The Conversation” on New Drug Pricing: Are We There Yet? Part I: Policy perspectives on Sovaldi and other Hepatitis C drugs
We all know that someday, the US will need to tackle a long-avoided national “conversation” on healthcare… the one
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.
For my policy views –the policy perspectives that could rework the world of Sovaldi coverage and reimbursement, start here with Part I. For industry-specific analysis on Sovaldi and the pipeline, go on to read part II.
The Conversation We’ve Ducked So Far
Every time a costly new therapy pushes national health expenditures upward, we raise much sturm und drang Americans are facing rationing, or worse. But somehow, The Conversation never happens. Patients still rest secure they’ll get everything they need, and companies are sure they’ll have a market.
Hints of The Conversation probably began way back when kidney dialysis first hit Medicare – although if anyone had predicted the cost we would have had The Conversation right there. It started up again when organ transplants earned coverage, piggybacking on the same public policies.
More recently, fear of The Conversation picked up when we nearly hit the six-digit bar – a $93,000 bill for prostate cancer vaccine Provenge. Medicare, which covers most prostate cancer bills (think, seniors), said yes without much of a hiccup. (A decision probably mandated by law, but that’s another story.)
Getting close to The Conversation doesn’t require a six-digit price. Fears set in when drugs hit the street at way behind anticipated pricing, like Makena for preterm labor or infant seizures at 1000x the price.
Patients recoil when their drug comes under the magnifying glass, but so far casualties are few. Each time policy wonks think The Conversation is coming, everyone simply accepts the price and moves on.
Even Healthcare Reform Doesn’t Force The Conversation
This “accept it and carry on” attitude to expensive new drugs has even survived most coverage mandates of Obamacare (we’ll save the contraception issues for another day). Obamacare might not even bring on The Conversation in deserving cases, since the old lifetime cap on claims is now history.
New demands to expand coverage (read, Obamacare), seem to up the ante, but we still base spending on supply (costs), not demand (budgets). As consumers, we get what we need and expect the system to pay. As for drugmakers, the “patent cliff” of generic competition has simply moved research firms into “specialty” drugs where the sky seems to be the limit. Despite all this (and more), no major squeals.
Obviously, this can’t go on forever with as researchers make increasingly expensive treatments and more Americans get Rx drug coverage – even the terrible coverage that more folks now receive.
Historically, each time a numbingly-expensive new drug arrives, we simply accept the costs. Not a hint of that difficult, very un-democratic conversation that we just can’t afford everything for everybody. Recent rounds of mind-numbing healthcare costs, though, might be bringing us to The Conversation. The biggest, clearest, loudest example: new hepatitis C drugs.
Hepatitis C Pills – A Conversation Starter
2013 signaled a landshift in oral treatments for Hepatitis C. First out of the gate: Gilead’s Sovaldi. At a list price over $92,000 per patient (over $1,000 per pill), we have a poster child of superpriced specialty drugs. We even have other Hep C drugs in the pipeline, also expected at super-prices.
By most measures, it’s expensive. Drug chain CVS (including the Caremark analysts) believe the very existence of Sovaldi will raise insurance premiums by over $300 per person! Sales in its first quarter topped $2 billion, ultimately coming from public and private insurance coffers.
The chorus of folks whining over the price is now larger than just the for-profit insurers. We have liberal think tanks, conservative reformers, Medicaid programs, and physician groups all wondering out loud if $92,000 for a round of therapy (with some patients needing two rounds) might be too much.
Is this The Conversation in the making? I say, NO. For further thoughts that focus on Sovaldi itself and the Hep C marketplace more generally, please read the second part of this post, here.