New Hepatitis C Drug Could Cost State $690 Million

At the same time, the drug’s manufacturer, Gilead Sciences, had 85.85 percent profits in June and sells the drug much cheaper to other countries.

Taking questions mostly from representatives of pharmaceutical companies at the State of Reform conference, Dr. Jeanene Smith, chief medical officer and administrator of the Office for Oregon Health Policy and Research defended the state’s go-slow approach to the Sovaldi $1,000 a pill Hepatitis C drug.

With the Oregon Health Plan facing exposure of $480 million if all known Medicaid patients were treated for the recommended 12 weeks on Sovaldi, Oregon’s Pharmacy and Therapeutics Committee restricted the drug to only those needing the treatment immediately. Oregon also must hold growth in spending to 3.4 percent or might have to pay back federal funds that helped launch the coordinated care organizations.

Smith pointed out that Hep C progresses slowly, and the state also needs to consider population health measures for the disease such as education about decreasing alcohol use, providing access to drug and alcohol treatment programs and decreasing barriers to care and treatment.

“The fundamental question is what is the health system for?” asked Todd Myers, a consultant for various biomedical research and bioscience associations.  “The problem with Sovaldi is that it works so well that the costs go up. That should be a good thing.”

Since Oregon purchases healthcare for more than just the Medicaid population – including state employees, educators, the prison and state hospital populations – the cost for treating those with  Hepatitis C or in advanced stages of the disease could ramp up to more than $210 million in the next two years for just the one drug.  “These are your taxpayer dollars,” she said.

Dr. Bob Gluckman, chief medical officer for the Providence Health Plan, said per capita spending on healthcare in the U.S. exceeds other developed countries yet social spending on housing, food and other essentials that “would have a bigger impact on health than healthcare,” lags behind even Czechoslovakia and other places with longer life expectancies.  Yet spending on pharmaceuticals in the U.S. is “way above other developed countries.”

“This is a miracle drug and the pharmaceutical industry deserves credit,” Gluckman said, “but a dialog has to occur at the societal level – who benefits and how much benefit is doing the most good for the most people.”

Sovaldi-maker Gilead Sciences reported 85.85 percent in profits in June, Gluckman said. Myers pointed out that the pharmaceutical industry is financially risky due to the high costs of research and development, adding that some PhRMA companies have shut down operations.

But PhRMA revenue grew six times faster than R&D costs during the period from 1995-2010, Gluckman added, and Gilead, along with other companies, make available the same drugs at a lower cost in other countries.  “Should the U.S. fund R&D for other developed nations?  For The Netherlands?  Canada?”  

Jan can be reached at [email protected].

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