CVS Caremark JAMA Commentary: New Hepatitis C Treatments Highlight Need to Control Costs of High-Priced Specialty Medications
WOONSOCKET, R.I., July 21, 2014 -- A new Journal of the American Medical Association (JAMA) commentary published online today and scheduled to appear in the August 13 print edition addresses the controversy surrounding the high costs of new Hepatitis C Virus (HCV) treatments such as Sovaldi (sofosbuvir) and implications for the growing specialty pharmacy market. CVS Caremark (NYSE: CVS) Chief Medical Officer Troyen A. Brennan, M.D., and Chief Scientific Officer William Shrank, M.D., suggest that the discussion to this point has focused inappropriately on price per pill, rather than on total cost to the health care system.
"Perhaps the controversy about sofosbuvir is really about the increasing total cost of specialty medications, considering both cost and prevalence of treatment targets," the authors write. "While a daily oral medication that costs $1,000 per pill gains attention, the more important issue is the number of people eligible for treatment. Sofosbuvir is not really a per-unit cost outlier, but is a 'total cost' outlier because of its high cost and very large population eligible for treatment a beacon for costs of specialty medications generally."
While HCV treatment options have improved dramatically over the past three years, with cure rates up to 95%, new therapies such as sofosbuvir can cost patients $84,000 for a standard 12-week course of therapy or roughly $1,000 per pill. Utilizing sofosbuvir as an example, the commentary analyzes the price of HCV medications in the context of the cost of investment and of comparative treatments, and finds that the issues are much more nuanced than previous discussions focusing on cost per pill alone.
The authors also explore the many different efforts currently underway to control overall costs. For example, some state Medicaid programs have not added new HCV medications to their formularies, despite new practice guidelines. Other states are delaying the addition of sofosbuvir until they can arrange a level of state subsidization, and many private insurers have instituted prior authorization programs to manage costs. Some public and private care coordinators are asking physicians to treat only those patients who absolutely need therapy now, as new treatment options anticipated later this year are expected to help lower costs.
Brennan and Shrank add: "A value-driven approach to pricing focuses on how treatment with sofosbuvir compares with other treatments for HCV infection. Value also has to consider the efficacy of treatment, and requires more sophisticated cost-effectiveness analyses, such as the incremental cost-effectiveness ratio, representing the added cost of an additional quality-adjusted life-year."
The authors say the health care system needs to adjust more quickly to the growing cost and utilization of specialty medications across a variety of conditions. "This is not an isolated phenomenon; other expensive specialty medications are in development, many with large potential pools of targeted patients. Effective approaches to control costs for high priced medications need to be developed and evaluated to ensure broad, equitable, and appropriate use of these new interventions in an already stressed health care system."