When two new drugs for hepatitis C hit the market, they were a game-changer.
About 95 percent of hepatitis C patients can be cured with either Harvoni or Vikiera Pak, two drug regimens developed by two competing pharmaceutical companies. No longer did patients have to endure the severe side effects of older treatments, which were often taken as weekly injections.
The catch? Both had a sticker price of about $1,000 a day. That put the drugs out of reach for many people without insurance, and led some insurers to refuse coverage of the treatment unless a patient’s infection had already progressed.
The CDC estimates that 3.2 million people in the United States have hepatitis C, which can be spread through infected needles, syringes or contact with another person’s blood.
Enter the country’s largest pharmacy benefits manager: St. Louis-based Express Scripts.
In December, the company convinced AbbVie, the maker of Vikiera Pak, to grant a steep discount for their hepatitis C medication on many of the plans that Express Scripts manages. In exchange, those plans would not cover Harvoni, which is manufactured by their competitor, Gilead. Express Scripts claimed the deal would save them $1 billion over the course of a year.
Chief Medical Officer Steve Miller at Express Scripts helped negotiate the deal. He said it was only possible because the two drugs are “medically equivalent.” In clinical trials, they showed similar cure rates, side effects and occurrences of withdrawal.
Miller had a hefty amount of negotiating power behind him: Express Scripts negotiates drug prices for about 85 million people covered under the health insurance plans it manages—from people who buy their insurance from companies like Anthem to military service members and employees at the U.S. Department of Defense.
But three months into the deal, some doctors say the two drugs aren’t interchangeable. While slightly less expensive than Harvoni, AbbVie’s Vikiera Pak consists of four pills per day and may react negatively with oral contraceptives or heart medications.
“It’s a restriction on choice,” said Dr. Brent Tetri, a St. Louis University physician who specializes in conditions of the liver and pancreas.
“It takes a pretty compliant patient to remember to take multiple pills in the morning and more in the evening. So, if there are any compliance concerns, it’s better to take one a day,” Tetri said.
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If doctors want to prescribe Harvoni to patients whose plans includes Express Scripts, they must go through an appeals process.
“It’s often a long wait. Typically it takes us a month or two to get medications approved for our patients, to jump through all the hoops to get approval for these things,” Tetri said.
Even though the waiting period for an appeal doesn’t normally pose a medical danger for patients, there’s often frustration when a treatment can’t begin immediately. For doctors, it’s more than an annoyance.
“It’s a real problem for us on the administrative end. There’s a lot of cost involved for our personnel and staff members to be on the phone for literally hours at a time, trying to get through to people,” Tetri said.
Express Scripts’ Steve Miller said the company estimated that only 5 percent of patients covered by their plans would appeal to take Harvoni. They’ve seen that projection play out over the past three months.
“If the appeal has legitimate, scientific basis to it, it gets approved. If the appeal is just that some marketing person has convinced them that one drug’s better than the other, the appeal gets denied,” Miller said.
Miller said he sees these negotiations as ways to improve the entire healthcare system. He says the overall price of both Harvoni and Viekira Pak dropped because of his company’s involvement.
“When we were able to negotiate this deal, Gilead wanted to keep market share so they started discounting,” Miller said. “This is unprecedented.”
Pharmaceutical companies are not required to disclose the discounts they negotiate with insurance companies and benefit managers, so it’s impossible to prove Express Scripts’ savings calculation. But as Gilead’s shares dropped in February, analysts predicted the company would be discounting Harvoni by an average of 46 percent, more than twice as much as in 2014.
Express Scripts’ Next Target: Cancer Drugs
The hepatitis C drug negotiations may be the first time Express Scripts has used an exclusion rule to pressure drug companies to reduce prices, but it’s unlikely to be the last. Miller said he plans to use a similar strategy to bring down the cost of cancer drugs, which he says has gotten “out of control” as cures have progressed.
“It’s more expensive now to buy you an extra month of life than it was in 1970,” Miller said. With hundreds of cancer drugs “in the pipeline” to become mainstream cures, Miller said there has to be an entity to check the cost. Patients with insurance don’t often notice the actual price of the drugs they take. Insurance companies can spread out the cost of pricier drugs to everyone that they insure when charging premiums.
“How do we give patients the very best treatment and best chance for cure, but also have affordability so that they can access the drugs?” Miller said.
He said that could include excluding competing drugs, value-based payment systems, or bundled payments. Express Scripts expects to release an outline of that plan to its clients in May.
For more health news, follow Durrie Bouscaren on Twitter: @durrieB
