When the harsh side effects of his hepatitis C medication forced Joel Roth to stop treatments last year, the only hope for his ailing liver was Sovaldi, a new wonder drug by Gilead Sciences Inc. that would hit the market later that year.
In December 2013, Sovaldi won approval from the U.S. Food and Drug Administration, and Roth, of San Rafael, Calif., was placed on a 24-week treatment regimen. The cost: $168,000, or an eye-popping $1,000 per pill.
In the first quarter of 2014, 30,000 U.S. patients were treated with Sovaldi, generating a whopping $2.3 billion in sales for Gilead, of Foster City, Calif.
The company says Sovaldi’s price reflects its 90 percent-plus cure rate for hepatitis C and the savings that produces by cutting patients’ long-term treatment costs, which can include hospitalizations, surgeries and even liver transplants.
But private insurers, drug benefit managers, health care advocates and Medicaid officials say the drug’s steep price tag will drive up insurance premiums, limit patient access and squeeze the budgets of state Medicaid programs, which have a disproportionate share of hepatitis C patients.
Adding to the furor: Sovaldi costs far less in countries that regulate prescription drug prices. In Egypt, a full 12-week course costs only $900.
The controversy has made Sovaldi “Exhibit A” in the health industry’s growing unease about the rising cost, development and use of expensive specialty drugs to treat complex, chronic conditions.
“Sovaldi is the canary in the coal mine, alerting us that disaster is coming unless something is done to prevent it,” said John Rother, chief executive of the National Coalition on Health Care, a nonprofit, nonpartisan collection of groups representing business, unions, medical societies, insurers and others working to improve the health care system. “Unfortunately, the problem is far bigger than one drug. We are talking about a tsunami of expensive medicines that could literally bankrupt the health care system.”
Even though Joel Roth’s Medicare drug plan paid for most of his Sovaldi treatments, he still had to come up with an $11,600 co-pay.
“I didn’t even have that much ready credit on my credit cards,” he recalled. “I was depressed. That was a showstopper.”
A health information technology worker and actor, Roth, 65, earned too much to qualify for programs that help with prescription drug costs. So he wrote Gilead’s patient assistance program asking for help.
“I got a call back about two weeks later and the lady said ‘We’re going to send you your medication for free for six months,’ and I just about cried on the phone,” Roth said.
Now 12 weeks into his combination therapy of Sovaldi and another medication, Roth said the hepatitis C virus that attacked his liver for years has become virtually undetectable in his blood.
“That’s the story with Sovaldi,” Roth said. “Everybody who takes it goes undetectable. The absence of that virus has made changes that have opened my eyes. I’ve noticed changes in my mental abilities, my energy. You don’t know until you feel better what you’ve been missing. It really is a miracle drug. It really truly is.”
A contagious liver disease, the hepatitis C virus is usually spread by infected blood. Transmission can occur through sexual activity, intravenous drug use or transfusions with infected blood. Baby boomers born between 1945 and 1964 have the highest infection rates.
The virus can be a mild illness that lasts just a few weeks. But in 75 percent to 85 percent of those who become infected, it remains in the body for years, causing long-term liver damage like cirrhosis or cancer. Some cases require liver transplant surgery, which can cost more than $500,000.
Before Sovaldi, patients like Roth were treated mainly with interferon, a protein produced by the human immune system to defend against viruses and other outside agents. It requires weekly injections for up to a year. The side effects, which forced Roth to discontinue treatment, can include flu-like symptoms, headaches, depression, insomnia, dry mouth, diarrhea and even hair loss. It has a cure rate that ranges from 35 percent to 75 percent.
Sovaldi, which is used in combination with other medications, is typically taken for three to six months, has few side effects and has shown a 90 percent-plus cure rate. Patients taking interferon typically cut their treatments from 48 weeks to 12 weeks once they begin taking Sovaldi.
“That’s a lot less interferon than they used to take, but it’s still 12 weeks of medication with a lot of side effects,” said Dr. Andrew Muir, clinical director of hepatology at the Duke University Medical Center in Durham, N.C. “The goal is to have every patient have an interferon-free regimen. And we will have that for everybody by the end of the year.”
