David J. States MD PhD FACMI
August 7, 2014

There is a paradox in health economics. On the one hand, the recently introduced drug Sovaldi is a wonder drug. It has a 90% success rate in curing a bad disease, hepatitis C, and it has relatively few side effects. The cost of treating is a patient with Sovaldi is high, $84,000 but much less than the cost of providing medical care for these patients which is even more expensive and can often include a liver transplant (1) . Some estimates for the lifetime medical care costs of hepatitis C run as high as $600,000. So the introduction of Sovaldi should be greatly reducing health care costs and improving the economics of Medicare and Medicaid. The paradox is that the high costs of Sovaldi threaten to bankrupt the system. Why is this?

One argument is that we are pushing forward all of the costs of future management into an expensive current day cure. But if this were the only explanation, the long term effect on health economics should be positive. We are removing $6 of future cost for every $1 we invest today. It sounds like a great bargain.

Were we ever really planning to spend the money required for the long term care of all hepatitis C patients? We perform about 6,000 liver transplants a year in the US (2), but we expect almost 120,000 prescriptions for Sovaldi to be written (1). The number of liver transplant operations performed each year is limited by the number of available donor organs as well as the capacity of surgical teams and medical centers. Even if all liver transplants were performed for hepatitis C, it would take 20 years to complete all of the necessary transplants at current capacity. In fact, hepatitis C is only one of many indications for liver transplant and not even the most common (2). We should not be counting the costs of avoiding the need for liver transplants in the benefits of prescribing Sovaldi because the reality is that we do not have the capacity or organ supply to perform all the transplants that would be required.

There are other drugs available to treat hepatitis C. The lifetime cost of these alternative drugs is comparable to that of Sovaldi (3), but all of these drugs have more serious side effects and none of them is close to being as effective as Sovaldi. Given the prospects of side effects, high co-pays of many prescription drug insurance plans and limited chance of success, most patients opt not to pursue these treatments.

The brutal truth that we are not talking about is that we were never planning to treat all of the people who currently have hepatitis C. Sovaldi is a shock to the system because the Medicare and Medicaid laws require us to provide care when it is available, and now that a safe and effective cure is available, we expect a large number of patients to avail themselves of this treatment instead of suffering inexpensively in silence.

1) http://www.nytimes.com/2014/08/07/upshot/why-the-price-of-sovaldi-is-a-shock-to-the-system.html?_r=0
2) http://www.liverfoundation.org/abouttheliver/info/transplant/
3) http://www.gilead.com/~/media/Files/pdfs/Policy-Perspectives/Patient-Access-to-SOF-for-HCV-4-28-14.pdf