VA Suggests High Price Could Be Offset Future Savings
By Sandra Basu
WASHINGTON – The high prices of new treatments for hepatitis C were slammed by the outgoing Senate Veterans Affairs Committee chairman, who also raised concerns about the impact of the expense on the VA and other federal agencies.
Questions have been raised in recent months about the drug, Sovaldi (sofosbuvir), which is marketed by Gilead Sciences, Inc. The drug costs $1,000 a pill or $84,000 for a regimen in the commercial market. Because of federal supply schedule pricing, the VA gets a 40% discount of less than $600 per dose.
“What we are looking at here with Gilead is not a decent profit. What we are looking at is very clearly a very, very excessive profit, and a lot of it will be paid for by the taxpayers of this country,” said Senate Committee on Veterans Affairs Chairman Sen. Bernie Sanders (I-VT).
“If VA is going to be spending billions of dollars for one drug to treat one illness, the reality is that there is less money available to deal with the many other problems facing VA,” he said.
Sanders said Gilead declined an invitation to the hearing to explain the cost of the drug. The company has previously defended the cost of its drug, however, and has said the “price of Gilead’s hepatitis C treatments reflects the significant clinical, economic and public health value” that the new therapy offers “to patients, their families and healthcare systems, and is comparable to, or in many cases less than, the cost of older, less-effective regimens.”
“By quickly curing a vast majority of patients, Gilead’s hepatitis C treatments may lessen the frequency of healthcare visits and hospitalizations, and lower the need for medications to manage side effects and complications,” the company explains on its website.
Meanwhile, ranking member Sen. Richard Burr (R-NC) said he thought the focus on the cost of the drug was misplaced.
“I believe that the price of this specific drug is to be looked at on a macro level. We should examine the long-term benefits groundbreaking therapies bring to our veterans, as well as the long-term savings that it could bring to the VA and taxpayers by replacing more risky and costly treatments, such as liver transplants,” he said at the beginning of the hearing.
In a recent interview with U.S. Medicine, David Ross, MD, director of the VHA’s HIV/HCV and public health pathogens program, said, “Although no precise savings projection is available, sofosbuvir-based regimens are expected to substantially increase the number of veterans achieving a cure, which may translate into significant downstream cost offsets to drug treatment.”
“Specifically,” Ross added, “successful treatment of hepatitis C infection is anticipated to result in reductions in liver-related complications, which may otherwise lead to hospitalization, hepatocellular carcinoma or the need for transplant.”
VHA Chief Consultant for Pharmacy Benefits Management Michael Valentino told the committee that VA has approximately 174,000 veterans in care with HCV, making it the largest single HCV provider in the United States. When it comes to Sovaldi, VA has negotiated a price of $539 per dose after all negotiated discounts.
Still, he explained that the costs for Sovaldi and Olysio (simeprevir), an HCV treatment used in combination with other antiviral drugs such as Sovaldi, was why VA had to ask lawmakers for $1.3 billion in additional funding for fiscal years 2015-16.
“Despite the significant discounts being negotiated, it will still be a challenge to ensure adequate funding is in place to provide these medications in the future,” he told lawmakers.
Because additional hepatitis C treatments will be available in the near future, providers currently have the choice to defer the use of Sovaldi, depending upon the genotype of the infection.
“As a provider, I’m going to [ask], ‘Is this drug going to work better and be less toxic for my patient then the one that is coming along?’ [If]so, I might wait; if not, then it’s more important to start treatment now,” Ross explained to lawmakers.
Sanders, meanwhile, questioned how many veterans could potentially be treated with Solvadi with the requested $1.3 billion. When Valentino estimated 25,000 to 30,000 patients, the committee chairman suggested that VA would need two or three times more than $1.3 billion if the current pricing remains and the agency does a good job with outreach to veterans with HCV.
John Rother, president and CEO of the National Coalition on Health Care, testified on behalf of the Campaign for Sustainable Rx Pricing, telling lawmakers that high-price treatments such as Sovaldi “force trade-offs with other necessary treatment, within the VA, within Medicaid, within prisons, within private health insurance.”
“We have a huge fiscal challenge ahead of us, not just in VA, but in healthcare generally, and it is driven in large part by the price of new specialty drugs. Sovaldi is really just the canary in the coal mine that indicates the kind of challenge ahead of us,” Rother said.
The Campaign for Sustainable Rx Pricing is advocating for “market-based solutions for making specialty drugs more affordable,” he added.
In written testimony, he elaborated, “One solution is to encourage alternative payment and incentive structures for rewarding innovation in the development of new drugs and technologies.”
Robert Weissman, president of the consumer advocacy group Public Citizen, suggested that “a sustainable solution” to the pricing of new Hepatitis C drugs “must involve a government-mandated license or acquisition of rights to make the drugs, so that generic suppliers can enter the market, with a determination of what constitutes fair compensation to Gilead or other brand-name suppliers for the mandated license.”
“With generic production, prices will fall by more than two orders of magnitude, so that drug costs will be less than 1.0% of what Gilead and other manufacturers are charging (potentially excluding royalty payments),” Weissman argued in written testimony.
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