The Ethical Challenges Raised by Hepatitis C Drugs

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By Leonard Fleck, PhD

Here is the key question I will address in response to a recent Forbes article: Does everyone infected with hepatitis C (HCV) have a just claim to a drug that costs $100,000 for a course of treatment but that yields a cure rate greater than 95% (but that costs less than $1000 to produce)? I would not blame the reader who instantly reacts with the thought “profit margins like that are unconscionable; THERE is the ethical problem.” But the purpose of this essay is not to engage in Big Pharma bashing (though a few good whacks would certainly be ethically justified). Instead, I want to examine the downstream ethics issues that have been generated by these drugs and their pricing.

Let us start with a few medical and demographic facts. The CDC estimates that about 3.2 million Americans are infected with HCV, roughly half of whom are unaware of the fact that they may be infected. I remind the reader that HCV was not identified until 1989. This means that some form of broad population testing would be necessary to identify all who are infected with HCV. The medical consequences of untreated HCV are often severe: liver fibrosis, liver cirrhosis and liver cancer. However, this is not the fate of everyone with untreated hepatitis C. Roughly 10% of these patients will suffer cirrhosis within 20 years of infection, while 30% will suffer this fate somewhere beyond 20 years. (Bastian, 2014) This fact alone will create a major ethical problem (see below). HCV is transmitted through bodily fluids, much like HIV. The point here is that HCV represents a public health threat.

There have been relatively less expensive HCV treatments that have achieved cures in some range of cases, but these treatment regimens required 48 weeks of treatment with peginterferon, which more than half the patients found intolerable, which resulted in their quitting treatment. Sofosbuvir (Sovaldi) shortened treatment time to 12 weeks, though the whole regimen still required interferon. However, adding ledipasvir to sofosbuvir (Harvoni) eliminated the need for interferon. The cost of Sovaldi is $84,000 for those twelve weeks, or $1000 per pill. Harvoni is priced at $1125 per pill or $94,500 for a 12-week course of treatment. If all 3.2 million Americans infected with HCV were to receive either treatment, that would represent $300 billion in sales. If we ask how individuals might become infected with HCV, the answer is that a large majority became infected through IV drug abuse. Roughly 500,000 individuals infected with HCV are in prison (Liu et al., 2014); another 750,000 or so are eligible for Medicaid coverage; roughly that same number is now covered by Medicare (or will be by the year 2020).

If all who were eligible for Medicaid coverage and HCV infected were treated this year, the cost to the states would be $55 billion. (Kardish, 2014) The same would be true in the prison system. These are costs that are impossible for the states to bear both ethically and economically. Consequently, most states are putting in place severe restrictions on access to these drugs. Specifically, individuals must have advanced liver cirrhosis in order to receive the drug at state expense. In addition, individuals must not have engaged in drug or alcohol abuse for a period of three months (alcohol abuse speeds cirrhosis in HCV patients). Further, if individuals re-infect themselves after curative therapy, they will not be eligible for another course of Harvoni at State expense. (Silverman, 2014; Bannow, 2014)

A mix of arguments is given to justify what appear to be these draconian policy choices. First, roughly 70% of HCV infected patients will not develop advanced liver cirrhosis or liver cancer. So, the argument goes, why spend tens of billions of dollars for a drug that will not make much of a practical difference in the lives of these patients? Further, individuals on Medicaid or in prison very often move out of poverty or serve their time. So, the argument goes, why should we (Medicaid or the prison system) have to pay these costs for these asymptomatic patients when they will leave the system and someone else can be the bearer of those costs. This same argument is being invoked by private insurance companies that are mindful of the frequency with which individuals switch insurance plans. Along these same lines, these considerations undermine any motivation for wanting to do population testing to identify individuals who are unaware of the fact that they are HCV infected. Finally, given limited resources (what taxpayers are willing to spend), providing unlimited access to Harvoni or Sovaldi would require substantial re-prioritization of health needs to be met for these populations, which (it is asserted) would be neither just nor justified.

Still, there is something medically and morally perverse about these arguments. Last year we in the US spent $17 billion on statins with the intent of preventing some number of heart attacks and strokes. No one argued that we should wait to see who suffered a heart attack and survived before offering a therapeutic response. Current protocols for treating HIV+ individuals recommend initiation of triple therapy as soon as infection is confirmed (as opposed to waiting several years for compromise of the immune system). The cost per year of those drugs is about $35,000 per person, and the gain in life expectancy may be thirty years or more. That represents more than a million dollars in lifetime costs for those drugs. If we see that as something a just and caring society ought to provide, both for the good of the patient and for public health reasons, then why would not moral consistency require the same for Harvoni or Sovaldi? Again, HCV is infectious. If HCV-infected individuals are untreated for twenty years, then they have the capacity to infect others through unprotected sex or needle-sharing, even if they never go on to advanced cirrhosis. Further, failing to screen for HCV in high-risk populations can only make that situation worse.

