Saturday, July 26, 2014

My View

Random ruminations from your resident curmudgeon...

The Center for Disease Control (CDC) estimates that 3.2 million people are infected with hepatitis C, and that this disease kills more than 15,000 people annually, more than succumb to HIV disease. Hepatitis C is most commonly spread by sharing needles, and if left untreated, can lead to chronic liver disease, cirrhosis, or liver cancer.

Patients that suffer with hepatitis C are costly to treat and require long term treatment, typically with Interferon, which has numerous serious side effects. Treatment requires taking a combination of drugs on a daily basis as well as a 48 week regimen of Interferon shots. The cure rate for these treatments is around 50%.

Now, bio-pharma company Gilead has developed a new treatment that has been very effective in treating and in many instances curing hepatitis C. their drug, marketed under the name Sovaldi. Sovaldi only requires 12 weeks of treatment, and although long term results are not available since it is such a new drug, initial reports are that its efficacy is significantly higher than current treatment protocols.

So a new drug has been developed that is more effective at curing a debilitating, chronic disease and will get people out of the healthcare system much more quickly than current protocols.

What's not to like?

Well, there is the matter of the cost of this wonder drug.

A 12 week course of treatment of Sovaldi cost $84,000.

Expensive drugs aren't new, but Sovaldi stands out because it is an effective treatment for a long term disease that costs the healthcare system millions of dollars annually. A number of those that suffer from hepatitis C are low income and qualify for Medicaid or are now covered under Obamacare. These government programs have mandates to provide the best coverage that is available and affordable for treatment of diseases and medical conditions.

And there is the dilemma.

New treatments and drugs like Sovaldi are not affordable for most state budgets.

While Sovaldi may cost $84,000 for a 12 week regimen, a liver transplant will cost on average $577,000. Long term treatment using Interferon and other protocols has shown to be marginally effective and more costly over the long term than using Sovaldi.

So while it may cost more on the front end, it would seem to make sense to spend the money now for a more effective treatment rather than more money over the lifetime of the patient.

But a drug like Sovaldi, that is effective but costly, will break the healthcare budget of most states. For example, Oregon currently spends $277 million to provide healthcare for its residents. Oregon Medicaid official Tom Burns estimates that if Sovaldi becomes the routine treatment for hepatitis C, it could cost the state $360 million to treat the state's enrollees that have that disease.

The cost of a wonder drug like Sovaldi has unleashed a massive debate about healthcare costs. State Medicaid programs are required to cover FDA approved drugs regardless of cost, unless there are comparable options available. It is estimated that treating hepatitis C patients in state programs could cost the states $55 billion per year.

And this could blow up state healthcare budgets.

And states are responding by limiting access to this drug, reserving it only for the very sickest patients.

This is the dilemma faced by federal and state government in providing healthcare. Costs are exploding as more people are forced into government programs. Irrespective of the effectiveness of the treatment, government agencies are beginning to limit some treatments because of the cost.

And this should be a warning to all of us.

As government continues to try to take control of the healthcare system, decisions will more an more be made on the basis of cost to the system, not what is best for the patient.

Incidents like this are going to continue to occur as states and the federal government look to control healthcare costs at the expense of the best treatment for the patient.

And you and I will suffer for it.

And that, my friends, is my view.

*Gilead justifies the cost of Sovaldi by saying that it took years of expensive research to develop the drug and that the price of the treatment is justified for the long term savings to the healthcare system.

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