Countries Use Novel Strategies to Tackle Price of HCV Drugs

Roxanne Nelson, RN, BSN

February 14, 2019

The introduction of direct-acting antivirals (DAAs) has changed the paradigm for treating hepatitis C virus (HCV) infections, with cure rates above 90%. The drawback is that these drugs come with a hefty, if cost-effective, price tag.

Currently, 71 million people globally are chronically infected with HCV, according to the Global Hepatitis Report, 2017, from the World Health Organization (WHO). A recent study suggests that the WHO's goal of eliminating HCV infections worldwide by 2030 is potentially feasible but faces some daunting challenges, including the cost of DAAs.

To help overcome some of the barriers to treatment access, Australia and Brazil are each exploring innovative methods to circumvent the cost. Two perspective articles published February 14 in the New England Journal of Medicine outline how they hope to accomplish this goal.

The Netflix Model

The healthcare system in Australia is complex but is generally funded by the government. Drugs that are on the national formulary are usually paid for by the government. To help make DAAs more affordable to patients and the healthcare system, the Australian government has rolled out a strategy, nicknamed the "Netflix" plan because it is similar to the movie subscription service, in which payment is for bulk access.

With the Netflix media service, instead of paying for individual movies, subscribers pay a lump sum for unlimited access to movies. With regard to DAAs, the Australian government negotiated an agreement in 2015 to spend approximately AUD$1 billion (US$766 million) over 5 years for unlimited DAAs for HCV patients.

But has this approach been beneficial to Australians?

Suerie Moon, MPA, PhD, and Elise Erickson, MA, both from the Graduate Institute of International and Development Studies, Geneva, Switzerland, sought to answer that question.

During the first 2 years, 47,122 people were treated. There was a patient surge during the first 12 months that stabilized at an average of 1586 new patients per month during the second year, the researchers write in their perspective article.

If rates remain at the level seen during the second year, note the authors, then a total of 104,223 patients would be treated over 5 years. This extrapolates to a per-patient drug price of AU$9595 (US$7352).

By contrast, in other countries with a per capita gross national income similar to that of Australia, the cost of treating patients was much higher. For example, the per-patient cost was US$72,765 (AU$94958) in the United States and US$55,284 (AU$72,146) in Iceland for ledipasvir/sofosbuvir (Harvoni, Gilead Sciences).

If they had used traditional pricing, the Australian government would have had to spend AU$6.42 billion (US$4.92 billion) more to treat the same number of patients, or they would have had to treat 93,400 fewer patients with a fixed budget of AU$1 billion (US$766 million).

Moon and Erickson point out that this strategy also benefits suppliers. The arrangement was economically feasible, because production costs for DAAs are small relative to the price of the finished product. For example, the cost of manufacturing a 12-week course of sofosbuvir has been estimated at US$68 to US$136 (AU$89 to AU$177), and under Australia's "Netflix" drug subscription plan, companies receive a "considerable financial reward for innovation" and have reduced risk with a guaranteed 5-year revenue.

"Overall, when production costs represent a small proportion of a medicine's price — as is the case for most patented small molecule drugs and high-priced biologics — lump-sum remuneration for innovation may be an effective, underused strategy for achieving universal access," they conclude.

Care for All in Resource-Limited Environments

On the other side of the globe, Brazil used a multipronged approach to cut the cost of DAA therapies. The government negotiated a deep discount for the drugs and developed a consortium for manufacturing generic products locally. It has, however, become tangled in legal battles over patents.

There are an estimated 700,000 people in Brazil living with HCV, report Elize M. da Fonseca, PhD, of the Department of Public Administration, São Paulo Business School, Brazil, and colleagues. The Brazilian Ministry of Health (MoH) has ensured that 50,000 patients would be treated.

But unlike its approach to HIV/AIDS, which offered treatment to anyone who needed it, the MoH instead adopted an incremental strategy for treating HCV. The first patients treated were those with severe liver fibrosis and coinfections. The program was eventually expanded to include the entire patient population. In addition, Brazil has initiated a number of initiatives focused on diagnosis and prevention, following the recommendations of the WHO.

The authors note, however, that there are "serious financial implications" in extending treatment to all, owing to the high cost of DAAs. Brazil was excluded from the licensing scheme developed by Gilead, the manufacturer of sofosbuvir, which allowed for discounted versions of the drug in 91 countries. This made authorized generics largely unavailable.

Without any discounts, the cost of treating their HCV population would be daunting. In 2015, Brazil leveraged their considerable purchasing power and was able to secure a 90% price discount from the US list price for the combination sofosbuvir-daclatasvir. Concurrently, Brazil has made "substantial efforts to enable local production" of generic versions of both sofosbuvir and daclatasvir (Daklinza, Bristol-Myers Squibb).

For more than a decade, the MoH has promoted the creation of consortia that include private pharmaceutical companies and public laboratories, called productive development partnerships (PDPs), for the purpose of developing drugs that are considered strategically important. Both sofosbuvir and daclatasvir fall into that category, and multiple PDPs are working toward producing generic versions of those agents. One of the PDPs includes Gilead, the manufacturer of sofosbuvir.

One consortium registered a generic version of sofosbuvir with Brazil's health regulatory agency, ANVISA (Agência Nacional de Vigilância Sanitária), and indicated a willingness to provide sofosbuvir at a cost of US$8.50 per pill, which is one quarter of the price charged by Gilead.

