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The seven letter debate that is Sovaldi

Reimbursement of high cost hepatitis C drugs raise difficult issues

The seven letters that I'm referring to are S-O-V-A-L-D-I. Everybody is up in arms over these seven letters. At a cost of $84,000 for a 12 week course of therapy, there is bound to be some debate from a variety of stakeholders, including this week's request from US senators for Gilead Sciences to justify the price of the drug.

But let's be clear: this hepatitis C treatment (used as an adjunctive therapy with another oral medication and a weekly injection) has a 90 per cent cure rate. In the grand scheme of low value healthcare services and treatments, are we really having an argument about a drug that has a 90 per cent cure rate? We insist that a healthy 75-year old woman with no history of prior bleeding undergoes testing prior to cataract surgery. There are still many clinicians who advise men to get a PsA test despite the fact that the statistics show that if we screen a thousand men for 10 years, we'll save one of them from dying of prostate cancer. We schedule MRIs for routine lower-back pain - the rate of which have doubled in the last decade and has cost the system untold hundreds of millions of dollars. We make drugs available that prolong survival for weeks and that cost the system double or triple what this therapy costs. In many countries we make clotting-factor therapy available to haemophiliacs from cradle to grave at an annualised cost (for severe haemophiliacs) of hundreds of thousands of dollars per year. And the list goes on. 

Choosing wisely
In fact the American Board of Internal Medicine has a wonderful campaign called 'Choosing Wisely' which is comprised of individual lists of five key bullet points that are physician-driven, professional-society-endorsed services, tests, procedures and other interventions that patients and physicians should question. There are now upwards of 60 lists, totalling 300 or more recommendations of services that tend to be utilised in common practice but for which the value is not deemed to be high, for sure, and may in fact be negative - in fact, the harms outweigh the benefits. 

And we're having a discussion about a drug that has a 90 per cent cure rate in spite of its costs? In this environment of low-value healthcare services and inefficient use of healthcare resources, this is the conversation we're having?

The makers of Sovaldi insist that they are saving the system boatloads of money because the downstream costs of liver transplants including decades of immunosuppressive therapy and ongoing monitoring and testing are prohibitively expensive. Makes sense to me. But let's not take the manufacturer's word for it. Let's get some bright actuaries to do some sort of sophisticated net-present value (NPV) calculation (don't look at me) and let's see if this is something worth investing in. Common sense tells us that if the NPV is greater than zero, we should invest. But we can make the hurdle higher. We can set the bar at a different level. 

And then let's ask the manufacturer to enter into a risk-sharing agreement with payers. There are various mechanisms available to us such as conditional coverage agreements where the failure to meet certain targets can lead to price and/or reimbursement changes or rebates. Similarly, we can use a risk-sharing agreement known as an outcomes guarantee agreement which specifies certain price reductions or rebates when patient outcomes are not achieved. This happens to be my preferred approach.

The challenge (albeit small) is that we need to ensure that we have a robust system to monitor patient outcomes - some sort of surveillance programme or registry that is clinician-driven and robust enough to provide reliable data.

Are we really having an argument about a drug that has a 90 per cent cure rate?

Now to be clear, there are those who are uninsured and those without the ability to pay and the manufacturer of this therapy has to enter into some sort of innovative payer scheme that targets that group and/or sets up a compassionate use programme. No patient should be left behind.

We've all heard the pleas of the insurers in recent months that this drug will 'bankrupt' the system; that we can't afford to give it to every hep C patient; that it should be reserved for the most severe and/or used as rescue therapy. Know this: some reports have suggested that publicly-traded insurers' full year EPS (earnings per share) could be massively affected by this one therapy depending on the number of hep C patients that they have in their insurance pool.

These issues are difficult ones. There is no 'right' answer. But perhaps the final word on this is best summed up by the traditional question we always ask but somehow have forgotten in this seven letter debate on whether we can afford to reimburse this drug: can we afford not to? 

Article by
Rohit Khanna

president and managing director, Catalytic Health. He can be reached at

14th July 2014



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