[Ip-health] ART: At $84, 000 Gilead Hepatitis C Drug Sets Off Payer Revolt

Céline Grillon international at actupparis.org
Wed Jan 29 08:58:37 PST 2014


                 At $84,000 Gilead Hepatitis C Drug Sets Off Payer  
Revolt
                   (By Drew Armstrong, Bloomberg.com,  Jan 27, 2014)

As Gilead Sciences Inc. (GILD) touted its $1,000-a-pill hepatitis C  
cure to
investors in a hotel ballroom in San Francisco, a group of about 20  
protesters
milled outside. “Gilead=Greed,” one sign read.

“I’m glad people have the new drugs, but I’m concerned about the  
prices,” said
Orlando Chavez, 62, a hepatitis C and HIV counselor and one of the  
protesters
on Jan. 13. He worries that insurers will see Gilead’s price and force
patients to try a less effective, older and cheaper therapy first, he  
said.

Chavez has good reason to worry.

Payers face billions of dollars in new drug costs as pharmaceutical  
companies
develop increasingly complex products in the years ahead. Express  
Scripts
Holding Co. (ESRX), Catamaran Corp. (CCT), Aetna Inc. and CVS Caremark  
Corp.
(CVS) among others are already pushing back against the high cost of  
Gilead’s
drug. They’re discussing how to pit similar drugs against each other,  
refusing
coverage for some, or subjecting treatments to more review by outside  
experts
and refusing to pay a premium based on one drug being more convenient  
to take
than another.

Gilead’s new drug, Sovaldi, costs $84,000 for a 12-week treatment. Such
breakthrough treatments and their stratospheric price tags have  
“absolutely”
caused insurers to reconsider covering high-priced hepatitis, diabetes  
and
other treatments, said Sumit Dutta, chief medical officer of  
Catamaran, the
fourth-biggest U.S. pharmacy benefit manager, or PBM.

“You can’t manage exclusively by the techniques PBMs have used in the  
past,”
Dutta said by telephone. “We’re seeing the shift, where payers are  
finally
going to say, ’It’s $84,000, and the other therapy is $50,000 -- what  
am I
getting?’”

Stock Valuation

For drugmakers and biotechnology companies that have zeroed in on high- 
priced
treatments to replace blockbusters such as Lipitor, the Pfizer Inc.
cholesterol drug that once drew more than $12 billion a year before  
losing
ground to generics, the change may affect how shareholders value their  
stocks,
according to Les Funtleyder, a health industry expert and author of  
the book
“Health-Care Investing.”

“There’s been a feeling among investors that biotech drugs are immune  
from
price competition,” Funtleyder said in an interview. “We’re getting to  
where
we may have may reached a pain point.”

Increasing Costs

Prescription drugs make up an increasing share of U.S. health care  
spending.
Spending on hepatitis C drugs alone is projected to rise seven-fold  
from $3
billion a year in 2011 to $21 billion in 2018, according to market  
research
firm Decision Resources Group LLC. U.S. drug spending will grow 6.5  
percent a
year from 2015 to 2022, faster than overall health costs, according to  
the
U.S. Centers for Medicare and Medicaid Services. That’s mostly driven by
rising prices and a leveling off of generic drug use, according to the  
U.S.
report.

Gilead shares fell 2.2 percent to $78.86 at 4 p.m. New York time.  
AbbVie Inc.
(ABBV), which is also developing a treatment, declined 2 percent to  
$46.83.

It will take Gilead three to six months since it was approved Dec. 6 to
formalize coverage with payers and PBMs, said Chief Operating Officer  
John
Milligan in an e-mail. In the meantime, most plans are covering it, he  
said.

When eventually combined with a second drug Gilead is studying, the  
regimen’s
price could rise to $100,000 or more per year, compared to what  
Catamaran says
is about $66,000 for the current standard of care.

That’s still cheaper than treating complications of hepatitis C, which  
can
lead to liver damage or failure and the eventual need for transplant,  
said
Gilead’s Milligan.