It must be remarked that HCV-infected patients are largely of low social status. Further, strong social disapproval is attached to the behavior that results in much HCV infection. So there is the subtle suggestion that these individuals are responsible for their impaired health, and consequently, do not have a just claim to the social resources needed to restore their health. I have argued elsewhere this is a seriously ethically flawed perspective. (Fleck, 2014)

Given constrained state budgets, the argument about unjustly skewed priorities that would result from unlimited funding for Harvoni has some ethical merit. That brings us back to the pricing issue. Gideon, the distributor of Sovaldi and Harvoni, claims that the drug is fairly priced because of all the future cases of liver disease related to HCV that would be prevented. However, the current annual cost of treating those diseases in the US is about $6.5 billion. (Kabiri et al., 2014) That yields a twenty-year cost of about $130 billion, far below the $300 billion in total sales Gideon might expect. So that argument is mathematically and morally specious.

There is the argument about research costs and failed drugs routinely invoked by drug companies. But Gideon spent nothing to develop this drug. Gideon bought the company that developed the drug for $9 billion. That is exactly equal to the first nine months of sales of Sovaldi. If the price of Sovaldi and Harvoni were reduced by 90% to $8000, the ethical issues raised above would all disappear. And since the actual cost of manufacturing the drug is only $1000, that still leaves a $7000 profit margin per prescription. If Senator Proxmire from Wisconsin were still alive, Gideon would deserve a gold-plated Golden Fleece award. Failing that, several severe ethical whacks to their corporate conscience are well deserved.


Fleck smallLeonard Fleck, PhD, is a Professor in the Center for Ethics and Humanities in the Life Sciences and the Department of Philosophy at Michigan State University.

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6 thoughts on “The Ethical Challenges Raised by Hepatitis C Drugs

  1. I think the per-pill cost is misleading. We’re talking about approximately $180,000 – for both drugs – to decrease the chance of cirrhosis from 30% to much lower (not zero but close) AND prevent spread of Hep C, so a public health benefit (or externality, for economists). $180,000 pales in comparison to liver transplant, and also compared to many cancer treatments that provide little hope of life-extending benefit. Statins are cheaper (cheapest high-intensity statin would be at least $12,000 for a 40 year old taking it til 75), but they take someone with a 7.5% or more risk of a heart attack to a bit less than that (not near zero).

  2. The cost of a liver transplant can be more than $400,000. So it sounds reasonable to say $100,000 pill can save $400,000. However, we can only do about 2500 liver transplants per year In the US. That puts the aggregate cost of liver transplantation per year at about $1.2 billion. But the aggregate sales of either Sovaldi or Harvoni this year will be about $12 billion. That is very far from sufficient to justify that price. The price is what compels Medicaid and the correctional system to limit access to the drug for those who already have advanced cirrhosis. Unless I am medically mistaken, curing an individual of hepatitis C who has advanced liver cirrhosis does not restore the liver to complete health. If the price of these drugs were reduced by 90%, that would economically allow access to these drugs for all hepatitis C infected patients BEFORE they progressed to cirrhosis; AND it would still permit a vigorously healthy profit margin of 900% since it only costs $1000 to manufacture the drug.

  3. Do they stand to make more with such a high price and restricted use or with the reduced price ($8,000) and more diffuse use of the drug? Would the lifetime savings by switching to these expensive drugs be more than the cost of using them?

    1. If I have done the math correctly, restricted use would yield life-sales of $100 billion (the 30% of individuals who would go on to cirrhosis). At $8,000 life-sales would total “only” $24 billion, not a shabby profit, given production costs of only $3 billion. Further, from an ethical point of view, the latter choice prevents cirrhosis, a very welcome social good (though I suppose investors might be less welcoming of that good). If the former choice is made, advanced cirrhosis afflicts a million people, which is not reversed by taking either of these drugs. That is a lot of personal suffering, not to mention ongoing financial cost to those individuals as well as society (taxpayers). But I suppose investors would be giddy with delight. Is everyone familiar with the German term “schadenfreude”? That should trigger a little ethical reflection.

      1. Thank you for your response. Please forgive my unfamiliarity with the subject. I assume Medicare and Medicaid are required to provide the most effective evidence based treatment for a particular condition, regardless of its cost. If so, how is the decision made and by whom, regarding the restricted use of such a drug, when cost is such a prohibitive factor in disseminating it to the entire afflicted population? Also, is the proposed market price of a drug considered in the approval process? What’s preventing them from marketing it even higher?

  4. You are correct that Medicare is required to provide the most effective evidence-based treatment for a particular condition, no matter what the cost. But the argument that can be made is that an individual who is Hepatitis C infected (most often for at least the first ten years) does not NEED the drug because he/she has no symptoms (and may never have any symptoms or liver damage). At this point we would have to get into a discussion of what should count as a medical NEED. As for the price of these drugs, Medicare is explicitly forbidden from considering price in judging whether or not a drug will be available as a covered benefit for Medicare beneficiaries. Also, Medicare is explicitly forbidden by a 2006 federal law (pushed through Congress by Big Pharma) from using its buying power (47 million covered lives) to extract discounts from pharmaceutical firms in the way countries in Europe routinely do. Politically speaking, this is an odd outcome, given the predominantly conservative makeup of Congress. We would expect that legitimating such price gouging would be contrary to free market principles. What this amounts to, practically speaking, is a mandated hidden tax on Americans for purely private purposes and private gain. This does not serve any public interest. On the contrary, as noted in my prior posting, it represents a public harm for those who must endure cirrhosis in order to gain access to these drugs.

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