Pricing Pressures: How the Business of Medicine Affects the Price of Therapy

In the HCV community, there is little that has not been said about the cost of direct-acting antiviral therapies. From the dais on the main stage at EASL to private conversations in clinics and coffee shops, most experts have weighed in on the new HCV therapies’ price tags, the possible impact of competition in the marketplace and the efforts to provide drugs for those who cannot afford them. HCV Next has covered much of this ground, from the first approval of sofosbuvir to the deal Gilead struck with the Egyptian government, bringing affordable treatment to millions of patients in that country.

But now, with another wave of drugs on the way, the dust has begun to settle. It was the right time to give voice to those responsible for making the drugs, pricing them and covering part or all of the costs for patients.

Through a series of interviews with HCV Next, the manufacturers addressed the basics of how they arrived at the price for the drugs and combinations. Insurance experts discussed the specifics of coverage and how the Affordable Care Act is changing the game. Payers offered insight on their own role in the increasingly competitive arena.

Of specific concern for clinicians is the bureaucracy involved in acquiring coverage for DAA therapies. Ed Pezalla, MD, MPH, vice president and national medical director for Pharmacy Policy and Strategy at Aetna, discussed this issue, as did Jagpreet Chhatwal, PhD, senior scientist at the Institute of Technology Assessment at Massachusetts General Hospital, and assistant professor at Harvard Medical School.

“It’s clearly impacting patients, both physiologically and psychologically,” Chhatwal said of the mountains of red tape. “Given that the drug prices have come down and there is clear evidence that HCV treatment is cost-effective, there should not be any restriction on access to treatment.”

But before diving into the complicated details of the insurance coverage structure, it may be helpful to hear exactly how the companies arrived at the prices for certain drugs.

Manufacturers’ Points of View

The pricing of drugs often begins long before those drugs are approved, with the research and development costs, the funding of clinical trials and more. With this in mind, HCV Next reached out to the major manufacturers.

Gilead, which manufactures sofosbuvir and its combination drug ledipasvir/sofosbuvir (Harvoni), and AbbVie, which manufactures the combination ombitasvir/paritaprevir/ritonavir/dasabuvir (Viekira Pak), responded to the inquiries from HCV Next. The $84,000 price tag for 12 weeks of Sovaldi breaks down to $1,000 per pill, while Harvoni sells for $1,125 per pill. Patients on Harvoni may be treated with three possible courses of therapy: 8 weeks ($63,000), 12 weeks ($94,500) or 24 weeks ($189,000). Viekira Pak costs $83,319 for a 12-week course and $166,638 for 24 weeks.

“Sovaldi and Harvoni represent a rare instance of scientific innovation, leading to a cure for a chronic, deadly disease,” Cara Miller, a spokesperson for Gilead, said in a statement. “Gilead believes the prices of Sovaldi and Harvoni reflect the innovation of the medicines. Gilead priced Sovaldi and Harvoni comparable to other direct-acting antiviral regimens available at the time of approval.”

In a continuation of the statement, Miller said, “Compared with these prior regimens, Sovaldi and Harvoni offer significant benefit, cutting treatment times in half for most patients and delivering cure rates of 90% for Sovaldi and 94% to 99% for Harvoni in patients with the most common type, genotype 1. As mentioned, unlike treatment for other chronic diseases, Sovaldi and Harvoni offer a cure at a price that significantly reduces hepatitis C treatment costs and delivers significant savings to the health care system over the long term.”

The FDA approvals of Sovaldi and Harvoni were, of course, based on a number of trials. While some data sets did indeed yield SVR rates upwards of 90% for Sovaldi and nearing 100% for Harvoni — namely the BOSON and NEUTRINO trials for sofosbuvir-containing regimens and ION-2 for sofosbuvir/ledipasvir — these drugs and regimens were associated with a broad range of response rates. Also, it is worth noting that the trials of sofosbuvir paired the drug with a number of other therapies, including peginterferon and ribavirin.

The TURQOISE-I study, which was conducted in patients coinfected with HIV and HCV, is cited in the Viekira Pak label. This open-label study yielded a 91% SVR12 rate among patients with genotype 1a HCV and 100% for those with genotype 1b.

Jackie Finley, director of U.S. Public Affairs for AbbVie, addressed the cost of Viekira Pak in a statement to HCV Next. “In determining the price of our products, AbbVie takes a number of factors into account, including the overall market dynamics, the benefits of the therapy to patients, and the value that the product brings to off-setting short-term and long-term costs,” she said. “The price of Viekira Pak reflects the value it brings to people living with hepatitis C and to the health care system — high certainty of a cure with notably low rates of discontinuation and relapse.”

