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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.
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? 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 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ JAMA. Published online
July 20, 2014.
doi:10.1001/jama.2014.8897 http://jama.jamanetwork.com/article.aspx?articleid=1890401 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. 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. 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. 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. 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. Medi-Span
data monitor.Medi-Span
Master Drug Data Base v2.5 (MDDB). Indianapolis, IN:
Clinical Drug Information LLC; May 20, 2014. 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. 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. Gilead. Support
path for Sovaldi.http://gilead.com/responsibility/us-patient-access/support%20path%20for%20sovaldi.
Accessed July 3, 2014. 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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