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Gilead’s new hepatitis C drug,
Sovaldi, is fast outpacing its older
rival, Incivek.
Weekly U.S. prescriptions
Sovaldi 7,159
8,000
15 weeks after its
Dec. ’13 launch
7,000
6,000
5,000
4,000
3,000
Incivek 2,268
15 weeks after its
May ’11 launch
2,000
1,000
0
0
1
2
3
Months after drug’s launch
Sources: Mark Schoenebaum, ISI Group
The Wall Street Journal
$1,000-a-Day
Hepatitis C
DrugIsRapid
Blockbuster
BY JONATHAN D. ROCKOFF
A hepatitis C pill from Gilead
Sciences Inc. that costs $1,000 a
day is on track to notch among
the biggest sales ever for the
first year of a newly approved
drug, showing just how hard it is
for insurers to curb the use of
pricey life-saving medicines.
The drug, called Sovaldi, is
the first in a new generation of
hepatitis C therapies that promise to cure more patients than
older therapies. It could ring up
$5 billion in U.S. sales this year
if current prescription patterns
hold. Some analysts say the figure might reach $9 billion. By
comparison, AbbVie Inc.’s Humira, a treatment for rheumatoid arthritis, was the biggestselling drug last year with $10.7
billion in world-wide sales.
Such heavy sales for Sovaldi,
so soon after the drug’s approval
just last December, threaten the
bottom lines of many insurers,
analysts say. Wells Fargo Securities analyst Peter Costa figures
that hepatitis C treatments will
cost the 10 largest publicly
traded insurers $798 million
more than they did in 2013.
Sovaldi carries a list price of
$84,000 for a 12-week course of
treatment. The cost has spurred
pushback among some payers
and public officials, who say the
price is too high for a drug with
such a broad potential market.
Some 3.2 million people in the
U.S. are believed to carry hepatitis C—many of whom contracted
it through intravenous drug use.
Chronic infections that go untreated kill 15,000 Americans
each year, and are a leading reaPlease turn to the next page
Tuesday, April 1, 2014 | B1
Size, Cost of GM’s Recalls Mount
Finger-Pointing Between Car Maker and Regulators Begins; Another 1.5 Million Cars Added to Recall
BY SIOBHAN HUGHES
AND JEFF BENNETT
WASHINGTON—Capitol Hill
is gearing up for a showdown
Tuesday that will pit General
Motors Co. against federal regulators about who is to blame
for car defects now linked to 13
crash deaths.
Separately, GM on Monday
recalled another 1.5 million vehicles world-wide to fix steering system problems and more
than doubled to $750 million
its estimate of the hit to firstquarter results from recalls
that now cover 6.3 million cars
and trucks.
That includes the 2.6 million
vehicles linked to the ignition
defect that will be at the center
of congressional hearings Tuesday and Wednesday.
Tuesday’s hearing, before a
House subcommittee, will star
GM Chief Executive Mary Barra
as well as David Friedman, the
acting head of the National
Highway Traffic Safety Administration.
The hearing promises a
round of finger-pointing over
where the blame lies for a
nearly decadelong delay between the recalls that began
this February and when GM engineers knew there were problems with ignition switches designed for the 2005 Chevrolet
Cobalt.
Engineers discovered it was
easy to jostle the keys out of
the “on” position while the car
was running, cutting power to
the air bags, power brakes and
power steering.
GM has since linked 13
deaths to accidents in which air
bags didn’t deploy in the re-
Matt McLoone for The Wall Street Journal
Taking Off
THE WALL STREET JOURNAL.
****
Monica Cortinas, left, and her mother, Rosie Cortinas, discuss the death of 23-year-old Amador Cortinas in a Chevrolet Cobalt accident. B2.
called vehicles.
According to disclosures by
GM and House investigators,
executives at the auto maker
decided not to delay the 2004
release of the Cobalt, which
was an important piece of GM’s
strategy for bolstering North
American earnings.
That strategy ultimately
failed. GM filed for bankruptcy
protection in 2009 and was
taken over by the U.S. government, which owned a stake in
the company until last December.
Some lawmakers have signaled that they have questions
about whether government
ownership played any role in
the handling of the ignition-
switch matter.