Finley also commented on the data. “In clinical trials, Viekira Pak, with or without ribavirin, cured 95% to 100% of chronic [genotype 1] hepatitis C patients, including patients with compensated cirrhosis and 92% or higher of the toughest to cure patients, including those with HIV coinfection and those who have undergone a liver transplant,” she said. “Additionally, in phase 3 clinical trials, less than 2% of patients experienced virologic failure.”

Many of those response rates were a vast improvement over previously approved therapies like peginterferon and telaprevir, and few experts, including Pezalla, argue with the efficacy of the Gilead compounds. He suggested that the efficacy should be considered in terms of improvements over previous options: “We’re talking about curing more than 90% of patients, something that wasn’t possible with previous interferon-based regimens,” he said. “This is truly a breakthrough and an important advance in treating a viral condition, which is extremely hard to do. We should remember this.”

The final point that Pezalla made is that there is such a large population that requires treatment. “Whenever we have a drug that is this expensive, usually it is a small population,” he said. “This is different because there were so many patients waiting for treatment because they couldn’t tolerate interferon. So there was a big rush for an expensive medicine, and it was not spread out over time.”

Cost-Effectiveness Studies

It may be too early to tell whether these drugs are cost-effective in the long term. With six known genotypes, varying levels of fibrosis and cirrhosis and a host of old and new drugs and combinations on the way to market, arriving at a defining cost-benefit analysis will be a monumental task for the research community.

Zhang and colleagues investigated a number of treatment regimens for genotype 1, including peginterferon plus ribavirin and telaprevir for 12 weeks; ledipasvir/sofosbuvir for 12 weeks; simeprevir (Olysio, Janssen) plus sofosbuvir for 12 weeks in noncirrhotics and 24 weeks in cirrhotics; Viekira Pak plus ribavirin for 12 weeks in noncirrhotics and 24 weeks in cirrhotics; and sofosbuvir plus peginterferon and ribavirin for 12 weeks in cirrhotics and noncirrhotics. For genotypes 2 and 3, they looked at 24 weeks of peginterferon and ribavirin for a treatment-naive cohort; sofosbuvir plus ribavirin for 12 weeks in genotype 2 patients and 24 weeks in genotype 3 patients; and peginterferon plus ribavirin for 24 weeks with follow-up sofosbuvir plus ribavirin for 12 or 16 weeks in nonresponders and relapsers, according to the data.

They concluded that Viekira Pak is cost-effective in noncirrhotic genotype 1 patients. For cirrhotic genotype 1 patients, Harvoni is cost-effective. “Sofosbuvir-based treatments for genotype 1 in general are not cost-effective due to its substantial high costs,” they wrote. “Two-phase treatments with 12-week and 16-week follow-ups are cost-effective for genotype 3 patients and for genotype 2 patients with cirrhosis.”

They noted that among patients with genotype 2 and 3 disease who fail peginterferon and ribavirin therapy, sofosbuvirplusribavirin is a cost-effective approach in a second-phase setting.

“However, there is limited data on sofosbuvir-involved treatment, and the results obtained in this study must be interpreted within the model assumptions,” they concluded.

Chhatwal said the idea of cost-effectiveness depends upon the actual cost: “I don’t think it’s accurate to conclude one is more cost-effective than the other. It all depends on what discounts are being offered to the payers. The common themes is that all new oral DAAs are cost-effective compared to older drugs.”

In Chhatwal’s analysis, he showed sofosbuvir-based therapies were cost-effective in 83% of treatment-naive and 81% of treatment-experienced patients when a willingness-to-pay threshold was placed at $100,000. When compared to interferon-based therapies, treatment for eligible HCV-infected persons in the United States with the new drugs would cost an additional $65 billion in the next 5 years, whereas the resulting cost offsets would be $16 billion.

Another Annals of Internal Medicine publication in March showed: “From a societal perspective, novel treatments for HCV are cost-effective compared with usual care for genotype 1 and probably genotype 3 but not for genotype 2.”

Yet another study published in Annals in May concluded: “Sofosbuvir provides good value for money for treatment-experienced patients with HCV genotype 2 or 3 infection and those with cirrhosis. At their current cost, sofosbuvir-based regimens for treatment-naive noncirrhotic patients exceed willingness-to-pay thresholds commonly cited in the United States.”