“In our conversations with payers, pricing is a consideration, but  
efficacy,
safety and treatment guidelines are equally important,” Milligan said.

Tools Available

Besides payers already have plenty of tools to push back on costs and  
force
patients to try cheaper medicines first, and they use them, said the  
drug
industry’s Washington trade group, Pharmaceutical Researchers and
Manufacturers of America. “Typically by the time the patients get  
through the
various steps they need to get to the product, they really do need  
it,” said
Lori Reilly, PhRMA’s head of policy.

Even so, payers are thinking twice before opening their wallets. Jeff  
Park,
Catamaran’s chief financial officer, said some prescription plans  
managed by
his company are already pushing patients to try older therapies first,  
moving
to the more expensive ones only and only if they fail.

“You can get to these more expensive treatments,” Park said in an  
interview in
San Francisco during the JPMorgan Chase & Co. health-care conference.  
But to
do so, “you have to outweigh the costs of the first, more cost-effective
treatment.”

Side Effects

That’s a big concern for patients and advocates such as Chavez who say  
that
strategy will force them to stick with side-effect-heavy older  
hepatitis C
treatments that rely on difficult weekly injections, making a patient  
feel as
if they have the flu over and over again.

Chavez contracted hepatitis C before the latest treatments were  
available. Now
recovered, he helps others get hepatitis C as well as HIV treatment in  
the San
Francisco Bay area. He took injections of interferon, an older drug, for
almost a year to rid his body of the virus. It was a brutal regimen,  
he said,
though it worked.

“It was terrible,” Chavez said. “I was up against it, so I had to do  
it, But
if I had the choice today I wouldn’t.”

He and others may not have that choice.

Switch Coverage

Last year, Express Scripts stopped covering insulins and a diabetes  
injection
made by Novo Nordisk A/S in favor of products from Eli Lilly & Co.,
AstraZeneca Plc and Bristol-Myers Squibb Co. (BMY) In the last four  
weeks,
prescriptions of Lilly’s insulin Humalog are up 15 percent compared  
with the
four weeks before Express Scripts’ change, while prescriptions of Novo’s
Novolog are flat.

The same sort of competition will happen with hepatitis C, said Charles
Bancroft, the chief financial officer for Bristol-Myers. The New York- 
based
company is developing its own regimen of hepatitis C drugs that will  
reach the
market soon after Gilead’s first-to-market treatment, and soon after  
AbbVie’s
second-to-market multi-drug treatment.

“The Gilead product, the efficacy is at the highest level,” Bancroft  
said in
an interview at the JPMorgan conference. “All of them are good enough,  
though.
What will eventually happen is that pricing will become more acute. What
you’ve seen in diabetes may happen more rapidly.”

Blocking Coverage

Express Scripts and other pharmacy managers have said that they’re  
ready to
block other drugs from coverage.

“We will identify which drugs can be pitted against each other and  
make some
really tough formulary decisions,” the company’s Chief Medical Officer  
Steven
Miller said in a December interview.

In the U.K. and Europe, health regulators regularly weigh the benefit  
of drugs
against their cost when deciding what the countries’ national health  
systems
will pay for. Bristol-Myers stopped selling a diabetes drug in Germany  
last
month after the government refused to meet its price, for example.

Obamacare could have a similar effect as individuals begin to weigh  
the cost
of insurance products, said Jami Rubin, an analyst with Goldman Sachs  
Group
Inc. With the Affordable Care Act’s insurance expansion, millions of new
customers in the law’s health care marketplaces will be picking and  
choosing
among drug plans based on cost and coverage, instead of having their  
company
pick a plan for them.

“What will society pay for a cure?,” said Rubin. “Is a cure worth  
$1,000 a
day?”

To contact the reporter on this story: Drew Armstrong in New York at
darmstrong17 at bloomberg.net

To contact the editor responsible for this story: Reg Gale at
rgale5 at bloomberg.net

http://www.bloomberg.com/news/2014-01-27/at-84-000-gilead-hepatitis-c-drug-sets-off-payer-revolt.html#q 
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