You know a pill is powerful when it brings the nation's healthcare leaders into one room to debate its broad implications for U.S. health policy.
The lightning rod is Sovaldi, the new hepatitis C wonder drug that, at $1,000 a pill, has every payer in the country quaking in its boots about how to pay for it.
For years, the healthcare industry has grappled with the coming onslaught of specialty drugs, which are expected to consume half the nation's annual drug spend in five years. But Sovaldi has elevated the discourse to a new level of urgency, which turned into a call for action at a forum May 21 hosted by The Atlantic and sponsored by Express Scripts. The nation's largest pharmacy benefit manager has been a vocal critic of Gilead Science Inc.'s $84,000 price for the 12-week treatment of Sovaldi, claiming the sticker price is irrational and unsustainable.
Joining Express Scripts, Chief Medical Officer Steve Miller in the discussion were representatives from America's Health Insurance Plans, the Pharmaceutical Research and Manufacturers of America, Pfizer, The Permanente Group, Biotech Industry Organization, John Hopkins University, Safety Net Hospitals for Pharmaceutical Access, and the Pew Charitable Trusts, among others.
The forum resurfaced an age-old conundrum: How does the system ensure access to life-saving treatments and allow a reasonable return on investment for drug companies while also keeping drugs affordable and not breaking the bank of healthcare payers?
Anyone hoping for a shred of hope in resolving the Sovaldi conundrum would have left the four-hour session disappointed. But if nothing else, it honed in on the pricing dilemma that accompanies a pipeline full of new miracle drugs. Panelists pointed out that expensive cancer drugs bankrupt patients while extending life by a few months although those patient populations are relatively small. The Sovaldi effect is magnified because of the sheer volume of patients that can benefit from the cure.
Hepatitis C, a virus transmitted through the blood has become the curse of the baby boom generation, largely a result of shared needles and bad blood transfusions from decades ago. An estimated 3.2 million Americans have hep C, with another million people remaining undiagnosed, primarily among the incarcerated and homeless populations, explained Donald Jensen, director of the Center for Liver Diseases for the University of Chicago.
Hep C is like a powder keg waiting to explode on the insurance system. Patients and doctors have been putting off treatment waiting for the entry of new oral hep C virus drugs, which allow some patients to avoid interferon injections with bad side effects.
Approved by the FDA in late 2013, Sovaldi hit the market in 2014 with a strong value proposition. It is better-tolerated than existing therapies, involves a shorter course of treatment, and has been shown to have a cure rate of more than 90 percent for hep C sufferers with the most common type, genotype 1. Taken by 30,000 patients, Sovaldi generated $2.1 billion in U.S. sales for Gilead in the first quarter of 2014.
While the prospect of a cure and reduced incidents of cirrhosis and liver transplantation is hard to argue with, self-insured employers, insurers, and government payers, in particular, are rightfully worried. The cost of treating every hep C patient in the country would amount to $227 billion, approaching the $260 billion total annual spend for all drugs in the United States, according to AHIP.
Not that pent-up demand would be relieved all at once, but payers will be left with huge bills, nonetheless. Express Scripts and other payers are counting on the emergence of Sovaldi competitors to force down the price, including Johnson and Johnson's Olysio, which launched around the same time as Sovaldi. However, no one at the forum suggested competition will lower the price in a meaningful way.
In the absence of the proverbial silver bullet, the forum produced the usual contemplations on system reforms, including the continued move to pay-for-quality in healthcare.
Payers and PBMs say they support innovative therapies but want proof that the value justifies the price. They call for more head-to-head trials that compare therapies in the real-world setting.
The federal government is already supporting the move to comparative effectiveness research, but that has to consider the cost component, Karen Ignagni, CEO of AHIP, said. She also raised the question: If insurers are now subject to profit caps and expenditure disclosures because of the Affordable Care Act, why shouldn't drug companies have to disclose their pricing and break out the R&D costs to ensure their profits are justifiable?
Drug industry officials say they have cost-effectiveness data and fund CER curriculum development in universities, but point out that payers and PBMs don't trust their data. They stress that developing a drug and bringing it to market typically takes 10 to 12 years and costs an average of $1.2 billion per drug. They need a reasonable return on investment not just to pay back R&D expenses for the drug but also to fund future innovations. Prices are set at product launch and fall over the years as discounts are negotiated with payers and PBMs in return for moving market share.
Physicians are caught in the middle. They were trained to prescribe the best treatments for patients, but increasingly are having the difficult conversation with patients about cost and affordability. Some panelists suggested that specialists are reserving the most expensive drugs for patients with the most severe conditions.
Ignagni said health insurers have had success partnering with pharmaceutical companies on medication therapy management and disease management. She said they should work together to tackle the specialty drug-pricing problem before Congress steps in with legislation.
We can't sustain six-figure therapies and we're at the beginning of that trend, she said.
John Castellani, CEO of PhRMA, countered that the healthcare system needs a better way of rewarding drug companies for developing treatments that are most effective for patients, recognizing that life-sustaining and life-saving drugs save costlier medical treatments in the long run. The problem is we're talking about costs, not value, he said.
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