This section summarizes the US payment system, explains the concepts of cost, price, profitability, value, and affordability, and discusses the cost effectiveness of HCV treatment. This section is intended to be informative. as described, the actual costs are rarely known. consequently, the hcv guideline does not currently use a cost-benefit analysis to guide recommendations.
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cost and reimbursement of medications
Many organizations are involved in the distribution of hepatitis C drugs, and each can affect costs as well as decisions about which regimens are reimbursed (US Gao, 2015); (US CBO, 2015). The functions that these organizations have in determining the real price paid for medicines and who has access to treatment include the following:
- Pharmaceutical companies determine the wholesale acquisition cost (WAC) of a drug (analogous to a label price). The company negotiates contracts with other organizations within the pharmaceutical supply chain that allow rebates or discounts to lower the actual price paid.
- Pharmacy benefit managers (PBMs) act as intermediaries between pharmaceutical companies and health insurance companies. They negotiate contracts that may include restrictions on the types of providers or patients who can be reimbursed for treatment. They may also offer exclusivity (restrictions on the drugs that can be prescribed) in exchange for lower negotiated prices, often provided in the form of wac discounts.
- Private insurance companies often have separate medical and pharmacy budgets, and use PBMs or directly negotiate drug prices with pharmaceutical companies. insurance companies determine formulary placement, which affects patients’ choice of plans and out-of-pocket costs. An insurance company may cover private, Medicare managed care, and Medicare plans and have different forms for each line of business.
- medicaid is a heterogeneous consortium of insurance plans that includes fee-for-service and managed care options. Most plans negotiate reimbursements with pharmaceutical manufacturers (through PBMs or individually). For drugs from a single source, such as all-oral HCV treatments, Medicaid plans receive the lowest price offered to any other payer (outside of certain government agencies), and the minimum Medicaid drug reimbursement is 23 .1% of the manufacturer’s average price (amp). Differences in negotiated contracts between plans have led to widely varying access to HCV therapy for Medicaid patients in different states (lo re, 2016); (Barua, 2015); (Canary Islands, 2015). State Medicaid programs have benefited from the Patient Protection and Affordable Care Act (ACA), although such benefits are mitigated in states that have chosen not to expand Medicaid coverage under the ACA. As the price of HCV therapies has fallen, states have loosened their Medicaid treatment restrictions, and a growing number are providing treatment to all infected people. Many states, however, continue to restrict access to HCV treatment based on stage of liver fibrosis or history of recent drug use. the proposed reversals of the medicaid expansion implemented under the aca threaten to reduce insurance coverage among people infected with hcv and could lead to new treatment restrictions.
- Medicare covers HCV drugs through Part D benefits, and directly negotiating drug prices is prohibited by law. These drug plans are offered through PBMs or commercial health plans, which may negotiate discounts or rebates with pharmaceutical companies.
- The Veterans Health Administration receives mandatory reimbursement through the Federal Supply Schedule Program, which sets drug prices for various government agencies (including the Department of Veterans Affairs, federal prisons and the Department of Defense) and typically receive significant discounts off the Average Wholesale Price (AWP).
- State prisons and jails are generally excluded from Medicaid-related reimbursements and often do not have the bargaining influence of larger organizations and therefore may pay higher prices than the most other organizations.
- Specialty pharmacies receive dispensing fees and may receive additional payments from contracted insurance companies, PBMs, or pharmaceutical companies to provide services such as adherence support and/or adverse event management and outcome measurements, such as early discontinuation and sustained virologic response rates.
- Patients incur costs (eg, copay or coinsurance) determined by their pharmacy plan. Patient assistance programs offered by pharmaceutical companies or foundations may cover many of these out-of-pocket expenses or provide medications at no cost to qualified patients who cannot pay.
Except for mandatory reimbursements, negotiated drug prices are considered confidential business contracts. therefore, there is almost no transparency regarding the actual prices paid for hepatitis c drugs (saag, 2015). however, the average negotiated discount of 22% in 2014 increased to 46% less than the wac in 2015, meaning many taxpayers are paying well below the wac for hcv medications (senate finance committee USA, 2016).
Cost-effectiveness analysis (CEA) compares the relative costs and outcomes of 2 or more interventions. cea explicitly recognizes budget constraints for health spending and seeks to maximize public health benefits within those budget constraints. the central question cea addresses is whether to invest limited healthcare dollars in a new treatment/therapy or use that money to invest in another healthcare intervention that provides better results for the same monetary investment. cea’s focus is therefore not simply on cost or money savings, but on health benefits. it assumes that all available resources will be spent and provides a framework for prioritizing among available treatment options by formally assessing the comparative costs and cumulative health benefits of a new treatment relative to current treatment.
The cost-effectiveness ratio of a treatment is usually expressed as an incremental cost-effectiveness ratio (ICER).
