The following is part of a series of guest posts on hepatitis C by Allan Joseph, a medical student at the Warren Alpert Medical School of Brown University and TIE research assistant. You can follow Allan on Twitter: @allanmjoseph. Links to all posts in the series to which this post belongs are in the introductory post. That post includes a glossary of terms as well.
If you go back to the previous posts and look at the history of treatment regimens, you can see that the increased costs are, in fact, correlated with improved outcomes and benefits — big ones. It might be that sofosbuvir is expensive, in part, because it’s effective. Yet insurance companies are balking at the price of sofosbuvir. In my reading, it’s unlikely that insurance companies will be paying for sofosbuvir for all chronic hepatitis C (HCV) patients in the near future. Let’s take a look at why.
CTAF’s analysis included a demonstration of a hypothetical large employer-sponsored plan with 1 million members, a plan large enough to withstand most price shocks. If the plan had a baseline HCV prevalence rate similar to that of the general population, and just half of those infected with HCV came forward for treatment in one year, the resulting increase in spending by insurance companies due to new regimens (sofosbuvir and simeprevir,* which we haven’t discussed here) would work out to approximately $50 per member per month, or $600 per member per year. That’s an enormous price shock and would absolutely result in large premium increases across the board. (Oh, and CTAF also estimated that applying that same model to California as a whole would increase drug expenditures by all payers in the state by $22 billion in a single year.)
So it’s enormously expensive to cover sofosbuvir for all chronic HCV patients. The benefits to the insurance companies that pay for it would be small, too. Though sofosbuvir might be cost-saving in the long run, its costs are recouped over the course of decades — making it exceedingly unlikely that the insurance company that paid for a patient’s sofosbuvir would reap the benefits. In fact, it’s most likely that Medicare would, since the prevalence of chronic HCV patients is highest among patients born between 1945 and 1965 — baby boomers who are now joining Medicare’s rolls.
It’s more likely that insurance companies would cover sofosbuvir only in certain cases — patients with extensive liver damage, for example. CTAF’s analysis suggests that only treating patients with advanced fibrosis with the new therapies would be solidly cost-saving, saving the state’s payers as a whole $1 billion over 20 years. Though that still doesn’t solve the problem of benefits accruing to insurers that didn’t pay for the treatment, as above. It also doesn’t address the fact that another likely group for approval would be patients who are ineligible for PR therapy — the most expensive groups to treat with the new therapies. However, the department of Veterans Affairs is moving towards this system — its latest guidelines suggest that providers consider not using sofosbuvir for patients who don’t have advanced liver disease.
There’s some chance the price may come down in the near future. New, equally-efficacious HCV drugs are scheduled to hit the market in the next year or two, which may force Gilead to reduce prices to stay competitive. It’s possible that the cost is so high this year so that Gilead could recoup as much of its development costs as possible in a short window of exclusivity. The appearance of new competitors might act much like the expiration of a patent.
On the other hand, some of the latest research is combining sofosbuvir with other brand-new drugs. The New England Journal of Medicine has run four different articles since January on combinations of sofosbuvir with daclatsvir or ledipasvir in different situations. The efficacy can be even higher — 99% in some groups — but costs will be astronomical. These combinations will change the calculus yet again. Without pricing information, it’s hard to tell just what things will look like, but I’d bet that they’ll make the debate over sofosbuvir alone look like nothing. For a few additional percentage points of efficacy, the price could quite conceivably double.
In the final post in this series, I’ll explore some possible solutions outside insurance companies. Spoiler alert, though: it won’t be pretty.
*A note on simeprevir: This is a drug that’s come out around the same time as sofosbuvir and is almost as expensive ($66,000 for a course of treatment, usually given in combination with sofosbuvir), but because it hasn’t been the focus of treatment, we’re not discussing it much.