Medicare covered $4.6B in hep C scripts for H1, and Gilead's the big winner

Hepatitis C drugs were a big-ticket item for Medicare last year. They're on track to be even bigger this year. As ProPublica reports, Medicare Part D spent nearly $4.6 billion on hep C treatments for the first half of 2015--almost as much as paid for 2014 total. And according to script numbers, Gilead Sciences ($GILD) will reap the lion's share of that spending.

Script-wise, the totals are impressive: More than 183,000 hep C scripts were filled through June 30 of this year. At that rate, hep C drugmakers will end up with 386,000 filled scripts for this year, up from about 288,000 last year, Pro Publica says.

Break those figures down by product, and it's clear that Gilead is far ahead of its chief rival, AbbVie ($ABBV), at least so far. Medicare covered almost 120,000 scripts for Gilead's combo pill Harvoni from January through June, compared with 3,352 for AbbVie's cocktail, Viekira Pak. Gilead's Sovaldi, the single-drug sofosbuvir tablet that's combined with other meds, was prescribed almost 24,000 times during the first half of the year.

Dollar-wise, the final 2015 sales tally, for Medicare as well as drugmakers, will be reduced by the sizable rebates some payers negotiated with Gilead and AbbVie. Some of those rebates are about 40%, analysts have said. That means the actual increase in spending--and sales--will be much lower on a net basis, because the hefty drug discounts didn't apply last year.

Still, as ProPublica notes, the billions in hep C spending amount to a new burden for Medicare, because the new generation of highly effective, easier-to-tolerate treatments are in far greater demand than old-style, interferon-based cocktails were. They're also far more expensive, even when rebates are taken into account.

And that burden isn't likely to shrink next year, either. Michael Kleinrock at the IMS Institute for Healthcare Informatics told ProPublica that he's expecting 2016 to be an even bigger year for hep C than 2015.

More patients will be treated and more money spent, he told ProPublica, though the year-over-year growth is likely to be slower as drugmakers find themselves victims of their own success. Many hep C patients will be cured by then, Kleinrock figures, leaving fewer patients eligible for treatment.

More companies will share those patients, however. Merck & Co. ($MRK) is likely to win FDA approval for its therapy in January, and Bristol-Myers Squibb's ($BMY) Daklinza won approval in July for use alongside Sovaldi. The BMS pill won priority review from the FDA earlier this month, for use in three groups of hard-to-treat patients.

- see the ProPublica coverage

Special Reports: Top 15 pharma companies by 2014 revenue - Merck - AbbVie - Gilead - Bristol-Myers Squibb | Biopharma posts a chart-topping 41 new drug approvals in 2014 - Harvoni - Viekira Pak

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