Since its approval last year by the Food and Drug Administration (FDA), Sovaldi has become a game changer in the treatment of hepatitis C, a nasty virus that over time destroys the liver.
Hepatitis C arose around 1989, and there are an estimated160 million people worldwide who are afflicted. The virus is spread by blood-to-blood contact. Most people get hepatitis C by sharing tainted intravenous needles, engaging in risky sex acts or having tattoos done by workers who use unsterilized needles, sometimes in prisons. Others contracted the disease from blood transfusions before 1992, as did a few health-care workers from needle pricks.
Before Sovaldi, the best available treatment was a six-month combination of retroviral medicines, which cured the disease in only 50 to 60 percent of cases. There were serious side effects, including persistent flu-like symptoms and, for one-third of patients, significant mood alterations.
Sovaldi cures hepatitis C, permanently, in more than 90 percent of cases, usually in 12 weeks and without side effects.
Sovaldi also is very expensive, $1,000 per daily pill and $84,000 for a full course of treatment.
People are furious about this. There are Congressional hearings. There are condemnations of corporate greed. There are reasonable claims that Sovaldi alone could increase overall health spending, especially for those on Medicaid or in prison, who are more likely to have hep-C than the general public.
And yet there are several reasons why the pricing is what it is.
First is that developing and getting FDA approval for Sovaldi cost billions of dollars. As it was being developed, other billions were spent on promising research that did not prove out. The few successful drugs have to be priced to pay for the many others that are not successful.
(I know, I know, drug companies spend lots of money on advertising. So far I haven't seen any TV commercials for Sovaldi, and my guess is that pharmaceutical advertising is done only when it increases drug sales by more than the advertising costs.)
Second is that the number of people needing treatment is small. An estimated 3.2 million Americans are believed to have hepatitis C, but most are unaware of this because they are still asymptomatic. If the research costs could be spread over a current patient base that was 10 times as large, the individual cost for treatment would be much lower.
Third is that this price will hold only for a short period. At least two other pharmaceutical firms are said to be close to releasing Sovaldi-like treatments for hep-C, which will introduce price competition and lower the cost.
Fourth is that while Sovaldi is expensive, it saves more money than it costs over the long term. People get sicker over time with hepatitis C and require progressively more health care. The disease leads to cirrhosis, liver failure and liver cancer. Hep-C patients receive most of the liver transplants in the country today. Each transplant costs more $500,000, and most transplanted livers, 80 to 90 percent by some estimates, ultimately fail again.
A Fair Complaint
Gilead Sciences, the company that manufactures Sovaldi, says it has adopted an "ability to pay" model. In countries like India and Egypt, where hepatitis C is more common, the cost is only one percent of the U.S. price. Personally I'm fine with this. Those countries are poor.
What does bug me is that Gilead does not charge other First World countries the same price it charges here. Here are some examples:
Country 12-Week Sovaldi Cost
United States $84,000
Canada $50,050 US ($55,000 Canadian dollars)
France $57,000
Germany $64,000
Britain $59,000
This disparity does not apply only to Sovaldi. For many years, other wealthy countries have demanded discounts for patented drugs, and drug manufacturers have acceded to them.
My impression is that these countries say, nah, we're not going to pay that much, and then the drug companies shrug, take the offered price and shift costs to the United States market.
As far as I know, no pharmaceutical company, anywhere, has refused to accept a European price for any drug. It would be interesting to see one try.
In fact, Sovaldi has given substantial discounts to the Veteran Administration and Pennsylvania's Medicaid agency, and other price cuts are likely to follow.
What to Do
Meanwhile, I think a few things can be done to mitigate cost impacts like that of Solvadi.
First, insurers can approve Sovaldi only for hep-C patients with advanced liver disease and let the early-stage patients wait until new medicines and competition push the market price down. This may sound harsh, but it also would spread the cost of treating people over a longer period and diminish the near-term shocks to our healthcare budgets. Several states now have adopted such protocols.
Second, U.S. healthcare programs like Medicare and Medicaid could refuse to pay more than the European price for any new drugs. (If this required enabling legislation, why not try it?) This might stiffen the spines of drug manufacturers, who need to demand that other First World countries pay their fair share for a change.
Third, the FDA could extend further the fast-track policies that were adopted during the AIDS epidemic.
The Significance
We seem to have lost track in all the debate of the importance of a drug like Sovaldi.
Many hep-C patients dreaded the previous treatments -- their side effects, the many shots -- so much that they avoided any treatment at all. Now a couple pills taken each day, and they are rid of a miserable, often deadly disease within three months.
In arguing for the Sovaldi price, the head of Gilead Sciences suggested that the apt comparison was the relative price per cure. Before Sovaldi, when it typically took two rounds of treatments, each a miserable six months long, to get the same result, he estimated the medical cost was $150,000 to $200,000.
This may be a self-serving view on his part, but our current medical system is larded with rent-seekers -- million-dollar oncologists, cost-shifting hospitals, artificial drug prices, rampant Medicare and Medicaid fraud and a Veterans Administration bureaucracy that seems to put veterans' needs last. It goes on and on.
I don't know what to do about all this, but I am glad at least that there is finally a cure for hepatitis C.
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