Original publish date was 7/21/2014; this post was updated on 8/5/2014 and 11/4/2014.
A national dialogue is needed around the value of new medicines and cures and the role they play in improving patient health and helping to manage long-term spending in the U.S. health care system. Unfortunately, the debate around hepatitis C has, for the most part, been twisted to the point that modern-day cures are seen as a nuisance rather than a monumental step forward in the battle against disease. For this reason, it is important to set the record straight on some of the misperceptions about the value of new and forthcoming hepatitis C treatments.
MYTH: New treatments for hepatitis C are bankrupting state Medicaid programs.
FACT: Treatments for hepatitis C, and prescription medicines as a whole, remain a small fraction of total Medicaid spending.
- Prescription medicines account for just four to five percent of total Medicaid spending. In 2013, Medicaid spent $18 billion on prescription medicines, out of more than $430 billion total.
- Official government data show prescription drug spending has been growing more modestly than overall health care spending and is expected to grow in-line with overall health care through 2023.
- To date, roughly 16,000 prescriptions have been filled for the newest hepatitis C medicine in Medicaid—accounting for just 6.4 percent of all prescriptions filled for the medicine overall.
- At current treatment rates, 2014 costs for the newest hepatitis C medicine would likely represent less than half a percent of annual Medicaid costs.
MYTH: New treatments for hepatitis C could double prescription drug spending in 2014.
FACT: New treatments for hepatitis C are projected to increase health care costs by ONLY half a percent in 2014.
- New cures for hepatitis C can help prevent up to $85 billion in medical costs in the U.S. health care system.
- A recent report by PricewaterhouseCoopers found that these new treatments would actually have a minor effect on growth in 2014. In fact, the report projects that new hepatitis C treatment will impact growth in health care costs in 2014 by only a half a percent but the impact will fall in future years and level off after 2016 as patients are cured.
- The report also notes that “long-term savings for chronic treatments, liver transplants, and lost productivity may ultimately offset the cost of these specialty drugs for the most seriously ill patients.”
- IMS Health estimates that total drug spending, including specialty medicines, is projected to remain at historically low levels, averaging one to four percent annually until 2017.
- Hepatitis C is the leading cause of cirrhosis, liver cancer and liver transplantation, and the medical costs associated with these very serious complications are no minor expense.
MYTH: New treatments for hepatitis C are not worth the cost.
FACT: New and forthcoming hepatitis C treatments can cure over 90 percent of patients, providing tremendous value to patients and society.
- Until recently, available therapies used to treat HCV infection cured only about half of patients, but with debilitating flu‐like side effects. For those who failed to respond to treatment, there were no alternative medicines to treat the disease.
- With new and forthcoming treatments, patients will be more likely to adhere to their medication regimens given that there are fewer side effects and non-injectable options are now available.
- The availability of more effective treatments provide the opportunity to improve outcomes for HCV patients who are frequently unable to work or have significantly more lost work days per employee than other workers, including sick leave, short‐term disability, and long‐term disability.
MYTH: All three million people estimated to have hepatitis C in the U.S. will be treated with new medicines in 2014.
FACT: More than three out of four people with hepatitis C do not know they are infected and are therefore unlikely to seek treatment for the disease this year.
- Unfortunately, progression of the disease occurs slowly, meaning patients often remain asymptomatic, and unaware they are infected, until very serious and often expensive complications emerge.
- Even among those Americans seeking testing, half do not return to obtain their results and are therefore unaware of their infection.
- Among those in the commercially insured market, PricewaterhouseCoopers estimates that only about 60,000 hepatitis C patients will be treated in 2014.
MYTH: Payers will pay the list price of new hepatitis C treatments for all patients getting treated.
FACT: Insurers negotiate prices with drug manufacturers and the government mandates discounts in some public programs.
- The Medicaid and the Veterans Affairs program receive statutorily-set rebates on prescription medicines, plus additional rebates in some instances.
- Plans and biopharmaceutical manufacturers also negotiate discounts and rebates on medicines in both the Medicare Part D program and commercial markets.
- Potential savings could be realized from competition as more hepatitis C medicines enter the market over the next year.
MYTH: New treatments for hepatitis C will blow up Medicare Part D costs and drive up beneficiary premiums.
FACT: The Centers for Medicare and Medicaid Services announced that estimated average premiums for 2015 will be $32/month, an increase of only $1 from 2014.
- Beneficiary premiums remain about half of the $60 originally forecast for 2015.
- Part D premiums are determined through a competitive bidding process. Each year, insurance companies submit bids to the government for the cost of providing prescription drug coverage; beneficiaries then pay a portion of those costs through premiums. The national average monthly bid amount is projected to decline for the 5th year in a row to about $70, a $5 decrease from 2014. Part D plan bids are actually lower today than they were in the first year of the program; the 2006 bid amount was about $92.
- The competitive nature of Part D gives plans and pharmacy benefit managers the tools they need to keep costs for beneficiaries low: “By offering an abundance of competing choices in each region and using cutting edge, cost-saving tools like pharmacy networks and home delivery the program is a win-win for both seniors and taxpayers," says PCMA President and CEO Mark Merritt.
- The Congressional Budget Office 10-year forecast for Part D spending continues to be reduced; for 2014 alone, it was reduced by $56 billion.
Robert Zirkelbach Robert Zirkelbach is Executive Vice President of Public Affairs at PhRMA. He joins PhRMA in 2014 after working for seven years representing the health insurance industry. He likes Saturday afternoon BBQs on his deck, traveling, trying new restaurants, and attempting to play golf. He’s an avid, somewhat obsessive, Iowa Hawkeye fan and is lucky to have a wife that loves watching college football on Saturday afternoons.