[Ip-health] ART: At $84, 000 Gilead Hepatitis C Drug Sets Off Payer Revolt
international at actupparis.org
Wed Jan 29 08:58:37 PST 2014
At $84,000 Gilead Hepatitis C Drug Sets Off Payer
(By Drew Armstrong, Bloomberg.com, Jan 27, 2014)
As Gilead Sciences Inc. (GILD) touted its $1,000-a-pill hepatitis C
investors in a hotel ballroom in San Francisco, a group of about 20
milled outside. “Gilead=Greed,” one sign read.
“I’m glad people have the new drugs, but I’m concerned about the
Orlando Chavez, 62, a hepatitis C and HIV counselor and one of the
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
Chavez has good reason to worry.
Payers face billions of dollars in new drug costs as pharmaceutical
develop increasingly complex products in the years ahead. Express
Holding Co. (ESRX), Catamaran Corp. (CCT), Aetna Inc. and CVS Caremark
(CVS) among others are already pushing back against the high cost of
drug. They’re discussing how to pit similar drugs against each other,
coverage for some, or subjecting treatments to more review by outside
and refusing to pay a premium based on one drug being more convenient
Gilead’s new drug, Sovaldi, costs $84,000 for a 12-week treatment. Such
breakthrough treatments and their stratospheric price tags have
caused insurers to reconsider covering high-priced hepatitis, diabetes
other treatments, said Sumit Dutta, chief medical officer of
fourth-biggest U.S. pharmacy benefit manager, or PBM.
“You can’t manage exclusively by the techniques PBMs have used in the
Dutta said by telephone. “We’re seeing the shift, where payers are
going to say, ’It’s $84,000, and the other therapy is $50,000 -- what
For drugmakers and biotechnology companies that have zeroed in on high-
treatments to replace blockbusters such as Lipitor, the Pfizer Inc.
cholesterol drug that once drew more than $12 billion a year before
ground to generics, the change may affect how shareholders value their
according to Les Funtleyder, a health industry expert and author of
“There’s been a feeling among investors that biotech drugs are immune
price competition,” Funtleyder said in an interview. “We’re getting to
we may have may reached a pain point.”
Prescription drugs make up an increasing share of U.S. health care
Spending on hepatitis C drugs alone is projected to rise seven-fold
billion a year in 2011 to $21 billion in 2018, according to market
firm Decision Resources Group LLC. U.S. drug spending will grow 6.5
year from 2015 to 2022, faster than overall health costs, according to
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
Gilead shares fell 2.2 percent to $78.86 at 4 p.m. New York time.
(ABBV), which is also developing a treatment, declined 2 percent to
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
Milligan in an e-mail. In the meantime, most plans are covering it, he
When eventually combined with a second drug Gilead is studying, the
price could rise to $100,000 or more per year, compared to what
is about $66,000 for the current standard of care.
That’s still cheaper than treating complications of hepatitis C, which
lead to liver damage or failure and the eventual need for transplant,
“In our conversations with payers, pricing is a consideration, but
safety and treatment guidelines are equally important,” Milligan said.
Besides payers already have plenty of tools to push back on costs and
patients to try cheaper medicines first, and they use them, said the
industry’s Washington trade group, Pharmaceutical Researchers and
Manufacturers of America. “Typically by the time the patients get
various steps they need to get to the product, they really do need
Lori Reilly, PhRMA’s head of policy.
Even so, payers are thinking twice before opening their wallets. Jeff
Catamaran’s chief financial officer, said some prescription plans
his company are already pushing patients to try older therapies first,
to the more expensive ones only and only if they fail.
“You can get to these more expensive treatments,” Park said in an
San Francisco during the JPMorgan Chase & Co. health-care conference.
do so, “you have to outweigh the costs of the first, more cost-effective
That’s a big concern for patients and advocates such as Chavez who say
strategy will force them to stick with side-effect-heavy older
treatments that rely on difficult weekly injections, making a patient
if they have the flu over and over again.
Chavez contracted hepatitis C before the latest treatments were
recovered, he helps others get hepatitis C as well as HIV treatment in
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,
though it worked.
“It was terrible,” Chavez said. “I was up against it, so I had to do
if I had the choice today I wouldn’t.”
He and others may not have that choice.
Last year, Express Scripts stopped covering insulins and a diabetes
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
prescriptions of Lilly’s insulin Humalog are up 15 percent compared
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-
company is developing its own regimen of hepatitis C drugs that will
market soon after Gilead’s first-to-market treatment, and soon after
second-to-market multi-drug treatment.
“The Gilead product, the efficacy is at the highest level,” Bancroft
an interview at the JPMorgan conference. “All of them are good enough,
What will eventually happen is that pricing will become more acute. What
you’ve seen in diabetes may happen more rapidly.”
Express Scripts and other pharmacy managers have said that they’re
block other drugs from coverage.
“We will identify which drugs can be pitted against each other and
really tough formulary decisions,” the company’s Chief Medical Officer
Miller said in a December interview.
In the U.K. and Europe, health regulators regularly weigh the benefit
against their cost when deciding what the countries’ national health
will pay for. Bristol-Myers stopped selling a diabetes drug in Germany
month after the government refused to meet its price, for example.
Obamacare could have a similar effect as individuals begin to weigh
of insurance products, said Jami Rubin, an analyst with Goldman Sachs
Inc. With the Affordable Care Act’s insurance expansion, millions of new
customers in the law’s health care marketplaces will be picking and
among drug plans based on cost and coverage, instead of having their
pick a plan for them.
“What will society pay for a cure?,” said Rubin. “Is a cure worth
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
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