by George Lauer, California Healthline Features Editor, California Healthline, Monday, August 25, 2014

While lawmakers in Congress and policymakers in Sacramento grapple with how to pay for — and perhaps regulate the cost of — high priced new drugs, an effective and expensive new treatment for hepatitis C continues to make inroads in California.

California Correctional Health Care Services, which oversees clinical care and drug prescriptions for 125,000 inmates at 34 prisons, began using Sovaldi last month.

Made by Gilead Sciences of Foster City, Sovaldi has become part of the “community standard” for medical professionals treating patients with hepatitis C, according to prison officials. The high cost of the drug — $1,000 per pill, about $84,000 for a full course of treatment — sparked a congressional investigation after objections from several corners of the health care industry.

The U.S. Senate Finance Committee last month launched an investigation into the high pricing of Sovaldi.

In a letter to Gilead Sciences, Finance Committee Chair Ron Wyden (D-Ore.) and senior Finance Committee member Chuck Grassley (R-Iowa) wrote:

“Given the impact Sovaldi’s cost will have on Medicare, Medicaid and other federal spending, we need a better understanding of how your company arrived at the price for this drug. In order for a marketplace to function properly, it must be competitive, fair and transparent. It is unclear how Gilead set the price for Sovaldi. That price appears to be higher than expected given the costs of development and production and the steep discounts offered in other countries. An efficient market needs informed consumers to keep costs down.”

Gilead officials, who declined comment, are cooperating and sending documents to Congress, according to a spokesperson in Grassley’s office.


‘A Tax on All Americans’


Hepatitis C, a viral infection that can lead to liver failure, cancer or other health problems, is often associated with intravenous drug use. Many of the estimated 3.2 million people living with hepatitis C in the U.S. are poor, imprisoned, elderly or all of the above, giving public systems a disproportionate share of hepatitis C patients.

study released last month by Express Scripts Lab predicted state governments could spend more than $55 billion on hepatitis C medications.

Authors of the study wrote:

“There is no doubt that Sovaldi is a breakthrough therapy, but unfortunately, it is also likely to break state budgets. Since health care for so many hepatitis C patients is funded by state programs, each citizen will be shouldering the unprecedented cost burden. The unsustainable pricing of this medication has essentially become a tax on all Americans.”

About 93,000 Californians in Medi-Cal and in the state prison system have chronic hepatitis C. If the state covers Sovaldi treatments for all of them, the bill would be about $6.6 billion, according to the study.


Impact Especially Felt in Prisons


While the high cost of Sovaldi could significantly increase spending in Medicare and Medicaid — as well as by private insurers — the impact could be especially felt in prison systems.

State Medicaid programs — Medi-Cal in California — are entitled by federal law to negotiate drug discounts, but state prison systems usually pay full retail prices. And because prisons typically have a larger percentage of hepatitis C patients than the general population, Sovaldi’s high price could have a significant influence on prison system budgets.

The use of expensive — but effective — treatments takes on added significance in California where the state prison medical system is operated by a federal receiver. A federal judge in 2006 determined the state’s prisoners were not getting adequate care and named a federal receiver to oversee and improve medical care. Unprecedented in size and scope, the receivership does not have a timeline and could last for a decade or longer.

An important tool in the measuring of effective health care in prisons is comparing care behind bars to the care received in the general population. If a treatment becomes a community standard on the outside, it will probably eventually become a standard in prisons. That process may happen especially quickly in California where prison medical care has come under such scrutiny in recent years.

“It’s a pretty extensive process and it does take some time,” said Liz Gransee, public information officer for the California Department of Corrections. Sovaldi went through that process and emerged as a “community standard” last month, Gransee said.

Treating hepatitis C is not inexpensive, no matter what drugs clinicians try. The cost of one course of hepatitis C treatment in the California prison system last year ranged from $13,500 to $88,800, according to California Correctional Health Care Services officials.

Depending on the patient’s situation, expensive treatments such as Sovaldi can end up saving money in the long run, state officials said.

“Our treatment protocols recognize that hepatitis C is a slowly progressive disease and in a significant number of patients does not progress to severe liver impairment. The treatment options available to us are changing very rapidly and safer and more effective drugs are continually being introduced into clinical use,” California Correctional Health Care Services wrote in an email response to questions about Sovaldi.

“Even though treatment using this drug is expensive, it is more cost effective than caring for a patient with end-stage liver disease who is dying, treating a patient who develops liver cancer, or providing a liver transplant for a patient. For these reasons, the judicious and carefully monitored use of the newly available drug makes sense, both from a medical and cost effective standpoint,” officials wrote.

The overall cost to treat hepatitis C patients in California prisons was about $12.4 million last year, up from $9 million in 2012.

The prevalence of hepatitis C infection among prisoners is “substantially higher than that of the general U.S. population,” according to CDC. In the general population, 1% to 1.5% have been infected, compared with 16% to 41% among prisoners.


Unlikely Alliances


Sovaldi has sparked some unusual alliances. Free-market fans, many of whom oppose national health care in any form, are applauding the United Kingdom’s National Institute for Health and Care Excellence, which this month issued guidance recommending Sovaldi as a cost-effective treatment.

Yevgeny Feyman, a fellow at the Manhattan institute, wrote in a Forbes article: “It’s rare that I get to say this — but we can learn something from the United Kingdom.”

Feyman admits he has a “long position” in Gilead Sciences.

An article in the staunchly free-market-friendly Wall Street Journal titled “The Medical Innovation Threat” contends the controversy over Sovaldi is a “prelude to price controls.”

Source: California Healthline, Monday, August 25, 2014