Payers have complained loudly about the cost of next-gen hep C meds from Gilead ($GILD) and AbbVie ($ABBV), arguing that the drugs should be reserved for the sickest patients. But now insurers are facing some evidence to the contrary, as a new study shows that new hep C meds are cost-effective when taken in early stages of the disease.
Scientists used a computer simulation to examine the cost-effectiveness of Gilead's combo pill Harvoni, which runs at $94,500 for a 12-week treatment course, in 1,000 imaginary hep C patients. It found that using the drug to treat people with any evidence of liver damage tacked on one year of healthy life for less than $50,000--a highly cost-effective result, Reuters points out.
And the results were similar for other new hep C treatments in the study including Gilead's Sovaldi, which runs at $84,000 per 12-week treatment course, and AbbVie's Viekira Pak, which rings in at about $83,000 for 12 weeks of therapy. Scientists published their findings in a recent issue of JAMA Internal Medicine.
But researchers also saw that the drugs' up-front costs are still an issue. Using the meds to treat hep C in about half the population with the disease would cost about $53 billion, although that number would go down if prices also drop, the scientists said. The finding comes as drugmakers making innovative therapies face more pricing pushback, with lawmakers, presidential hopefuls and government agencies weighing in on skyrocketing costs.
"I think a key policy point here is that the cost-effectiveness is important and this study shows that, but a next and important step is … to address the cost of the drug," said lead author Harinder Chahal of the University of California, San Francisco, as quoted by Reuters.
Still, the findings come as welcome news to Gilead and AbbVie as they forge ahead with their meds despite pricing pushback. Last year, AbbVie set off a pricing war after it inked an exclusive deal with Express Scripts ($ESRX) for Viekira Pak. Gilead struck back with a few deals of its own, giving the company more ammo even as it enjoys top-dog status in the market.
The Foster City, CA-based company has felt the effects of having to discount its hep C superstars, but Gilead doesn't seem worried about the slowdown.
The company has only "touched the tip of the iceberg" when it comes to its patient pool, CEO John Martin said over the summer. And Gilead had some cards dealt in its favor in October after the FDA warned that AbbVie's rival treatment could cause serious liver injury or death in patients with advanced forms of the disease and demanded that the company change Viekira Pak's label.
Gilead could face increased competition for its bestsellers, though, as combo treatments from Merck ($MRK) and Bristol-Myers Squibb ($BMY) near approval, potentially putting more pricing pressure on the company further down the line.
Special Reports: The top 15 pharma companies by 2014 revenue - Gilead Sciences | New drug approvals of 2014 - Harvoni