FAQ: The High Cost of Hepatitis C Drugs

FAQ: The High Cost of Hepatitis C Drugs WebMD Health News By Kathleen Doheny Reviewed by Brunilda Nazario, MD More from WebMD New Oral Hepatitis C Drugs: FAQ FDA Warns...

April 14, 2014 -- Last week, the World Health Organization strongly endorsed two new oral drugs that fight hepatitis C, a liver-damaging virus. The WHO recommended that all 150 million people infected worldwide be assessed for these drug treatments.

With that endorsement, though, came concern from WHO officials about the high price of these new medicines, one of which costs $1,000 per pill. Some doctors and insurers -- and now an editorial in the New England Journal of Medicine -- are voicing the same concern. A large U.S. pharmacy benefits manager is threatening a boycott if costs don't come down.

Meanwhile, new drugs in the pipeline have a success rate that rivals the two main players.

Hepatitis C is spread by an infected person's blood, such as by sharing needles or drug equipment, sexual contact, or, in years past, by transfusions and organ transplants. If infection becomes chronic, it can progress to liver failure, liver cancer, or the need for a transplant. In the U.S., about 3 million people are infected, but many are unaware of it.

WebMD asked experts and the drugmakers to address the most frequently asked questions about these two pricey ''game-changers'' and got some predictions about future treatment costs.

Q: We hear about a $1,000-a-pill price. Really?

The cost for Sovaldi (sofosbuvir) varies based on the exact use, says Michele Rest, spokeswoman for Gilead, which makes the drug. When used with the hepatitis C drug ribavirin, a common combination, a 12-week course costs about $84,000 wholesale, or $1,000 a day, she says.

A 3-month course of Olysio (simeprevir), also used with other medications, is about $66,000 wholesale, or about $733 a day, says Craig Stoltz, a Janssen spokesman.

Q: Why do the drugs cost so much?

"On average, to research and develop just one medicine takes 10 to 15 years and more than $1 billion," says Jennifer Wall, a spokeswoman for the Pharmaceutical Research and Manufacturers of America.

Rest declined to provide details on research and development costs for Sovaldi or how long it took to develop.

Scientists have been working on these advanced hepatitis C drugs for more than 20 years, and companies take “enormous risks” in developing new drugs, says William Carey, MD, a hepatologist at the Cleveland Clinic. Many trials that looked promising at first had to be stopped. “Those losses must be made up for with the drugs that do make the market,” he says.

Business decisions come into play, too, says Henry Masur, MD, past president of the Infectious Diseases Society of America.

In 2011, Gilead paid $11 billion to acquire Pharmasset, the company that developed Sovaldi, Rest says.

"They have a lot invested in it and have to make their money back," Masur says.

Q: Are these treatments that much better than older ones?

The newer treatments have success rates of 90% or more -- meaning there is no sign of the hepatitis C virus in the body-- compared to success rates of up to 70% for older treatments, Masur says. Some of the new drug treatments wipe out the need to use interferon, which is taken by injection and has unpleasant side effects.

Q: Do any patients pay those total costs out of pocket, or does insurance cover it?

Insurance plans may cover the costs, but also may require copays from patients. "We have had [insurance] approvals for both, with some copays from patients," Carey says. Both drugmakers say they have programs to provide assistance either to reduce the out-of-pocket costs or to provide the drugs at no charge.

Even so, the assistance programs for the new hepatitis C drugs are not, so far, ''as mature, friendly or helpful'' as similar programs for other drugs, Carey says.

Q: Why has the cost of Sovaldi gotten more attention than Olysio?

The focus on Sovaldi is not just because it costs more. Some experts see Sovaldi as the front-runner of the two drugs.

In one analysis, experts favored Sovaldi as the drug with the most potential to increase the number of patients who are virus-free.

Q: Is Sovaldi less expensive outside the U.S.?

Yes, Rest says. In lower-income countries, the company has put ''tiered pricing'' into place, based on the country's gross national income and the number of hepatitis C cases.

Q: What about all the savings in terms of fewer people infected and fewer treatments for chronic infection complications?

From a public health standpoint, reducing the number of infected people is desirable, Masur says. "The more sick people in the population, the higher the hazard to public health," Masur says, since an infected person can spread the virus.

The higher cure rate with the newer oral drugs offers multiple benefits, Carey says. "It runs the gamut, from saving people from the emotional turmoil of hepatitis C to reducing the likelihood of developing cirrhosis, dying of liver failure, or getting liver cancer.''

But, he says, the time it would take for the treatment costs to be offset by the savings in other treatments will probably be lengthy. In one scenario evaluated by the nonprofit Institute for Clinical & Economic Review, analysts say only two-thirds of initial drug costs would be offset by medical savings at the 20-year mark.

Q: What's the future likely to hold, and will prices decline?

Several other hepatitis C drugs are under study, and competition may solve the cost problem, or least improve it. ''To some extent this is probably going to be a self-correcting problem," Carey says. ''Although Gilead and Johnson & Johnson have the corner on the market now, there are plenty of other drugs in development." As those drugs become approved, supply and demand will drive down the costs of the two current drugs.

One oral drug under development, known as ABT-450, cured more than 95% of patients, even in some who weren't helped by other treatments. The study results were presented at the annual meeting of the European Association for the Study of the Liver in London Thursday and published in the New England Journal of Medicine online. The study was funded by AbbVie, the maker of the new drug.

Also this weekend, scientists reported positive results using Sovaldi in combination with another Gilead drug, ledipasvir. Those results were published in the April 12 issue of the New England Journal of Medicine.

An editorial in the same issue of the journal describes the results as “exciting” but says, "The major limitation remaining [to treatment] will be economic." Using current cost estimates, the experts say, treating even half of the infected people in the U.S. ''would add billions of dollars to an already overburdened medical care system."

But pressure to lower those costs is increasing.

Express Scripts, a pharmacy benefits manager that handles more than 1 billion U.S. prescriptions a year, is planning a boycott of Sovaldi when less expensive drugs become available.

''While we are waiting for those competitive products to come to market, Express Scripts will continue to cover Sovaldi for the patients who need it," says Riddhi Trivedi-St. Clair, a company spokesperson.

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