Humanizing Drug Costs

Humanizing Drug CostsKristin Espeland GourlayReporting on Health WebinarSeptember 3, 2015

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Sticker Shock

Specialty drugs drugs for serious or chronic conditions you cant just walk down to your pharmacy and pick upHuge driver in the rising cost of drugs and health careThe conversation seems to center around the sticker price.$94,000 for a 12 week course of Harvoni, for example, although some patients may need longer.Many cancer drugs cost much more than that.2

Whats Missing From the ConversationFor Patients?Will it help me/cure me?Will it hurt me/make life miserable?Can I get it?How much will it cost me?Is that a one-time cost, or a lifetime expense?Will my insurer cover it?

But whats missing from this conversation?From the patients perspective:Is it a cure? Does it prolong life? If so, for how long?To what degree will the treatment affect a patients quality of life? Will it only keep you alive for another few months, but in so much agony youll wish you hadnt started?

Co-pays, complementary drugs, co-insurance. For hepatitis C Drugs like Sovaldi and Harvoni, the sticker price is between $84,000 and $94,000 or $1000 a pill. Ive done some informal surveying of patients and doctors and found thatShort course, or for the rest of your life?

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Whats Missing From the ConversationFor Payers?

How many patients might benefit?

Can we afford this?

Is the old (or standard) treatment just as good?

Do we have to offer this treatment?

From the perspective of the overall health system, or all the different payers: Is this a rare disease, or a public health burden?In case of hepatitis C: most common blood borne illness. Between 3 5 million americans infected. New cases on the rise because of increasing injection drug useEven if we wanted to treat everyone whos infected right now, we couldnt cannot afford itOld treatment definitely not as good works about half the timeDo we have to offer it? If it becomes the community standard of care, prisons must offer it. Medicaid patients must have access to same providers/treatments. In a word, yes.4

Is it cost effective?

One way to get beyond the sticker shock and start to answer some of these other questions is to ask whether a drug is cost effective.Uncomfortable to think about whether a treatment is cost effective. Especially when its your health, your childs health. Your patients health. We want to treat/cure/alleviate pain no matter the cost.

But in a system with resource constraints, I learned that it has to be part of the conversation. It already is part of the conversation in other countries take the UKs national health service, for example.

These new treatments for hepatitis C made a big splash biggest drug launches ever for some. High prices. But is there a way to put these prices in context? Can we compare this cost for this treatment with the cost of another treatment?

In fact you can. Theres an equation for it.

To work it out, you have to understand this concept of the quality-adjusted life year. Thats a term health economists have come up with to use in this equation. I will give you a taste.

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Cost EffectivenessHeres how you figure it out:

Price of new treatment Price of old treatment (divided by)QALY* gained w/ new treatment QALY gained w/ old treatment= $ dollar value

*QALY = Quality Adjusted Life-Year

Health economists generally agree that one quality-adjusted life year is worth $50,000.Anything less than $50,000 is considered cost effective.

Bear with me! Im bad at math. But heres an equation for figuring this out.

As journalists we can probably leave this to the health economists and experts like Dr. Bach.

but its good information to have in your back pocket, to cut through the hysteria about drug prices. What kind of bang for your buck?For new hepatitis C treatments which vary based on how long you have to take them, what genotype theyre for, whether theyre taken in combination with other drugs. The newer ones in particular are generally considered cost effective for patients with certain types of hep c.

Something thats cost effective generally buys you one quality adjusted life year for less than $50,000. A quality adjusted life year is a metric health economists came up with to be able to compare treatments. Its survival and quality, all rolled into one. The $50,000 dollar number really struck me how did we come up with that? A health economist explained to me that its about what a healthy person could be expected to produce in terms of economic value, a year.

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The Uncomfortable Math of Hep C

Excerpt from a story in my series, At the Crossroads: The Rise of Hepatitis C and The Fight To Stop It

For my series on hepatitis on rhode island public radio, I covered the cost of these new medications in a few different ways.One was just to own up to the uncomfortable math. I did it in the style of a math lesson with another producer in the newsroom.

I visited a health economist, got him to explain this to me and actually do the math on the back of my notebook. Then I brought that back to the newsroom and tried to explain it to my colleague.

Heres an excerpt.

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Beyond Price and Cost EffectivenessAccess: Are insurers/payers restricting access to this treatment?Pre-authorizationsIncarcerationInsurance formulary variations

Affordability: A treatment might be cost-effective, but can the health system afford it?

Another way to humanize drug prices is to ask whether access is universal or limited, and if its limited why? Is that because the drug costs a lot, or because so many people might need or want to take it that the system just cant afford it for everyone?

Heres some examples when it comes to hepatitis C and access to new treatments.

A big percentage of hepatitis C patients have medicaid coverage. (big percentage have medicare, too. But well stick with medicaid example for now)

Medicaid agencies around the country have taken different approaches to ration the drugs, essentially. Thats because treating everyone would cost tens of millions, maybe billions.Rhode island requires a pre-authorization: thats a form your doctor fills out, saying why you need the drug. The patient fills out some information too. Patients have to meet certain clinical criteria. In rhode island, you have to have a certain amount of liver damage, or cirrhosis, before you can quality. But there are other criteria that some people feel are less clinical, less helpful, and more almost. Discriminatory: You have to be drug and alcohol free for at least 6 months. Only specialists can prescribe this unless your doctor applies to the health department.

Illinois requires longer time drug and alcohol free. Some agencies require urine screening. Signing a patient pledge. Ask yourself: would these kinds of restrictions be put on cancer treatments, other treatments?

Requirements vary widely. You could ask your medicaid agency for a copy of the policy, see a copy of the pre-authorization. Find out their estimates for the number of hep C cases they project treating in the coming fiscal year. Compare what actually happens. Find out if theyve tried to negotiate prices with drug makers. Find out how many patients approved for treatment, how many denied, and why.

Prisons are another health system you might look at. Huge percentage of prisoners infected with hepatitis C.

Find out how your prisons are handling this. In rhode island, they decided they had to triage the sickest patients. Entire health care budget is $20 M. treating all hep c infected inmates would completely blow the entire budget.

How to find patients to share stories: talk to specialists, drug treatment centers, facebook

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ResourcesTufts Cost-Effectiveness Analysis Registry, https://research.tufts-nemc.org/cear4/Home.aspxHarvards Center for Health Decision Science: http://chds.hsph.harvard.edu/Projects/Project-ListMedical journals (NEJM, etc.)Example of a cost effectiveness analysis: http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4524433/UK National Health Service guidelines: http://www.nice.org.uk/Drug prices: www.goodrx.comAsk state Medicaid agency for guidelines, pre-authorizations, formularies

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Questions? Comments?

Get in touch: kgourlay@ripr.org

Find my work at www.ripr.org

Helpful?

QALY excerpt201584010.18