New Hepatitis C Drug's Cost, Though Lower Than Some Expected, Fuels Rx-Pricing Debate

Gilead Science's revelation Friday (Oct. 10) that it will charge $94,500 for a 12-week course of its newly approved hepatitis C drug Harvoni, though less than some market analysts had expected, stoked the national drug pricing debate. The Campaign for Sustainable Rx Pricing criticized Harvoni's price and urged Congress to make drug companies justify the price of expensive pharmaceuticals. Medicaid health plans simultaneously released a report detailing prescribing and coverage restrictions states have employed to manage the high cost of Gilead's first hepatitis C drug, Sovaldi, and warning that states will increasingly use such methods as more expensive drugs hit the market.

National Coalition on Health Care President John Rother wrote an open letter to Congress complaining that Gilead didn't take advantage of a “golden opportunity” to respond to criticism from patients, policymakers and payers about Sovaldi's $84,000 treatment regime cost. “Instead, Gilead chose to double-down with a price of $94,500 for Harvoni,” he wrote. Rother urged lawmakers to force drug makers to justify and document their pricing decisions, unveil projected prices earlier in the FDA approval process, and make more clinical safety and efficacy data available to researchers.

Medicaid Health Plans of America timed the release of a report on states' responses to Sovaldi's price with Gilead's Harvoni announcement. The report, prepared by Viohl & Associates, warns the growth of specialty pharmacy drugs will hike pressure on states to manage treatment costs. “States will continue to employ a variety of strategies and impose restrictions, including prior authorization and quantity prescribing limitations, to curtail the impact of such medications on their Medicaid programs,” the report concludes.

While Gilead's $94,500 price for a 12-week course of Harvoni is less than some market analysts expected, Rother complained the company merely set the price to be on par with the cost of a treatment course of Sovaldi, plus pegylated interferon and ribavirin. The price is not based with any regard to “value proposition or cost/benefit calculations,” he wrote to lawmakers.

Insurance companies and others have been pressuring Gilead to lower the Sovaldi's price and had hoped the company would set a new course with its successor drug Harvoni. Harvoni is a once-daily pill that combines Sovaldi (sofosbuvir) and ledipasvir.

A Gilead spokesperson said the price of Harvoni reflects the value of the medicine because it cures patients for significantly less than the cost of treating patients indefinitely for the chronic disease. The price per bottle for Harvoni is $31,500. Hepatitis C patients without scarring of the liver and with low viral loads can be cured with an eight-week course, Gilead says, and those patients account for about half of those infected with the most common type of hepatitis C. Given that the price per-pill is the same regardless of the length of the treatment course, the eight-week course costs $63,000 and the “average blended” cost of the drug is $81,000.

But Rother told Inside Health Policy that most plans will only cover the drug for sicker patients so he doesn't buy the so-called blended cost. Also, the market will be expanded because Harvoni eliminates the need to take interferon, which makes patients very sick.

“In the rest of the economy, when you get a bigger market, you cut the price for volume,” Rother said.

Some analysts expected Harvoni's price to be higher because doctors often prescribe Sovaldi with Johnson & Johnson's Olysio, even though FDA did not approve the drugs in combination, and the drugs together cost about $150,000. However, Gilead President and CEO John Milligan told Inside Health Policy on Oct. 1 that Gilead would keep the price close to the price of Sovaldi plus interferon and ribavirin.

But health plans complain that the price is too high because some 3.2 million Americans are estimated to be infected with hepatitis C. Other drugs, especially biologics that treat cancer, are more expensive, but they treat much smaller populations.

State Medicaid directors and the private managed care plans that administer most Medicaid programs are especially upset. The study released by Medicaid Health Plans of America notes how difficult it is for states to cover Sovaldi without cutting other health services or dipping into education and infrastructure budgets.

The analysis finds that 35 states require prior authorization for Sovaldi. Most, if not all, states with prior authorization requirements require liver biopsies to determine the severity of disease before covering the drug. Many states include additional restrictions, including limits on who may prescribe and requirements that patients not use alcohol or illegal drugs.

Patient advocates are working with researchers at Harvard and Brown to analyze state restrictions on Sovaldi, but unlike health plans, patient advocate are doing the research to advocate for lifting restrictions, especially those that prohibit alcoholics and patients addicted to illegal drugs from getting Sovaldi.

The analysis by Medicaid plans finds that, of the 37 states that use managed care plans, 28 include pharmacy benefits and nine states carve out the pharmacy benefit. Also, 22 states do not require that Medicaid managed care plans align preferred drug lists with state-approved lists. -- John Wilkerson (jwilkerson@iwpnews.com)