Medical Groups Question Price of New Hep C Drug

An innovative hepatitis C drug that was only recently hailed as a breakthrough treatment is facing skepticism from some health care providers, as they consider whether it is worth the $1,000-a-pill price set by manufacturer Gilead Sciences Inc.

A panel of California medical experts voted Monday that Gilead's Sovaldi represents a "low value" treatment, considering its cost compared with older drugs for the blood-borne virus.

The vote was part of a broader review of new hepatitis C drugs by the California Technology Assessment Forum, an insurance industry-affiliated group that assesses the costs and effectiveness of new medical treatments. The group is expected to issue a final report next month on Sovaldi and another new hepatitis C drug, Olysio from Johnson & Johnson.

Doctors have long sought more effective, palatable treatments for hepatitis C, the liver-destroying virus carried by an estimated 3 million to 4 million Americans. Until late last year, the standard treatments required taking up to 12 pills a day, alongside antiviral drug injections that can cause flu-like symptoms, an approach that cured only about 75 percent of patients.

Gilead Sciences' drug, approved by U.S. regulators in December, was quickly embraced by physicians based on its once-a-day pill regimen and increased effectiveness, curing between 80 and 90 percent of patients.

But some patient groups and health providers are beginning to question the cost of that benefit.

"The combination of the huge patient population and the price of the pills is creating real tension in the system about the potential affordability of these drugs," said Dr. Steve Pearson, who is leading the California group's hepatitis drug assessment.

Foster City, Calif.-based Gilead Sciences Inc. has priced Sovaldi at $84,000 for one 12-week course of treatment. Some patients may need to take a second course, raising the price to $168,000. And those costs come on top of the traditional drug cocktail, including the injectable drug interferon-alpha, which still serves as the backbone of therapy for most patients.

In Janaury, the AIDS Healthcare Foundation urged state Medicaid providers to deny coverage for the drug until Gilead agrees to lower the price. The group, which provides HIV testing and prevention services, argues that Sovaldi's price "will unnecessarily drive up health care costs and limit access to potentially lifesaving care."

"AHF believes that the price Gilead is charging for Sovaldi is not remotely justified. For one, it is exponentially more expensive than medications for other severe chronic conditions." The group notes that Sovaldi costs 1,100 percent more than Gilead's most expensive HIV drug, Stribild, which costs $80 per pill.

About 25 percent of people with HIV infection are also infected with hepatitis C. And patients with both viruses are more likely to be enrolled in Medicaid, the state-federal health plan for the poor.

In a review released ahead of Monday's meeting, the California Technology Assessment Forum estimated that replacing currently used hepatitis C drugs with Gilead's Sovaldi would raise California drug costs between $18 billion and $29 billion per year, including both government and private insurer costs.

Gilead Sciences has said that the drug's costs will be recouped over the long term as fewer patients suffer liver failure and transplant complications. But the California group's assessment concludes that even after 20 years, reduced health care spending on hepatitis complications would still only cover about two-thirds of the Sovaldi's upfront costs.

At Monday's meeting the panel of experts from California universities and hospitals voted that Sovaldi and J&J's Olysio are superior medical treatments to older therapies from Merck & Co Inc. and Vertex Pharmaceuticals. But considering their costs and benefits, a majority of panelists said that both of the new drugs deliver a "low value." Olysio costs about $66,000 for one course of treatment.

The experts recommended the drugs should be used only for patients with severe hepatitis complications, such as liver cirrhosis.

The California Technology Assessment Forum was founded more than 50 years ago by the non-profit insurance provider Blue Shield of California. Recently the group was incorporated into the Institute for Clinical and Economic Review, a Boston-based research group funded by insurers, drugmakers and academic institutions. The group's board of directors includes executives from Blue Shield of California, Avalere Health, UnitedHealth Group and the Pacific Business Group on Health.

Gilead Sciences did not send a representative to Monday's meeting, but a company spokeswoman noted that it offers financial assistance to patients who cannot afford the drug and related insurance costs.

"Over time, we expect that treatment guidelines and the medical science will be what guides the discussion around treatment for a very serious liver disease -- not the potential short-term budget impact," said Cara Miller, in a statement. The company has noted that many private insurers are already covering the drug under their formularies.

Wall Street analysts estimate Sovaldi could garner sales of up to $8 billion this year alone, which would make it among the best-selling pharmaceutical products in the world.

A spokesman for J&J's Janssen Pharmaceuticals said the panel's vote and conversation recognized Olysio "as an important treatment option for patients living with chronic hepatitis C."