Solvaldi and “The Conversation” on New Drug Pricing: Are We There Yet? (Part II – Sovaldi and the Hepatitis C marketplace, 2014)
We all know that someday, the US will need to tackle a long-avoided national “Conversation” on healthcare… the one that comes when the price of a new drug outstrips the economy’s ability to cover.
Like the kid in the back seat, I wonder, “Are we there yet?” This time, it seems hepatitis C drugs like Sovaldi are bringing us… really close. Learning why we’re close but not there, requires a little explaining.
The first part of the explanation is a policy-based discussion. That’s found in my recent, essential post (Part I) on the policy background. Find it on my blog, here.
Starting The Conversation – A Reading List
If you read either the trade press or mainstream newspapers, you’re surely convinced that Sovaldi is both overpriced and destined to kill our healthcare budget. Is the drama around Sovaldi pricing really justified? The press is having a field day with the growing scope of those kvetching. Examples:
The Wall Street Journal:
http://m.us.wsj.com/articles/beggar-thy-neighbor-medicine-1406245356?ref=/home-page
Kaiser Health News is documenting the bankrupting impact on State Medicaid programs:
http://www.kaiserhealthnews.org/Daily-Reports/2014/July/25/Medicaid-issues.aspx
We’ve got outrage over pills over $1,000 from National Public Radio:
Newsweek has figured out that the train is full of expensive Hep C treatments:
http://www.newsweek.com/insurers-worry-84000-hepatitis-c-drug-sovaldi-could-break-bank-252539
Is this really The Conversation starter?
This might look like a time to have a national conversation. After all, it’s not just Gilead trying to break the bank here. AbbVie, Bristol and Merck all have fabulously expensive Hep C drugs in the pipeline. Even if they come in south of Gilead’s pricing (as expected), we’ll still have each of the great treatment options running north of $50 grand.
This would be one thing if Hep C were an orphan disease hitting 1,000 photogenic children per year. But Hep C is rampant amongst folks who survived the 1960s, with almost 300,000 diagnoses and 80,000 deaths every year. We’re seeing an explosion in diagnoses for various reasons, too. This is a blockbuster of a market, not a rare drug scenario. Put 300K diagnoses against $50K or more per case (and don’t forget the other needed drugs and related doctor bills) and you have… the uncountable.
Just to make the scene more complex, treating each Hep C case used to cost up to $300,000 in the pre-Sovaldi days, making the $94,000 cost look like a relative bargain. (Explain that, CVS-Caremark and your $300 bump in insurance premiums prediction!). Plus, the old drugs rarely cured patients with a certain flavor of the virus, making this a quality of care issue and not just a cost question.
Now, I’ll offer my “cynic alert.” The big difference here is that many cases of Hep C went undetected, and the patients went on to die of something else so those giant-sized treatment costs never came into play. Now, with so many drug dollars at stake (or so many good treatment options, depending on how cynical you are) we’re pushing for Hep C screening to find more candidates for treatment.
And that’s what gets … expensive. [Expensive in the US, I mean – the calculations for developing world countries are trickier if you believe the World Health Organization.]
So, what if The Conversation really starts?
The big voices on Wall Street seem to think The Conversation would be fatal to expensive new drugs treating diseases with large populations. I’m not so sure. In most cases, drugs would be a cost-effective alternative to current treatments. (Did I just agree with the drug lobby, on anything? Wow, a first time on everything for this cynic. Somebody alert the media.)
Basically, these new treatments mean we’re finding more people to treat for the nasty, nasty disease of liver cancer. Treatment cost is $100,000 per patient, which avoids $300,000 in future healthcare expenses but only (cynic alert) for those who’d be living long enough to need treatment. If enough cured patients live long enough to hit Medicare age, we have a new burden on Medicare that no one is really addressing. (Something like how Medicare saves money from tobacco… because patients die before hitting 65. Ouch.)
The real conversation isn’t the drug price, in my view. It’s the effort to draw Hep C patients out of the woodwork and into treatment. We don’t have good guidelines on “watchful waiting” for Hep C (that’s doctor talk for avoiding treatment in the hope that patients will die of something else along the way). We don’t have good patient selection criteria for Hep C , as Medicaid programs are now learning the hard way. These new drugs are teaching us, basically, that we don’t know what we’re doing.
So, it’s the actuaries, the epidemiologists, the WHO, and the oncologists running this game, not the drugmakers or pharmacy committees or formulary makers or even politicians.
Somehow, I think we’re slated to have a very important conversation, but not The Converation on cost that everyone was expecting. And for those sheep on The Street who are following conventional wisdom about superpriced drugs, you’re in for a big surprise. Fascinating.
Don’t forget to take a look at the first part of this post, here, for some background perspective.