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Price Gouging with new Hepatitis-C drug

More of getting what the market will bear

The reason pharma’s list price is so high is because of what they can soak the government for who pays the un-negotiated average wholesale price—as per legislation under Bush, that has not been changed by the Democrats.  My topical $65/month testosterone, costs Medicare $365—the first is what I paid before going on Medicare; the second is what Medicare pays.  My friend’s 3 day hospital stay for a uterine infection (basic IV antibiotic) was billed at $21,000, of which Medicaid picked up $11,300 and the private insurance supposedly the remainder, minus a $400, her co-pay.  Corporations in a corporatocracy are very good at gouging the system. The simple solution would be to legislate against price gouging. 

http://www.fiercepharma.com/story/jama-hep-c-drugs-could-add-300-every-americans-insurance-premium/2014-07-21?utm_medium=nl&utm_source=internal

JAMA: Hep C drugs could add $300 to every American's insurance premium

The payer panic over the cost of Gilead Sciences' ($GILD) pricey-and-wildly-successful hepatitis C drug Sovaldi has been well documented. But now, one of the two biggest pharmacy benefits managers in the U.S. says the debate over Sovaldi's $1,000-per-pill price is a symptom of a bigger anxiety.

 

Specialty drugs, in two words. So, not just the new generation of highly effective, highly expensive hep C drugs, but a whole raft of drugs that stand to burden the U.S. healthcare system. And with that in mind, payers are going to have to develop an entire menu of ways to control their spending on pricey meds, CVS Caremark ($CVS) CMO Troyen Brennan and CSO William Shrank say in a JAMA commentary published online Monday.  As the two authors point out, it's not just the price of Sovaldi that's the trouble. The drug is highly effective and promises to save money on pricey hep C complications. "[T]he more important issue is the number of people eligible for treatment," the commentary notes. "Sofosbuvir is not really a per-unit cost outlier but is a 'total cost' outlier because of its high cost and very large population eligible for treatment." That's millions of people, and many billions of dollars. "The simple math is that treatment of patients with HCV could add $200 to $300 per year to every insured American's health insurance premium for each of the next 5 years," the authors write.

 

Is it any wonder that insurers are trying all sorts of things to avoid the cost:  Barring Sovaldi from formularies in spite of new treatment guidelines; treating only the sickest patients; demanding, in the case of Medicaid programs, additional state funding just to cover its cost. With more-pricey specialty meds rolling out all the time, payers will be looking at these and other strategies to save money. Consider, for instance, the state of Arkansas' choice to bar some cystic fibrosis patients from using Kalydeco, Vertex Pharmaceuticals' ($VRTX) $300,000 treatment.

 

"Effective approaches to control costs for high-priced medications need to be developed and evaluated to ensure broad, equitable, and appropriate use of these new interventions in an already stressed healthcare system," the commentary states. Any ideas?

 

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http://www.fiercepharmamarketing.com/press-releases/cvs-caremark-jama-commentary-new-hepatitis-c-treatments-highlight-need-cont

CVS Caremark JAMA Commentary: New Hepatitis C Treatments Highlight Need to Control Costs of High-Priced Specialty Medications

Media Contact: Christine Cramer, CVS Caremark, (401) 770-3317,  christine.cramer@cvscaremark.com

CVS Caremark JAMA Commentary: New Hepatitis C Treatments Highlight Need to Control Costs of High-Priced Specialty Medications

WOONSOCKET, R.I., July 21, 2014 /PRNewswire/ --A new Journal of the American Medical Association (JAMA) commentary published online today and scheduled to appear in the August 13 print edition addresses the controversy surrounding the high costs of new Hepatitis C Virus (HCV) treatments such as Sovaldi (sofosbuvir) and implications for the growing specialty pharmacy market. CVS Caremark (NYSE: CVS) Chief Medical Officer Troyen A. Brennan, M.D., and Chief Scientific Officer William Shrank, M.D., suggest that the discussion to this point has focused inappropriately on price per pill, rather than on total cost to the health care system.