Chhatwal also clarified the difference, to him, between affordable and cost-effective.

“At the list price, new HCV treatments would strain the budget of most payers and are clearly not affordable,” Chhatwal said. “Several studies have shown that HCV treatment would increase the overall cost. That is to say, resulting downstream costs would not offset the high price paid up front. But this does not imply that the therapies are not cost-effective. In fact, almost all published studies showed that with current discounts, HCV therapies provide a good value for money. Therefore, the real issue is getting funds to treat patients.”

Marketplace Competition

In light of the burden of cost, there have been various agreements made to best serve manufacturers, payers and patients.

The main rebate that has garnered headlines in the U.S. is the one AbbVie negotiated with Express Scripts regarding Viekira Pak, sofosbuvir and ledipasvir/sofosbuvir. Adam Kautzner, PharmD, vice president of Formulary & Drug Trends Solutions at Express Scripts, explained the details and potential impact of the deal his company made with AbbVie.

“In essence, Express Scripts’ bold decision was the catalyst to drive down the cost of Viekira Pak, Sovaldi and Harvoni throughout the market, and make curative therapy affordable and accessible to more patients,” he said. “Our actions here demonstrated the impact of our scale, and offer evidence that creating competition in the marketplace is a win for all.”

Kautzner pointed HCV Next in the direction of materials on the Express Scripts website that contend that “the financial and clinical landscape for treating this disease in the U.S.” will be changed by the deal.

“Our clients will save more than $1 billion this year on hepatitis C medications, and we will financially guarantee that their patients will adhere to their therapy,” reads the website. “Due to the industry-wide ripple effect of our decision, the U.S. health care system will save more than $4 billion this year. Most importantly, more patients infected with this virus will receive the medication and the specialized clinical support that they desperately need. Because in the battle to beat hepatitis C, you can’t just provide for the sickest and call it a day.”

In a report from the Pharmaceutical Care Management Association in July 2014, the organization estimated that with the approvals of sofosbuvir and simeprevir, 2015 federal spending in Medicare Part D would increase from $2.9 billion to $5.8 billion with individual Medicare Part D beneficiary premiums increasing from $481 million to $965 million.

Large companies such as Express Scripts and CVS have a great deal of purchasing power, according to Pezalla. “They can purchase a sizable percentage of the drug. If there is only one drug on the market, they’ll pay whatever the list price is,” he said. “If there are two or more drugs on the market, there will be competition to get the drug adopted by insurers and health plans.”

Chhatwal remains skeptical about whether competition truly will drive prices down. “I don’t think that the new drugs are priced lower,” he said. “They are in the similar range when we look at the listed price.”

However, he acknowledged that the Express Scripts-AbbVie agreement is a step in the right direction. “Payers are negotiating on the discounts,” he said. “Therefore, competition clearly brought down the effective drug price of HCV treatment in the form of rebates. But we don’t generally observe these trends in drug pricing.”

On the clinical side, the recent FDA warning of severe liver disease associated with Viekira Pak has not deterred Express Scripts from the current course.

“Express Scripts closely reviews all new clinical evidence to ensure our formularies continue to deliver the best possible health outcomes,” Kautzner said. “The risk of using Viekira Pak in patients with severe liver disease was known and addressed as we defined policies for exception coverage when the drug was approved last December. We proactively put a clinical process in place to manage the small population of patients with more severe liver disease who might require an alternative to Viekira Pak. From the very beginning, we recommended and approved other therapies in this subgroup.”

Kautzner added that the label change will not impact the availability of Viekira Pak for patients who may safely benefit from it. “Our client’s prior authorization policies allow for physicians to make risk/benefit decision that ensure the right patient gets the right drug for the right indication,” he said. “Our specialized care model allows us to more rapidly respond to any changes in drug labeling to ensure patients are well cared for.”

Handling Bureaucracy

Pezalla is aware that bureaucracy is a primary concern for many doctors and aid workers who treat HCV. “We don’t deny that it takes some effort on the part of the physician and his or her office staff to receive prior authorization for treatment or procedure,” he said. “We don’t take that lightly. However, we are trying to operate according to guidelines, and some rules to help us manage the cost of therapy. If we can get a patient treated with one drug rather than another at a lower cost, we do so.”

Clinicians are encouraged to access the rules for coverage on the Aetna website. “We realize that different health plans have different rules,” Pezalla said. “We’re not allowed to coordinate with other health plans about what we’ll cover and how we’ll cover it. Our industry receives a lot of scrutiny and is heavily regulated. One plan may prefer drug A and one may prefer drug B due to a number of factors, costs and deals made with various plans. Knowing our rules is basically the only way to minimize complications.”

