THE PRICE pharmaceutical companies are asking for a new drug more likely reflects an expectation of what they can get governments and insurance companies to reim­burse rather than the factual cost of manufacture plus a profit.

One manufacturer of the HCV-drugs has argued that the drugs are fairly priced because of all the future cases of liver disease related to HCV that would be prevented.

According to, among others, a recent analysis commissioned by the California Association of Health Plans, this seems to be a tendency with a number of new, high profile drugs, not only for HCV.

In the USA, a growing number of state legislatures from Ca­lifornia (AB-463) to Massachusetts (Senate, No. 1048) have introduced bills that would require pharmaceutical companies to disclose their costs and justify rising prices.

The bills are not wholly identical, but reflects a substantial public interest in understanding the development of drug pricing. Some would require drug makers to report profits and various operational costs for any medicine that has a price tag of more than $10,000 a year, while others seek this information for all medicines, regardless of price.

A poll by the Kaiser Family Foundation found that 76% of Americans overall – and across party lines – say their top health care priority is ensuring that high-cost drugs for chronic conditions, such as HIV, hepatitis, mental illness and cancer, are affordable to those who need them.

In December, 2015, the US Senate Comittee on Finance published what was called a case study, into the pricing and marketing of Gilead Sciences’ Hepatitis C drug Sovaldi and its second-wave successor, Harvoni.

During the 18-month investigation no concrete evidence was found in emails, meeting minutes or presentations that basic financial matters such as R&D costs or the multi-bil­lion dollar acquisition of Pharmasset, the drug’s first devel­oper, factored into how Gilead set the price. By going for the highest price Gilliad could get, treatment was put out of the reach of millions and caused extraordinary problems for Medicare and Medicaid.

The desire for a deeper understanding of drug pricing is fur­thered by the many different prices of the same drug de­pend­ing on country, insurance company and the interlocutor or in­terlocutors, who did the negotiating.

Pharmaceutical companies admit to operate with tiered prices, setting the asking price individually from country to country, asking more in wealthier countries than in poorer. As a result, it is not uncommon for neighbouring countries to have different prices.

Smaller, distributors may use this as a business model: im­por­ting labelled drugs from a country, where the price is cheaper, and reselling in another, below the more expensive price the original company asks there. However, it is not a very transparent world, as many of these deals, are kept a secret.

One strong negotiator, representing many, can bring the asking price down. This has been the experience of HIV/AIDS. Here prices started very high, but eventually came down, thanks to a combination of activism and bulk purchase by global funds (The Global Fund, Gates and Clin­ton Foundations) or bilateral development programmes (PEPFAR).

Who to treat and follow up?

Current European and American guidelines does not call for everybody to be treated as soon as they are found to be in­fec­ted. Most infected are asymptomatic for years and con­si­de­red in no urgent need for treatment. (As we know it, based on the 30 years or so data are available from.) Also giving the medication too early may cause more harm than benefit. Ba­sed on the progression the physician will assess for each in­di­vidual patient when to start the treatment. However, there is no universal agreement on when that time is.

Even though all patients will be treated, eventually, that time may come sooner than later because of indication creep. Af­ter new treatments have been approved it often turns out that far more patients are being treated, because the indi­ca­tion for when to treat is lowered.

This happened with the HPV vaccine to prevent cervical can­cer, genital warts, and other cancers. Initially it was to be gi­ven only to teen girls, but now is about to be given to boys and women as well.

A textbook example of indication creep is cataracts surgery, after laser technique was introduced. Before, patients had to stay in hospital post-procedure; after it could be performed on an outpatient basis. The hope was to make a serious dent in waiting lists. In reality, the waiting times have become even longer. As the surgeons buildt up routine, the threshold for doing the intervention was lowered. Undoubtedly, many patients have benefited from this, but it has also made the waiting list seem never-ending and cost far more than bud­geted.

Politicians tend to be uneasy about indication creep. On the one hand it is good that so many get a chance to be treated; on the other they are quite befuddled about who really made the decision to go beyond budget.

One good argument for the treatment is that the cure holds the promise of drastically reducing the need for liver trans­plants in the future. This would mean fewer expenses. But getting that reduction in health spending comes at a price here and now. Because in an interim period you will have to pay for the cure as well as liver transplants. To those already in need of a new liver the cure has come too late.

- Will lowering the price of the drugs solve all problems?

Not necessarily. Of course, it will make the drugs more ac­cess­ible, but some of the bottlenecks in the system will re­main, even if the drugs were available for free. One of the first hurdles to overcome is having the drug registered within every country it is going to be used. The pharmaceutical com­pany holding the rights to a product may not want to register it, because it will be too costly compared to what they will expect to earn. A generic manufacturer may also have concerns, because a generic drug has to be prequalified by the WHO, which is also costly.

Even in the industrialised countries trained personnel will be a factor to be reckoned with. Knowing when to begin treat­ment and following up requires special skills. Taking on an extra caseload will be a challenge. Health systems do not have the excess capacity. If they have, they probably are not very efficient.

Questions worth asking:

Is there a limit to how many new, high priced drugs govern­ments and insurance companies are willing to pay for?

Will price be an (overruling) indicator for which patients will be given access to expensive drugs?

Usually pharmaceutical companies use the argument of cost of research, clinical trial and the approval and drug candi­dates that turned out to be blind end to justify prices. But once those cost have been recuperated, will companies lower prices?

Developing stories to keep in mind:As of 2015

At the Millennium Summit at the United Nations in Septem­ber 2000 world leaders committed to help achieve the eight Millennium Development Goals (MDGs) by 2015. The MDGs are to be replaced by Sustainable Development Goals (SDGs) that from 2016 and onwards will set targets for future inter­national development.

- Will HCV be a specific SDG?

The Global Fund to Fight AIDS, Tuberculosis and Malaria is a public-private partnership that began operating in 2002 as an international financing organization that aims to »attract and disburse additional resources to prevent and treat HIV and AIDS, tuberculosis and malaria«.

Recently The Fund simplified its logo to just: The Global Fund. - Is The Global Fund about to embrace HCV?

References & Further Reading