Bad News for Hepatitis C Patients: Your Treatment Costs May Be Higher Than Expected

Source: National Cancer Institute.

When it comes to the world's most pervasive infectious diseases, hepatitis C finds itself near the top of the list. According to estimates from the World Health Organization, some 180 million people worldwide have the hepatitis C virus, or HCV, many of whom aren't aware of it. Within the United States, the Centers for Disease Control and Prevention has estimated that there are about 3.2 million HCV-positive patients.

Hepatitis C is luckily not a quick killer like some other widespread infectious diseases, but it nonetheless can cause a progressive decline in liver function, leading to cirrhosis, liver cancer, and possibly even death. Per the CDC, one to five out of every 100 people with HCV will die as a result of their disease. In 2007 the CDC estimated that HCV led to a little more than 15,000 deaths in the United States.

Source: Gilead Sciences.

Hepatitis C medicines improve by leaps and bounds The good news for HCV patients is that we've witnessed a marked improvement in treatments over the last year and change. Gilead Sciences has delivered Sovaldi and Harvoni, which are both once-daily HCV therapies that generally delivered a 90% or greater success rate in ridding patients of detectable levels of disease in clinical trials. Likewise, AbbVie brought Viekira Pak (a regimen of up to six pills) to market in December with similar sustained virologic response efficacy.

And these won't be the last HCV therapies to hit pharmacy shelves either. In May,Merckfiled for approval of its cocktail therapy of grazoprevir and elbasvir with the Food and Drug Administration after the once-daily combo hit the upper 90s-percentile in terms of sustained virologic response.

Yet in spite of the prospect of increasing competition, the cost for HCV medication remains high. Sovaldi, which is typically targeted at the less common genotypes 2 and 3, costs $1,000 wholesale per pill. Harvoni, Gilead's genotype 1 therapy (genotype 1 is responsible for about 70% of all HCV cases), is an even pricier $1,125 per pill. For a relatively standard 12-week treatment course (at wholesale cost) the price tag for Sovaldi or Harvoni is a whopping $84,000 or $94,500, respectively.

Hepatitis treatment costs could soar The scary news for hepatitis C patients is that the cost of their treatments could rise even further if a new study released from the Henry Ford Health System and CDC is correct.

Source: Centers for Disease Control and Prevention.

The Chronic Hepatitis Cohort Study, which was published in The American Journal of Gastroenterology,examined 9,783 HCV-positive patients who were geographically, racially, and gender diverse. The findings of the study demonstrated that, as a whole, the degree of liver disease associated with HCV is being largely underreported.

The report showed that 2,788, or 29%, of studied patients had some form of liver cirrhosis. But 62% of those with liver cirrhosis, or 1,727 patients within the study, had nothing on their medical records about having liver cirrhosis. In the words of Stuart Gordon, M.D., lead study researcher and Director of Hepatology at Henry Ford Hospital:

This finding is meaningful because genotype 1 patients who have been previously treated and present with liver cirrhosis need to undergo a more rigorous 24-week treatment course if they're on Gilead's Harvoni. At $1,125 per pill, that works out to an additional expense of $94,500, for a total treatment wholesale cost of $189,000! If there are four times as many of these individuals as previously believed, it could mean substantially more in revenue for companies like Gilead, and a lot more money coming out of the pockets of patients and insurers.

Three factors that could still control pricingOf course, it's still possible that HCV pricing could be reined in, although none of the following three pathways presents with any guarantee of effectiveness over the long run.

Source: AbbVie.

First, insurers and pharmacy-benefit managers can consider playing hardball with hepatitis C drugmakers in order to net substantial discounts. To some degree we've already seen this, with PBMs Express Scriptsand CVS Healthand select insurers forging long-term deals with HCV drugmakers and netting significant discounts in the process. However, if the findings of this new study are correct, even these substantial concessions from drug developers may not shield insurers from paying out hefty sums in member-related HCV expenses.

Secondly, an increase in competition could do just the trick. The emergence of grazoprevir/elbasvir, a possible combo therapy from Bristol-Myers Squibb, or even a treatment from a smaller player like Achillion Pharmaceuticals, could put pricing pressure on companies like Gilead. Then again, with 180 million people worldwide needing HCV medicine, and most remaining undiagnosed, it appears that drug developers are in the driver's seat when it comes to maintaining strong pricing power.

Finally, the government could take a page out of India's or Switzerland's drug pricing rule book and begin instituting price caps on pharmaceutical products. While such a move would certainly curb pricing, it could also have major detrimental effects on innovation. Drugmakers count on high prices (and profit margins) in the U.S. to help subsidize their efforts to bring medicine to emerging market countries. Without this buffer, drugmakers could look to take jobs to cheaper overseas markets.

This is worth watchingIf anything, this new study serves as an important wake-up call for our healthcare system, alerting physicians, patients, and investors that they need to keep a close eye on the evolution of patient treatment within the HCV space.

It remains to be seen if new tests will emerge to make the progression of HCV on a patient's liver easily diagnosable, although Gordon suggests the use of the previously validated FIB-4 score, which is based on liver enzymes, platelet counts, and a patient's age. But what we do know is that HCV drugmakers like Gilead are seeing no material decline in demand for their product, and they likely won't for many, many years to come. In short, if you think consumers were ticked at Gilead's HCV pricing last year, you may not have seen anything yet!

The article Bad News for Hepatitis C Patients: Your Treatment Costs May Be Higher Than Expected originally appeared on

Sean Williamshas no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen nameTMFUltraLong, track every pick he makes under the screen nameTrackUltraLong, and check him out on Twitter, where he goes by the handle@TMFUltraLong.The Motley Fool recommends CVS Health. The Motley Fool owns shares of and recommends Express Scripts and Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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