NHTSA took blows in a
memo released Sunday by investigators for the House Energy and Commerce Committee’s Republican majority,
which pointed to decisions by
the agency in 2007 and 2010
not to pursue complaints about
air bags that failed to deploy in
crashes involving now-recalled
GM cars.
“GM had critical informaPlease turn to the next page
Online>>
Follow live coverage of CEO Mary
Barra’s testimony at 2 p.m. ET
at WSJ.com/Business
Chamber of Commerce Comes to Silicon Valley
BY JONATHAN KRIM
The U.S. Chamber of Commerce, among the most powerful
business lobbying organizations
in Washington, is planning a second outpost in Silicon Valley in
an effort to broaden its membership and clout.
The Chamber is expected to
announce Tuesday that its second-in-command, David Chavern,
51, will relinquish his role as
chief operating officer to lead
the initiative. Mr. Chavern has
been meeting with Silicon Valley
entrepreneurs and leaders to
both lay out the Chamber’s plans
and to hear ideas on how the
group can best help technology
executives. Their businesses are
increasingly confronting thorny
public-policy issues, such as im-
migration, privacy and taxation.
The Chamber’s move is recognition that it hasn’t been a factor
in representing the fastest-growing sector in the economy. Mr.
Chavern said that while some
major tech companies belong to
the organization, he is focused
on getting more small and midsize tech firms to join, as well as
venture capitalists and other investors. The Chamber, which was
founded in 1912, doesn’t disclose
specific companies among its
more than 300,000 members.
“Too often we get tagged as
being about the old economy,”
Mr. Chavern said in an interview.
“But our core messages are all
forward-leaning.” Mr. Chavern
said he hopes that the Chamber’s
pro-business, low-tax, minimal
regulation views will fit the sen-
sibilities of technology companies. “The best representatives
of our ideals are here” in Silicon
Valley, he said.
Mr. Chavern has tried to establish his own links to the Valley, making a personal investment in a mobile software
company called Humin. That
company’s co-founder and CEO,
Ankur Jain, has in turn connected Mr. Chavern with others
in the industry.
“If the regulatory environment doesn’t understand these
changes, it will not be able to
protect consumers in the long
term or allow the future of our
nation’s economy to thrive,” said
Mr. Jain in an interview.
But the Chamber’s success in
Silicon Valley is a question.
Big tech companies already
have active lobbying shops in
Washington, and there are myriad technology trade groups. The
Chamber has overwhelmingly
backed Republican candidates in
recent election cycles, and some
of its positions aren’t universally
popular in Silicon Valley.
Apple Inc. quit the Chamber
in 2009 after deciding the group
was fighting against measures
that would limit greenhouse gas
emissions. Yahoo Inc. didn’t renew its membership in 2010, for
undisclosed reasons.
To some in the libertarianleaning Valley, the Chamber also
is part of what is wrong with
Washington: Lobbying for hire, a
political system fueled by money
and hyper-partisanship.
In 2013, the Chamber and its
subsidiaries spent $74.4 million
on lobbying. It also sought to
help take control of the Senate
from the Democratic Party in the
2012 elections, though the effort
failed.
This year, the Chamber has
angered some Tea Party conservatives by declaring it will work
in primaries to defeat GOP candidates it deems too extreme to
be electable in general elections.
“I don’t really think we need
them here,” said Carl Bass, CEO
of software maker Autodesk Inc.
He said he doesn’t think the
Chamber’s politics and positions
will sit well with the broad Valley constituency.
Mr. Chavern said he seeks to
“focus less on party than position... The middle is getting
emptier all the time, and that’s a
problem.”
The Diet Soda Business Is in Free Fall Future of B-School
BY MIKE ESTERL
Thunderbird Is
Still Up in the Air
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Bloomberg News
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Spri
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BY MELISSA KORN
–6%
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–4%
–3%
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The Wall Street Journal
Source: Beverage Digest
billion gallons last year, the first
yearly decline since 2009, despite
a 4.7% rise in bottled water volumes.
There are some areas of
growth, however. Beverage Marketing estimated that U.S. volumes of caffeinated energy drinks
and ready-to-drink coffee rose
5.5% and 6.2% last year, respectively. Sales of sports drinks
edged up 0.6%, though volumes of
fruit drinks dropped 1.9%.
Diet sodas represent nearly a
third of U.S. soda sales but have
posted three straight years of declines.
