California is grappling with how to afford a new generation of expensive hepatitis C drugs. The new treatments are incredibly effective, with cure rates of 90 percent for some strains of the disease. But they are also expensive—sticker prices can reach over $90,000. Between July 2014 and November 2015, the state paid $387.5 million to treat just 3,624 patients with the disease.
There are a complicated set of factors that influence how pharmaceutical companies price powerful new drugs, from factoring in long-term cost savings to negotiations with private and public insurers. The video below explores how one hepatitis C drug— Sovaldi— got its initial price of $84,000 per course of treatment, or $1,000 per pill.
Video animation and voicing by Sam Rolens.