"Demand for expensive hepatitis C drug strains insurers; When ‘miracle’ cures, cost collide" by Robert Weisman | Globe Staff June 01, 2014
When scientists envision breakthrough medicines of the future, they’re thinking about drugs like Sovaldi. Since being approved for US sale in December, the hepatitis C pill has racked up a cure rate of more than 90 percent. It’s a staggering, life-altering statistic for the estimated 3.2 million people in the United States infected with the virus, which over time ravages the liver.
“My virus is now undetectable,” said Barnstable resident Laurel Welch, 65, a retired nurse who contracted hepatitis C through contact with contaminated blood 25 years ago and began taking Sovaldi in January. “I was so sick for so long. Now I’ve got a new life.”
Sovaldi, sold by California-based Gilead Sciences Inc., may also represent the future of cutting-edge drugs in another way: At $1,000 a pill and $84,000 for a full treatment regimen — plus the cost of companion medicines — it’s straining the finances of insurance companies.
Demand for Sovaldi is growing so fast that insurers have begun restricting who can immediately get it, to the dismay of patients.
Gilead and others say the large upfront costs will eventually reduce long-term medical expenses of people with hepatitis C. For now, however, insurance companies and government payers can’t see that far.
“The impact on state budgets is, frankly, breathtaking,” said Christopher “Kit” Gorton, president of Network Health, one of the insurers that cover Medicaid patients, a large segment of the infected population. “It’s a big challenge for everyone.”
A half dozen Massachusetts insurers that contract with Medicaid, the government health insurance program for low-income earners, paid out a combined $23.3 million in Sovaldi-related claims between January and March, according to the Massachusetts Association of Health Plans, an industry group. It was enough to result in quarterly losses for most Medicaid insurers in the state.
Banks got bailed out to the tune of trillions and the war machine is eating up billions, so what is the problem?
MassHealth, the government Medicaid program that insures many patients directly, spent about $10.8 million on the new hepatitis C treatment during the first three months of the year.
“It’s a significant cost driver,” said John Polanowicz, the state secretary of health and human services. But he hailed Sovaldi as “a drug that could take out hep C” and potentially save millions of dollars that would otherwise be spent treating diseases caused by the virus, such as liver scarring and cancer.
And taking millions from the profit column!
Gilead also stresses the many millions of dollars that won’t have to be spent on hepatitis C patients’ medical care years from now.
“It 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.
Like many prescription drugs, Sovaldi was in development for more than a decade. It began as a research project at Emory School of Medicine in Atlanta, and the early drug discovery work was done by New Jersey drug company Pharmasset Inc. Gilead paid $11 billion to acquire Pharmasset in 2011, primarily to gain the rights to market its hepatitis C drug candidate.
Federal grants and Pharmasset’s research outlays on Sovaldi totaled more than $14 million, but Gilead spent tens of millions more to shepherd the drug through clinical trials.
Borrowing from the playbook of scientists who developed drug “cocktails” to fight the HIV virus, Gilead’s researchers used Sovaldi in combination therapies that could attack hepatitis C without causing the severe side effects of earlier treatments.
And who benefits from all this?
They really don't want to cure anything, do they?
The drug’s price is based partly on Gilead’s calculations of how quickly it can recoup its development and acquisition costs before the approval of competing drugs that could bring down the cost of treatment.
Looks like price gouging to me.
But under pressure from insurers, which worry about even greater payouts as more hepatitis C patients clamor for the new pill, state health officials are drafting guidelines advising which patients need to be covered immediately.
Translation: they are going to start RATIONING CARE!
The guidelines would help insurers set priorities for treating a virus that can remain dormant for years, or even decades.
Many people are thought to have contracted it through needles or infected blood in the 1960s or 1970s — when screening procedures were less stringent — and still don’t realize they have it.
“From a financial standpoint, this is not sustainable,” said Laurie Doran, chief financial officer at Boston Medical Center’s insurance arm, HealthNet Plan. “We didn’t budget for [Sovaldi]. I don’t believe anyone really knew how expensive this drug was going to be.”
The drug contributed to a first-quarter financial loss at Partners HealthCare, the giant Boston system that runs Massachusetts General and Brigham and Women’s hospitals and recently bought Neighborhood Health Plan, a Medicaid-contracted insurer.
“We’re getting three or four new [coverage] requests a day,” said Neighborhood Health chief medical officer Paul Mendis.
Even as it awaits state guidelines, Neighborhood Health has developed its own criteria for Sovaldi treatments, drawing on advice from infectious-disease specialists. “I’m not happy with Gilead’s price,” Mendis said. “One thousand dollars a pill — really?”
State government and insurance industry leaders say patients whose doctors prescribe Sovaldi will be able to get it eventually. But some patients who have been told to wait say they’re the victim of health care rationing — long a taboo in US health care.
Unless you need a VA appointment.
Insurers in Massachusetts don’t call it rationing. But they say they will have to adopt a “gated” approach to reimbursing doctors and hospitals for the high cost of the drug if they want to stay in business.
A turd, by any other name....
“A lot of experts think everybody doesn’t need to get this drug in the first instance,” said Lora Pellegrini, president of the Massachusetts Association of Health Plans. Setting coverage priorities for Sovaldi, she said, could create a model for dealing with other high-priced drugs being developed. “This is the tip of the iceberg,” Pellegrini said.
But there could be some price relief on the way. Insurers, as well as patients responsible for expensive Sovaldi copayments, are eagerly awaiting the arrival of competing new-generation hepatitis C treatments they hope will work as well as Sovaldi at lower cost. That could force Gilead to reduce its prices as well.
But, whatever the cost, there seems little question that Sovaldi is a breakthrough drug....
And someone is making a buck!
--more--"
Related: Can health care and tech work together?
The trouble with organ banking
Every time I see something like that in my agenda-pushing paper I can't help but think of the Israeli organ-harvesting operation. Lends the whole operation a veneer of legitimacy I guess.
Lahey’s cost-aware network growing north of Boston
Also see: House Calls
Monday Morning Medication From China
I'll pass on the pills, thanks.
NEXT DAY UPDATE:
Merck to buy Cambridge’s Idenix in $3.85b deal
They should call it hepatitis ¢.
