For the last year, a stream of new drugs with shocking sticker prices has looked unstoppable. There was Sovaldi, introduced last December by Gilead Sciences, priced at $84,000 for a 12-week course of treatment. Then came Harvoni in October, also from Gilead, priced even higher at $94,500. And last Friday, drugmaker AbbVie received FDA approval for Viekira Pak, which the company priced at about $83,300. All three drugs are prescribed to treat hepatitis C.
Now comes a major pushback—and it's a significant moment in the war over drug pricing and access.
This week, the country's biggest drug plan manager Express Scripts said it will drop Gilead's drugs Sovaldi and Harvoni from a list of preferred drugs covering 25 million patients and instead will only put Viekira Pak on its list. Express Scripts said it has negotiated a significant discount with AbbVie — perhaps between $20,000 and $30,000 per course of treatment — in return for expanding access to patients and allowing primary care doctors to prescribe the drug.
Insurers and companies like Express Scripts have been sounding the alarm that the new hepatitis C treatments hitting the market are at the forefront of a new wave of high-priced drugs that, while offering major improvements over previous therapies, will strain their budgets.
Over the past year, these companies have tried to limit access to these drugs as a result. In many cases, they'd only allow sicker patients to receive these new hepatitis C drugs, and they limited the types of doctors that could actually prescribe them.
"This negotiation is a vast improvement to the current environment in which a significant number of patients have limited or no access to curative treatment," read a statement from Ryan Clary, executive director of the National Viral Hepatitis Roundtable, which has pushed for widespread access to new hepatitis C medications.
Until recently, Express Scripts didn't exclude any drugs from its list of preferred medications. But the exclusion list grew from 44 drugs two years ago to 66 in this past year. The company's chief medical officer, Steven Miller, said he's been telegraphing a move like the AbbVie deal all year.
"We need innovation, and affordability has to be part of that innovation," Miller said in an interview. The companies aren't disclosing the discount, but he said the deal helps close the gap between prices in the U.S. and western Europe. Sovaldi is priced at $57,000 in the United Kingdom and $66,000 in Germany.
Since the Express-Scripts AbbVie deal was announced before the market opened Monday, Gilead's stock has fallen 18 percent.
Compared to other developed countries, in which governments set prices, there are limited tools for pushing down the costs of brand-name medications in the United States. Domestic government programs receive mandatory discounts (excluding Medicare), and it's up to private payers to try to negotiate discounts with the drugmakers.
But will the Express Scripts deal set the tone for future expensive specialty drugs hitting the market? Some closely watching the industry think it could.
“We believe we are in the early innings of a transformation around specialty formulary exclusions and believe this could play out in other competitive specialty categories over time," JP Morgan analyst Lisa Gill said in a research note, Reuters reported.
Miller said Express Scripts will continue to look to strike similar deals, pointing to new advancements expected in treatments for cancer, multiple sclerosis and rheumatoid arthritis.
Hepatitis C was an attractive area for dealmaking because there were a few new treatments coming onto the market in a short amount of time, and more could soon join. They all represent major advancements over previous treatments and have showed equal effectiveness in clinical trials. This exclusion strategy doesn't work, though, unless there's a treatment that proves to be just as effective.
"The only way you do exclusions," Miller said, "is you have to do drugs that clinically have identical outcomes."
But Dana Goldman, director of the Schaeffer Center for Health Policy and Economics at the University of Southern California, warns this could come at the expense of the patient since not all will respond to the same treatment. Express Scripts says it won't limit access for hepatitis C patients who need Gilead's drugs, but drug exclusions could still be problematic for patients, Goldman said.
"The reality is if you put up barriers for physicians and patients, we know that people won't have as good access," said Goldman, whose own research found that limits on what drug availability lead to worse outcomes for psychosis patients.
The Gilead exclusion is receiving heightened attention because of the high stakes around treatments involving patients with hepatitis C — a liver disease more than 3 million Americans are infected with. The difference with hepatitis C drugs and others soon to hit the market is that they can treat a much wider set of patients than previous high-price specialty drugs have.
"The result of that is there's enormous pressure on payers to limit access," Goldman said. "The problem is that there are a lot of patients that would benefit from access to open formulas."