March 1, 2014

Costly hepatitis drug Sovaldi rattles industry

Provided by The Washington Post

By Sandhya Somashekhar, Saturday, March 1, 2:32 PM

When the Food and Drug Administration approved a medication called Sovaldi in December, it was hailed as a breakthrough in the fight against hepatitis C, a blood-borne disease that affects 3.2 million Americans and kills more people in the U.S. annually than AIDS.

Then California-based Gilead Sciences, the manufacturer, announced the price: $84,000 for a 12-week course, more than what many cancer treatments cost in a year.

The hefty price tag has rattled patient advocacy groups and insurance companies, who say most costly new treatments coming on the market are targeted for a smaller patient population. Putting such a premium on a drug that could help so many will be crushing, they say.

At least one prescription drug plan is encouraging doctors to delay prescribing Sovaldi for patients who can wait. One insurer has said it risks bankruptcy if it’s required to cover the drug for everyone who needs it this year. Advocates say Gilead has taken corporate greed to new levels.

The drug has also prompted a new round of hand-wringing over a larger issue: the escalating cost of specialty drugs, which are designed to treat chronic illnesses such as rheumatoid arthritis and multiple sclerosis and sometimes require special handling.

While these therapies are delivering body blows to some of the world’s most pernicious diseases, they also are testing the limits of what society is willing to pay for sought-after treatments or cures.

“The advancements that are coming in medicine are going to be stunning and amazing, both in terms of the kinds of things we can treat that we never could and what their cost is going to be,” said Matt Salo, executive director of the National Association of Medicaid Directors. “We’re going to need to think as a country about how do we value health and health care.”

In the past, treating hepatitis C was not always successful and involved lengthy treatment with injectable drugs that had significant side effects. By contrast, Sovaldi promises to cure nearly all sufferers with a once-daily pill that has far fewer side effects.

The Centers for Disease Control and Prevention has called hepatitis C an undeclared public-health crisis, affecting as much as 2 percent of the adult U.S. population and killing 1,500 Americans a year. It is caused by a virus and is typically transmitted through blood contact, such as dirty syringes.

Many people contracted the disease through blood transfusions before routine testing of donated blood for hepatitis C began in 1992.

The disease can go undetected for years and can eventually lead to cancer or cirrhosis of the liver. It is particularly prevalent among baby boomers. Federal health authorities recommend that everyone born between 1945 and 1965 be tested for the disease.

Ronni Marks, 60, of New York City contracted the disease from one of the many blood transfusions she underwent since childhood. After two unsuccessful treatments in the past that caused debilitating side effects, she began a course of Sovaldi and two other drugs this year.

“Hopefully these are the wonder drugs they say they are,” she said.

When a friend asked Marks for a photo of the slim, yellow pill — a single dose costs $1,000 — she snapped a picture of it on a blue background. “She said that it looked like it was taken on a Tiffany’s box,” Marks said. “I joked that it should have been, considering the price.”

In a statement to The Washington Post, Gilead said the price is fair because it is a significant improvement from previous treatments and it is not more expensive than the old treatment. It said it has had a good response from insurance companies agreeing to cover the drug. Gilead added that it offers a generous assistance program to help low-income people get the drug at a low cost.

The fact that Sovaldi actually cures hepatitis C gives it an advantage over other types of therapies, allowing the company to price it higher, said Kenneth Kaitin, director of the Tufts Center for the Study of Drug Development, an independent nonprofit research group at Tufts University.

“It is legitimately a big deal,” he said.

He noted that several other companies also are developing therapies for hepatitis C and that Gilead wants to lock in an aggressive price before it faces tougher competition.

Still, the price has provoked an outcry from the insurance industry, as well as from state Medicaid directors who say taxpayers will have to shoulder much of the cost of the drug because many with hepatitis C get their health care from the government through Medicare, Medicaid and the prison system.

Molina Healthcare, a company that operates Medicaid ­managed-care plans for 11 states, has told state officials it cannot bear the cost of covering the drug. The company, which gets a flat fee from states for each Medicaid recipient, negotiated its 2014 rates before the FDA approved Sovaldi. It is asking states to pay for the drug separately and is deciding whether to cover the drug at all.

“We can’t absorb this kind of a hit,” said chief executive J. Mario Molina.“It would cause us and other health plans to potentially become insolvent.”

Express Scripts, the nation’s largest prescription drug benefit manager, has said it is encouraging some doctors in its networks to delay prescribing Sovaldi for hepatitis C patients who can safely wait. It is the first time the company, which helps employers keep down the prescription drug costs for their employee health plans, has asked doctors to avoid a drug because of the cost.

The company hopes that when rival hepatitis C drugs hit the market, the increased competition will drive down costs.

“We have a public health crisis that’s been identified in hepatitis C. We now have a drug that is wonderful in its promise,” said Karen Ignagni, president of America’s Health Insurance Plans. “But the pricing of this drug for a public health crisis doesn’t match the situation.”

Lena H. Sun contributed to this story.