How new breakthrough drugs are priced always creates heated debate. Gilead’s new breakthrough drug Sovaldi for hepatitis C was no exception. Here Baird’s CMC Associates at Ward Health, describe the issues and evidence surrounding the introduction of life saving Sovaldi. They argue from a health economists point of view, that even though expensive Sovaldi is ultimately cost saving and above all, what matters most is delivering what’s urgently needed for Hep C patients, and that’s good health.
Sovaldi is a breakthrough drug for hepatitis C that has been shown to cure more than 90 percent of patients in just twelve weeks, adding value to the healthcare system and transforming lives. It is more effective, safer, and causes fewer side effects than existing first line treatments. Sovaldi does exactly what patient advocates and industry critics have been asking for. The controversy stems from the drug’s price. Sovaldi’s manufacturer, Gilead, has priced the treatment regimen at $84,000 ($1,000/day) in the United States and this has created an uproar.
Gilead has been condemned by myopic critics who refuse to look past Sovaldi’s price to consider the benefit. However, critics rarely mention that this price is competitive with existing therapies. By comparison, the previous standard-of-care, Incivek costs approximately $100,000 per year, roughly 20 percent more than Sovaldi. And it’s less effective and accompanied by nasty toxicity. When combined with two other drugs (interferon and ribavirin), Incivek claims a cure rate of no-more-than 80 percent through a 24 week treatment regimen that included significant toxicity and side effects.1
Two additional points are worth making: First, Sovaldi is far from the most expensive drug in the United States. Eleven of the twelve cancer drugs approved by the US FDA in 2012 cost more than $100,000 for a course of treatment or per year.2 Notably, the most expensive drug in the United States costs more than $400,000 per year. That distinction goes to Soliris, a chronic therapy for the treatment of a rare blood disorder.3 Second, the price of Gilead’s Sovaldi can be expected to fall as competing products soon enter the market. Several similarly promising and effective treatments are in late-stage development, including one from AbbVie that should receive FDA approval later this year.4 Competition from new therapies will allow payers to select which drug they cover among a variety of effective treatments, forcing prices down.
Perhaps most importantly, despite its price, Sovaldi has the potential to save money and lives in the long run. If left to progress, hepatitis C can lead to liver cancer, cirrhosis and liver failure. As mentioned above, Sovaldi cures close to 90 percent of patients in half the time required by current therapies, without their toxicity and side effects. In contrast, liver transplants can cost $300,000 and then require $40,000/year for anti-rejection drugs that must be taken for the rest of the patient’s life.5 For additional perspective on the relative costs of treatment alternatives, consider the table below. Annual costs range from $8,529 to $668,609 to treat, not cure, a single patient. With this in mind, Sovaldi seems very cost effective.
Comparison of Direct Patient Costs for HCV Based Upon Severity of Disease
|Total of 34,597 HCV patients in study||HCV w no liver disease||HCV with cirrhosis||Hepatatic (Liver Cancer)||Transplant|
|Total $PPPY incremental cost over patients with no HCV||$5,870||$27,845||$43,671||$93,609|
|Total Rx costs incl anti-viral drugs||$2,659||$3,102||$145,000||$575,000|
|Total patient cost per year||$8,529||$30,947||$188,671||$668,609|
|All-cause and incremental per patient per year. J Manag Care Pharm. 2011
Source: Center of Health Engagement, http://www.cyndynayer.com/what-value-cancer-cure/
Given that slightly more than half of U.S. Medicare dollars are spent on patients who die within two months, the return on an investment in Sovaldi is striking: a cure and improved life for years, if not decades, into the future. In addition, studies suggest that Sovaldi has the potential to reduce future infections. Given that most new infections stem from drug users sharing needles, treatment of these individuals would limit the spread of the disease and benefit the general public.
Industry critics have vilified Gilead and the pharmaceutical industry, outraged by the cost of the treatment and the expense that will be borne by health system payers. They have blindly made price the issue, seemingly discounting the lives that will be saved and enhanced and the future cost savings that will accrue to society from the development of a safe and effective cure for hepatitis C. They have clearly missed the point.
The issue that should be at the heart of the Sovaldi debate is health; the health benefits it will provide to individuals and to society. With Sovaldi, Gilead has delivered exactly what society needs and what we hope pharmaceutical research will accomplish: a safe, effective treatment that demonstrably adds value to the healthcare system and transforms patients’ lives. As described in a recent contribution to Forbes, real biopharmaceutical innovation must (1) deliver value to the healthcare system; (2) be a major improvement over existing, and often generic, therapies, and (3) be safe and well tolerated.6 Sovaldi embodies these three criteria and we should be encouraging and incentivising more of this type of innovation. Rather than celebrate Gilead’s success, we seem to be frustrating similar investments and discouraging the development of other breakthrough therapies. If we really want more innovation, cures and treatments as we claim, we must reexamine how Sovaldi has been received.
1Sadeghi-Nejad, Nathan. “Sovaldi and the Cost-Innovation Paradox,” Forbes, March 27, 2014.
2Sanger-Katz, Margot. “Why the Price of Sovaldi is a Shock to the System,” New York Times, August 6, 2014.
3Sadeghi-Nejad, Nathan. “Sovaldi and the Cost-Innovation Paradox,” Forbes, March 27, 2014.
4Sadeghi-Nejad, Nathan. “Sovaldi and the Cost-Innovation Paradox,” Forbes, March 27, 2014.
5LaMattina, John. “What Price Innovation? The Sovaldi Saga,” Forbes, May 29, 2014.
6LaMattina, John. “What Price Innovation? The Sovaldi Saga,” Forbes, May 29, 2014.
First Published on Ward Health blog: September 05, 2014 Republished with permission.