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‘National Dialogue’ Urged On Cost Of New Hepatitis C Drug

By Julie Appleby

May 28th, 2014, 3:31 PM

The outcry continues over the $1,000-a-pill hepatitis C drug made by California-based Gilead Sciences.

While the drug is a significant advance over older treatments for the viral liver disease, the price set by the company “represents an abuse of market power,” said John Rother, president and CEO of the National Coalition on Health Care, which includes businesses, unions, insurers, consumers and some drugmakers, including the Generic Pharmaceutical Association.

On Wednesday, the group urged a “national dialogue” on the cost, saying Sovaldi’s price tag threatens the budgets of government run-health programs as well as the premiums for everyone who has private insurance.

With more such “specialty drugs” in the pipeline for other conditions that affect millions of people, the group says the drug industry must find “a more sustainable approach” on prices for new products – although it stopped short of giving examples of how that might be done.

The U.S. currently spends more than $300 billion on pharmaceuticals each year.  Simply covering the cost of Sovaldi for the more than 3 million Americans who are estimated to have hepatitis C could double that.

Gilead has staunchly defended Sovaldi’s price, saying the cost – at least $84,000 for a typical patient – is justified because the drug is curative for many and could slow health spending on costly complications of hepatitis over time.

“Sovaldi … represents a finite cure, an important point to consider when comparing the price of a pill or bottle to the lifetime costs of treating a chronic disease,” said spokeswoman Cara Miller. Paying for the new drug will fall on private insurers, and taxpayers through government programs such as Medicaid and Medicare, and could also lead to higher premiums.

All insurers are currently setting guidelines for the use of Sovaldi and another new costly hepatitis C drug called Olysio. While some are making it broadly available, others are saying some patients with mild liver damage should wait for treatment. More hepatitis C drugs are expected on the market as early as this fall – and, unlike Sovaldi, may not require the use of additional drugs that add costs as well as difficult side effects.

The drug industry has long noted that prices reflect the cost of researching and developing drugs. The industry is on the offense, with its lobbying arm saying in a blog post Wednesday that prescription drugs account for only 9 cents of every dollar spent on health care. The Pharmaceutical Research and Manufacturers Association of America is also circulating charts this week touting advances in cancer treatments – and noting that the average sales price of cancer drugs covered by Medicare has not risen faster than medical inflation.

If all drugmakers were to justify high prices by saying their products could reduce costs over time by preventing complications, “it could bankrupt the system,” said Rother.

Rother says that officials from Gilead have talked with his group, but so far only in a “defensive” posture over the price. Instead, he wants them to “engage” in conversations about ways to lower the drug’s price.

The coalition joins others – notably pharmacy manager Express Scripts – in calling for a “national dialogue” on drug pricing, although it could not point to an example where that has lowered drug prices in the past.

Prices for drugs in the U.S. are generally what the market will bear – and the market is snapping up Sovaldi even at its high price.  In first quarter earnings, Gilead said the drug brought in $2.1 billion in revenue.

“This is an issue other countries have solved,” said Debra Whitman, executive vice president of policy at AARP and a board member of the coalition. She noted that Sovaldi costs $66,000 per 12-week treatment in Germany and $57,000 in Great Britain.

Among the differences in those countries is that regulators are far more involved in approving drugs for use in national health plans – and negotiating how much is paid for them. In England, for example, the cost as well as the effectiveness of drugs is part of the evaluation about whether to approve them for use in the national plan.

Rother said the coalition is not calling for price controls and doesn’t think Congress should get involved. “They don’t need to have a direct role,” said Rother. But, he cautioned, if negotiations with drugmakers fail, the industry will ultimately find itself facing lawmakers. “The hope is we can resolve this quickly and through the private sector,” he said.

13 Responses to “‘National Dialogue’ Urged On Cost Of New Hepatitis C Drug”

  1. DEREK says:

    In my opinion, the price is fair. This is a truly innovative product, and the manufacturer of these types of molecules deserve compensation. When you have oncologitics that extend life for 11 months but do not cure, (and tend to cost substantially more than 84k) how can you contest a drug that delivers greater than 90% remission rates? In addition, the long-term savings due to all of the complications associated with Hepatitis C are much more expensive than 84k a month. Health plans are intended to act on the behalf of their customers, but there is a conflict of interest due to the fact that they are also trying to act on behalf of their shareholders.

  2. DEREK says:

    84k over the lifetime of the disease I meant, not a month.

  3. Casper says:

    Gilead’s pricing is an assault on the American taxpayer … The question to ask the public is whether they want to raise taxes at the state and federal level to pay for Sovaldi

  4. Jaskaran says:

    While the treatment is very effective, this case is just one of many where the price of a new drug is exorbitant. While prices have continued to creep up, this drug seems to finally be causing people to realize that the system isn’t sustainable.

