Are we finally doing something serious about the high prices we pay for prescription drugs? Maybe. At the end of May, the Washington-based National Coalition on Health Care, an organization of employers, unions and advocacy groups, launched "Sustainable Rx Pricing," a campaign to "spark a national dialogue" about the high cost of drugs, particularly Sovaldi, the $1,000-a-pill remedy to treat hepatitis C.
Building on growing but relatively isolated pushback from doctors over the price of some cancer and/or orphan drugs to treat rare conditions, the Coalition's campaign marks the first time that a diverse group of big stakeholders have publicly questioned some of the specifics of America's high medical bill. Until now, drug prices have been manageable largely because of the widespread use of generic substitutes, says John Rother, who heads the Coalition. But Rother warned that Sovaldi's high price tag – $84,000 for the recommended three-month treatment regime – plus 200 new specialty drugs in the pipeline, some of which may be costly like Sovaldi, means the country is headed down an unsustainable path for paying for prescription drugs.
Sovaldi, debuting at the end of 2013, has been shown to be effective for treating hepatitis C, which had been difficult to treat before Sovaldi came along. The world-wide market is huge, and Gilead Sciences, the drug's manufacturer, has priced its product to capitalize on millions of potential customers. There are some 3 million patients in the U.S. alone who could benefit from the drug. UnitedHealth Group reported it paid $100 million in the first quarter of 2014 for the drug, and insurance company actuaries are beginning to factor expenses for Sovaldi into the premium rates most of us will pay next year.
In the U.S., we have rarely asked if paying for a new, super-expensive drug would crowd out other health care services and needs. Instead, employers, insurers, and Medicare and Medicaid have simply paid the bills. This time is different. Rother told me he had no expectation that Gilead would lower its prices but added that any company that priced its drugs so aggressively was not thinking of the needs of the health care system as a whole.
A couple weeks before the Coalition's campaign launched, I visited the offices of Britain's National Institute for Health and Care Excellence, called NICE for short, to learn how the Brits were handling Sovaldi and its high price tag. NICE evaluates the effectiveness of new drugs and technologies and makes recommendations to the National Health Service (NHS) about which drugs offer enough therapeutic value to warrant coverage by the NHS. Final recommendations are due in October although the NHS has agreed to pay about $32 million in the meantime to treat 500 of the sickest patients with hepatitis C.
NICE uses a metric called a QUALY (quality-adjusted life years measurement) that assesses a drug's effect on length of life and the quality of life it offers to the person receiving it. A QUALY takes into account whether a treatment helps a patient live longer, the quality of life treatment offers and examines treatment side effects that may put a patient at risk for other illnesses. The Institute then weighs cost effectiveness to determine if it's better to spend money on treatments for a small group of people or to use resources for treatments or services that would improve the health of more people. For example, would money be better spent on more nurses on the hospital wards?
There's no chance the U.S. will adopt a NICE-like system any time soon. The Affordable Care Act (ACA) specifically prohibits the Patient-Centered Outcomes Research Institute, created by the ACA, from considering cost in its work evaluating the effectiveness of various treatments. And Medicare can't consider cost either when it decides whether or not to cover a new drug or device. So the government's hands are effectively tied. Rother's Coalition will have to lead on this one. The impact they make on the price tag for Sovaldi will help determine whether America can ever be serious about containing high prices for prescriptions.