How Will New Hepatitis C Drug Pricing Affect Health Care Costs?
A New Era in Hepatitis C Treatment
Until recently, treating hepatitis C (HCV) required 24 weeks or more of weekly injections with a regimen including peginterferon alfa. These drug combinations often failed to cure the HCV infection and came with many side effects.
However, it's been a breakthrough year for HCV treatment, with many new, more effective and safer options taking the spotlight. Spearheading the way has been sofosbuvir (Sovaldi), a nucleotide polymerase inhibitor that allows for oral dosing, interferon-free treatment for many and a shorter treatment course.
But the drug's introduction -- and its high baseline price tag -- has stirred considerable debate. Let's examine the brief history of sofosbuvir and how its controversial price could impact future health care costs.
Sofosbuvir Wins Approval
On Dec. 6, 2013, the U.S. Food and Drug Administration (FDA) approved sofosbuvir for the treatment of HCV. Several clinical trials had shown that sofosbuvir was very safe and effective at treating HCV in just 12 weeks. In particular, sofosbuvir demonstrated efficacy in participants who could not tolerate or take an interferon-based treatment regimen.
A Steep Price
Almost immediately, activists and others spoke out against drugmaker Gilead for the high price of sofosbuvir, which totaled $84,000 for 12 weeks of treatment (about $1,000 per pill). "What they have done with this particular drug will break the country," said Steven Miller, the chief medical officer at Express Scripts. "It will make pharmacy benefits no longer sustainable. Companies just aren't going to be able to handle paying for this drug."
Gilead Promises Discounts
In April 2014, Gregg Alton, Gilead's executive vice president for corporate and medical affairs, acknowledged that Gilead had reached agreements with the U.S. government, and suggested it would discount the price by 23%, with an additional discount for Veterans Affairs (VA) and Department of Defense patients.
Alton also stated that Gilead had discount agreements with a number of health insurers, including Kaiser Permanente, which had acted early to secure a discount for its patients.
What's the Alternative?
While the price tag may be high, those who defend it point out that sofosbuvir-based therapy appears to be the most effective, least-toxic HCV cure yet developed. And that saves the health care system considerable money.
"The cost of treating patients who may otherwise need countless physician visits, hospital care and a liver transplant can run higher," according to a Wall Street Journal report by pharmaceutical industry expert Ed Silverman. "Consider that as many as 20% of those infected with hepatitis C may develop cirrhosis of the liver and 4% will develop liver cancer. In short, the argument is that it's cheaper, and more effective, to take the pills."
Long-Term Gains?
"A new estimate suggests that, for private insurers, the impact of new hepatitis C treatments -- including Sovaldi and any forthcoming medications -- on medical costs will eventually decline, as will the impact on the growth in spending on overall health care," Silverman writes in his Wall Street Journal report.
The estimate, according to PricewaterhouseCoopers Health Research Institute, assumes that the actual number of HCV patients will gradually decline over the next decade as more are treated. Therefore, "the impact of these drugs is currently rising thanks to these new treatments, reaching an estimated 0.5% of overall medical costs this year and 0.7% in both 2015 and 2016. But afterwards, the impact lessens and is estimated to decline to 0.3% by 2020."
[Image credit: The Wall Street Journal]
An Uncertain Future
The PricewaterhouseCoopers Health Research Institute "projects that the impact on spending growth for health care will be greatest this year, rising 0.5%, but falling to 0.2% next year and then having little to no impact through 2024," according to Silverman's report. The idea is that HCV treatments will actually contribute less to medical costs over time as more people are cured.
However, these are just assumptions and estimates, which could just be wishful thinking. A number of patient advocates and health care providers remain highly skeptical that the price of sofosbuvir is justified or sustainable.
Meanwhile, now that physicians are being encouraged to screen more patients for HCV -- regardless of symptoms -- the number of individuals who are eligible to receive treatment is likely to rise. How this will affect the ongoing debate around drug pricing, not to mention health care costs in general, remains to be seen.