[Ip-health] Stat+: Netflix model for HepC is saving Australia a lot of money

Suerie Moon suerie.moon at graduateinstitute.ch
Mon Feb 18 00:46:21 PST 2019


 Great piece by Ed Silverman in Pharmalot/Stat Plus on Australia's use of
the Netflix model for HepC medicines, excerpts below and full story at:
https://www.statnews.com/pharmalot/2019/02/15/australia-netflix-heptitis-drug-prices/

The ‘Netflix’ model for hepatitis C drugs is saving Australia a lot of money

*By* Ed Silverman <https://www.statnews.com/staff/ed-silverman/> @Pharmalot
<https://twitter.com/Pharmalot>

February 15, 2019

Subscribing to the so-called Netflix model
<https://www.statnews.com/pharmalot/2019/02/06/washington-netflix-hepatitis-drug-prices/>
for purchasing hepatitis C treatments is projected to lower patient costs
by approximately 85 percent in Australia, where the government is working
its way through a five-year deal in which several drug makers were paid a
lump sum of $766 million for the medicines, according to an analysis
<https://www.nejm.org/doi/pdf/10.1056/NEJMp1813728> in the New England
Journal of Medicine.

Under emerging Netflix models — which vary — states or countries agree to
pay a fixed amount of money to receive unlimited treatments of a drug for a
patient population.

In Australia, where the government signed a deal in 2015 with four
different pharmaceutical companies, the cost to treat each patient is
expected to total $7,352 by the time the agreement is completed. This
compares with the roughly $55,000 that the Australian government otherwise
anticipated spending under traditional purchasing agreements.

[snip]

The arrangement has “allowed the Australian government to offer universal
access to curative hepatitis C treatment to its population, which very few
countries, even the wealthiest, have been able to afford to do,” explained
Suerie Moon, director of research at the Global Health Centre of the
Graduate Institute in Geneva, and lead author of the analysis.

“By the end of the 5-year agreement, they will be on track to have treated
about 43% of the estimated 230,000 people living with hepatitis C, and
there is now active discussion of eliminating hepatitis C within Australia
within the coming decade.” She added that, while the Australian agreement
is confidential, the research was based on information that was publicly
reported.

[snip]

The Netflix model, though, is still another approach, although the notion
has mostly gained attention thanks to efforts by state officials in
Louisiana
<https://www.statnews.com/pharmalot/2019/01/10/louisiana-hepatitis-netflix-drug-prices/>
and Washington
<https://www.statnews.com/pharmalot/2019/02/06/washington-netflix-hepatitis-drug-prices/>,
where variations of the concept are being pursued. Both states are
soliciting bids from drug makers in hopes of widening access to a new
generation of medicines that, when they first debuted several years ago,
threatened to strain budgets.

[snip]

This sort of arrangement, she continued, is feasible because the
manufacturing costs are lower to represent a small portion of the price.
The cost to make the hepatitis C treatments for 100,000 people is about $10
million, which is a small fraction of the $766 million that will be paid to
the companies – AbbVie (ABBV
<https://www.google.com/search?biw=1604&bih=729&tbm=fin&ei=FxpnXLzqAcfV5gLs87WABA&stick=H4sIAAAAAAAAAONgecRoyi3w8sc9YSmdSWtOXmNU4-IKzsgvd80rySypFJLgYoOy-KR4uLj0c_UNiqqKDQpzeQC18xrMOgAAAA&q=NYSE%3A+ABBV&oq=NYSE%3A+abbv&gs_l=finance-immersive.1.0.81i8k1.13206.14209.0.15253.7.7.0.0.0.0.157.721.5j2.7.0....0...1c.1.64.finance-immersive..0.7.720...81j81i5k1.0.sH1tsbAA2BU>),
Merck (MRK
<https://www.google.com/search?biw=1604&bih=729&tbm=fin&ei=BhpnXIOFLcrI5gKVipXAAw&stick=H4sIAAAAAAAAAONgecRoyi3w8sc9YSmdSWtOXmNU4-IKzsgvd80rySypFJLgYoOy-KR4uLj0c_UNzKuyq8oNeADakoh1OgAAAA&q=NYSE%3A+MRK&oq=mrk&gs_l=finance-immersive.1.0.81l3.12470.13777.0.15207.7.7.0.0.0.0.137.711.1j5.6.0....0...1c.1.64.finance-immersive..1.6.710.0...0.KpzfpGh87Ug>),
Gilead Sciences (GILD
<https://www.google.com/search?biw=1172&bih=605&tbm=fin&ei=I1Y3XMDUMu-xgwfQ7b7QDw&q=gild&oq=gild&gs_l=finance-immersive.3..81l3.16676501.16677683.0.16678114.4.4.0.0.0.0.196.564.0j3.3.0....0...1c.1.64.finance-immersive..1.3.564....0.jpSqWvtSL2Y#scso=_S5c3XKODJ42wgwf4nKKwBw2:0>),
and Bristol-Myers Squibb (BMY
<https://www.google.com/search?biw=1604&bih=729&tbm=fin&ei=JxpnXNLdDZKW5wK564SICw&stick=H4sIAAAAAAAAAONgecRoyi3w8sc9YSmdSWtOXmNU4-IKzsgvd80rySypFJLgYoOy-KR4uLj0c_UNzKtyzI2zeQCpbwqAOgAAAA&q=NYSE%3A+BMY&oq=NYSE%3A+bmy&gs_l=finance-immersive.1.0.81i8k1.10424.12372.0.13360.9.8.1.0.0.0.239.805.7j0j1.8.0....0...1c.1.64.finance-immersive..0.8.569...81j81i5k1.0.QgO3l_LLnV8>
).

[snip]

 “But at the end of the day, what makes this arrangement work is a
government that is willing to go to the mat for the health of its people.
If a government is willing to negotiate and use all the leverage it has —
whether compulsory licensing or withholding inclusion in a formulary, for
example — its more likely the companies will offer a reasonable pricing
arrangement.”

[snip]

 “The government  was able to project the total number of potential
patients and negotiate an astonishingly low per person treatment rate when
compared to what patients were paying in the U.S. and what they pay even
today,”  said Dr. Walid Gellad, one of the researchers, who heads the
Center for Pharmaceutical Policy and Prescribing at the University of
Pittsburgh.

“The U.S. government spent $3 billion to $4 billion in Medicare –
approximately, if you remove rebates – in one year for 70,000 Medicare
patients to receive Harvoni, (a Gilead drug). Australia spent $766
million for 100,000 patients. Who made a better deal?”


______________________________________________________________________________
Suerie Moon, MPA, PhD
Director of Research, Global Health Centre and Visiting Lecturer, Graduate
Institute of Geneva
Adjunct Lecturer, Dept. of Global Health and Population, Harvard T.H. Chan
School of Public Health
Bureau P2-712, Maison de la Paix, Chemin Eugène-Rigot 2, CP 1672, 1211
Geneva, Switzerland
Tel: +41-22-908-5845       Mobile: +41-76-823-2830           Skype ID:
sueriemoon


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