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Acute cures for chronic diseases: Are new financing and messaging models needed?

31 July 2014 Tericke Blanchard

The development of short-term therapies that can cure life-threatening diseases, versus chronic treatments that manage the condition, are driving opportunities in public health. However, health systems are generally structured to cover chronic treatments over a patient's lifetime.

To capture long-term individual and societal benefits from the delivery of curative therapies, we may need to amortize the costs, Scott Gottlieb said at an American Enterprise Institute (AEI) conference on July 17, 2014. A replay of the conference can be found here. This would reduce upfront costs so that payment models are more in line with realization of the long-term value.

Focus on outcome A novel payment system to spread out costs for cures is necessary, US Representative Michael Burgess (R-TX) agreed. Burgess is a medical doctor and vice chairman of the House Energy and Commerce Committee's Health Subcommittee.

He acknowledged that while the cost of Gilead's hepatitis C virus (HCV) drug Sovaldi (sofosbuvir) is an issue that needs to be worked out, the "headline ought to be 'we cured hepatitis C.'"

Sovaldi-manufacturer Gilead views the product as an innovative breakthrough that can cure hepatitis C in most patients while avoiding potentially high downstream costs due to liver injury. The company says it is priced comparably with other regimens, including the costs of managing side effects associated with older, less effective therapies. "Including the lower cure rate, the cost per cure of the older regimens was roughly between $150,000 and $200,000," Gilead Executive VP Gregg Alton said. "With the Sovaldi regimen, we're actually getting down to about $115,000 per cure." Based on Sovaldi's wholesale acquisition cost, a 12-week course of treatment would be $84,000 per patient.

Concern over volume There are a large number of hepatitis C patients which raise concerns due to potentially high total costs over a short period. According to the US Centers for Disease Control & Prevention, there are about 3.2 million people in the US with chronic HCV infection.

In order to temper some of the concern, Alton said 30,000 patients were on Sovaldi in the first quarter. Gilead, which held its second quarter earnings call July 23, 2014, reported that a total of 70,000 patients in the US and 10,000 in Europe have been prescribed Sovaldi. The company estimates that so far about 9,000 hepatitis C patients have been cured.

Additional indications for Sovaldi and potential new HCV drugs could draw even more patients in for treatment. Coverage of medical cures should focus on "what is the value of a cure versus what's the value of a life-long therapy," Alton said. Since launch, scrutiny around Sovaldi in the media, Congress, and among payers has focused on cost, not cure rates. Going forward, this experience will likely impact manufacturers' external affairs activities in terms of anticipating and managing the dialogue around specialty medicines.

The same day as the AEI conference, two US Senators sent a letter to the Gilead CEO requesting detailed pricing information regarding Sovaldi. The "government could tell you what to charge," but I encourage the manufacturers and payers to work it out, Burgess warned. "You may not like what we figure out."

With more specialty products in development and continued pressure on healthcare budgets, this debate on how to capture value will continue. However, if the new hepatitis C treatments produce novel payment models and methods for communicating value, will this also shift how costs are managed?

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