There has been a flurry of articles published in leading newspapers recently on the introduction of Gilead’s new drug, Sovaldi, for treatment of hepatitis C. The prevalence of hepatitis C in the United States  is estimated at between 3 million and 5.2 million people. The majority of these patients will end up with chronic liver disease, with hepatitis C also being the leading cause of liver failure requiring liver transplant.  Treatment with Sovaldi over a 12-week period is estimated to cost over $80,000. But a treatment regimen with Sovaldi can provide higher cure rates— between 80 percent and 95 percent—with less side effects and better adherence versus other treatments.

Many are up in arms about this high price and the fact that Gilead has a monopoly. However, based on some of the current therapies and costs for other diseases such as cancer, which have much lower cure rates, should they be?

Some pragmatic policymakers have already established more reasonable guidelines for the use of Sovaldi. The California Technology Assessment Forum (CTAF), a public forum that conducts evidence-based reviews of new and emerging medical technologies, recently published a review of the comparative effectiveness and value of Sovaldi and espoused the following:

• First, additional longer-term effectiveness data needs to be collected. This includes longer-term cure rates, side effects, quality-of-life assessments and other indirect benefits such as reduced absenteeism from work. Only until this type of data are collected and assessed can one determine the true value of Sovaldi.

• In the meantime, in order to be better purchasers of care and value, employers, insurers and anyone else paying health care bills and policymakers might consider prioritizing treatment for those who require care most urgently, establish guidelines that define lack of early response and thus discontinuation of treatment, and require these types of drugs be prescribed by those with the most knowledge of hepatitis C.

Additionally, there are other companies with similar drugs in the pipeline. Once these drugs hit the market, Gilead’s monopoly will likely cease to exist. This, in turn, will likely result in lower prices.

I attended the Wharton student health care conference in February where Dr. Roy Vagelos, C’50, HON’99, the ex-CEO of Merck, spoke. Vagelos’ theme for his presentation was on the value of new technologies and drugs, including their longer-term effect, such as cure rates. What Vagelos was adamantly against was the high price of therapies that produce minimal results and the marketing of these therapies to consumers and their families—families who really have no choice in wanting to see their loved one survive for as long as possible. These types of therapies provide minimal value and can result in a backlash of consumer distrust of the health care field. According to Vagelos, a treatment that provides clearer value cures a very dangerous disease with minimal side effects.  Based on his definition of value, Gilead’s Sovaldi qualifies as such. It

What I find most interesting, however, is that the costs for better or newer care are creeping more frequently into decision-making by payers and providers, on which we as an industry were silent 15 years ago, but which is needed if the U.S. is to bend the cost curve. Good for us.

What is needed next?  We need a good, long-term study on the cost effectiveness of Sovaldi to compare its incremental costs to the standard of care, and to evaluate a person’s incremental quality of life.

In other words, what’s needed is a really good incremental cost-effectiveness ratio (ICER) analysis. Any takers?