you can pay the price

While the tactic of spurring further governments around the world to buy into Gilead’s miracle drugs now are filling the company’s pockets, the elimination of the disease means a rapidly declining market in the future. Gilead needs to find the next big blockbuster drug to stay on top. So, what’s next for Gilead? With a long list of products being developed in the pipeline such as therapeutics for HIV-AIDS and other liver diseases, Gilead would need to pull a new rabbit out of their hat to top Harvoni.


Iacobucci, D. (2014) Marketing Management (MM), 4th Edition, South-Western, Cenage Learning, Mason.  Chapter 3, Segmentation, Chapter 4, Targeting and Chapter 5, Positioning.

Blackett, T and Robins, R (2001) Brand Medicine – The role of branding in pharmaceutical industry. Palgrave Publishers Ltd, New York. Chapter 5: Direct to consumer advertising – the US perspective.

Spiller, L., Wymer, Jr., and Walter, W. (2002). Physician’s responses to marketing strategies of Pharmaceutical Companies. Journal of Pharmaceutical Marketing and Management. Vol 15: Issue 1

Written By: Patricia Vietheer Student No: 215464584


2 thoughts on “The Price of a Cure

  1. great info, thank you. Would be interesting to know how much Hep C inpatient and outpatient treatment costs Australia in the public hospital sector to know if the return on investment for the govenrment is going to pay off economically? Morally and ethically funding this medcaiton is a must, but the economics would be interesting.


    • Yes, indeed that would be interesting. In August 2012, the Boston Consulting Group published a report on “The Economic Impact of Hep C in Australia” commissioned by Janssen – they estimated that Hep C costs the Australian government $252 million each year. They forecasted that without a cure, the medium term economic impact would cost $1.5 billion over 5 years and $13.6 billion over the lifetime of the currently infected group. So you could argue that if elimination of hep c is achieved, it would pay off economically in the long term. Elimination only means a reduction in the public health burden so without a vaccine that prevents transmission, there will still be infections occurring especially through immigration from countries that still have a high burden of disease.


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