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Life Health > Health Insurance

Gilead pills priced at $1,000 a day are found cost-effective

By Doni Bloomfield

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(Bloomberg) — Health insurers that have been reluctant to cover hepatitis C drugs with list prices of $1,000 a daily dose will face more pressure after a report concluding the medications are “cost-effective” given their benefits.

The report, still in draft form, is by an influential panel of doctors and medical experts that helps insurers set policies. While insurance companies already cover the sickest patients for treatments by Gilead Sciences Inc. (Nasdaq:GILD) and AbbVie Inc. (Nasdaq:ABBV), they’ve resisted extending coverage to people who aren’t yet showing damage from the disease. Even with negotiated discounts, the pills can cost hundreds of dollars a day.

The 32-member panel is a joint effort by the American Association for the Study of Liver Diseases and the Infectious Diseases Society of America, which together represent more than 10,000 physicians, health workers and scientists. Its recommendations, which haven’t previously included cost-effectiveness language, will give doctors backing to argue that insurers should make the drugs more widely available.

See also: $10 copy of Gilead blockbuster Sovaldi appears in Bangladesh

The answer to whether these drugs are cost-effective is “a resounding yes,” Benjamin Linas, a member of the group and a doctor at Boston Medical Center, said by phone. The conclusions will be issued soon, Linas said.

Linas co-wrote a separate paper that found that Gilead’s drug was only cost-effective for some early-stage patients after being discounted between 40 percent and 60 percent. The panel’s report refers to the cost of the drugs after discounts, Linas said.

Health insurers and government programs have negotiated discounts of almost half of Gilead’s list price, on average, the company has said.

Still not cheap

The way the panel defines it, being “cost-effective” doesn’t mean that a drug is cheap or will save a patient money in the long term. It means the treatment is worth the price because of its health benefits, weighing its value against its expense and comparable treatments.

“If you look at the catalog price, which is like the sticker price on the car, no one actually pays that,” Linas said. “The more realistic, actual cost, the price people are paying — it’s in the cost-effective zone.”

See also: Hepatitis cruise, India trips among plans to save on $1,000 pill

The report’s cost-effectiveness conclusions aren’t meant to tell doctors how to treat patients, he said, but rather to help them “when they engage with payers so they have some sense of what the big-picture environment is.”

Financial ties

Because the hepatitis C panel includes some of the top researchers in the field, many of its members have financial ties to the drugmakers. At least 18 of the 32 panelists received more than $1,000 in payments or funding last year from either Gilead or AbbVie, according to disclosures on the guideline website and data published last week from the U.S. Centers for Medicare & Medicaid Services (CMS).

Only eight received no funding or other compensation, such as meals. Linas got about $125 in meals from drugmakers and said he declined payments or honorariums offered for speeches.

The panel’s current hepatitis C guidelines are cited by the three largest U.S. health insurers, the U.S. Department of Veterans Affairs and the World Health Organization. Health insurers use such guidelines to determine best medical practices and shield themselves from potential litigation, among other reasons, said Peter Kongstvedt, a health policy professor at George Mason University.

Looking for lawsuits

“There’s about 100 million plaintiff lawyers, trial lawyers out there waiting for these things to drop, and they’ll use them as the basis for lawsuits,” he said.

Matt Sobczak, a spokesman for IDSA, said the cost-effectiveness section “is still in development and IDSA does not yet know the outcome.” Gary Davis, AASLD’s secretary and a member of the panel, said he didn’t know what would be in the section but believed it would be mostly educational.

Health insurers consider clinical conclusions such as the AASLD-IDSA guidelines in making decisions about what drugs to pay for, according to Clare Krusing, a spokeswoman for industry group America’s Health Insurance Plans. She declined to comment on how the addition of a cost-effectiveness section might affect insurers before seeing the text of the revision.

See also: Skyrocketing cancer drug prices are Express Scripts’ target

Cara Miller, a Gilead spokeswoman, declined to comment, and Adelle Infante, an AbbVie spokeswoman, didn’t have an immediate comment.

The new guidelines rely on research that so far has focused mostly on Gilead’s treatments, Linas said. One of the studies that examined AbbVie’s drugs also found them to be worth the cost, even at the list price.

“The guidelines that are produced that look at the references, and look at the randomized studies, and come to good clear conclusions based on that — that’s a major influence on any payer,” Kongstvedt said.

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