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The Real Cost of Hepatitis C Treatment: Part 1

Posted by Jack Bilson on Feb 23, 2016

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Recently, a lot of buzz surrounds Hepatitis C treatments. In the last thirty days, a new treatment received the FDA nod of approval, while patients who were denied treatment with existing Hepatitis C drugs started a legal backlash. Meanwhile, leaders in the managed markets talk strongly about drug price reduction and lawmakers continue to weigh in on the costs and how government agencies don’t have the budget to pay for these treatments. As I watch the scene of chaos between drug companies, patients and government unfold, it is evident that how we treat, or undertreat Hepatitis C (not to mention a slew of other diseases) is not just an economic decision for all involved. The novelty of a readily available or cost effective treatment for those that “need it” is a moral crisis. As a result of this dichotomy, it is inevitable that the outcome of the access to care for treatment for Hepatitis C patients will influence the economy of care, as well as the standards put forth in healthcare guidelines across disease states in the future. 

Background

What is Hepatitis C? First, let’s look at the newer Hepatitis C treatments by Gilead (SOVALDI & HARVONI) and Abbvie (Viekira Pak), which cure patients with chronic Hepatitis C virus (HCV) greater than 90% of the time after a mere 12 weeks of use. Let that resonate: I used the word "cure" not "manage".  While the specific genotype(s) of HCV treated varies among the products, they all offer widespread use among a significant number of patients. This is what many people hope for when they think of a pharmaceutical solution - a cure - and we have it. Fantastic… but with a caveat and a hefty price tag of over $80,000. Additionally, the incidence of disease is between three to five million people in the United States, according to the CDC, so we have a lot of people to cure. Once again, pharmaceutical innovation prevails with these new drugs extending both the quality and quantity of human life. Here is the catch: many payers do not include the cost of coverage for these products in their budgets. So, how are we dealing with the evolved Hepatitis C landscape and how will the ramifications of those changes affect how we deal with similar situations in the future? 

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The above infographic was created by MMIT in Dec 2015. View the full Hepatitis C Reality Check here.

Enter a New Player

Merck just launched Zepatier, indicated for HCV genotypes 1 & 4 (less genotypes than HARVONI but more than Viekira Pak). It will only cost $54,600 versus the higher price tags of the other players. Medicaid has a mandated 23% rebate which means that the cost of Zepatier will dip below $45,000, or about half the list price of HARVONI, for Americans covered under the program. Not to be outdone, Abbvie also hints at plans for a version of their drug which will treat more genotypes. More competition in the field translates to more cost savings for payers and increased innovation. Free market economics at work…better products, better availability, all while lowering costs.

Rationing Care

Given the cost of the existing drugs on the market, some private and public insurers refuse to cover the treatment(s) today. Some payers will only cover the medication for the sickest patients, meaning people in the early stages of the disease don’t receive treatment at all (or possibly until they get sicker). This restriction is not a result of limited supply of treatment, but because of cost. Ironically, conventional wisdom, along with some peer reviewed medical research, tells us that even with a potential price tag of $95,000, it is often less expensive to cure Hepatitis than treat it. Case and point: As an untreated case of Hep C progresses, a patient may incur a variety of different costs, from hospitalizations to liver transplants. By avoiding a reoccurring, expected cost of a cure (over a short twelve week period), payers are ultimately signing a blank check for the unknown and likely more expensive treatments and hospital care. 

Even if the experts use a healthcare costs model that judges on quality-adjusted life year (QALY), used by the much discussed UK model (NICE), most agree that treatment cost of these products is worth it. Meanwhile, in Washington state, two patients sued their insurance carriers for denying them treatment because they were only in the early stage of the disease. These are now class action lawsuits, prompting the question, “Will more lawsuits happen?” According to the CDC, baby boomers are 5x more likely to have HCV, so yes I (a Gen X’r) suspect to see plenty more lawsuits if care continues to be rationed. Rationed care is popular in the health systems found in Canada, UK, and Europe, but it’s traditionally uncommon in the USA, incubating concern from most Americans. Is a Hep C cure a canary in the coal mine for a future health system in the USA?

Check back later this week to view part 2 as well as more trends on trending therapeutic areas and topics in healthcare.

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Jack Bilson, III is a Father, Assistant Scoutmaster, Pharmaceutical Consultant and Vice President at MMIT (MMIT brings transparency and guidance to pharmacy and medical benefit information).

He tweets about healthcare stuff and occasionally StarWars @jackbilson3

His views expressed here are his own.

Topics: Specialty, Industry Trends, Market Access