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  • Brendan Shaw

Can we handle a cure?: the politics and economics of hepatitis C treatment

When the first of the new hepatitis C medicines, the direct acting antivirals (DAAs), entered the market about five years ago they became a lightning rod for the furious debates that often go on around access to medicines.

The direct acting antivirals are a real cure for hepatitis C and were a major technological advance on previous treatments. Compared to the previous generation of interferons that only had a 40% to 50% cure rate and major side effects that often led to complications or patients giving up on treatment, the initial new DAAs were a simple once-a-day tablet on a 12-week treatment regime with an almost 100% cure rate and few side effects.

When the first DAA, Sovaldi™ (sofosbuvir) came on the market in the US with the headline price of US$1,000 per pill or US$84,000 for a course of treatment (before discounts) it triggered gasps of disbelief and a barrage of criticism.

Politicians complained bitterly about the budgetary cost, health ministers banded together in angry posses, senior health officials were in the corridors of Geneva lobbying the WHO to do something, the WHO wrote articles and put pressure on the companies to lower their price. Activist groups campaigned vigorously not just on the drugs themselves but used them as a platform to again campaign against the pharmaceutical industry, the patent system and the overall business model of the pharmaceutical industry.

The new hepatitis C medicines threw fuel on an already burning fire that was the heated debate about whether the private sector should be developing new medicines at all.

It was a tumultuous time, to say the least.

Yet a report by the WHO earlier this year shows that at least as far as pricing of the medicines goes, the companies, governments and international organisations are working through these issues. For example, while the initial official price in the United States for sofosbuvir was US$84,000, the WHO report shows that prices for 28 day treatment are as low as a couple of hundred dollars in many lower-income countries like Cameroon, Egypt, Indonesia, Mongolia, Morocco, Myanmar, Pakistan, Uzbekistan and Vietnam.

The telling chart in the report (below) shows that in low- and lower-middle income countries basically every person living with hepatitis C has the possibility of getting access to a cheap, generic version of these new hepatitis C treatments. There are still arguments about affordability in upper middle-income countries, but this increasingly becomes a question of whether such countries are willing, rather than able, to afford funding their own health systems.

Source: WHO, 2018, Progress report on access to hepatitis C treatment: focus on overcoming barriers in low- and middle-income countries,, accessed 18/3/2018, p. ix.

Whether patients in low- and lower-income countries actually get even the generic medicines is a different story. According to the WHO there are still millions of people in the world who are not being treated.

However, just cutting the price of medicines doesn’t solve the access problem. The recent WHO report identifies that diagnosis is a big problem. The lack of funding for screening and diagnostic tests means that most people with hepatitis C worldwide remain undiagnosed, given the disease can often be asymptomatic. There are also regulatory issues, such as the fact that in many countries the medicines have not been approved by regulatory authorities for quality, safety and efficacy. The WHO makes the point that it’s now up to governments to step up to the plate, as it were, and fund these medicines. Governments that don't have national plans to treat hepatitis C need to have them and need to put the money into their health systems to fund these treatments.

The pharmaceutical industry has, arguably, done its part – developing an increasing number of innovative treatment options with innovative tiered pricing, generic licensing and access strategies – but the rest of the health system needs to catch up.

And now, the entry of more patented medicines to treat hepatitis C from other companies – those much-maligned ‘me-toos’ that have often been criticised by industry opponents as a waste of resources – have played their part in driving competition in the market and leading to major price drops even for the newer, patented medicines. Today we have several companies such as Gilead, Abbvie and MSD with a range of new hepatitis C treatments[1].

In fact the commercial market for treating hepatitis C is now maturing to the point where many patients are now being cured such that growth in company sales is expected to decline, and several companies are cutting back their development of new treatments. However, the commercial realities of the market and the fact that many people in the world still need to be treated shows the issue needs to be carefully managed.

There are a few lessons that have come out of the hepatitis C experience over recent years for policy makers, businesses and the broader community.

One is that cost-effectiveness and health technology assessment took a back seat to budget impact. Even at the high official price in some countries before discounts, numerous studies showed that the new DAAs, such as sofosbuvir and sofosbuvir/ledipasvir were cost-effective, relative to the previous older, less effective therapies, particularly taking into account the broader costs to society of hepatitis C. The issue with these new treatments was never their cost-effectiveness per se, but their overall budget impact on payers due to the size of the patient group. This budget impact was the reason for the pressure put on the industry on pricing.

Another observation is that the experience with the new DAAs in the hepatitis C market suggests that health systems and their funding systems are, ironically, not set up to cope with cures.

The economics of a cure are different from other diseases that require ongoing treatment, as is being experienced by the companies supplying the hepatitis C cures. The problems identified by the WHO in governments not having sufficient planning, funding and political will to cure their populations of hepatitis C show that countries do not cope well when a widespread, effective new cure is developed that needs large upfront investment.

But to be fair to governments, they were not much worse at anticipating this than Wall Street analysts in the private sector who also missed the underlying economics of a cure – first by underestimating the returns companies would receive from curing hepatitis C, and then subsequently expecting the returns to last longer than they did.

It seems that despite a blockbuster cure being the holy grail, the pharmaceutical industry, governments, payers and investment analysts alike still aren’t sure how to handle a one when it comes on the market.

There are several broader policy and business questions coming out of the hepatitis C experience.

How do investors and health systems fund a breakthrough cure for a disease with a large patient population given the underlying economic issues?

How do you reconcile the human rights and public health imperatives against the imperative for companies to earn a sufficient commercial return to be interested in investing in the development of radical new drugs?

And how can we avoid the usual wearisome arguments and campaigning and have a better conversation about the economics of medical innovation alongside the requirement for good budget management on the part of payers and affordability for patients?

There’s a lot of work needed to find a cure for that.

[1] Such as Sovaldi™ (sofosbuvir), Harvoni™ (ledipasvir/sofosbuvir), Mavyret™ (glecaprevir/pibrentasvir), Viekira Pak™ and Technivie™ (ombitasvir/paritaprevir/ritonavir) and Zepatier™ (elbasvir/grazoprevir).

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