3. High Hepatitis C Treatment Cost Leads to Restrictions, Sets Off Price War

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The high cost of new interferon-free hepatitis C treatments has raised concerns about how public payers and private insurers will be able to afford them and sparked a more general discussion about the cost of pharmaceuticals in a changing healthcare landscape.

Gilead Sciences raised eyebrows and tempers when it priced its groundbreaking sofosbuvir (Sovaldi) at $1000 per pill, or $84,000 for a typical 12-week course of treatment. Its new combination pill Harvoni was priced at $94,500 -- a comparatively good deal as it adds a second drug, ledipasvir, that markedly improves effectiveness for HCV genotype 1. Many patients may be cured in just 8 weeks and the Fair Pricing Coalition has proposed a uniform "price per cure" for all patients based on the 8-week cost of $63,000.

AbbVie set the price for its Viekira Pak combination regimen at $83,300 for 12 weeks. While this is a bit less than Harvoni, it requires 4 pills and twice-daily dosing -- compared to 1 pill once-daily -- and it contains components that are more likely to cause drug interactions. Janssen's HCV protease inhibitor simeprevir (Olysio) costs $66,000, but it must be combined with sofosbuvir or other direct-acting antivirals to create an interferon-free regimen.

While some chemotherapy and drugs for rare diseases cost as much or more, high-priced HCV meds raise concerns because an estimated 3 million people in the U.S. are living with chronic hepatitis C. Many of them rely on public funding such as Medicaid, Medicare (a majority are in the 50-70 year age range), and state prison budgets. Advocates, clinicians, professional societies, and members have Congress have demanded that Gilead and the others lower their prices.

When the standard of care was poorly tolerated and modestly effective interferon-based therapy, most experts recommended that only people with advanced cirrhosis should be treated. With the new highly effective and well-tolerated interferon-free regimens, advocates say that everyone can benefit from -- and deserves -- treatment before they develop advanced liver disease. But some public payers, private insurance companies, and national health systems have put restrictions on who can be treated in an effort to hold down costs.

With more than one good treatment option is available, some hoped for price competition to bring costs down. AbbVie fired the first shot, cutting a deal with pharmacy benefits manager Express Scripts in which Viekira Pak will be the exclusive treatment option for genotype 1 hepatitis C patients in exchange for a deep discount. Gilead soon countered with agreements with CVS Health and Anthem that will make Harvoni or Sovaldi the preferred treatment option in exchange for favorable pricing.

Deals like this break new ground in the arena of pharmaceutical price competition. While these agreements could potentially allow many more hepatitis C patients to receive timely treatment, they also set a precedent of payers -- rather than doctors and patients -- making treatment decisions on the basis of price.

NEXT: 4. HIV Cure Setbacks: Mississippi Baby and Bone Marrow Transplants