I just read a thought provoking blog on high priced new drugs. The author, a hospital pharmacist, is faced with the issue of how her institution can afford to treat patients with a new drug that promises profound increases in quality of life, but at astronomical prices.
(Note – I am not personally endorsing or failing to endorse the Campaign for Sustainable Rx Pricing that Dr. Duty mentions in her blog. I don’t know enough about the organization to have an opinion one way or the other.)
Until a few years ago, people infected with the Hepatitis-C virus (HCV) were in a bad way. Treatments were available, but they included interferon which had nasty side effects. Most patients experienced fatigue, headache, and muscle aches. A third or more had nausea, fever, depression, irritability and insomnia. Even worse, cure rates averaged under 60%.
But then there was a major clinical breakthrough. Gilead Sciences introduced a new drug –Sovaldi (sofosbuvir) – that provided cure rates of 95%. While most patients had to take Sovaldi with interferon, many could be treated with an interferon-free regimen that avoided most side effects. A year or so later Gilead introduced an improved product – Harvoni – that consisted of sofosbuvir and ledipasvir. With Harvoni almost all HCV could be cured by a single 12-week, interferon-free regimen. What a drug – ultra-high cure rates and minimal side effects.
But, as with most things in life, there was a down side. The drugs are expensive. The list price for the recommended 12-week treatment is $84,000 for Sovaldi or $94,500 for Harvoni.
One of the purposes of this blog is to educate readers about basic issues in pharmacy business. This post will discuss the differences between discounts, rebates, and kickbacks. Warning – I am not a lawyer and this is not a legal opinion. It’s a non-lawyer’s attempt to understand and explain some basic pharmacy business concepts.
A headline on the Wall Street Journal Health Blog from earlier this year announced that “AstraZeneca Pays $7.9M to Settle Kickback Charges Paid to a PBM” The federal government alleged that AstraZeneca made illegal rebate payments to Medco in exchange for preferred formulary position for Nexium (a very popular drug prescribed for ulcers).
Pharmaceutical companies commonly provide rebates to PBMs and specialty pharmacies to increase use of their products, so why was the rebate in this situation a kickback? Continue reading →