The $1,000 pill is popular! So, who pays?

Pricey hepatitis C drug Sovaldi "shattered" sales expectations. Reporters need to keep asking the costs and benefits questions.

Remember the $1,000-per-pill hepatitis C treatment, Sovaldi, that wowed the press upon FDA approval in December? In the months since, reporters—and insurers and state Medicaid directors, among others—have begun asking much-needed questions about the price and potential of the drug. This week, Gilead, the company behind Sovaldi, announced that sales of the drug hit $2.3 billion, which “shattered the previous record for sales of a drug in its first full quarter on the market,” as The New York Times put it, and “pushed [Gilead’s] first-quarter earnings far beyond expectations…but could aso heighten concerns about the high cost of the drug…and the ability of the health care system to pay for it.” As Sovaldi and an early competitor, Olysio, blaze their way through the pharmaceutical pipeline into physicians’ offices, and drugmakers watch their sales soar, these questions of costs and benefits are exactly where reporters should be focused.

Richard Knox has been following Sovaldi for NPR for months, and his latest work is notable for an illuminating discussion of the drug’s use and price in other countries—one of the five questions I urged reporters to pursue back in March. “[The] controversy over the cost is apparently beginning to have an effect on pricing,” Knox wrote earlier this month. In Egypt, where some 20 percent of the population is infected with the hepatitis C virus, Gilead is selling the drug for $900 for a 12-week treatment. Yet some say that because discounts are based on the exorbitant price in the US, the drug may be too expensive for widespread use. Knox tells NPR’s audience that the drug sells for $55,000 in Canada and $66,000 in Germany—somewhat less than in the US, but still expensive as pharmaceuticals go. Governments in those countries are involved in setting drug prices. Why do Americans have to pay such a high price for a drug that’s cheaper everywhere else? It’s a big, complex question—and one that more reporters should endeavor to answer for their audiences.

Julie Appleby of Kaiser Health News has been following Sovaldi, too, and last week she reported that some groups examining the “what’s a cure worth” question are recommending that only patients with advanced liver disease be given the drug. Last Wednesday, the Department of Veterans Affairs made such a recommendation—also including patients waiting for liver transplants. The California Technology Assessment Forum, a group partly funded by insurers, made a similar recommendation a couple days earlier. “We think these drugs should be used because they have a high clinical benefit, but not everyone needs to be treated immediately,” said Rena Fox, a professor of medicine at the University of California, San Francisco. “If these were a penny a tablet, we would want to treat everyone. But for the time being we have only a certain number of hepatologists out there with experience using these drugs and we cannot treat the whole population.”

Recommendations of the VA and the California assessment panel are likely to influence insurance company guidelines for covering the drug and what the carriers will pay. Appleby’s colleague, Jay Hancock, hinted at that in his recent story about UnitedHealth Group’s first quarter investment call with stock analysts. “We’ve been surprised on the volume—the pent-up demand [for the drugs],” said United’s chief financial officer Daniel Schumacher. As a result, the carrier spent $100 million on hepatitis C drugs in the first three months of the year—much more than expected. Rationing by severity of illness may be new for the US. Will the media explain how widespread use of the drug would feed into higher insurance premiums for everyone? This is a key question.

In fact, it is a question I wish PBS Newshour had spent more time on in its April 23 segment on Sovaldi, “New hepatitis C drug raises hope at a hefty price” (Maybe they will take a stab at this another time). Costs came up repeatedly in reporter Hari Sreenivasan’s piece, such as when Matt Salo of the National Directors of Mediaid told Sreenivasan:

I think it is critically important that we start having that conversation about, how do we value health, what price health, and what price pharmaceuticals? I think this is an important conversation we need to have.

It is indeed a conversation we need to have, and reporters have an obligation to help steer that conversation. Where to turn next: the demand for Sovaldi is clearly there, so what would widespread use of the $1,000-per-day pill mean for everyone’s insurance premiums? Insurance companies are not charitable institutions. In other words: we’ll need more reporting on costs versus benefits, and who pays.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman. Tags: , , , , , ,