Will Sovaldi’s high cost result in federal price controls?

Federal regulation of the price of drugs is a divisive issue in the health care industry.

The Hepatitis C drug Sovaldi boasts an impressive cure rate for a disease that affects one in every 100 Americans. While this normally would be a cause for celebration, the drug has received significant backlash — not for any dangerous side affects, but for its staggering price tag: roughly $84,000 a patient.

Sovaldi's maker, Gilead Sciences, argues that the cost reflects their significant investments in research and development. According to the Wall Street Journal, over there have been over 700 Hepatitis C treatments projects across the industry in the last ten years that never made it out of the lab.

However, consumers and critics are not sold on this argument, and voiced their disapproval. Now, politicians have taken note, and are questioning Sovaldi about its pricing structure. 

"I think that the government needs to step in here and make sure that the market is rational….Right now, pharmaceutical companies can charge whatever they want, and I think there needs to be a rational basis for all of this," Mario Molina, the CEO of Molina Healthcare that runs Medicaid and ObamaCare plans in nine states, told the Wall Street Journal. 

Members of the Senate Finance Committee have sent a letter to Sovaldi, asking them to explain why the drugs cost "appears to be higher than expected given the costs of development." The letter asked it to explain a run-down of the costs that might shed more light on the pricing decision. 

Critics argue that organizations need to be allowed to set their own prices, in order to incentivize progress. However, the high cost of drugs like Sovaldi can leave many care facilities facing issues with bad debt if patients are not prepared for the cost. 

If your facility is experiencing issues with cash flow as a result of the rising cost of pharmaceuticals and other treatments, it could be time to outsource receivables management and write off fewer dollars to bad debt.