Kautzner added that Express Scripts also works with doctors and patients to help make the process “as seamless as possible.”

For Chhatwal, it may be helpful for the government to step in and facilitate these difficulties with bureaucracy. “Efforts should be put towards gathering funding to provide timely treatment,” he said. “For example, there is substantial government support for HIV treatment. In contrast, HCV does not have that kind of financial support.”

Insurance Coverage Rules

Pezalla walked HCV Next through some of the decision-making processes from the insurance end. “When a new treatment or combination is approved by the FDA, we start a review of the evidence for that medicine,” he said. “First, we decide if it’s covered through medical benefit or pharmacy benefit. A medical benefit is one delivered through the health care setting. This is a buy-and-bill medicine that is not bought through retail pharmacy.”

HCV drugs are in the pharmacy benefit category, according to Pezalla. “We have a team of physicians, data analysts and pharmacists who review the evidence for new medications and what the FDA has said about it,” he said. “We look at the label, indications and contraindications. We look for other published data in peer-reviewed journals, including the randomized controlled trials on which the approval was based. We also look at recommendations from established professional bodies.”

A pharmacy and therapeutics committee then puts all of this information together. Pezalla noted that this committee includes people who do not work for Aetna. “It is chaired by a physician at Aetna, but he doesn’t vote,” he said. “These are independent consultants, representatives from different parts of the country. They may ask for different information from specialists. The reviews take place 90 days from launch to marketplace. A decision is made within 180 days.”

The first decision pertains to inclusion on the formulary, then the cost/copay decision is made. After those overarching rules are in place, Pezalla said it becomes a patient-by-patient decision, looking at each particular case.

“Then we address disease severity,” he said. “We don’t make a decision based on disease severity, but we do want this information available in case the patient progresses. We get a liver biopsy, Metavir score and Fibroscan, etc. It is good for patients to have this information.”

Treatment-experience status also is a factor, as is level of cirrhosis and whether or not the patient has HIV.

Pezalla stressed that the 8- and 12-week duration of therapy is a factor in the decision-making process, as well. “There is not much room for experimentation,” he said. “We don’t want to have false starts with these drugs because they cost a thousand dollars a day. So we treat empirically.”

“All of this information covers 90-some percent of cases,” he continued. “But there can be a lot of unknowns in HCV treatment. Many patients have other current diseases that we never thought about. How do you manage a patient with a history of cancer or who is taking an immunosuppressant because of a nonliver transplant? Some things are not well understood. We have to deal with patients one at a time. Over time, we’ve built rules around these exceptions, but it takes time.”

Assistance Programs

Beyond the program in Egypt, Gilead is working to facilitate access in other parts of the world, according to their statement.

“For more than a decade, Gilead has been working in partnership with governments, health care systems, providers, public health entities and generic manufacturers to make its HIV and hepatitis B medicines available worldwide,” Miller said. “Currently, 7.6 million people living with HIV in developing countries receive Gilead antiretroviral medicines through these efforts. Gilead is now using a similar model to help ensure broad access to its hepatitis C medicines in developing countries. More than 470,000 people have already received a sofosbuvir-based regimen since the approval of these products, with at least 110,000 of those residing in lower-income parts of the world. Gilead is working with regional partners to introduce branded Sovaldi and Harvoni in low- and middle-income countries, prioritizing those with the greatest disease burden. The company also works with 11 generic drug manufacturers in India to produce high-quality, low-cost generic versions of its chronic hepatitis C medicines for use in 101 developing countries.”

In the U.S., Gilead has established a program called Support Path. This program helps to ensure that cost is not a barrier to Sovaldi or Harvoni therapy for patients without insurance or those who deal with high copays, according to Miller. “The program provides Sovaldi and Harvoni at no charge for eligible uninsured patients.”

Finley addressed this issue, as well. “We remain focused on supporting access to treatment and comprehensive care for people living with hepatitis C across the world,” she said. “For some patients in the United States facing financial difficulties, the AbbVie Patient Assistance Program might provide medication at no cost. Access to assistance through the Patient Assistance Program will vary based on income and insurance coverage. A co-pay assistance program is available for eligible commercially-insured patients being treated with Viekira Pak.”

Kautzner added that Express Scripts offers patient assistance programs to help with copayments and other financial assistance for continuing therapy. “We secured $50 million of financial assistance for patients who use specialty medications in 2011, $240 million in 2014, and are anticipating $500 million in 2015,” he said, referring to funding received from manufacturers.

