Medicare takes $4.5B cost hit from superstar hep C treatments

Industry watchers knew Medicare would be shelling out a whole lot more on hepatitis C treatments last year, thanks to new-and-improved drugs. But just how much more did it cough up?

Some $4.5 billion, that's how much. According to ProPublica, Medicare spending on the newcomer meds amounted to more than 15 times its 2013 total of $286 million. Two new stars from Gilead ($GILD) were among the main culprits, with $84,000-per-treatment-course Sovaldi accounting for more than $3 billion of the bill. The company's Harvoni, though it only hit the market in October, cost Medicare $670 million, while the charge for Johnson & Johnson's ($JNJ) Olysio--often taken with Sovaldi--rang in at $821 million.

Medicare's Part D drug-coverage program isn't exactly used to that kind of spending wave, ProPublica points out. In the program's 9 years, it's benefited from patent-cliff spending slowdowns as generic competitors took down major sellers, including Pfizer's ($PFE) Lipitor, and Sanofi ($SNY) and Bristol-Myers Squibb's ($BMY) Plavix.

The result? Taxpayers will bear the brunt of the new costs of treating Medicare's hepatitis C patients. But patients will likely pay more, too, thanks to higher deductibles and maximum out-of-pocket costs for many of Medicare's 29 million seniors and disabled enrollees.

Drugmakers have made the case that their pricey new meds are ultraeffective and cheaper than the alternative--liver transplants and other expensive care that hep C patients can require down the road.

Steve Miller

But those points haven't pacified payers, some of who have taken the issue into their own hands. Steve Miller, CMO at pharmacy benefits manager Express Scripts ($ESRX), has led the charge, recently igniting a pricing war by inking an exclusive pact with Gilead rival AbbVie ($ABBV).

And the crusade against high prices may not end with hepatitis C. Miller has already hinted at plans to bring the same tactics to the up-and-coming field of PCSK9 cholesterol fighters, as well as to cancer meds with lofty sticker prices.

- read the ProPublica story

Special Reports: The top 10 most expensive drugs of 2013 | The most influential people in biopharma today - 2014 - Steve Miller - Express Scripts

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