[Skip to Navigation]
Sign In
Comment & Response
November 26, 2014

Costs of New Treatments for Hepatitis C Infection

Author Affiliations
  • 1Department of Health Policy, George Washington University, Washington, DC
  • 2LWC Health Pty Ltd, Canberra, Australia
JAMA. 2014;312(20):2168. doi:10.1001/jama.2014.14337

To the Editor In seeking to rationalize sofosbuvir pricing, Drs Brennan and Shrank1 assumed $11 billion in development costs. Even if this were reasonable, Gilead’s $2.27 billion first quarter revenue would suggest that the price was grossly inflated. But the development of sofosbuvir did not cost that much.

Normally, a commercial sale includes an amount for intangible assets, such as goodwill. In the acquisition of Pharmasset by Gilead for $11 billion, these assets were estimated at only $74.8 million.2 Despite 3 hepatitis C virus (HCV) drugs in development at Pharmasset (with only $62.4 million attributed to sofosbuvir development in 2009-20113), Gilead accounted for almost all the remaining tangible assets as the “fair value” of sofosbuvir.2 Consistent with standard accounting practice, the fair value was classified as an intangible asset.2 It is therefore incorrect to consider the $11 billion as research and development costs.

Add or change institution