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The Drug That Costs $1,000 a Day — And Why You Should Care

By Kyle Marshall | June 6, 2014 | Healthy Lifestyle, Industry Perspectives

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You have to love the TV pitchman’s favorite question: “Why pay more?” But it’s no longer good for a chuckle when you find out there’s an actual answer.

In the case of Sovaldi, the new hepatitis C drug, someone has to pay more — a lot more — than what the vast majority of other drugs cost. Try $84,000 for the 12-week course of treatment. That’s $1,000 a day.

So why pay more? Because that’s what it takes to get the latest and most effective treatment known for hepatitis C, a difficult condition that often takes years to develop and can lead to death. Traditional hepatitis C treatments work in about 40 to 80 percent of cases. For Sovaldi, the success rate is around 90 percent, giving millions of patients realistic hope for being cured.

Gilead Sciences Inc. came out with Sovaldi in December. Since then it has become one of the pharmaceutical industry’s quickest success stories, generating $2.27 billion in sales for Gilead in the first quarter of 2014.

It also earned another distinction: Poster child for the debate over the high cost of specialty drugs.

Dialogue on Drug Costs

In the wake of news reports on Sovaldi’s price, the health insurance industry, businesses, unions, AARP and others started leading the charge for a national dialogue on drug costs. They say Gilead has offered no rationale for an outrageously high price. The pharmaceutical industry fought back, saying over the long term, Sovaldi will save money by reducing the amount spent on hospitalizations and liver transplants for hepatitis C patients.

Throw out those arguments between the lobbying groups and consider why we as health care consumers ought to care.

First and foremost is what you’d expect to pay out of pocket if you needed the drug. If you have Medicare Part D prescription benefits, you could expect to pay about $7,000 in out-of-pocket costs for the 12-week course of treatment, according to the journal Health Affairs. Patients with private health insurance almost certainly would pay more.

Thinking more globally, look at the impact on the health care system — which ultimately affects all of us through insurance premiums, out-of-pocket expenses, higher taxes and other costs.

Here, Sovaldi holds a unique position in pharmaceuticals. Most specialty drugs are targeted to small subsets of the population. But Sovaldi could benefit as many as 3 million Americans because of the prevalence of hepatitis C, which was transmitted in many blood transfusions before 1992.

The potential size of the market for Sovaldi, combined with its retail price, is what leads health policy experts to worry about the drug’s impact on medical spending. Some estimates project Sovaldi going so far as to double what the health care system spends on prescription drugs each year.

Then there’s the ongoing issue of comparing U.S. drug costs with prices in other countries. Unlike most other nations, we don’t have government price controls. Sovaldi prices abroad range from $66,000 in Germany for the 12-week course to as little as $900 in Egypt.

You Decide

No one wants to see patients denied a treatment that could save their lives. Yet unless we get a better handle on health care spending, consumers, employers, governments and insurers will all suffer financial hardships coming up with the money to pay for all the health care we expect to receive.

So let’s pose two questions for discussion:

  • Is $1,000 a day too much to pay for one prescription?
  • How do we decide what’s too expensive for a given health care treatment?

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