A California cost-effectiveness panel is prepared to say this about Gilead Sciences' brand-new combination treatment for hepatitis C: It's cost-effective, even at an eye-popping price. But--and this is a big but--the state can't afford to pay it.
After an exhaustive analysis of hepatitis C drugs--clinical trial data, side effects, prescription costs--and hep C-related treatment spending, the California Technology Assessment Forum (CTAF) tabbed Harvoni as one of the only new treatment cocktails worth the price. A combination of Gilead's ($GILD) previously approved Sovaldi and a new agent, ledipasvir, Harvoni was "very cost effective," the draft report states.
Under a commonly used metric--quality-adjusted life year--Harvoni beat a $50,000 threshold suggested by the World Health Organization. In fact, in some groups of patients, the QALY calculation came in at $20,000 or less. That's at the U.S. list price of about $1,000, and compared with old-style treatment with interferon and ribavirin.
Not so for Sovaldi plus simeprevir, a.k.a. Olysio, Johnson & Johnson's ($JNJ) new hep-C-fighting protease inhibitor at 12 weeks of treatment, or Sovaldi with ribavirin, with or without interferon, the report says.
But when CTAF plugged its numbers into spending calculations, the results weren't as favorable. Using Harvoni to treat the state's Medicaid patients and prison population would add $3 billion to its drug spending. Though California would save on long-term treatment costs, the offset would only be $254 million over the first 5 years after treatment. Twenty years down the road, the cost savings would be $1.2 billion, putting the cost increase at $1.8 billion.
If the state only treated patients with advanced disease, as some private insurers are doing, the costs would be considerably lower, the report states: $800 million in additional spending, with $475 million in savings over 20 years.
In fact, CTAF says, to meet the state's targets for value, the cost of Harvoni would have to be less than half its sticker price: $34,000 to $42,000, depending on patient group, versus $94,500 for 12 weeks of treatment at retail prices.
The CTAF panel meets Thursday to talk over the draft report and solicit feedback from companies and patient groups. Part of the meeting will be a panel including execs from Gilead and Merck ($MRK), as well as Express Scripts, which has been a vocal critic of hep C pricing decisions. The report is available from CTAF at its website.
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