Massachusetts Attorney General Maura Healey warned Gilead Sciences that it could face legal action if it doesn't reduce the prices of its hepatitis C drugs. But if Healey proceed to sue the biotech company, her case probably will rely on an untested legal theory that could be applied widely to other specialty pharmaceuticals.
In a letter to Gilead CEO John Martin, Healey said her office was considering legal action as the costs of two hepatitis C drugs, Sovaldi and Harvoni, "may constitute an unfair trade practice in violation of Massachusetts law," according to CNBC.
Healey also said in the letter that her office will "continue to examine this potential claim for unfair commercial conduct."
A 12-week treatment course of Gilead's Sovaldi pills costs $84,000, and the company's Harvoni, a two-drug combination treatment, costs $94,500.
According to The Boston Globe, lawyers in the attorney general's office won't discuss how it would build a case against Gilead. But the top lawyers in Healey's office have been known to deploy legal tools beyond the consumer protection act, as well as regulatory and investigatory levers and public pressure to challenge businesses.
The attorney general's office is studying the potential complaint for Gilead would be brought under Massachusetts' consumer protection law, known as Chapter 93A.
Michael C. Gilleran, partner in Boston law firm Burns & Levinson and the writer of a book on Chapter 93A, said Healey would be relying on the statute of choice for business litigation in Massachusetts. He said the statute is very broad, very vargue, and has huge firepower. "It provides for triple damages and attorneys' fees," Gilleran added.
However, the statute has never been used to force a drug company to drop the price it has set for a drug. The case involved changing an already established benchmark price.
Gilleran said he is not aware of any state court in the U.S. that has ruled that overpricing is an unfair and deceptive practice. He said there is no general authority under 93A to regulate prices.
To win the case, Healey would have to prove that Gilead in "unfair and deceptive" practices that harmed people needing treatment for hepatitis C virus but can't afford the drugs. Only 10 percent of hepatitis C patients in the U.S. have been treated with Gilead's drugs.
There is also hope that new competition from Merck's brand-new two-drug cocktail Zepatier might force Gilead to lower its prices. According to FiercePharma, Merck's Zepatier costs $54,600 per treatment course.
Drugs generally cost more in the U.S. than other countries. Healey noted that Gilead's Sovaldi, priced at $1,000 a pill in the U.S., costs only about $4 a pill in India and $10 a pill in Egypt.
