Lowering Hepatitis C Treatment Prices

Lowering Hepatitis C Treatment Prices
AP Photo/Eric Risberg, File
X
Story Stream
recent articles

American consumers have been inundated over the past few years by marketing campaigns for a growing range of anti-viral, biologic “cures” for Hepatitis C. The disease affects between 2.7 million and 3.9 million Americans, and between 75 and 85 percent of those who are infected with Hepatitis C are afflicted with the chronic variant. For an estimated 1 to 5 percent of Hepatitis C patients, it is the major cause of death from liver cancer and cirrhosis. 

A major breakthrough in Hepatitis C treatment came in December 2013 when Gilead Sciences, Inc. received U.S. Food and Drug Administration (FDA) approval for Sovaldi (sofosubivir). Sovaldi is a pill with a cure rate of 90 percent coupled with treatment time reduced to as little as 12 weeks (from the previous 24 and 48 weeks for injection treatment plans). In October 2014, Gilead received FDA approval for Harvoni, a pill that combines sofosbuvir with ledipasvir, and is prescribed through a course of treatment of either eight or 12 weeks, with a cure rate in the 94 to 100 percent range. 

In recent years, the biopharmaceutical industry focused much of its R&D efforts on finding cures for Hepatitis C. “Cure” in this case means that the virus is not detected in a patient’s blood when measured three months after treatment is completed. These efforts resulted in 10 antiviral, oral treatments of Hepatitis C being approved by the FDA since 2013, with all receiving an agency “priority review” status, consisting of an expedited six month review under its Accelerated Review process.

In 1992, the U.S. Congress passed the Prescription Drug User Fee Act (PDUFA) which authorizes the FDA to collect user fees from companies that manufacture certain human drug and biological products. Since the passage of PDUFA, these user fees have played an important role in funding the agency’s Accelerated Review process for new drugs. Given that these 10 priority review drugs required an average of only 7.7 months for agency application completion, and none beyond one year, Accelerated Review should be characterized as a generally successful regulatory review process.

The initial cost of a 12-week treatment plan for Sovaldi was $84,000, or $1,000 per pill. And since Sovaldi needs to be taken in combination with other medications, the total treatment price approach $150,000. For Harvoni it’s $94,500, or $1,125 per pill. Gilead’s initial pricing of Sovaldi and Harvoni for a 12-week treatment regime were the company’s original list price for these biologics. But industry competitive factors over time usually erode initial drug list prices.

For example, after receiving FDA approval in December 2014, Viekira Pak, a competing Hepatitis C treatment, became commercially available in 2015, and pharmacy benefit manager (PBM) Express Script negotiated a discounted price lower than its list price of $83,390. (The exact price is a trade secret.) Today, it is reasonable to assume that major PBMs who manage employee pharmaceutical plans for health-care insurers in the U.S., including Express Scripts, CVS Health and United Healthcare, are paying no more than $50,000 for each patient’s Hepatitis C treatment. Likewise, physicians are now acutely aware of the costs of pharmaceutical treatment and patients’ health-care insurance coverage limitations. This combination of PBM “guidance” on covered drugs and physician knowledge of lower-cost, equally effective treatments, has resulted in downward competitive pressure on list prices of Hepatitis C drugs.

And the best may be soon to come. Biopharmaceutical firm Abbie Vie Inc. received priority review approval from the FDA in August 2017 for its combination product Mavyret (glecapevir/pibrentasvir). Mavyret is a “breakthrough” anti-viral drug, as it is the first Hepatitis C treatment for all six genotypes of Hepatitis C and has an effective treatment duration of only eight weeks. Mavyret not only revolutionizes the treatment of Hepatitis C, but its list price for an eight-week treatment plan of $26,400 will likely result in dramatic price reductions by industry competitors. Moreover, for a PBM willing to agree to exclusive approval of Mavyret to treat Hepatitis C, a negotiated discount off the list price of up to 50 percent — the industry standardcould further reduce Mavyret’s final price. Mavyret’s unique effective treatment capabilities, coupled with its low comparative sticker price, makes it a major development in expanding treatment availability.

Thomas A. Hemphill is professor of Strategy, Innovation and Public Policy in the School of Management, University of Michigan-Flint and policy advisor at the Heartland Institute, Chicago, Illinois.

Comment
Show commentsHide Comments