The HCV-specific program offered by Express Scripts is called the Hepatitis Cure Value Program. “One significant benefit of bringing these drugs down to a more fair price is that it makes them accessible to more patients,” Kautzner said. “Another component of the Express Scripts’ Hepatitis C Cure Value program that we are very proud of is the fact that it makes Viekira Pak available to all HCV genotype 1 patients, regardless of disease severity or progression. For our clients who chose to keep Sovaldi and Harvoni on their formularies, or who chose to limit coverage, we work with them to determine the coverage eligibility criteria, and then our team of prior authorization clinicians implements the criteria.”

A key component of the program is that patients are guaranteed to complete their therapy, according to Kautzner. “Our hepatitis specialist pharmacists are uniquely trained to care for patients with HCV who are using these medications and help ensure adherence and therapy completion,” he said. “If a patient doesn’t complete therapy, Express Scripts will cover the cost of the medication. To date, we’re seeing high cure rates because patients are completing their therapy.”

The Affordable Care Act

An X-factor in all of this is the way in which the Affordable Care Act is impacting and will impact HCV treatment.

“A lot of parts of this law have been going into place over the past several years,” Pezalla said. “It is really important that patients can’t be denied coverage based on pre-existing conditions or can’t be saddled with high premiums because of a condition. HCV with HIV, cirrhosis or HBV previously got in the way of coverage, but now they don’t.”

Pezalla added that in the wake of the Act, health plans now offer a wider array of services, including screening for HCV. “We’re not going to deny screening for anyone,” he said.

Chhatwal was slightly more practical in his assessment. “The Affordable Care Act would increase the number of people who would have access to HCV therapies,” he said. “I don’t know if or how it will directly impact HCV drug costs.” by Rob Volansky

• References:
• Afdhal N, et al. N Engl J Med. 2014;doi:10.1056/NEJMoa1316366.
• Chen C. Gilead profit tops estimates as hepatitis C drug Sales surge. Bloomberg Business. July 28, 2008. http://bloomberg.com. Accessed October 16, 2015.
• Chhatwal J, et al. Annals of Internal Medicine. 2015;162(6):397-406.
• Foster GR, et al. Gastroenterology. 2015;doi:10.1053/j.gastro.2015.07.043.
• Hepatitis C Online. Medications to treat HCV. Available at: http://www.hepatitisc.uw.edu/page/treatment/drugs. Accessed October 16, 2015.
• Lawitz E, et al. N Engl J Med. 2013;doi:10.1056/NEJMoa1214853.
• Linas BP, et al. Ann Intern Med. 2015;162(9):619-29.
• Loftus P, et al. AbbVie’s revenue growth misses expectations. The Wall Street Journal. http://www.wsj.com/articles/abbvies-revenue-growth-misses-expectations-1437740776. Accessed October 16, 2015.
• Milliman. The impact of new hepatitis C drug therapy on individual Medicare Part D spending. Available at: http://www.pcmanet.org/images/stories/uploads/2014/partdpremiumstudymilliman.pdf. Accessed October 16, 2015.
• Najafzadeh M, et al. Ann Intern Med. 2015;162(6):407-19.
• Zhang S, et al. BMC Gastroenterol. 2015;doi:10.1186/s12876-015-0320-4.

• For more information:
• Jagpreet Chhatwal, PhD, can be reached at 101 Merrimac St., Boston, MA; email: jagchhatwal@mgh.harvard.edu.
• Jackie Finley, Director, U.S. Public Affairs at AbbVie, can be reached at 1 North Waukegan Road, North Chicago, IL 60064; email: jaquelin.finley@abbvie.com.
• Adam Kautzner, PharmD, can be reached at One Express Way, St. Louis, MO 63121; email: Jennifer_Luddy@express-scripts.com.
• Cara Miller, Senior Director, Public Affairs at Gilead Sciences, can be reached at 333 Lakeside Drive, Foster City, CA 94404; email: public_affairs@gilead.com.
• Ed Pezalla, MD, MPH, can be reached at: 151 Farmington Ave., RE52,Hartford, CT 06156; email: PezallaE@aetna.com.

Disclosures: Chhatwal reports consulting for Merck, Gilead Sciences and Complete HEOR Solutions. Finley reports employment with AbbVie. Kautzner reports employment with Express Scripts. Miller reports employment with Gilead Sciences. Pezalla reports employment with Aetna.