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The Real Cost of Hepatitis C Treatment: Part 2

Posted by Jack Bilson on Feb 26, 2016

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In case you missed it, here's the link to Part 1, which we posted earlier this week.

Hep C Cost Battle Royale: USA 1, EU 0

At the Forbes Healthcare Summit in New York in January, Express Scripts’ SVP and CMO Steve Miller said that they pay less for their Hep C drugs than Europe. I asked Forbes Summit moderator and healthcare reporter, Matthew Herper, if Miller dropped his microphone on stage, raised his hands in the air, and fist pumped in triumph after he delivered that bomb on the audience (Matthew tastefully did not reply to my question). Despite European costs controls and single payer system(s) the complicated U.S. healthcare system resulted in lowered costs for these treatments at one of the largest insurers in the nation.

The idea that this occurred prior to Merck and Abbvie’s presence in the space demonstrates that central price controls will not always translate to the winner in price. One of the biggest challenges for drug companies is that the cost of development is not recovered until years later when the product is actually used. There has been some speculation on a model where drug companies could get payment over some number of years (vs at the time the product is used) after the patient is treated and reaping the fiscal benefit of treatment years later. The business model becomes more complex with the privately insured population swapping plans often and payers deferring costs for a future insurer. However, the fact that many private U.S. insurers reimburse these drugs today, often at less cost than Europe, generates some optimism.

Pandering to Voters

Lawmakers and Politicians love to bash pharma companies. The irony in that statement is that pharma products are more accessible than ever before, partly due to the Affordable Care Act that was driven by those same stakeholders. It is interesting that those who are looking for our votes love to complain about high drug prices even when they don’t understand the system that they themselves may have recently voted to change. To compare the situation of Hep C treatments with mature drugs that serve a small population and which have their costs raised suddenly (i.e. Turing Pharma) is simply an inaccuracy, with very different fiscal impacts overall. However, that did not stop Senator and Candidate Hillary Clinton from pushing misleading TV ad about drug costs, which included Hep C drug pricing information from About a year ago, Senator and Candidate Bernie Sanders asked the department of Veterans Affairs to break the patents on Gilead’s product. Senator Sanders attempted to block President Obama’s nominee due to his perspective that the next head of the FDA must somehow reduce the costs of prescription drugs, despite the fact that the FDA does not control drug prices at all. Not one to miss a bandwagon to jump on, businessman and candidate Donald Trump now seemingly supports that Medicare should negotiate drug prices directly with pharma manufactures, a policy that Clinton agrees with.

It is critical that we understand that the new crop of Hep C treatments represent a medical breakthrough that dramatically improves and sustains life for a large swath of the population. Even at a high per patient cost for treatment, these drugs pay for themselves in the long haul. These politicians fail to understand the economic and moral value in eliminating Hep C. While the government and some private insurers claim that they have not budgeted to utilize this cure, the federal government frequently spends beyond its means on other high profile buzz topics that are not budgeted for either (enter Zika Virus research, natural disaster support, Tomahawk missiles being fired into Syria). Yet, we seem to do them anyway. Instead of complaining about the costs here, someone could claim their place in history as “the politician that cured Hep C in America”.

Instead, the White House seems to focus on funding the “Cancer Moonshot”, without understanding much else beyond the marketing term. I don’t depend on my politicians to be my scientists, so I don’t judge them for their lack of understanding of the complexity and diversity of cancer. They are not versed enough to know that this ‘moonshot’ will likely never even orbit the earth, let alone the moon. I do, however, expect them to be able to see things worth funding when they are morally and fiscally prudent. Will we face the same (very American) challenge with a cancer cure, once developed, where we do not have the funding or budget to give it to anyone? Isn’t that what we are already doing with Hep C today, with a cure but no budget to get it those who need it?

How Long Do We Wait?

In the end, how can we not afford a cure that is fiscally and morally responsible? How can we not find a way to utilize these products across all Americans (prisoners, pensioners, professors and pops) today? The lawmakers claim to care about the cost of our healthcare. But, when presented with a cure for a horrible disease, we cannot find a solution to pay for it? This is a total political failure.

The current system we have today looks to have cut the cost of Hep C treatments by nearly half in three years. Imagine what another three years of the free market, even in pharma, could bring in terms of cost reduction? When the patent finally falls on SOVALDI in 2028, the cost of these treatments will quickly plummet. In the same way that millions of Americans with Type 2 Diabetes or Hypertension buy medications for $20 a month today without any insurance (that cost $2,000 to $20,000 annually just 12 years ago) the same will happen in Hep C eventually. While we wait for market forces to bring the cost down, some will go without care, some will die, some will cost the health system millions of dollars when it could have cost thousands.

Is it acceptable to wait another ten to twelve years before we have the budget to use the cure for Hep C that is available today?

How long will we wait for the budgets to be fixed, so that we can save American lives (and money) in the future?

Check back back for more trends on trending therapeutic areas and topics in healthcare.

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

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