Breakthrough drugs for lowering cholesterol and fighting cancer are expected to hit the market over the next few years, saving lives but also leaving the federal government struggling to pay for high-cost drugs without restricting access or resorting to innovation-killing price caps.
Drug pricing has received renewed attention lately as public and private health plans struggle to pay for two expensive new hepatitis treatments that carry $1,000-per-pill price tags. Either of the drugs, Harvoni and Sovaldi, can cure hepatitis C, a liver disease that can be life-threatening and which had previously been hard to treat — but an entire treatment regimen can cost $80,000.
While California-based drugmaker Gilead Sciences has been in negotiations with drug benefits manager CVS Health to try to bring down the cost of the medication, health plans and consumers will run into the same problem when other breakthrough treatments start to hit the market, said Gregory Daniel, a research fellow at the Brookings Institute, a Washington think tank.
For instance, in the next two to three years, a new kind of cholesterol-lowering drugs called PCSK9 inhibitors are expected to arrive, as are new oncology treatments.
The inhibitors block a protein in the liver and allow the body to remove more cholesterol from the blood than it would normally. The drugs are being developed by big-name manufacturers like Pfizer and Sanofi, and they’re being talked about as the next step up from the last generation of anti-cholesterol medications, statin drugs, which includes brand names like Lipitor and Crestor.
But then comes the sticker shock: CVS, one of the nation’s largest pharmacy chains, estimates a run of PCSK9 treatment could cost up to $12,000.
That may seem like a much smaller price tag than the $80,000 for a round of Sovaldi treatment, but Sovaldi cures the condition it’s treating; PCSK9 drugs won’t permanently cure high cholesterol, so the patient may need multiple rounds of treatment, pushing the bills higher and higher.
“The question is, how does anyone pay for a new health technology that didn’t exist before?” asked David Rein, an author of a recent study on the Gilead drugs and a scientist at the University of Chicago.
Rein’s study found that the Gilead drugs are cost-effective, mainly because they eradicate a chronic disease that generates health costs over years. However, making that initial payment is the problem.
Some health insurers and other critics have called on Congress to do something about the pricey new drugs, including imposing price caps. Neither Republicans nor Democrats on Capitol Hill appear to have much appetite for that now. (The House is considering legislation to speed up approval of breakthrough treatments, although a final package has yet to be introduced.)
A price cap would bring down prices for consumers over the short term, Daniel said, but it could also stifle innovation, as drug companies would no longer see the same financial benefit from their output. Manufacturers are going to charge a lot to recoup the investment into making the products, he said.
In the case of the hepatitis C drugs, Gilead told the Examiner it has a co-pay coupon program and other assistance programs to help patients with inadequate insurance get the drug. The company justifies the high cost in part because Sovaldi and Harvoni are cures and not chronic treatments.
In the oncology drug market, drug companies have poured in money over the past few years to create new therapies to offset lost revenue from popular brands that face generic competition. Case in point: Abbvie’s recent takeover of Pharmacyclics to gain access to the company’s blood cancer treatments.
Some blockbuster drugs set to hit the market in the next few years focus on immunotherapy, which use the body’s own immune system to fight cancer. The drugs either stimulate the immune system to target cancer cells or give the immune system new tools like man-made proteins to fight certain cancers.
One new immunotherapy drug, called Opdivo and made by Bristol Myers Squibb, was approved by the federal government earlier this week. The drug treats melanoma by taking away proteins that hinder the immune system from attacking cancer cells.
Increased competition could drive the makers of these miracle drugs to lower the prices, Daniel said. He said the federal government should install a robust postmarket surveillance program to determine how the drugs are being used and curb wasteful spending.
An insuror or health benefit manager would provide temporary coverage for a drug, and then study how it is used. That entity can review the data and determine whether it is getting its money’s worth, Daniel said.
Daniel said that the pieces are available to create such a system, such as data from drug registries and electronic medical records. However, they all need to be connected and interoperable, which is hard to make happen.
If no other solution is found, health plans could delay providing Sovaldi and Harvoni until the hepatitis C patient reaches an advanced stage, said Rein.
Thirty-five state Medicaid programs already require prior authorization for getting Sovaldi, with several states imposing unorthodox patient restrictions, according to report last year from the consulting firm Viohl and Associates. Several states such as Iowa and West Virginia don’t reimburse for any lost or stolen medication, and other states like Alaska and Arizona adopted a “once-in-a-lifetime” rule where patients only have one chance to get the treatments.