A growing number of Americans are worried that aspartame
0%
and other artificial sweeteners
are unhealthy, despite decades of
studies by the Food and Drug Administration and other government agencies having found them
to be safe. There is also a debate
over how diet drinks might affect
metabolism.
Sales volumes of full-calorie
Coke, the top-selling U.S. soda,
slipped 0.5% last year but Diet
Coke plunged 6.8%, according to
Beverage Digest.
Consumption of Pepsi-Cola and
Diet Pepsi dropped 3.6% and 6.9%,
respectively. Diet Mountain Dew
also declined more sharply than
regular Mountain Dew, according
to the data service.
Coke said Monday it is committed to expanding its U.S. soda
business again through “increased investment, better execution and new innovation.’’ PepsiCo, meanwhile, said it has a
“diverse, well-positioned’’ portfolio in several growth areas, including its Gatorade sports drinks
and Lipton teas.
Beverage giant Coke is far
more exposed to soda than chief
rival PepsiCo, which also has a
huge snacks business.
About 60% of Coke’s U.S. revenue comes from soda, compared
with roughly 25% at PepsiCo. The
bulk of Dr Pepper’s sales are also
tied to soda.
The Thunderbird School of
Global Management is back at the
bargaining table after an accreditor effectively quashed a proposed deal with Laureate Education Inc., which operates a
network of for- and nonprofit
universities, last month.
On Monday Thunderbird’s
president, Larry Edward Penley,
said the deal with Laureate—
which would have supplied muchneeded cash and an avenue to expand abroad with Laureate’s 80school
network—won’t
go
forward as proposed.
While that doesn’t rule out an
alliance with Laureate, the Glendale, Ariz.-based business school
has contacted other institutions
to signal it is again open to a
deal, Dr. Penley said. Laureate has
encouraged Thunderbird to reach
out to other partners, according
to its chief executive.
One official at a school that
has been approached by Thunderbird in recent weeks said the
leadership there worries that the
business school is seeking a fast
fix. “They were getting married
to Laureate. They’re looking for
another partner a week later,” the
official said, adding that such
haste makes that school “uneasy.”
The development is the latest
P2JW091000-4-B00100-1--------XA
Composite
A nearly decade-long decline
in U.S. carbonated soft drink sales
accelerated last year as more
Americans turned their backs on
artificially sweetened diet sodas,
according to data published Monday.
The drop-off is a mounting
problem for industry giants CocaCola Co., PepsiCo Inc. and Dr
Pepper Snapple Group Inc.,
which have long depended on
zero-calorie sodas to make up the
difference as Americans became
increasingly concerned about the
health effects of sugared drinks.
Overall soda volumes fell an
estimated 3% in 2013, the ninth
straight yearly contraction and
more than double the 1.2% decline
in 2012, according to Beverage Digest. The trade publication and
data service also estimated U.S.
retail sales of carbonated soft
drinks shrank 1% to $76.3 billion,
the first downturn in dollar terms
in at least 15 years, indicating
that the companies were unable
last year to offset volume declines by raising prices.
There is no sign that 2014 will
be any better. U.S. store sales of
soda were down 1.9% in dollar
terms for the 12 weeks ended
March 15, according to Citi Research, which cited Nielsen scanner data.
The soda falloff is weighing on
overall beverage sales. Beverage
Marketing Corp., another industry tracker, estimated Monday
that U.S. purchases of nonalcoholic drinks slipped 0.1% to 30.21
twist in a saga that has exposed
Thunderbird’s precarious position
in the marketplace and led to
open revolt among some alumni
and trustees, who formed a separate alumni group to question the
board’s decision-making process
and attempt a rescue of the
school.
Thunderbird ended fiscal 2013
with an $8.7 million loss, more
than double its prior-year loss,
and had $5.6 million in cash and
short-term investments as of June
30, according to its annual report.
That reflected a $2.7 million decline in tuition revenue and a 62%
drop-off in contributions.
Thunderbird ended
fiscal 2013 with an
$8.7 million loss.
Once recognized as the premier M.B.A. program for global
business, Thunderbird enrolled
1,041 students across about a
dozen degree programs this
spring—nearly 300 fewer students than it had in its full-time
M.B.A. alone in 2000.
The next steps remain uncertain. The school started partPlease turn to the next page
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