Hepatitis C Perfect Storm Highlights New Economic Challenges

Hepatitis C Perfect Storm Highlights New Economic Challenges

Our Thinking / Healthcare /

Hepatitis C Perfect Storm Highlights New Economic Challenges
Calendar03 August 2014

The confluence of a number of factors has Chronic Hepatitis C (CHC) exploding on the radars of employers who until now gave it relatively little attention based on low prevalence and minimal therapy costs.

First, the Centers for Disease Control recently expanded screening guidelines to include testing of the entire population between 49 and 69 years of age in an effort to increase diagnosis among the estimated 3.2 million Americans who carry the virus and aren’t even aware they have it. At the same time, under the ACA, 8 million previously uninsured individuals (among whom it’s estimated the greatest numbers of undiagnosed are concentrated) now have health care coverage, potentially increasing utilization and demand for CHC treatment. And, a much-buzzed-about $1,000-per-pill breakthrough drug therapy — now standard on a number of plan formularies — has many gasping and questioning its value.

Indeed the winds have changed. These new dynamics are presenting unprecedented challenges for reconciling the clearer public health interests with the murkier, unexpected economics of extremely high therapy costs and the highly variable planning and budgeting around paying for them.

In the case of CHC, the newest therapies offer a 90% cure rate, fewer side effects, and just 12 weeks of treatment (compared to a 50% to 65% cure rate and 48-week treatment duration of earlier therapies) but carry a price tag ranging from $85,000 to $300,000 per patient (covering both the drug and patient care), or up to nearly eight times that of previous therapies.

And CHC is merely a harbinger of the tensions that are soon expected to play out across many other disease states, where new drug therapies will offer some combination of higher cure rates, shorter treatment durations, and better side-effect profiles, but because of steep R&D costs and limited patient volumes to drive prices down, will be equally as expensive.

The reality is, despite the costs, these new breakthrough drugs offer highly effective treatments to individuals who desperately need them. How do you tell patients they can’t have or have to pay out of pocket for a substantially better therapy because of budget constraints? This is a fundamental issue, not just for employers or those in employers’ traditional plans, but also for individuals in private and public exchanges, and Medicaid.

Moving forward — particularly in the context of health care reform — everyone will have to start thinking about these dynamics in new ways and determine if and how they will cover the costs of therapy. 

For example, given the ACA’s goal of increased access, there may need to be a requirement to limit access or specific treatment protocols to patients whose unique gene type is proven responsive to the new therapies. In addition, patients will require higher-touch clinical and behavioral health case management than typically provided in the past through delegation to Centers of Excellence and physician communities, particularly given the much higher level of financial investment at stake. And even more creative solutions may have patients dusting off their passports to seize what many believe could be increased opportunities to reap the benefits of pharmacy medical tourism. (Some countries are able to provide the same CHC therapies for less than one-tenth of the cost in the US.)

But what can individual employers do now?

The first step is to work with their medical carrier or pharmacy benefits manager to assess the potential CHC prevalence in their plan. Once the magnitude of the problem is established, employers will be in a much better position to take advantage of whatever solutions emerge once the storm clears.

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