Vital Signs Blog

Sovaldi likely to cost Medicare billions

The rising cost of hepatitis C drugs like Sovaldi and Olysio will increase Medicare Part D spending by $2.9 billion to $5.8 billion next year and could drive up premiums as much as 8.6%, according to a new report (PDF) by the actuarial firm Milliman.

The findings are based on the assumption that 15% to 30% of the Medicare Part D population that's estimated to be infected with hepatitis C will receive an $84,000 course of Sovaldi in 2015.

“While most payers cover about 75% of an enrollee's prescription drug costs, Medicare Part D covers 95% at high spending levels,” Mark Merritt, CEO of the Pharmaceutical Care Management Association, said in a statement. “The study shows taxpayers will bear the lion's share of the increased drug costs for Medicare Part D beneficiaries taking hepatitis C drugs.”

Milliman's analysis does not, however, include the effect of the drug therapy on other medical costs.

Last week, Gilead Sciences CEO John Martin predicted the hue and cry about Sovaldi's price tag will subside as more people are cured of hepatitis C, eliminating the cost of treating the disease as a chronic illness over a patient's lifetime.

Sales of the drug reached $3.5 billion in the second quarter of this year, accounting for more than half the company's total revenue and driving $3.66 billion in net income for the quarter.

On Monday, 333 patient groups from around the country, co-signed and sent a letter (PDF) to HHS Secretary Sylvia Mathews Burwell, arguing that health plans sold on the new insurance exchanges have too much leeway to exclude coverage for the expensive medications needed by patients with chronic conditions like hepatitis C.

Follow Virgil Dickson on Twitter: @MHvdickson


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