Hepatitis C drug highlights dilemmas of cost, access

Gilead Sciences recently brought to market a product called Sovaldi, a breakthrough treatment for the most common form of hepatitis C. The total medication cost is roughly $84,000 per patient, or $1,000 per day for 12 weeks. The new medication works well and cures the disease in about 90 percent of cases.

The problem is that more than 3.2 million Americans suffer from a chronic form of hepatitis C. The total cost to treat appropriate candidates is staggering — $300 billion. In its first full quarter, sales amounted to nearly $2.3 billion and Gilead’s stock price almost doubled in the past 12 months. Such high costs create an ethical dilemma with gripping questions spanning from how these prices are set to who should have access to treatment and who should pay.

Sovaldi is only leading the parade. The evolving fields of biomedical engineering and biotechnology have an entire pipeline of breakthrough cures that are both highly effective and extremely expensive. There are simply not enough resources for everyone to have full access to all of the health care money can buy.

The proponents of Gilead’s cure for hepatitis C argue that if untreated, 20 percent of patients will go on to suffer from liver cirrhosis, many of whom will require liver transplants, while 4 percent will go on to suffer from liver cancer. The cost of a liver transplant is well over half a million dollars, or about sevenfold the cost of the medication. The economic argument then is that investing in treatment now will temporarily raise the total cost of health care in this country but, in a few years, it will pay off.

Hepatitis C is most commonly contracted from sharing dirty needles. It also can be transmitted through sexual relations and other contact with body fluids. Many of those who suffer from the disease are low-income and are among the 7 million new Medicaid beneficiaries now covered as a result of the Affordable Care Act.

At $84,000 per case, Oregon would need $360 million to treat its Medicaid beneficiaries who have chronic hepatitis C. The cost of Sovaldi alone would approximate the $377 million the Oregon Medicaid program spent on all prescription drugs for its 600,000 members last year. It would drain the coffers.

Everyone born between 1945 and 1965 should be tested at least once for hepatitis C, even if they have no risk factors, according to a July 14 letter sent to Hawaii’s physicians from Dr. Linda Rosen, director of health for Hawaii. Previously undiagnosed cases of hepatitis C are now quickly emerging. By one estimate, the total number infected in Hawaii is as high as 23,000 people. For this group, Sovaldi treatment costs would be $2 billion to $4 billion. Government payers in Hawaii are facing the same concerns as in Oregon. Private payers worry that if everyone with chronic hepatitis C received Sovaldi, insurance premiums, already at an all-time high, would go through the roof.

While the cost of Sovaldi is $84,000 in the U.S., it is $66,000 in the United Kingdom and $57,000 in Germany, but the entire European Union is up in arms at the pricing. Fourteen countries have decided to share information as they individually work with Gilead to reduce the price tag.

It is well established that the U.S. usually pays the highest prices for medications and treatments. This is because carriers have little choice but to pay for proven treatments. The result is that the U.S. bears the burden for a disproportionate share of research and development for treatments compared to other countries. The main problem is that the U.S. does not have a clear authority that evaluates the cost-effectiveness of new treatments. Sovaldi has triggered calls for a national dialogue on pricing.

That dialogue must include Big Pharma, and the result cannot be so heavy-handed that it disincentivizes capital investment in research and development. But the existing market power of firms that develop the treatments must be curbed.

While nations are working together on an international level to effect price control — and within the U.S., multiple stakeholders have called for policy change — individual payers across the board have no choice but to resort to coverage criteria to limit exposure.

Sovaldi has sounded alarms for patients with chronic hepatitis C who will benefit from this expensive medication and for insurance carriers who are asked to offer the benefit. The ethical dilemma is magnified by the increased rolls of newly insured under health care reform. Until and unless the price problem can be addressed, Sovaldi will be followed by a host of expensive and effective treatments that make it impossible to accomplish the goals of health care reform: broad access to quality care at a reasonable cost.

Ira “Kawika” Zunin, M.D., MPH, MBA, is a practicing physician. He is medical director of Manakai O Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to info@manakaiomalama.com.