Solve the Sovaldi Math Problem: Miracle HCV Cure + Unsustainable Price = ?

According to the CDC, an estimated 3.2 million people in the United States have chronic hepatitis C virus (HCV) infection, with most not even knowing they are infected.  The effect of the disease is devastating, and can lead to cirrhosis of the liver, liver cancer, or even death.  In the United States today, more people die due to HCV than HIV/AIDS.  Given its prevalence and its contagious nature, HCV infection is a public health crisis and it must be addressed.

Pharmaceutical researchers have been working for years to treat this infectious disease, and the results of their work have begun to pay off.  Gilead Sciences has introduced Sovaldi®, a drug that has a high cure rate in certain genotypes of HCV.  This is great news – a cure for a disease that kills thousands of people here in the US and worldwide.  We truly live in a great time – doctors can prescribe a cure and millions can live more productive lives.  So what could be wrong?

With the introduction of new HCV cures, we no longer face a health problem.  What we face is a math problem.

Gilead has tried to justify charging whatever they want for Sovaldi®, by noting its value: it helps prevent the downstream costs of HCV infection including liver transplants.  Therefore, in their view, all of the future costs that society would face if not for this drug should flow to Gilead and their shareholders.  So instead of future savings, what we’re really left with is nothing but present day cost.

Imagine if Jonas Salk had taken this approach. In the late 1940s and early 1950s, polio crippled 35,000 Americans a year – a true health crisis that put children in iron lungs and resulted in premature death.  Jonas Salk’s vaccine prevented all of this, and since 1979 polio no longer exists in the United States.  What if, like Gilead, Salk had decided to take all the costs of polio – the cost of iron lungs, occupational and physical therapy, braces, crutches, corrective shoes, and orthopedic surgery – and demanded that the federal government pay all of that for the vaccine?  Would polio today be eradicated?  What other diseases would not have been treated because of the devastating effect on the health system of paying for the polio vaccine?

But this is exactly what we face today with Gilead’s approach to pricing.  For both ethical and public health reasons, people with HCV must be treated.  The cost of doing so with what Gilead is demanding is unsustainably high and threatens to do immeasurable harm to state Medicaid budgets. According to Express Scripts, a nationwide pharmacy benefit manager, the cost of treating the HCV Medicaid population with Sovaldi® is over $55 billion.  Now that the benchmark price has been set, do we really believe the cost of treatment will substantially be reduced until years from now when generics come on the market?

So the question now is a simple math problem; no one denies the value that Sovaldi® can bring to individual patients and society as a whole.  But what’s the point if no one can afford it?

Medicaid is over $450 billion per year and growing at over 12%.  Are the tens of billions of dollars that will be required to treat Medicaid patients with Sovaldi® available?  According to the CEO of Molina Health Care, 25 Medicaid patients can be treated for a year for the cost of one patient on Sovaldi®.  Should taxes be raised, or other services cut, because one company has decided to demand a ransom for treatment?

We would hope Gilead would do the right thing and reconsider.  To date, they have shown no indication of thinking through the larger consequences.  Instead they opted to focus only on their shareholder rights.  At what point does society need to intervene when there is no consideration about the ramifications of their choice?


Jeff Myers is the president and CEO of Medicaid Health Plans of America, the national trade association representing the Medicaid managed care industry.

Morning Consult