In December 2013, the Food and Drug Administration (FDA) approved Sovaldi to treat HCV. This new treatment reportedly costs $84,000 for the typical 12 week course of treatment making it one of the most expensive drugs to enter the United States market. Some patients with genotypes 1 and 3 are likely to require 24 weeks of treatment (with a current cost of $168,000). Olysio is another high cost HCV drug to enter the market and has a 12 week treatment cost of approximately $66,000. The relative use pattern for these drugs is not well established at this time so for the purpose of this study we are assuming an average cost of $84,000 per course of treatment for a patient who uses one of the new HCV drugs (which corresponds to a 12 week treatment of Sovaldi).
Unlike some other high-cost specialty drugs, the new HCV drugs have a significant patient base so their financial impact causes a meaningful and measurable increase in cost to beneficiaries and United States
taxpayers. No one knows for sure how many infected beneficiaries will ultimately receive the new treatment, but if for example, 50% of infected Medicare Part D beneficiaries were eventually treated with the $84,000 course of treatment, approximately $11 billion of new spending would enter the Part D system. The magnitude of the potential cost is significant on both an absolute basis as well as relative to the $75 billion in total individual Medicare Part D cost that CMS is projecting for 2015. Based on Milliman’s December 2013 HCV study, HCV is more prevalent among low income individuals than it is for non-low income individuals (2.91% of the Dual Medicare and Medicaid population and 0.31% of the Non-Dual Medicare population). Therefore, the federal government will pay more in low income cost sharing and premium subsidies, and will collect less member cost sharing to offset government spending associated with HCV drug therapy.