That’s because new hepatitis medications that eliminate the need for interferon are already in the pipeline and should be available by the end of the year.
“It is an exciting time,” said Tom Nealon, national board chairman of the American Liver Foundation. “Because of new medications, for the first time, we have the opportunity to cure more than 90 percent of patients infected with hepatitis C and offer people a better quality of life while undergoing treatment.”
For the 3 million-plus Americans with hepatitis C, Sovaldi, the brand name for the drug sofosbuvir, has proven a godsend. But its price has roiled the health care industry.
Other drugs that treat rare conditions and complex ailments have cost more than Sovaldi, but “there has never been this high priced a drug for this common of a disease,” said Dr. Steven Miller, chief medical officer at Express Scripts, a St. Louis firm that manages prescription drug benefits for health plans, private employers and the U.S. Department of Defense.
“Usually when a drug company can spread out their earnings over a lot of people, they usually price more moderately. These people have decided that they are going to make all of their money back in the first year alone,” Miller said of Gilead.
In 2011, Gilead paid $11 billion to purchase Pharmasset Inc., the Princeton, N.J., company that originally developed Sovaldi. In a statement, Gilead spokeswoman Cara Miller said Sovaldi’s price is comparable to other hepatitis C virus drug regimens.
“Sovaldi reduces total treatment costs for HCV _ taking into account the cost of medications (including those for side effects or complications) and health care visits _ and it represents a finite cure, an important point to consider when comparing the price of a pill or bottle to the lifetime costs of treating a chronic disease,” according to her statement.
Clay Black of Fulton, Ky., said he never had symptoms before he was diagnosed with the disease in September 2013.
His insurance approved his Sovaldi coverage in just four days. Black’s co-pay for Sovaldi is just $35 a month. His entire hepatitis C drug regimen costs him just $80 per month.
But not all patients are as lucky. Dr. Richard Elion, director of clinical research at the Whitman-Walker Health clinic in Washington, D.C., said health insurance coverage of Sovaldi is a hit-or-miss proposition. Medicaid fee-for-service doesn’t cover the drug in the District of Columbia, Elion said, but Medicaid managed care plans do.
Commercial insurers are also balking at coverage.
“I have a patient who’s been waiting for over month and hasn’t been approved yet,” Elion said, adding that insurers want detailed explanations and justifications for Sovaldi treatments.
He said he frequently is asked to provide the same information multiple times to numerous insurers.
“It’s wrong,” Elion said. “These drugs are approved on national guidelines that have been recommended for (patient) care. There’s no debate on whether they’re useful. It’s just that, I think, the insurance companies are trying to conserve their dollars.”
Halfway through his 12-week, $84,000 Sovaldi treatment course, Black is convinced the pricey medication is a wise investment for insurers.
“Would you, Mr. Insurance Company, rather pay for my Sovaldi or would you rather pay for treating liver cancer or a liver transplant?” Black said. “Sovaldi is saving money.”
But projected savings on future patient spending could take 20 years to realize, said Margaret Murray, CEO of the Association for Community Affiliated Plans, which represents Medicaid managed care plans.
Murray said the average Medicaid recipient is only in the program for eight months. “And so for our plans, they are unlikely to see these (savings) benefits” with Sovaldi, she said. “They’re very concerned about the financial impact. And I would say, across the board, they’re all starting to see requests for Sovaldi.”
While Gilead has a number of patient assistance programs to help patients pay for coverage, a backlash is growing among stakeholders who fear Sovaldi will open the gates to more expensive medications.
Miller, of Express Scripts, said his clients are furious about the cost of Sovaldi. As alternative treatments hit the market in the coming months, he has informed Gilead that he will look for cheaper alternatives for his clients, which provide prescription drug coverage to 85 million people.
“We want to signal to the competitors that we’re willing to give them a lot of market share if they’re willing to give us better pricing,” Miller said.
Rother’s organization, the National Coalition on Health Care, has launched a “Campaign for Sustainable RX Pricing,” in hopes of starting a national dialogue with industry stakeholders “about what we can do to better balance the incentives for drug innovation, which we all want, with the need for affordability. That balance is lacking today,” Rother said.