Congratulations to Gilead Sciences for producing Sovaldi (sofosbuvir), which cures hepatitis C about 90 percent of the time. The drug has a list price tag of $84,000 for 12 weeks of treatment. That $1000 per pill price tag is causing concern among health insurers, policymakers and the general public. The Wall Street Journal (Sales Soar for Pricey Hepatitis Drug Sovaldi) emphasizes the negative impact the drug’s release is likely to have on health insurers’ profits this year.
Doctors and patients are rushing to embrace the drug, and prescribing has taken off during the first several months of availability. Despite the concerns about cost containment, health insurers and pharmacy benefit managers have done little to restrict access. Gilead is making money hand over fist.
This is the American healthcare system at its best: providing rich rewards to those who bring truly innovative solutions to market first and not letting cost concerns lead to rationing. I hope Gilead’s example spurs investors to fund other treatment breakthroughs and get them to market ahead of competitors.
Hepatitis C is a scourge and the treatments have been difficult to take and not nearly as effective until now. One of the reasons the total costs of Sovaldi is so high is that there are millions of people who were infected years ago and are starting treatment now. The CDC recommends testing for baby boomers, many of who were unknowingly infected from intravenous drug use in the 60s and 70s or from a tainted transfusion received up till the early 1990s. Once the big group of long-term infected patients is tested and treated, and when more products like Sovaldi come to market, costs will decline.
The cost problem in American healthcare is not from products like Sovaldi that are expensive but work. The problem is expensive care that is less effective or even harmful.
I asked all nine candidates for Governor of Massachusetts the following question:
Hepatitis C is 3 or 4 times more common than HIV. New drugs that can cure the infection are coming on the market this year but they are very expensive. What role should the state play in ensuring that residents are tested, linked to care, and have access to these new medications?
Don Berwick, former head of CMS and the Institute for Healthcare Improvement, had a good answer:
“We have to recover money from ineffective care, wasteful care, and harmful care. We need to work very hard to make sure that we have the resources liberated from health care waste, so we can rededicate them to things like proper hepatitis C care.”
None of the candidates had a great suggestion for how to make sure everyone gets tested. But the beauty of the profit motive is that Gilead is hard at work raising awareness about hepatitis C testing and treatment, which will benefit the company and patients.