January 17, 2014

The price and cost of hepatitis C treatment

Provided by Family Practice News

By: CHRISTOPHER MOORE, M.D., AND STEVEN FLAMM, M.D.

01/16/14

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Dr. Christopher Moore

Chronic hepatitis C virus (HCV) infection is a major cause of liver disease affecting 180 million people globally. HCV infection, both silent and slow in its revelation, and devastating in its complications, has been described as a "viral time bomb." In December 2013, the Food and Drug Administration approved sofosbuvir, a nucleotide NS5B polymerase inhibitor, given compelling evidence that when taken with pegylated interferon-alfa and ribavirin for genotype 1 or 4 (for 12 weeks) or with ribavirin for genotype 2 (for 12 weeks) or 3 (for 24 weeks), sustained virologic response (SVR) rates are excellent, with very limited side effects.

The excitement has been tempered by the knowledge that sofosbuvir alone is priced at approximately $80,000 for a 12-week course. This cost is beyond the means of many individuals in countries with affluent economies, even with insurance and/or patient assistance programs, and vastly beyond those of developing countries – where HCV infection is most burdensome. It should be noted that the cost of therapy with high SVR rates may greatly offset the price required to manage the long-term complications and indirect effects of chronic HCV infection. And further, since the treatment is shorter than in the past and since the regimen has far fewer side effects, the overall cost of therapy may be similar to that of first-generation protease inhibitor–based regimens that constituted the standard of care for genotype 1 previously. With that said, idealized studies have shown that generic sofosbuvir–based regimens could be priced substantially lower.

The query "why must it cost so much?" articulates traditional concerns of the public and its advocates who feel confusion, cynicism, and anger at corporate strategies. As physicians and fellow citizens, armed with both Hippocratic and democratic principles, we immediately identify with these positions. Yet, we would also urge restraint in attempting traditional actions, such as government fiat, that would seek to arbitrarily lower price.

The concepts "price" and "cost" are commonly conflated: The former is the amount a buyer, or third party, is willing to pay the seller; the latter is the amount it takes to bring that good or service to market. The pharmaceutical industry is straddled with high fixed costs of production (research and development) and aggressive FDA regulatory control over efficacy and safety. Prices attempt to recapture cost and justify the risk of initial investment. Generic drug replication does not embody these extreme costs that are partially reflected in lower prices.

Nevertheless, it is hoped that price reduction through traditional market measures will be achieved, i.e., to create "cooperation without coercion." Perhaps price reduction will be achieved when competitive products reach the market in the near future. Perhaps price reduction will be achieved by aggressive negotiation of cost with third-party payers. Sofosbuvir retains patent protection until 2029; thus, generics are not readily possible outside of "compulsory licensure" – the ability of governments to violate patent law in periods of national necessity. Such intervention, or the threat of it, has occurred in many countries, including the United States. We believe it is unlikely to occur in this case.

The HCV market, estimated at greater than $10 billion annually in sales, provides a strong incentive for drug development – producing the multitude of agents in various stages of development for FDA approval. The competition of multiple sellers for buyers will drive down price and facilitate quality. An extreme example of this can be seen in countries practicing socialized medicine, which effectively have a single buyer, so there is greater leverage for price reduction.

Compulsory licensure, while based upon sound moral intentions, would stifle future innovation by removing profit incentive and creating an unstable economic atmosphere. It is informative to review the vaccine market, in which economic instability has led to fewer sellers, either from attrition or conglomeration. The ultimate consequence is decreased innovation, competition, and drug availability.

Corporations are not moral agents. Similarly so, government has no agency, but rather should be considered an instrument through which a moral citizenry can achieve agreed upon objectives. Aggressive education and collaboration amongst physicians and their patients, purchasing groups, and public lobbying agencies to collectively negotiate reasonable price reduction are encouraged – to realize the potential we have as buyers en masse.

Pharmaceutical profits may be conspicuous, but nevertheless, it is that very incentive of profit that brings such powerful drugs so quickly to the market in the first place. Patients can neither benefit from nor feel the loss of drugs that never make it to market. A morality of intention, absolved of comprehensive economic parameters, while psychologically enticing and proximally politically advantageous, would lead to greater long-term harm for the very patients we have vowed to protect.

We hope that price and cost issues will not prohibit large numbers of HCV-afflicted patients from receiving the current therapies and other highly efficacious regimens that will soon be forthcoming.

Dr. Christopher Moore is a fellow in transplant hepatology, and Dr. Steven Flamm is chief of transplantation hepatology and professor of medicine and surgery, at Northwestern University Feinberg School of Medicine, Chicago. Dr. Moore reported having no conflicts of interest. Dr. Flamm is a speaker for Vertex and Gilead; does research and consults for Abbvie, Vertex, and other companies; and does research for Boehringer Ingelheim.

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