"Perhaps the controversy about sofosbuvir is really about the increasing total cost of specialty medications, considering both cost and prevalence of treatment targets," the authors write. "While a daily oral medication that costs $1,000 per pill gains attention, the more important issue is the number of people eligible for treatment. Sofosbuvir is not really a per-unit cost outlier, but is a 'total cost' outlier because of its high cost and very large population eligible for treatment a beacon for costs of specialty medications generally."

While HCV treatment options have improved dramatically over the past three years, with cure rates up to 95%, new therapies such as sofosbuvir can cost patients $84,000 for a standard 12-week course of therapy or roughly $1,000 per pill. Utilizing sofosbuvir as an example, the commentary analyzes the price of HCV medications in the context of the cost of investment and of comparative treatments, and finds that the issues are much more nuanced than previous discussions focusing on cost per pill alone.

The authors also explore the many different efforts currently underway to control overall costs. For example, some state Medicaid programs have not added new HCV medications to their formularies, despite new practice guidelines. Other states are delaying the addition of sofosbuvir until they can arrange a level of state subsidization, and many private insurers have instituted prior authorization programs to manage costs. Some public and private care coordinators are asking physicians to treat only those patients who absolutely need therapy now, as new treatment options anticipated later this year are expected to help lower costs.

Brennan and Shrank add: "A value-driven approach to pricing focuses on how treatment with sofosbuvir compares with other treatments for HCV infection. Value also has to consider the efficacy of treatment, and requires more sophisticated cost-effectiveness analyses, such as the incremental cost-effectiveness ratio, representing the added cost of an additional quality-adjusted life-year."

The authors say the health care system needs to adjust more quickly to the growing cost and utilization of specialty medications across a variety of conditions. "This is not an isolated phenomenon; other expensive specialty medications are in development, many with large potential pools of targeted patients. Effective approaches to control costs for high priced medications need to be developed and evaluated to ensure broad, equitable, and appropriate use of these new interventions in an already stressed health care system."

For access to the full JAMA commentary, please visit: http://jama.jamanetwork.com/article.aspx?doi=10.1001/jama.2014.8897

About CVS Caremark
CVS Caremark is dedicated to helping people on their path to better health as the largest integrated pharmacy company in the United States. Through the company's more than 7,600 CVS/pharmacy stores; its leading pharmacy benefit manager serving more than 64 million plan members; and its retail health clinic system, the largest in the nation with more than 800 Minute Clinic locations, it is a market leader in mail order, retail and specialty pharmacy, retail clinics, and Medicare Part D Prescription Drug Plans. As a pharmacy innovation company with an unmatched breadth of capabilities, CVS Caremark continually strives to improve health and lower costs by developing new approaches such as its unique Pharmacy Advisor program that helps people with chronic diseases such as diabetes obtain and stay on their medications. Find more information about how CVS Caremark is reinventing pharmacy for better health at info.cvscaremark.com.

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JAMA. Published online July 20, 2014. doi:10.1001/jama.2014.8897   http://jama.jamanetwork.com/article.aspx?articleid=1890401

New Expensive Treatments for Hepatitis C Infection

JAMA. Published online July 20, 2014. doi:10.1001/jama.2014.8897

 

Treatment of infection with hepatitis C virus (HCV) has changed substantially in the last 3 years, with new therapies now reaching cure rates (defined by sustained virologic response) higher than 95%. As little as 3 years ago, treatment involved an arduous course of pegylated interferon and ribavirin, which caused serious adverse effects in more than 80% of patients; less than 50% of patients could finish the treatment course. Because HCV infection can be indolent, with slowly developing liver injury in the form of scarring and fibrosis, many patients were so-called warehoused by their physicians, followed up closely while waiting for more promising treatments.1

In 2011, introduction of the first generation of protease inhibitors, particularly telaprevir and boceprevir, heralded change. When combined with interferon and ribavirin, these medications produced much higher sustained viral responses in the HCV genotype 1 subclasses.1 However, these agents were much more expensive than standard therapy, at a cost of more than $80 000 per course of therapy, and were associated with high levels of viral resistance development if patients did not strictly adhere to therapy.

