The global price discrimination with Sovaldi has brought to light "pharmacy tourism" - patients trying to acquire the same drug at as much as 1% of the price of the drug in the US market.
This isn’t just theoretical. I was approached by a consultant representing large U.S. employers who were exploring pharmacy tourism that would send patients abroad for their drugs.
The controversy over the pricing of Gilead’s Sovaldi for Hepatitis C is a textbook example of price discrimination in action. I hope that my quick review of some of the principles involved will help explain what’s going on.
Gilead sells Sovaldi for high prices in America: up to $85,000 or so for a course of treatment. The price is a little lower in Europe, substantially lower still in middle income countries and less than $1000, or 1% of the U.S. price in poor countries such as India. Such stark differentials set up major financial incentives for people in richer countries to obtain the product in poorer countries. With more than $80,000 per patient at stake, grey marketers could easily make millions of dollars and even an individual patient from a rich or middle income country would find it financially worthwhile to go to a low income country to procure the medicine.
Link to the editorial on Healthcare Payer News: