Short Takes On News & Events

Biggest Insurer Shocked With Hepatitis C Costs

By Jay Hancock

April 17th, 2014, 12:11 PM

UnitedHealth Group spent $100 million on hepatitis C drugs in the first three months of the year, much more than expected, the company said Thursday. The news helped drive down the biggest insurance company’s stock and underscores the challenge for all health care payers in covering Sovaldi, an expensive new pill for hepatitis C.

“We’ve been surprised on the volume — the pent-up demand across all three businesses” — commercial insurance and private Medicare and Medicaid plans, said Daniel Schumacher, chief financial officer of UnitedHealth’s insurance wing. Schumacher and other executives discussed the company’s first-quarter results on a call with financial analysts.

Made by Gilead Sciences, Sovaldi costs more than $80,000 per treatment and is seen as highly effective against hepatitis C, a chronic virus infection that often leads to liver failure. But the high cost, and what increasingly looks like high demand, is straining budgets for the¬†government-financed Medicare and Medicaid programs as well as for private insurers that had not priced the drug into this year’s premiums.

UnitedHealth bosses discussed other pressures on first-quarter profits, especially from customers who renewed 2013 policies for 2014. To avoid premium increases associated with Affordable Care Act rules that became effective this year, many customers extended their plans late last year.

President Obama also expanded the ability of policyholders to keep their plans. The result is that UnitedHealth has many more customers than expected on older plans at lower rates, squeezing profits.

But discussion of Solvaldi and hepatitis C treatment dominated the phone call.

“The price is exceptionally high,” and use “has accelerated very quickly” since it was approved in December, said¬†Gail Boudreaux, chief executive of the company’s insurance operation.

The drug’s expense has prompted numerous conversations about costs and benefits of specialty drugs and whether there are some pills the country can’t afford.

UnitedHealth shares fell as much as 5 percent in early Thursday trading even though the company reported first-quarter profits that slightly exceeded analysts’ expectations. Other insurer stocks also fell. Gilead’s stock price rose about 1 percent.

9 Responses to “Biggest Insurer Shocked With Hepatitis C Costs”

  1. Killroy71 says:

    Even if the cost of the drug is cheaper than treating HepC for decades, it’s a lot to ask one company to bear. It takes a lot of healthy “I never use my insurance” people paying premium to balance that out. Meanwhile, you got grumpy customers wondering why their premiums are going up. Where’s the risk corridor for miracle drugs? Maybe the drug companies should help.

  2. Well how many $175,000 hammer toe procedures did they pay in New York, just sent that old check right out.. banks maybe have a different out of network customary charge data base:) You can’t make this stuff up.

    It also helps not to bid on Medicare Advantage contracts when you have no doctors in network too, so add this one and it tell me the king of healthcare analytics is faltering like everyone else with the world of changing business models, plus keeping track of 15 pages at the SEC of owned subsidiaries gets to be a task.

    With all their own analytics they run and zero down on pennies, this got away from them? Hard to believe as I just wrote today that HMO patients in the west now will require their MD to get an authorization for any compounded drugs come July 1. So if they are all over these smaller amounts, they didn’t look at this cost.

  3. Shelby says:

    This is when a public/private partnership would have a significant impact on fighting back at the consistently escalating drug cost industry. That industry should subsidize these premium drugs where exclusive patents last for years, consumers get bilked for years, insurers pass on the costs for years. Americans don’t realize that all of us pay for these drugs in one manifestation or another.

  4. Kevin says:

    Hey Roy,

    Obamacare (ACA) or not, the cost to treat HEP-C is still expensive. So I guess these unfortunate people should just show up at the emergency room to be treated for their overt symptoms rather than seeing a specialist to concentrate on a plan of early intervention. Most experts will tell you that early intervention, over the long haul, is much less expensive than dealing with overt symptoms in the hospital ER. But then again, most Republicans are brain-dead and have no idea how effective early intervention is when it comes to cost. Most brain-dead Neanderthal Republicans get their healthcare expertise from Rush Limbaugh or Faux Noise, right?

  5. alex says:

    I wonder what Mr. Schumacher’s total compensation for 2013 was. United Health Group has been screwing providers and consumers for years. United’s first concern is it’s own bottom line

  6. ROBIN FORBES says:

    I’m surprised there haven’t been more comments, yet. As someone who was diagnosed with HCV in 1999, I have to agree with Roy so far. The cost is expensive, but so is cancer treatment, and many other treatments that no one bats an eye at being available to patients. We need more HCV screening. How do you know YOU don’t have HCV? What did you do 20 years ago? Get any tattooes? Pedicures, manicures? Share any personal hygenie products such as nail clippers or razors, etc? Ever snort cocaine as a youth through a straw? It’s NOT just an I.V. drug user problem. Tainted blood in the 80′s? It’s still around. Hospital employees such as the recent fiasco in a New Hampshire Hospital and many others that you don’t hear about? Geez, for all you know it could be anyone from the CEO to the soccer mom next door that could have HCV and not know it. It’s not as if liver transplants are a dime a dozen. I know people that have lost all their savings, homes, everything. HCV per say will not kill you, but the problems resulting from HCV that will kill you. It’s not pretty. If we could just get those people that ARE infected, manage or treat them, then we will have come a long way. But no one wants to know about this. People who are infected continue to live a life style that exaxerbates the virus, making it worse. Money should not determine wether someone lives or dies.

  7. steven says:

    So far, I agree with Kevin. Hospitals in America are slowly going broke. Why? Because dumb governors and dumb legislators in many states will not expand Medicaid and get more of their people insured. We can’t keep expecting hospitals to accept uninsured and nonpaying people into their emergency rooms. We can’t expect hospitals to continue paying the uncompensated costs of freeloaders that refuse to pay. Hospitals signed on to the Affordable Care Act expecting the full participation by their governors and legislators. Never in a million years did the hospitals expect that Republicans would turn down federal Medicaid dollars for idealogical reasons. These Republicans refused the “return” of billions of their own dollars in federal taxes they had already sent to Washington to fund the expansion. How insane is that? Meanwhile, those Medicaid expansion dollars went to states that expanded Medicaid. Dumb Republicans in many states refused money that rightfully belonged to their own residents. No wonder they call the GOP the party of stupid!

  8. Elizabeth Metcalf says:

    I would like to think that someone is looking at the true cost to make this drug vs. the cost to the perscribers and then the patient and or their insurance company. I feel that until this is done and the problem if there is one worked on and solved we will keep going around the same tree chasing our tails.

  9. Rosenjack says:

    I shocked when I read this blog. United health group spent $100 million on hepatitis c drugs in the first three month of the year. I would like to say that today insurance is most important factor of the life.