In 2014, the introduction of polymerase inhibitors set a new standard. The first in this class, sofosbuvir, manufactured by Gilead, has shown significant effectiveness when combined with ribavirin and interferon in patients with genotype 1 HCV. Sofosbuvir also can be combined with another new protease inhibitor, simeprevir, to treat patients in whom interferon-based therapy has failed. These regimens provide interferon-free treatment protocols that are shorter and well tolerated and have 80% to 95% cure rates.1 This fall, an oral combination of sofosbuvir and ledipasvir will be introduced that inhibits both the NS5B polymerase and NS5A polymerase and has been shown to reduce treatment to an 8-week course with cure rates of more than 95%.2 Now, a chronic disease that affects millions of Americans can be cured by well-tolerated oral medications.

Perhaps surprisingly, most media coverage of this important development in HCV treatment has not focused on the cure rates but, rather, on cost. The price of sofosbuvir is essentially $1000 per pill, or $84 000 for a standard 12-week course. The fact that pricing in the United Kingdom for a similar regimen is $54 000, and perhaps as low as $900 in Egypt and other developing countries,3indicates that the pricing in the United States is a purely financial decision by Gilead and has outraged many. Indeed, some pharmacy benefit managers are calling on their clients to boycott these products until alternatives are available late in 2014.4  But is the pricing unfair? This question can be considered from at least 2 perspectives—“return on investment” and “value driven.” In a market-driven health care system such as that in the United States, the manufacturer, Gilead, should be able to recoup its costs of development (ie, return on investment). With sofosbuvir, this is fairly straightforward. The medication was identified and initially tested by a different firm, Pharmasset, which Gilead bought in 2012 for $11 billion.5Although there were additional drug development costs, assume that sofosbuvir cost $11 billion to develop. If all of the approximately 3 million HCV carriers in the United States were treated with sofosbuvir at current prices, Gilead would net more than $250 billion dollars, or better than a 20-to-1 return on its investment, suggesting that pricing is inappropriately high. However, not all HCV-infected persons will be treated with sofosbuvir. A half dozen major competing medications are in development and expected to come to market in the next 4 years; as this occurs, price competition will likely drive down costs and the return for Gilead.

A value-driven approach to pricing focuses on how treatment with sofosbuvir compares with other treatments for HCV infection. For instance, according to the average wholesale price from Medi-Span, the cost of a 12-week course of sofosbuvir plus pegylated interferon and ribavirin is $116 910.72.6 This price is expensive, but the cost of a 24-week course of the first-generation protease inhibitor telaprevir plus pegylated interferon and ribavirin is $111 606.48, and the 48-week course that many patients need is $143 827.92.6

Average wholesale price is only part of the equation. Value also has to consider the efficacy of treatment and requires more sophisticated cost-effectiveness analyses, such as the incremental cost-effectiveness ratio, representing the added cost of an additional quality-adjusted life-year. The evidence documenting the effectiveness and tolerability of the newer sofosbuvir regimens, and the expected reductions in downstream costs associated with averted progression of disease, suggest that these newer expensive medications may represent a relatively good “deal” by typical cost-effectiveness thresholds. Indeed, the cost per additional quality-adjusted life-year may be quite comparable with other therapies.

Perhaps the controversy about sofosbuvir is really about the increasing total cost of specialty medications, considering both cost and prevalence of treatment targets. While a daily oral medication that costs $1000 per pill gains attention, the more important issue is the number of people eligible for treatment. With broader screening, the pool of eligible patients may be as high as 3 million in the United States alone.7 The simple math is that treatment of patients with HCV could add $200 to $300 per year to every insured American’s health insurance premium for each of the next 5 years. Thus sofosbuvir is not really a per-unit cost outlier but is a “total cost” outlier because of its high cost and very large population eligible for treatment—a beacon for costs of specialty medications generally.

These costs will be especially burdensome over the next year. Presently, Gilead has a monopoly, and its investors expect it to make a profit during this period. However, it is anticipated that by December, another highly effective oral regimen will become available.8 Pharmaceutical manufacturers know that monopolies are evanescent. With HCV treatment, that lesson is very recent: the manufacturers of telaprevir and boceprevir priced their products high and were profitable for 15 to 18 months, but now their products are essentially replaced by the new polymerase inhibitors.