  5. Steve says:

    This is a tough call. If, as the article says, people were “snapping” up this drug AND paying for it, it would be one thing. However, people are “snapping” up this drug and leaving others to pay for it. It would be interesting to see how much snapping there would be if there was a hefty copayment for this drug.

    Unless a person became infected with Hep C through blood transfusions and/or organ transplants (pre-1992), he/she should demonstrate some responsibility for his/her actions and shoulder a portion of this bill for this drug. From what I understand, Hep C is not like catching a cold. Risky behaviors underlie this disease. It’s time for people to take responsibility for their actions.

  6. Michael says:

    I honestly think we need to evaluate the opportunity cost of Gilead NOT being able to charge $84k per course of treatment in the U.S and $66k in the UK.

    This begs the question, would Sovaldi have been developed at all, if these markets willing to pay these prices did not exist? Or would Hep C continue to be a chronic condition and for most folks uncurable?

    To me that is the only relevant question: How much does the market need to generate to insure this cure comes into being at all?

    M

  7. Kip says:

    STEVE SAYS:
    MAY 29, 2014 AT 11:16 AM
    “This is a tough call. If, as the article says, people were “snapping” up this drug AND paying for it, it would be one thing. However, people are “snapping” up this drug and leaving others to pay for it. It would be interesting to see how much snapping there would be if there was a hefty copayment for this drug.

    Unless a person became infected with Hep C through blood transfusions and/or organ transplants (pre-1992), he/she should demonstrate some responsibility for his/her actions and shoulder a portion of this bill for this drug. From what I understand, Hep C is not like catching a cold. Risky behaviors underlie this disease. It’s time for people to take responsibility for their actions.”

    So, if infected persons can’t “shoulder” the portion you suggest, society should let them suffer and die without this drug? If that’s your argument, then the only difference between living with Hepatitis C and dying of Hepatitis C, in your world, is ability to pay, right? Those that can pay will live and those that can’t will die, right? Is that the way it is in Steve’s perfect world?

  8. Rusty S. says:

    I agree the patient needs to pick up a good portion of the cost of this drug. If a patient can’t afford to do that then there are other, albeit burdensome, treatment options. It’s an affront to the american tax payer to have a patient paying $6 in copays and leaving $83,994 for the tax payer to pick up. I think the price is fair. It’s curative. If you want the cure you pay the price. Without the benefit of profit compaines would not be developing these groundbreaking medications.

  9. Tim says:

    The really disgusting thing here is that Gilead did not develop this drug so they have no research spend to recover. They bought the company that did develop it in 2011 or 2012 for $11B. If utilization of this drug skyrockets, as many think it will, they could recoup their “investment” in a year or less and ultimately earn a ROI 500% plus. All on the back of the American taxpayer, privately insured, etc. This is a greed play….pure and simple. Personally, I’m hoping CMS, State Medicaid offices and private insurers make the decision to refuse coverage until more reasonable pricing can be agreed upon. We’ll see.

  10. Greg says:

    I think drug manufatures should be required to disclose the actual cost of R&D for a new drug and the cost to make the drug and then there should be a limit on how much they can charge over the amount of recovering their investment. I am sure a fair % can be worked out.

  11. Paula says:

    Utilization of this drug skyrockets? Huh? With 3.5 million Americans infected with Hepatitis C, about 1 percent of the total population, how can anyone think utilization of this drug will skyrocket any time soon? Is Hepatitis C like breast cancer, with 12 percent of Americans affected? Is Hepatitis C like prostate cancer, where 1 in 7 men are already diagnosed? Not even close! Hepatitis C is a disease where 1 out of every 100 people are infected. In my opinion, that’s not an epidemic! Regardless of the medicine, any person who pays $1000 per pill, that person is insane! Before I let any PhRMA company abuse me by demanding $1000 per pill, I’ll trust a more conventional and proven therapy.

  12. Rusty S. says:

    Putting a cap on how much profit a company can make just because some people can’t afford a medication is VERY un-American. “I do think at a certain point you’ve made enough money. ” – Barack Obama <——- That kind of thinking is ridiculous and dangerous.

  13. Cindee says:

    So Derick seems to think the price is fair! I have just failed a treatment and this is the drug I need. But in California the insurance companies are not bending. This price is ridiculous even if it is a cure it’s taking advantage of the people who don’t have cash in their hands. My hepatitis has gone into cirrhosis and I can’t wait much longer. This company is holding us hostage over making billions. There’s nothing fair about it

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