New Hepatitis C Medications: A Case Study in Cost-Effective but Unaffordable Prescription Drugs - Annals of Internal Medicine: Fresh Look Blog


Wednesday, March 14, 2018

New Hepatitis C Medications: A Case Study in Cost-Effective but Unaffordable Prescription Drugs

The last few years have been marked by public outcry over the costs of novel prescription drugs, such as the hepatitis C medication sofosbuvir (brand name Sovaldi), which are highly efficacious but extremely expensive.

On the one hand, sofosbuvir produces cure rates of  >90%, a figure that seemed unthinkable a few decades ago. On the other, it is priced at approximately $1000 per pill ($60,000–$90,000 for a treatment course), making it unaffordable for many patients. This price tag has spurred physician and advocacy groups to call for price lowering so that more patients can benefit. In turn, the drug manufacturer has defended its price point by giving sofosbuvir’s high efficacy. Fundamentally, part of the disagreement is one of value. What is an appropriate amount to pay for a medication with undisputable benefit?

A pair of studies published in Annals of Internal Medicine shed light on this issue through cost-effectiveness analyses of novel HCV regimens. In the first study, researchers showed that from a societal perspective, sofosbuvir-based regimens are more cost-effective than older treatment regimens for patients with genotype 1 HCV and potentially for patients with genotype 3 HCV (1).  Similarly, in the second study, investigators demonstrated that sofosbuvir-based regimens can be cost-effective for most patients, from the perspective of a third-party payer (2). 

These analyses are important for quantifying the potential costs and benefits of treating HCV patients with sofosbuvir-based regimens. However, it would incorrect for clinicians to simply conclude that we should provide unqualified support for novel treatments because they are deemed cost-effective. Instead, physicians should recognize a few critical features of these analyses:

No treatment is inherently cost-effective. Although cost-effectiveness is often attributed to a particular treatment (“such-and-such treatment is cost-effective”), we should always be mindful that treatments are cost-effective only in comparison to other treatments. In the Annals studies, new HCV regimens were compared with standard of care using older medications (e.g., ribavirin, pegylated interferon). If the analyses had compared new regimens against each other, or with “no care at all,” they would have arrived at different numbers and conclusions.

Given the current state of drug development, the comparisons made by the 2 studies are appropriate.  But other comparisons (and therefore cost-effectiveness evaluations) will become more appropriate over time.

“Cost-effective” does not mean “affordable.” As the authors of both studies have noted, new HCV medications will cost us money, and there are inherent tensions between the long-term benefits of treating disease and short-run challenges of paying for prescription drugs. For example, the first analysis varied the hypothetical amount that society would be “willing to pay” for new sofosbuvir-based regimens and arrived at conclusions based on different dollar cutoffs. Different cutoff points can lead to different conclusions in cost-effectiveness analyses. This is because these studies provide information about outcomes depending on our willingness to pay for a treatment, but they do not tell us if we ought to pay that much. In other words, they provide guidance about if (if we are willing to pay a certain amount, will the treatment be cost-effective at that amount?) but not should (should we be willing to pay a certain amount for the treatment?). The answer to the latter addresses the issue of affordability: It not only incorporates how we value health benefits but also how much money can be reasonably spent on medications to achieve those outcomes. That determination can only be made through ethical considerations and a public discourse about the value of health outcomes, not from results of cost-effectiveness analyses.

Ultimately, these studies contextualize the costs and effectiveness of sofosbuvir against other treatment options and a certain “willingness to pay” for the medication. This is helpful information insomuch as we can compare these results to those of other medications, procedures, and technologies. But these examples also highlight that “cost-effective” does not equate to “affordable.” As new efficacious but expensive medications emerge, I believe that this recognition will help clinicians better interpret similar study conclusions and advocate for patient interests through professional societies and advocacy groups. 

