Still Spouting on Sovaldi? That's A Misdiagnosis, Doc

By Louis Garguilo, Chief Editor, Outsourced Pharma

In a recent LA Times Op-Ed, picked up by my (decidedly one-sided) hometown newspaper, the Times Union, Dr. Daniel J. Stone, internal medicine and geriatric medicine specialist in Los Angeles, lashes out at the pharmaceutical industry, and the company that appears to have cured his patient of hepatitis.

I thought I was done with articles in support of Sovaldi and Gilead Sciences. But Dr. Stone raises some interesting points. I certainly admire his deep care and concern for his patients, and credit him with taking the time to lay out his argument.  

Unfortunately, that argument includes a misdiagnosis of the ailment.

No Thanks For The Cure?

Let’s set out the central facts as presented by Dr. Stone:

• An 84-year-old female patient was diagnosed with hepatitis C years ago.
• A past treatment caused months of severe side effects, and left her with advancing cirrhosis.
• The new drug Sovaldi offered hope; it was list-priced at $80,000 for a three-month treatment.
• The patient’s Medicare HMO plan reduced that to $9,000.
• She then qualified (because she was “underinsured,”) for financial assistance from the Patient Assistance Network.
• We aren’t told how much she actually ends up paying.
• She’s nearing treatment end, and has no detectable virus in her blood.

“Fortunately, my patient’s story ends well,” says Dr. Stone. “The outcome represents a miracle of American biotechnology.”

But then Dr. Stone accuses the pharmaceutical industry of “ripping us off, pill by pill, shot by shot.” He adds: “Instead of working to earn reasonable returns by relieving our suffering and saving lives, [pharmaceutical companies] now focus on profits above all.”

Many of us beg to differ.

Who's Paying For What?

We’ll talk about the healthcare system more in a moment. But right away the wheels fall off of Dr. Smith’s bashing bandwagon with his decision to gloss over the cost savings to the system provided by many new drugs. As a specialist, he surely understands the importance of specifics. Instead, he makes this misleading statement:

“Gilead and others point out that Sovaldi is cost effective compared with paying for other healthcare services that the drug might prevent. Compared with having a liver transplant, for instance, Sovaldi’s price tag still allows for some overall savings.”

Some overall savings? How about multiplying the saving of these new hepatitis C drugs – a fraction of the cost of prior (inferior) treatments – by millions of patients (just in the U.S.), and consider the avoided costs of intensive and long-term care and hospitalization. That’ll bring us more accurate calculations of how new hepatitis C drugs save the entire healthcare system billions of dollars over time.

As I wrote in a prior article (which I hope you’ll read), Gilead isn’t bankrupting health care or patients: By curing or more effectively treating patients – at the prices suggested – it's bankrolling a convoluted healthcare system it did not design.

The Healthcare System And Plumbing?

Dr. Stone says Pharma “targets” insurance companies for profits, “[b]ut when insurance companies take a hit, they bump up premiums to employers or the government. So we all pay — in taxes, reduced take-home pay, copayments and deductibles. Insurance becomes a lever that releases massive payments to the drug companies.”

Perhaps here we can overlook the attack on Pharma for a moment, because I believe Dr. Stone is agreeing with the point that we have a larger, systemic problem here. He actually raises an incredible question; incredible because it seems to draw out an answer counterintuitive to the direction our current government and healthcare system is heading: “If Gilead had to sell its drugs to individuals using their own dollars, how many $80,000-plus treatments could it sell?”

Here’s hoping we can someday get closer to an answer for him. Let’s think about how to extract the layers of healthcare bureaucracies, and replace them with more free-market principles, for the selling of pharmaceuticals and health care overall in the U.S.

Yet while drawing us to this valid discussion, Dr. Stone, if you will, springs a leak. He doesn’t believe in the cost savings we mention above. And he turns to plumbing to explain why.

“This argument [for the cost of new drugs] is a lot like a plumber billing a customer $20,000 to fix a leaky pipe under the sink. Considering the costs of a possible flood, it might seem defensible. In the real world, any plumber charging based on “what you saved” by preventing a potential catastrophe would lose business to competitors. Gilead's Sovaldi doesn't have competitors; insurance just pays the bill.”

But Gilead does have competition, as our astute readers know, which started surfacing soon after Sovaldi was released. Today, AbbVie's Viekira Pak and Merck’s Zepatier compete directly. Again, we are in agreement the whole system needs looking at, but don’t abide with singling out drug makers for operating profitably.

While I think it’s a horrible comparison brought in by Dr. Stone, the plumbers where I live certainly excel at extracting a very nice price for services and parts. They also practice “preventative medicine,” which as we all know, is cheaper than the alternative by far. Of course plumbers don’t need to invest billions of dollars in research and development, regulatory obligations, manufacturing supply chains, and the like. By actually trying to make a free-market example, Dr. Stone ends up making our case more than his.

Let’s End At The Patient

It wasn’t too long ago a hepatitis C patient had about a 50% chance of a sustained response after receiving debilitating treatment lasting nearly a full year. She faced nausea, diarrhea, rashes, insomnia, severe depression, and life-threatening outcomes, including a kidney transplant. Along with her and her loved ones’ hardships, the care and therapies cost hundreds-of-thousands of dollars, and in many cases much more. She paid some, some was covered by the “healthcare system” of government reimbursements and programs, healthcare “providers,” hospitals, her employer, patient assistance organizations, and insurance companies.

Today that patient can be cured in three months for a fraction of these costs, and she requires limited contact with the healthcare system. This is thanks to new drugs most specifically.

There is a lot wrong with our healthcare system, there is also a lot right. The real question is how do we correct the former and build on the latter. Unfairly singling out pharmaceutical companies is not the way to do either.