Debate Around the Hepatitis C Drug Must Take Into Account the Benefits to Patients and the Long-Term Savings

Three years ago I witnessed my dying friend pass away from hepatitis C. It was a tragic event that had played out over 10 years, and included two liver transplants and countless hospitalizations. After seeing firsthand the tragic effect of that disease, it was encouraging that after all these years there were finally cures to Hepatitis C coming to market.

The price of Gilead Sciences’ hepatitis C drug, Sovaldi, has received a lot of attention lately. The cost is indeed high: one pill costs about $1,000; a standard 24-week treatment of Sovaldi is projected to be about $84,000. However, what is often lost in the discussion is the fact that Hepatitis C is the leading cause of cirrhosis, liver cancer and liver transplantation. These diseases and surrounding procedures and complications are not only painful for patients, but extremely costly. Medical costs associated with liver disease can be lifelong expenses.

Groundbreaking Hepatitis C (HCV) Drug 

Sovaldi has been hailed as a breakthrough treatment, and its commercial release is a welcome advance in medical research for the 3.2 million Americans infected with HCV and their families. As noted above, much of the discussion surrounding the drug has focused on the cost. A recent article titled “The Price of NOT Curing Hepatitis C” bucks this trend and provides some insightful comments to put the pricing controversy into perspective.

Robert Zirkelbach, Senior Vice President, Communications at PhRMA states: “Over the past few months, there has been increased focus on the price of a new cure for hepatitis C, with some stakeholders arguing that the country cannot afford to pay for this new treatment. But what is often left out of these discussions is the price all of us will pay if we are unable to develop new treatments and new cures for some of the most debilitating and costly diseases affecting Americans, such as cancer, diabetes, heart disease, and Alzheimer’s.”

A report from Milliman, written before Gilead’s treatment became available, highlighted the unsustainable cost burden on society of treating patients with hepatitis C. This report projected that without new treatments and cures for hepatitis C, “annual medical costs for patients with this disease would more than double from $30 billion to over $85 billion over the next 20 years – an unsustainable trend.” 

Previous therapies for hepatitis C carried numerous side effects, such as anemia and depression, while only helping about half of patients. Cure rates for Sovaldi, however, were nearly 90% in clinical trials before the drug was approved for sale in December, and there were far fewer complications. The Millman report points out that complications associated with the disease are very serious: “Chronic HCV infection can progress to cirrhosis, liver cancer, and liver failure. Treatments for these conditions include “procedures to drain ascites (the fluid that accumulates in the abdomen), medications, endoscopic intervention, or surgery to manage esophageal varices (dilated veins that can rupture and produce life-threatening hemorrhage), and liver transplantation.”

The Milliman report notes that “HCV-related liver disease is a leading reason for liver transplants” and forecasts that without better treatment, “the total number of patients with advanced liver disease in 20 years will be more than four times greater than it is today.” Moreover, the report states that “the per-patient cost of caring for people with chronic HCV infection will increase 3.5 times in 20 years.”

The report concludes: “As more HCV infected people progress to advanced liver disease, we project these serious conditions to generate a rapidly growing portion of medical costs for HCV-infected people over the next 5 to 10 years, and lead to a dramatic increase in costs over the next 20 years. In the absence of improved and accessible treatments that can alter the progression of disease, payers, especially Medicare, will feel the impact of a baby boomers’ advanced liver disease epidemic.”

Analysis

Sovaldi will be a great expense initially, even with only a fraction of the HCV infected patients receiving treatment. But the numbers don’t describe the fact that Sovaldi will curb patient suffering, prevent future liver transplants, and keep patients out of the hospital, hopefully leading productive lives. Nor does the first year cost to Medicare and Medicaid (projected to be about $2 billion) take into account that the drug has the potential to save Medicare and Medicaid money—perhaps not instantly but in the very near future.

The debate over Sovaldi’s cost comes at an interesting time in light of the 21^st Century Cures initiative we recently covered. This is a new bipartisan effort to bridge the gap between medical advances and the regulatory policies that govern them and aims to examine the “full arc” of the innovation process to get new treatments and cures to patients more quickly. Much discussion surrounding this initiative has focused on how best to incentivize the development of cures for patients and to spur innovation. Demanding lower prices for a breakthrough drug seems like the opposite approach.

Indeed, PhRMA points out that “the debate around hepatitis C has, for the most part, been twisted to the point that modern-day cures are seen as a nuisance rather than a monumental step forward in the battle against disease.”

Obviously there has to be a balance and a rational basis for the prices drug companies charge. Most recently, the Senate Finance Committee weighed in on the issue, stating in a letter to Gilead that “at $1,000 per pill, [Sovaldi’s] pricing has raised serious questions about the extent to which the market for this drug is operating efficiently and rationally.” The letter focuses on the burden on government payers and the fact that the drug is being sold for much less in other countries, including Egypt, where Sovaldi is only $900 for a course of treatment. It is interesting to note that humanitarian efforts such as discounts to Egypt, which has the highest hepatitis C infection rate in the world, may explain the reason for the price differential.

The Senators note that Phamasset, Sovaldi’s original developer, had expected to sell it for $36,000 for a standard treatment and want to know why Gilead has decided to more than double that price. The Senators gave a long list of documents they want Gilead to turn over in the next 60 days, including those related to the costs of developing and marketing Sovaldi.

According to Inside Health Policy, some lobbyist and analyst sources believe Gilead’s forthcoming hepatitis C drug is the real target of the complaints about Sovaldi. “The next drug is supposed to eliminate the need for interferon, which makes patients sick,” the article states. “Although sales of Sovaldi already are stronger than expected, once interferon is removed from the treatment regimen, sales of the two drugs are expected to skyrocket so lawmakers, health plans and pharmacy benefit managers are putting public pressure on Gilead in the hopes that they can curb the price of the combo-drug regimen, sources say.” We will be interested to follow Gilead’s response in the coming weeks.

Importantly, competition offers a great check on prices. Johnson and Johnson is already posting large gains from its Hepatitis C drug, Olysio, which was approved just this past November.