Hooray for high-priced hepatitis treatment Sovaldi

Congratulations to Gilead Sciences for producing Sovaldi (sofosbuvir), which cures hepatitis C about 90 percent of the time. The drug has a list price tag of $84,000 for 12 weeks of treatment. That $1000 per pill price tag is causing concern among health insurers, policymakers and the general public. The Wall Street Journal (Sales Soar for Pricey Hepatitis Drug Sovaldi) emphasizes the negative impact the drug’s release is likely to have on health insurers’ profits this year.

Doctors and patients are rushing to embrace the drug, and prescribing has taken off during the first several months of availability. Despite the concerns about cost containment, health insurers and pharmacy benefit managers have done little to restrict access. Gilead is making money hand over fist.

This is the American healthcare system at its best: providing rich rewards to those who bring truly innovative solutions to market first and not letting cost concerns lead to rationing. I hope Gilead’s example spurs investors to fund other treatment breakthroughs and get them to market ahead of competitors. 

Hepatitis C is a scourge and the treatments have been difficult to take and not nearly as effective until now. One of the reasons the total costs of Sovaldi is so high is that there are millions of people who were infected years ago and are starting treatment now. The CDC recommends testing for baby boomers, many of who were unknowingly infected from intravenous drug use in the 60s and 70s or from a tainted transfusion received up till the early 1990s. Once the big group of long-term infected patients is tested and treated, and when more products like Sovaldi come to market, costs will decline.

The cost problem in American healthcare is not from products like Sovaldi that are expensive but work. The problem is expensive care that is less effective or even harmful.

I asked all nine candidates for Governor of Massachusetts the following question:

Hepatitis C is 3 or 4 times more common than HIV. New drugs that can cure the infection are coming on the market this year but they are very expensive. What role should the state play in ensuring that residents are tested, linked to care, and have access to these new medications?

Don Berwick, former head of CMS and the Institute for Healthcare Improvement, had a good answer:

“We have to recover money from ineffective care, wasteful care, and harmful care.  We need to work very hard to make sure that we have the resources liberated from health care waste, so we can rededicate them to things like proper hepatitis C care.”

None of the candidates had a great suggestion for how to make sure everyone gets tested. But the beauty of the profit motive is that Gilead is hard at work raising awareness about hepatitis C testing and treatment, which will benefit the company and patients.

By healthcare consultant David E. Williams of the Health Business Group

Happy 9th birthday to the Health Business Blog!

Happy 9th birthday to the Health Business Blog!

Happy 9th birthday to the Health Business Blog!

The Health Business Blog turns nine years old this month. Continuing a tradition I established with birthdays onetwothreefourfivesixseven and eight I have picked out a favorite post from each month. Thanks for continuing to read the blog!

March 2013: Don’t worry, Obamacare won’t kill 99 cent value meals

Initial estimates of the costs of the Affordable Care Act to small employers were severely overstated. A new analysis shows a typical Wendy’s will spend about $5000 per year extra, not $25,000 as had been feared.

April 2013: The still-early state of online doctor reviews

There are several websites where consumers can see and post ratings of physicians. But the sites contain incomplete and sometimes misleading information. Some doctors are upset and going as far as suing for libel. In this post, I review the state of the sites.

May 2013: Harvard Pilgrim CEO Eric Schultz discusses consumer engagement and transparency

HarvardPilgrim HealthCare is consistently ranked as best health plan in the US and was the first health plan to select transparency vendor Castlight Health to provide patient-specific price information. CEO Eric Schultz lets us in on what he’s up to next.

June 2013: Fox guarding henhouse? Radiologists want to “control” radiation debate

I don’t know how you feel, but I’m not confident that people who make a very good living from CT scans should be the ones to decide how much radiation is reasonable for patients to be exposed to.

July 2013: Health care deal sites –I’m quoted and I’m skeptical

Daily deal sites like Groupon are (or were) all the rage, so it’s no wonder that healthcare-specific sites have also popped up. These are interesting to talk about but have little real-life impact on the healthcare market. The Dallas based NPR station did a piece on one such site and quoted me. Later, the national Marketplace show picked up the story.

August 2013: When Progressive’s Flo follows your health

Progressive’s Flo sure is perky. The company has a Snapshot device that is mounted in policyholders’ cars to monitor how safe their driving is. It may seem far-fetched, but I expect the same philosophy to be carried over into healthcare eventually. Are you ready to have Flo monitor your eating, drinking, and sexual behaviors?

September 2013: How a tough manufacturing process for Advair might help GSK

GSK has struggled with the manufacturing of the Advair inhaler for 15 years. But its woes are turning out to be a blessing in disguise because manufacturing has created an effect barrier to entry for generic challengers.

October 2013: Patients should not be responsible for telling doctors to wash their hands

I’m all for good hand hygiene and for participatory medicine. But I really dislike the notion that patients have to be the ones to police the handwashing practices of doctors and nurses. I’ll do it if I have to, but it’s pathetic if the profession has to resort to this.

November 2013: Reference pricing and the role of the government

Reference pricing for medical procedures constrains costs by capping the amount an insurer will pay for a procedure and making the patient pay the extra amount. The Wall Street Journal would have us believe that the use of reference pricing is a great argument for free market approaches in healthcare. But if anything, it demonstrates the inadequacy of the private sector to take on cost control.

December 2013: Ali Velshi interviews me about the ObamaCare rollout

I was interviewed live on Real Money with Ali Velshi about what’s going wrong and right in the rollout of federal and state health insurance exchanges. He’s balder than I am.