Brazil's MoH has encountered barriers relating to intellectual property rights that have prevented it from utilizing this potential source of inexpensive drugs. The authors point out that overall, patent protection for sofosbuvir has been controversial in many countries, including Brazil, and the government has been urged by international and Brazilian nongovernmental organizations to deny patent protection.

After a complicated court battle, the patent was eventually approved, although the approval was narrower than what Gilead had initially applied for. Subsequently, the court's decision was temporarily suspended, and the legal status of the patent is currently in limbo. The local consortium says that their version doesn't infringe on it, and in late 2018, the MoH proceeded to purchase the less expensive version of the drug. Gilead is currently trying to obtain other patents on HCV drugs in Brazil and to compete for MoH purchases with lower prices.

"The barriers to eliminating HCV in Brazil would be heightened by patent protection, but they would not be insurmountable," write da Fonseca and colleagues. "The capabilities developed by the PDPs can still contribute to the Brazilian government's broader strategy for reducing prices by relying on local production."

They add that even if Gilead was granted broad patent protection for sofosbuvir and remained the sole supplier, "the existence of the local consortia and their potential to serve as alternative sources of the drug can aid the government as it engages in price negotiations."

The Netflix Model in the US

Although it is unlikely that Brazil's strategy would be workable in the United States, there is growing interest in the model that Australia has embraced.

Several Medicaid programs in the United States are considering the subscription "Netflix" model. "So far, Louisiana and Washington have publicly announced such plans," said Jagpreet Chhatwal, PhD, assistant professor, Harvard Medical School, and senior scientist, Institute for Technology Assessment, Massachusetts General Hospital, Boston.

Chhatwal believes that "we will hear from more states after these two states move forward, as the model is quite innovative — it has obvious advantages to scale up treatment."

Currently, in the United States, more than a third of HCV patients are denied coverage for DAAs by private and public insurers, according to a study published last year in Open Forum Infectious Diseases. This is particularly true for recipients of Medicaid, which provides coverage for low-income individuals.

Andrew Aronsohn, MD, associate professor of medicine, University of Chicago Medical Center, in Illinois, also thinks the Australian model is really intriguing. He doesn't see any reason why the model can't be expanded to other state Medicaid programs, especially those that still have fibrosis restrictions in place as a mechanism to cut costs and improve access.

"On a similar note, large payers such as Blue Cross, the VA [US Department of Veterans Affairs], and large hospital systems may also be entities that would see value in this plan," he told Medscape Medical News.

"To me, beyond the cost savings, the real benefit of this plan is that it lines up incentives to treat better than our current system," Aronsohn explained. "This is key in any HCV elimination strategy."

For instance, he pointed out, if Illinois Medicaid adopted this approach, public health officials would be incentivized to treat as many patients as possible, since they would already be paying for it and they would know they would see real cost savings in the future, when the payer would not need to pay for complications of liver disease down the road.

"This will pave the way to eliminate other existing barriers to treatment," he added.

Scaling Up Is Not Enough

But HCV treatment is a multiprong endeavor. Chhatwol emphasized that scaling up treatment is not enough. "Because HCV is a silent disease, a vast number of patients remain undiagnosed, and unless HCV screening is aggressively implemented, most countries will soon run out of diagnosed patients for treatment, " he said.

The United States is a fragmented health market, which makes things even more complicated. The benefits of treating Medicaid patients are not necessarily availed by Medicaid, he pointed out. "HCV is a slow, progressive disease, and treating someone today will potentially prevent a liver transplant decades later," he said. "However, we can learn lessons from Australia's experiment. The Netflix model will be more effective if it is accompanied by changes in HCV screening — emerging evidence suggests that we should consider universal testing of HCV."

Stefan Wiktor, MD, MPH, acting professor of global health, University of Washington, Seattle, agrees that the main problem is lack of diagnosis. "The big increase in treatment numbers starting with the introduction of DAAs was due to the presence of legacy patients — those already diagnosed," he told Medscape Medical News. "Those were largely treated by 2016, and in the absence of much concerted effort to boost diagnosis rates, not enough new patients were being identified."

This "linkage" problem is much like it was with HIV, inasmuch as HCV treatment is a multistage process, and at each step of the way, people get lost, he noted. "Some people just refuse, as they don't see the benefit of it," he said.

A key point is that in more and more countries, price is less and less a barrier to hepatitis treatment and elimination. "In almost all countries that have tried to scale up elimination, they rapidly run out of patients," Wiktor said. "Even in the US, with reduced prices and more liberal eligibility criteria by insurance companies, the number of people being treated is dropping."

Australia is the best-case example, where all of the success factors are in place: political commitment, a great health system, and free drugs for all HCV patients. "Even with that, the program is really slowing down, and most persons diagnosed are not being treated," he emphasized. "If they can't work out all the angles, how will countries with fewer resources manage?"

The authors, Wiktor, and Aronsohn have disclosed no relevant financial relationships. Chhatwal has received research grants and a consulting fee from Gilead Sciences and Merck & Co, Inc.

N Engl J Med. Published online February 14, 2019. da Fonseca et al, Abstract; Moon and Erickson, Abstract

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