By JaniActman of Medill News Service
WASHINGTON (MarketWatch) — With the California-based drug manufacturer Gilead Sciences planning to roll out another hepatitis C medication, academics said Wednesday that policy changes are needed in the costly drug market so the interests of patients, health insurers and pharmaceutical companies align.
At a Brookings Institution and the University of Southern California’s Schaeffer Center for Health Policy & Economics forum, USC’s Darius Lakdawalla argued that the cost and benefits of some drugs don’t match up.
“I think we have a health policy regime in the U.S. that has been pretty successful, if not very successful, at generating scientific innovation,” said Lakdawalla, Quintiles chairman in Pharmaceutical Development and Regulatory Innovation. “But I think that historically, we have not done such a good job in encouraging innovation of pricing. In fact, in many ways the regulations we have in place stifle creativity and make it very hard to innovate.”
Controversy surrounding high-cost drugs has existed for years, but gained traction last year after the Food and Drug Administration approved the medication Sovaldi, which can cure hepatitis C, but costs about $1,000 a pill. The disease, which can cause cancer or cirrhosis of the liver, affects 3.2 million Americans and kills 15,000 a year, according to the Centers for Disease Control.
At the Washington event, Gilead GILD, +0.12% President John Milligan said the cost of other available hepatitis C drugs was the main consideration in determining the price of Sovaldi. The company has developed another medication that will be two-thirds the price for an eight-week regimen, and offers higher cure rates. It is expected to be approved by the FDA on Oct. 10, Milligan said.
Lakdawalla and others at the forum pointed out that though other drugs are expensive, Sovaldi is unique because it targets a large population and many insurers could take a hit on the coverage because the health benefits can take years to kick in.
“The [insurers] who are paying upfront for the treatment may not reap the benefit of payment reduced at some later time,” said panelist Tom Gustafson, health care policy advisor at law firm Arnold & Porter LLP.
Allowing insurers to open lines of credit and recoup a “hand off” fee when their clients become Medicaid-eligible could help to alleviate problems associated with high-cost medications, suggested Lakdawalla.
Dana Goldman, health policy professor at Southern Cal, argued that policymakers need to focus on a model that would prioritize rewarding innovators for valuable advancements while cutting wasteful spending. Investing in treating all hepatitis C patients in the near term would save in the long run, he said.
“The bottom line from this is that new treatments have great value, but you have to think of the treatment strategy and the long-term versus short-term benefits,” Goldman said.
He added that treating those with only advanced disease may lessen health-care fees upfront, but taking care of all patients would reduce future costs.
“I would argue that if you treat advanced disease, while it may make sense to individual payers, it doesn’t take advantage of the breakthrough innovation that we’ve seen.”
At a Brookings Institution and the University of Southern California’s Schaeffer Center for Health Policy & Economics forum, USC’s Darius Lakdawalla argued that the cost and benefits of some drugs don’t match up.
“I think we have a health policy regime in the U.S. that has been pretty successful, if not very successful, at generating scientific innovation,” said Lakdawalla, Quintiles chairman in Pharmaceutical Development and Regulatory Innovation. “But I think that historically, we have not done such a good job in encouraging innovation of pricing. In fact, in many ways the regulations we have in place stifle creativity and make it very hard to innovate.”
Controversy surrounding high-cost drugs has existed for years, but gained traction last year after the Food and Drug Administration approved the medication Sovaldi, which can cure hepatitis C, but costs about $1,000 a pill. The disease, which can cause cancer or cirrhosis of the liver, affects 3.2 million Americans and kills 15,000 a year, according to the Centers for Disease Control.
At the Washington event, Gilead GILD, +0.12% President John Milligan said the cost of other available hepatitis C drugs was the main consideration in determining the price of Sovaldi. The company has developed another medication that will be two-thirds the price for an eight-week regimen, and offers higher cure rates. It is expected to be approved by the FDA on Oct. 10, Milligan said.
Lakdawalla and others at the forum pointed out that though other drugs are expensive, Sovaldi is unique because it targets a large population and many insurers could take a hit on the coverage because the health benefits can take years to kick in.
“The [insurers] who are paying upfront for the treatment may not reap the benefit of payment reduced at some later time,” said panelist Tom Gustafson, health care policy advisor at law firm Arnold & Porter LLP.
Allowing insurers to open lines of credit and recoup a “hand off” fee when their clients become Medicaid-eligible could help to alleviate problems associated with high-cost medications, suggested Lakdawalla.
Dana Goldman, health policy professor at Southern Cal, argued that policymakers need to focus on a model that would prioritize rewarding innovators for valuable advancements while cutting wasteful spending. Investing in treating all hepatitis C patients in the near term would save in the long run, he said.
“The bottom line from this is that new treatments have great value, but you have to think of the treatment strategy and the long-term versus short-term benefits,” Goldman said.
He added that treating those with only advanced disease may lessen health-care fees upfront, but taking care of all patients would reduce future costs.
“I would argue that if you treat advanced disease, while it may make sense to individual payers, it doesn’t take advantage of the breakthrough innovation that we’ve seen.”
http://www.marketwatch.com/story/sovaldi-pricing-raises-debate-over-drug-costs-2014-10-01?link=MW_home_latest_news
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