The High Price of Hepatitis C Medications.

Hepatitis C Medications and Cost

Illustration of rising cost of prescription drugs over white background
Fanatic Studio/Getty Images

The astronomically high price of the new hepatitis C medications has been shocking, and certainly disconcerting to those who may be faced with a high out of pocket co-pay, or worse, denied coverage. This begs the obvious question: why are these life-saving medications so expensive? It’s important to emphasize upfront that these medications do save lives. They prevent liver cancer, avoid progression to cirrhosis, and may avoid death or need for liver transplantation.

Let’s start at the beginning and trace our path to this moment. Only six years ago, interferon and ribavirin were the treatment standard for hepatitis C. For the most common strain (genotype 1) the success rate was around 50%, and even this came at a fairly substantial cost in terms of adverse events, duration of treatment (6-12 months), and price tag ($50,000-$70,000) considering the extensive blood test monitoring and office visits required at the time.

In 2011, the first wave of direct-acting, antiviral agents (DAAs) were approved (telaprevir and boceprevir), which improved success to 70% but also needed to be administered in conjunction with interferon and ribavirin. The added side effects of these medications limited the enthusiasm in spite of the higher success rate and higher cost. We really needed a therapy which was free of interferon side effects, of short duration and with a high cure rate.

Over the past two years, multiple even newer agents have been approved by the FDA with success rates often approaching 90% cured or higher with few side effects. In 2013, the first of these new agents arrived (sofosbuvir [Sovaldi] and simeprevir [Olysio]). The price tag for many of these agents has been equally impressive, with some costing $1000-$1200 per pill.  PER PILL!  A 12 week course of therapy could cost between $86,000-$94,000 – not including doctor visits or lab testing. Few could afford these agents without excellent insurance assistance.

So who determines the price tag?

The short answer is that the pharmaceutical company which developed the product sets the price. This is the wholesale acquisition cost (WAC). They are not obligated to provide justification. There are, however, some facts worth considering in this regard. It costs, on the average, $2.6 billion and takes 10 years for a drug to reach FDA approval (1), and only about two out of ten marketed drugs earn enough to cover their development costs, according to a study from Tufts University. Pharmacy benefit managers (PBMs) and Veteran’s Affairs could (and have) negotiated discounts of up to 46% or greater in some cases. This clearly helps, but Medicare is legally forbidden from negotiating and pays full price.  Since nearly 70% of patients with hepatitis C in the United States are “baby boomers” born between 1945 and 1965, Medicare becomes a major health provider. Therefore, if a plan requires a medication co-pay rate of 20%, which may not seem overly excessive for a blood pressure medication, this could be nearly $20,000 for a 12 week course of hepatitis C therapy. And double that if 24 weeks is selected.

Is it worth it?  

The sticker shock of the new medications led many to question whether the medical benefits were worth the cost, including this author (1). First, these therapies are associated with a high “cure” rate above 90%. A cure of a case of hepatitis C has a major impact on longevity and quality of life. Not only is there a decrease in “all-cause mortality”, but there is also a marked reduction in the ultimate need for liver transplantation and development of liver cancer (2). Those who do not have cirrhosis at the time of treatment can largely expect as normal a life as they would have without hepatitis C. In fact, one of the justifications for the high price by the pharmaceutical industry is the downstream savings in the need for fewer liver transplants.

How else can we assess value? There are actually several ways that have been studied.  One easy way is to calculate the cost of a cure with today’s medications compared to older standards. For example, if an older therapy was cheaper but only cured 50% of patients treated, the cost to cure 100% of patients could conceivably make this more costly to society than a slightly more expensive medication that cured 95%. This has certainly proven to be the case. Older treatments that included peginterferon, ribavirin and either telaprevir of boceprevir (the standard of care therapy in 2011), averaged between $172,889 to $188,859 per cure. This is almost double the cost per cure of the newer medications, and they were also associated with substantially more toxicity and side effects.

A cost effectiveness analysis is a different way of assessing value. These analyses take into account the cost of the medication and care today against any cost savings by disease prevention in the future.  In general, these types of analysis suggest that very cost-effective interventions typically include those procedures costing less than $20,000; those ranging from $20,000 to $100,000 are moderately cost-effective; and interventions costing more than $100,000 are possibly cost-effective.(3) Using a scale in which $50,000 per quality adjusted life year gained is considered to be a value, most of the newer therapies come in at or around that figure (4). If we think about the potential downstream costs associated with medical visits and testing, not to mention the less common but real risks of liver cancer, cirrhosis and need for a liver transplant, it is easy to see how these may be judged cost-effective.

However, cost-effective is not the same as affordable. It has been estimated that it would cost the health care industry approximately $139 billion to treat everyone in the USA who has hepatitis C.  For programs with a relatively fixed medication budget such as many State Medicaid plans, this would mean either restricting access or taking funds from another disorder. Most State Medicaid plans have thus instituted a form of rationing in which only patients with the most advanced stages of disease qualify for consideration for treatment, and even then there are often additional hurdles to be overcome.

What options are available for someone with hepatitis C and inadequate insurance coverage for treatment?  Next time we will discuss some easy, some difficult and some truly extreme options to obtain affordable treatment.

Continue Reading