Given this context, how should costs be managed? In some state Medicaid programs, the new medications have not been added to the formulary, despite the new practice guidelines. Physicians for whom the drug is denied by the state are going to Gilead, and, by report, the company is quietly subsidizing the costs—there is an official assistance program offered by Gilead.9 In states where managed care plans provide the Medicaid benefit, many are not adding sofosbuvir to their formulary until they convince the state to renegotiate or consider “carving out the drug”—ie, having the state pay directly for the therapy outside the capitated payment agreement.

Some private insurers have added sofosbuvir to the formulary and are absorbing the costs but also are taking steps to ensure appropriate utilization by developing prior authorization programs based on practice guidelines. Some insurers are asking physicians to treat only patients who absolutely need therapy now. Delaying treatment for some patients promises lower future costs, as competition generated by new drugs will likely cause prices to decrease as pharmacy benefit managers negotiate for best prices on behalf of health insurers and employers. This approach has been countenanced recently by expert panels.10

The ultimate approach to cost will be lower prices, which will occur as more products create competition. However, it will likely entail narrower formularies, in which the physician choice of a particular medication is limited by the deals negotiated by insurers and pharmacy benefit managers. Even then, the costs could still be very high—restrictive formularies have led to discounts of 30% to 40% for branded medications, not the greater than 95% discounts that occur when drug patents expire and generic competitors enter.

In summary, the health care system is adjusting quickly, but perhaps not quickly enough, to compensate for the high prices of HCV medications and, more importantly, the high cost of treating all HCV-infected individuals. However, this is not an isolated phenomenon; other expensive specialty medications are in development, many with large potential pools of targeted patients. Effective approaches to control costs for high-priced medications need to be developed and evaluated to ensure broad, equitable, and appropriate use of these new interventions in an already stressed health care system.

 

Ghany  MG, Liang  TJ.  Current and future therapies for hepatitis C virus infection. N Engl J Med. 2013;369(7):679-680.
PubMed   |  Link to Article

2

Kowdley  KV, Gordon  SC, Reddy  KR,  et al; ION-3 Investigators.  Ledipasvir and sofosbuvir for 8 or 12 weeks for chronic HCV without cirrhosis. N Engl J Med. 2014;370(20):1879-1888.
PubMed   |  Link to Article

3

TWN Info Service on Intellectual Property Issues. Health: no sofosbuvir patent in Egypt, but Gilead deal still expensive. April 10, 2014.http://www.twnside.org.sg/title2/intellectual_property/info.service/2014/ip140408.htm. Accessed July 8, 2014.

4

Staton  T. Express Scripts assembling anti-Sovaldi coalition to shut out Gilead hep C drug. April 8, 2014http://www.fiercepharma.com/story/express-scripts-assembling-anti-sovaldi-coalition-shut-out-gilead-hep-c-dru/2014-04-08. Accessed July 3, 2014.

5

Gounder  C. A better treatment for hepatitis C.New Yorker. December 9, 2013.http://www.newyorker.com/online/blogs/elements/2013/12/a-new-treatment-for-hepatitis-c.html. Accessed July 8, 2014.

6

Medi-Span data monitor.Medi-Span Master Drug Data Base v2.5 (MDDB). Indianapolis, IN: Clinical Drug Information LLC; May 20, 2014.

7

Denniston  MM, Jiles  RB, Drobeniuc  J,  et al.  Chronic hepatitis C virus infection in the United States, National Health and Nutrition Examination Survey 2003 to 2010. Ann Intern Med. 2014;160(5):293-300. 
PubMed   |  Link to Article

8

Feld  JJ, Kowdley  KV, Coakley  E,  et al.  Treatment of HCV with ABT-450/r–ombitasvir and dasabuvir with ribavirin. N Engl J Med. 2014;370(17):1594-1603.
PubMed   |  Link to Article

9

Gilead. Support path for Sovaldi.http://gilead.com/responsibility/us-patient-access/support%20path%20for%20sovaldi. Accessed July 3, 2014.

10

California Technology Assessment Forum. The Comparative Clinical Effectiveness and the Value of Simeprevir and Sofosbuvir in the Treatment of Chronic Hepatitis C Infection: Final Report. San Francisco: California Technology Assessment Forum; April 15, 2014.

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