Simple math shows the challenge facing U.S. taxpayers, patients and insurers following the launch late last year of two expensive new drugs to treat hepatitis C.
If all 3 million people estimated to be infected with the virus in the United States were treated with the drugs, at an average cost of $100,000 per person, the amount spent for all prescription drugs in the country would double, from about $300 billion in a year to more than $600 billion.
That prospect has inspired an unusually blunt public debate: Should such treatments — one drug costs $1,000 a pill — be limited to the sickest patients, or should the drugs be immediately available to everyone? And should those in taxpayer-funded programs have the same access?
“These are, at their core, ethical fights,” said Arthur Caplan, director of the bioethics division at New York University Langone Medical Center.
The issues are especially contentious because the drugs, Sovaldi by Gilead Sciences and Olysio by Janssen Therapeutics, are an advance in treatment and offer a cure for many people; they are not just medicines that ease symptoms or extend life.
“The more definitive the cure, the closer we are to asking, ‘What’s the value of a human life?’ ” said Tony Keck, director of Medicaid in South Carolina, where the treatments are covered case by case.
This is not an isolated predicament. Specialty drugs account for less than 1 percent of all prescriptions but more than a quarter of spending. Other high-cost specialty medicines in the pipeline include treatments for high cholesterol and diabetes, which affect tens of millions of people.
“This is the tip of the iceberg,” said Steven Pearson, president of the nonprofit Institute for Clinical and Economic Review. “We have about a year or two as a country to sort this out” before more specialty drugs hit the market.
For now, the question is how broadly public and private insurers will make the hepatitis drugs available. As they finalize their guidelines, many are looking to recommendations from expert groups.
A panel from the American Association for the Study of Liver Diseases and the Infectious Diseases Society of America called the drugs an advance and said they should be the preferred treatments for most of those infected with the virus.
“We just put down the best regimen for the individual,” said Gary Davis, a hepatitis expert and panel co-chairman. “We recognize cost issues are really important, but we are clinicians, not the people who should be addressing that.”
But in April, a panel for the Department of Veterans Affairs offered a different take, suggesting that doctors should use the drugs mostly for patients with advanced liver disease, including those awaiting transplants. The VA panel said most patients at early stages of the disease should consider waiting for drugs now in development that may prove superior. Analysts expect those drugs to be available within a year or two.
Sovaldi and Olysio “should be used because they have a high clinical benefit, but not everyone needs to be treated immediately,” said Rena Fox, a VA panelist and professor of medicine at the University of California at San Francisco.
Prioritizing treatment for those with advanced liver disease was also suggested by the California Technology Assessment Forum, a panel sponsored by the Blue Shield of California Foundation that advises insurers, providers and patients.
They noted that drugs expected out this fall may prove superior because they will not require the use of interferon, a drug that can have debilitating side effects.
Even so, Ryan Clary, executive director of the National Viral Hepatitis Roundtable, a patient group, lambastes such limits as “absolutely, rationing.” His group, which receives funding from the drug industry, wants the treatments to be broadly available. “There are plenty of reasons a person with hepatitis C would like to have the virus out of their body,” he said. “To say, ‘We want you to hold off until you start to get sick,’ is really problematic.”
The hepatitis drugs are not the most expensive drugs on the market, but their cost is of concern because of the large number of people infected with the virus.
Sovaldi costs $84,000 for a 12-week treatment, although some patients will need to take the drugs for 24 weeks. Olysio is about $66,000 for a 12-week treatment but is approved for fewer types of patients. Other drugs must often be used with the two new products, adding to the cost.
In the United States, drugmakers set prices based on development costs, as well as on what the market will bear, with companies demanding higher returns for products that have little or no competition. Until they lose patent protection, brand-name drugs in the United States often are able to garner the highest prices in the world. Prices generally fall sharply once generic rivals hit the market.
The drugmakers defend the pricing, saying the drugs are curative and can prevent the need for other costly care, such as liver transplants. “Gilead believes the price of Sovaldi is fair based on the value it represents to a larger number of patients,” Gilead spokeswoman Michele Rest said.
Demand has been strong. On April 22, Gilead reported that Sovaldi sales hit $2.3 billion in the first quarter, a record-breaking launch for a drug.
Insurers and consumer advocates hope increased competition will result in lower prices for the next round of hepatitis C drugs, but that is by no means guaranteed.
Because hepatitis C produces few symptoms in the beginning, most people do not even know they have it. Thus, fewer than 20 percent of those estimated to have the virus have sought treatment with the older regimens.
More patients are expected to be diagnosed, however, as health officials urge baby boomers to get tested. The blood-borne virus is spread mainly by intravenous drug use, although many people were unknowingly infected by poorly sterilized medical equipment and blood transfusions before widespread screening of the blood supply began in 1992.
Policymakers say the cost of treating even half of those infected could raise premiums for everyone with private insurance.
In an earnings call last month, UnitedHealthcare, one of the nation’s largest insurers, said it spent $100 million on hepatitis C treatments in the first quarter of the year, far more than it had expected.
Like many private insurers, United covers the drug broadly, following medical societies’ recommendations, although some of its plans may charge patients higher co-payments for the drugs.
Because many of those infected are low-income, in prison or aging baby boomers, the spending could fall hardest on taxpayer-funded health programs such as Medicaid and Medicare.
This “has the potential to throw a wrench into short-term state budgets,” said Matt Salo, head of the National Association of Medicaid Directors.
Medicaid programs, for the most part, are still setting coverage rules. In Texas and elsewhere, Medicaid will not cover the drugs until guidance comes through.
Other states have completed initial reviews. Florida, for example, placed Sovaldi on its preferred drug list, while Pennsylvania officials will seek public comment on draft rules requiring patients to show some liver damage, get a prescription from a specialist and have their treatment overseen by a case manager to qualify.
The price poses a quandary. “For the price of Sovaldi for one patient, we could provide health insurance through Medicaid for [up to] 26 people for an entire year,” said J. Mario Molina, chief of Molina Healthcare, with Medicaid plans in 10 states. “No question it is a very efficacious drug. But it’s just who gets it and when.”
Molina is holding off on offering the drug in many cases while it seeks answers from state officials about whether they will cover this year’s costs, which were not built into Molina’s contracts.
Waiting is not unusual for hepatitis patients. Many delayed treatment because the options were problematic.
Older regimens were complex to administer, had to be taken for longer periods and were less effective. So there is pent-up demand for the new drugs.
But it is highly unusual to ask patients to wait for a treatment already on the market.
“When you think of diabetes, high blood pressure, cancer or other conditions, there aren’t many where there is a serious discussion of whether treatment should be given,” said David Thomas, a medical societies’ panel member and director of infectious diseases at Johns Hopkins University. “There’s no safety issue, so ‘Does it cost too much?’ is the only question left.”
He said cost questions need to be debated “with all the vested parties at the table, not just the doctor with a patient.”
Yet, doctors increasingly are asked to pay attention to cost, at the risk of a loss of trust by their patients, NYU’S Caplan said.
“That’s a shot directly across the bow of the traditional notion that my physician is my advocate, that they look out for me,” he said. “And don’t worry about the national debt or the fact that Medicare will go broke in 20 years. They worry about me.”
Kaiser Health News is an editorially independent program of the Kaiser Family Foundation. The Blue Shield of California Foundation funds KHN coverage in California.