  1. Najafzadeh M, Andersson K, Shrank WH, Krumme AA, Matlin OS, Brennan T, et al. Cost-effectiveness of novel regimens for the treatment of hepatitis C virus. Ann Intern Med. 2015;162:407-19. [PMID: 25775313] doi:10.7326/M14-1152
  2. Chhatwal J, Kanwal F, Roberts MS, Dunn MA. Cost-effectiveness and budget impact of hepatitis C virus treatment with sofosbuvir and ledipasvir in the United States. Ann Intern Med. 2015;162:397-406. [PMID: 25775312] doi:10.7326/M14-1336


  1. The societal "value" of such drugs should never be considered only in relation to the relative cost-effectiveness viz. other treatments or even other health states, rather they must be considered relative to all the alternative uses of the resources, education, infrastructure or a guaranteed income. These alternate uses are particularly germane given the recent emphasis on the social determinants of health. Deciding that $100,000 per life year is a reasonable figure to pay for a treatment ignores the alternative uses. Since the costs of such drugs are socialized via health insurance coverage, these are no longer private decisions but must be considered more broadly in terms of alternative uses of the resources.

    1. Thank you for this comment. I agree that there are inevitable choices to make about spending both within medicine (e.g., for certain types of care over overs) and beyond (e.g., for health care vs other services). This comment also reinforces something that's been raised by others in discussions about value - the potential benefit and need for public discourse about appropriateness of different kinds of spending.

  2. I recently attended an international internal medicine conference in an Asian country where a pharmaceutical display was advertising Sofosbuvir+Velpatasvir for the treatment of hepatitis C. I was told by the company representative that a 12 week course of treatment would cost the equivalent of $600 in his country. The discounted cost of this medication listed on is about $75,000 for a 12 week course. The more than 100-fold price differential illustrates the problem of inflated pharmaceutical prices in the United States many times greater than the manufacturing and distribution costs. The oft-cited research and development costs as justification provided by pharmaceutical companies lacks face-validity in such cases.

    1. Tom, thanks for this comment. The anecdote you shared helps highlight the point above about how cost-effectiveness does not equal affordability. It also highlights the multiple dimensions of cost (drug development, manufacturing, acquisition) and price, and the multiple associated stakeholders and players, all of which must be disentangled and considered when thinking about spending.

  3. The whole sale acquisition (WAC) cost of newer HCV drugs are around $ 1000 per pill/day (Daklinza, Zepatier, Harvoni, Mavyret, Technivie, Viekira Pak, Olysio, Sovaldi, Epclusa, Vosevi). The regimen cost for 1a genotype HCV treatment ranges from $54,600 to $150,000 for 12 weeks of treatment. The treatment cost for 12 weeks with Daklinza, Olysio and Sovaldi is $63,000; $66,000 and $84,000 respectively. However the estimated production cost for 12 weeks of treatment for Daklinza, Olysio and Sovaldi is $10-30; $130-270 and $68-$136 respectively for these drug (Hill at et al Clin Infect Dis 2014; 58:928-36). The manufacturing cost and WAC is totally out of proportion several thousand time more. In treatment of HCV genotype 2, for 24 weeks of Vosevi, the WAC is $294,000 and for 16 weeks of treatment is $196,000. Clearly the cost of treatment is not affordable as there is a huge incremental cost. All these companies have not published breakeven pricing with only direct cost. In 10 years only 25% of patients with non SVR will have hepatocellular carcinoma (HCC) compared to 10% of patients with SVR response. In 5 years 95% of patients with non-SVR will not have HCC. The treatment failure rate using virologic outcome is around 40% (SOF+RBV). Most economic models which have been published have been funded by pharmaceutical companies and have assumption bias such as the models do not include suboptimal treatment completion rate. Treatment completion of both dual and triple therapy regimens is suboptimal in the real-world clinical setting. Treatment completion rates for dual therapy dropped by >35% between weeks 12 and 24 and for triple therapy ≥50% do not complete the recommended length of therapy, particularly older patients. None of these treatments are cost effective. Also cost of screening is not built in the models. In conclusion the WAC is 10,000 time more than the manufacturing cost of these drugs, all the models are biased, willingness to pay or life year gain has limitations and more work needs to be done as which sub-set of the patients will benefits the most using CART or predictive modelling.

  4. I am amazed that we accept the gouging by the pharmaceutical industry. As physicians and as a society we wring our hands when patients die in droves because they cannot afford these medications, but God forbid that we do anything to upset Gilead share holders!

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