January 2014: Marijuana is not gay marriage

It’s tempting to draw parallels between the legalization of gay marriage and legalization of marijuana and in fact, both are gaining ground rapidly. But there are serious differences. I predict we’ll look back on gay marriage and wonder why we took so long to legalize it, while we’ll look back on marijuana legalization and kick ourselves.

February 2014: Health Business blog to post interviews with all Massachusetts candidates for Governor

Massachusetts voters deserve a substantive, competitive campaign for Governor this year. I have decided to do my part to foster a productive debate by conducting one-on-one interviews with each of the nine candidates on health care issues. Most of the candidates are well known in the health care world but even those with non-health care backgrounds have studied the issues and have credible ideas.

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Thanks again for another great year!

By healthcare consultant David E. Williams of the Health Business Group

North Adams hospital to close: Here’s how it fits into the bigger picture

I’m quoted in the Springfield Republican today about the closure of North Adams Hospital and the implications for healthcare in Massachusetts more broadly. The article draws heavily on a report we contributed to about the challenges facing lower and middle income communities as a result of how healthcare is financed in this state.

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By healthcare consultant David E. Williams of the Health Business Group

Office of Recovery: Avellone proposes strong response to substance abuse

Joe Avellone (D), candidate for Governor

Joe Avellone (D), candidate for Governor


Dr. Joe Avellone, Democratic candidate for Governor of Massachusetts, is very concerned about the impact of substance abuse. In particular, he’s zeroed in on addictions to narcotics and heroin that have arisen out of the widespread prescribing of powerful painkillers for serious and not-so-serious conditions.

His Office of Recovery would have high visibility in the Executive Office of Health and Human Services and focus on getting individuals into treatment during their window of opportunity.

In this podcast interview, Avellone describes why he’s making this issue a priority, how his plan would work, and how it compares to efforts elsewhere.

Earlier I interviewed Avellone and all other candidates for Governor about healthcare policy.

By healthcare consultant David E. Williams of the Health Business Group

Back to the 1980s: My day at UC Berkeley

I was in the San Francisco Bay Area on business last week, and spent an interesting and enjoyable day on the University of California Berkeley campus, where I experienced two blasts from the past.

Choosing Wisely is the name of an initiative to prevent unnecessary use of medical tests and procedures. But it could also describe how I selected my 10th grade biology lab partner at Walt Whitman High School in Bethesda, MA in the early 1980s. At the time Mike Eisen was a smart guy who also happened to be the son of two scientists. He was a good  (and mischievous) student who knew a heck of a lot about fruit flies.

It will surprise no one from those days that Mike went on to become a prominent scientist himself with a lab at Berkeley. Speaking on behalf of my classmates, I will say we are also relieved that his mischievousness has been productively channeled into disrupting the scientific publishing industry for the public good as co-founder of the Public Library of Science (PLOS) rather than for the development of nuclear hand grenades or brain erasers, as seemed plausible back then.

In any case, Mike and I had a lot of fun catching up on work and life.

Later I had the pleasure of attending a graduate class taught by Veronica Miller, who is also the Executive Director of the Forum for Collaborative HIV Research, a long term client of ours. This groundbreaking class (US FDA, Drug Development, Science and Health Policy) in the UC Berkeley School of Public Health is all about drug development and the role of the FDA, using the examples of HIV and Hepatitis C.

There were two guest speakers: Romas Geleziunas, a scientist from Gilead who talked about what it will take to cure HIV, and a patient advocate, Matt Sharp, who was diagnosed in 1988 and has been on the leading edge of activism and research ever since. It was interesting to hear him discuss the early days of ACT UP with a group of students who are too young to remember what it was all about.

It made me think back to my 11th grade oral communications class with Mrs. Z in 1984. For our culminating project we had to give a speech on a topic we considered important and that others should know about. I had been reading about AIDS that year and was very concerned about the epidemic and how it could grow to affect the whole society. The conventional wisdom (passed down from the seniors) was it was best to do a speech about Mrs. Z’s cat, since that was the main thing that interested her. I decided to ignore that advice and did my speech on AIDS anyway, and spent a lot of time prepping it. When it came time to deliver my speech, Mrs. Z was chewing gum, filing her nails and looking out the window. I got a B, one of the few grades I remember from high school. (By the way, very few of my teachers were like Mrs. Z!)

On the one hand it seems like the last 30 years have flown by pretty quickly. On the other hand, the early 80s do feel pretty remote.

By healthcare consultant David E. Williams of the Health Business Group

Health Business Group in HealthLeaders

HealthLeaders (‘Vicious Cycle’ Flagged in MA Hospital Financing Disparities) reports today on a white paper we contributed to about the impact of hospital price differences in Massachusetts.  We built on previously publicized price data to highlight the implications for middle class and lower income communities: they effectively subsidize their richer brethren who pay the same premiums but get their routine care from pricier providers.

One of the things that surprised us is that Medicaid managed care plans, which are hired by the state, pay teaching hospitals much more than they pay community hospitals.

The report includes four recommendations to address the disparities:

  1. Require high-cost providers to hold cost growth below the general benchmark under Chapter 224 of health reform
  2. Consider each provider’s payer mix when setting Medicaid (and possibly commercial) rates
  3. Implement a Medicaid Accountable Care Organization (ACO) to contain costs and encourage quality, rather than relying on cutting unit prices
  4. Encourage commercial health plans to design products that reward members who use low cost providers

I’m quoted in the article.

By healthcare consultant David E. Williams of the Health Business Group