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icer estimation and interpretation
estimating and interpreting the icer requires answering 3 questions:
- How much more money will be spent on the new treatment compared to the old treatment? the additional cost of the new treatment includes that of the new drugs, as well as the costs that will be avoided by preventing complications of the disease. Prevention of long-term complications is especially important when considering the cost-effectiveness of HCV treatments because the costs of therapy are immediate, while the costs of preventing advanced liver disease and other complications of chronic infection are avoided. often accumulate in the future.
- How much more benefit will be produced by the new treatment compared to the old one? life expectancy is a valuable measure of benefits, but considering mortality benefits alone fails to recognize the value of treatments that improve quality of life. the quality-adjusted life year (qaly) provides a measure that integrates both longevity and quality of life and is the preferred outcome for cea.
- how do you interpret ice? The ideal CEA would list all possible health care interventions, their lifetime medical cost, and Qalys lived. such a list would allow a perfect theoretical prioritization of spending to maximize qaly across the population. In effect, CEA compares ice for a specific treatment to a threshold value and rejects treatments with ice that exceeds a particular threshold as unprofitable. the threshold value is called the company’s willingness to pay threshold. it is not intended to be an assessment of how much society is willing to pay to save a life. rather, it is intended to reflect the average return in qaly expected if the available budget were not used to provide a new treatment, but instead were invested in the current health system. In the United States, the willingness-to-pay threshold is typically considered to be $50,000 or $100,000 per qaly earned.
A cost-effective intervention is not necessarily affordable. Affordability refers to whether a payer has enough resources in its annual budget to pay for a new therapy for everyone who may need or want it within that year. Several features of the cea limit its ability to talk about the budget impact of interventions that are implemented in the real world.
- perspective on cost cea seeks to inform decisions about how society should prioritize health care spending. As such, it generally takes a societal perspective on costs and includes all costs from all payers, including out-of-pocket costs to the patient. however, when making coverage decisions for therapy, an insurer considers only her own income and expenses.
- time horizon from a societal perspective, cea uses a lifetime time horizon, which means that it considers lifetime costs and benefits, including those that occur in the distant future. however, business budget planning generally assumes a 1-year to 5-year perspective. savings that may accumulate 30 years from now have no impact on spending decisions today because they have little to do with the solvency of the current budget.
- Weak association between willingness-to-pay and real-world bottom line Social willingness-to-pay thresholds in ceas are not based on actual budget calculations and bear little relation to the payer’s bottom line. willingness to pay is intended to be an estimate of the opportunity cost of investing in a new therapy. In economics, opportunity cost refers to how that money could have been spent and the benefits lost by not investing in that alternative (Wong, 2017a). when payers make a coverage decision, the calculation is simpler and relates to the short-term cost of drugs and budget impact. given the rapid development of new technologies and therapies, funding them all (even if they all fell below society’s willingness-to-pay threshold) would likely lead to runaway growth in demand and outstrip the limited healthcare budget.
There is no formula that provides a good means of integrating value and affordability concerns. when new hcv therapies are considered cost-effective, it indicates that these therapies provide a good return for the resources invested and bringing such therapy to more people would be a good long-term investment. however, determining the total resources that can be spent on HCV treatment depends on political and economic factors that are not captured in cost-effectiveness determinations.
Cost-effectiveness of current direct-acting antiviral regimens for the treatment of hepatitis C
Since the first direct-acting antivirals (DAAs) received US Food and Drug Administration approval in 2011, several cost-effectiveness investigations have compared DAA-based regimens with standard regimens. previous attention to calculate the ice. have also investigated the cost-effectiveness of removing restrictions on hcv treatment. Compared to interferon-based regimens, the ICER for DAAS has been consistently estimated to be <$100,000 per qaly for all genotypes and stages of fibrosis.
several studies compared daa regimens with each other. In general, when given a choice between the recommended AA HCV regimens, the least expensive regimen is preferred as a more efficient use of resources (even if it requires multiple tablet doses). Due to the similar efficacy of most DAA regimens, cost becomes the critical factor driving relative profitability. Studies have also estimated the cost-effectiveness of HCV treatment in special populations, including patients awaiting liver transplantation, HIV/HCV coinfected patients, those with chronic kidney disease, people who inject drugs, and adolescents, all with favorable ices . At this point, it is reasonable to conclude that DAA regimes provide good value for the resources invested.
cost versus affordability of hcv treatment
Despite mounting evidence that HCV treatment is cost-effective and can even save long-term costs in some cases, many U.S. payers, especially those offering Medicaid insurance products, continue to limit access to treatment. against hvc. access has improved as cost has fallen, but limitations remain. Proposed reductions in health care spending for Medicaid are likely to exacerbate the problem, as the value of HCV medications would remain unchanged, but the resources available to provide them would be reduced.
hcv screening cost-effectiveness
Several cost-effectiveness studies show that routine, one-time testing for HCV among all adults in the US. uu. it would likely identify a substantial number of hcv cases that are currently being missed, and that doing so would be cost-effective. one study used simulation models to compare various versions of routine counseling, including routine testing for adults aged 40 years, 30 years, and 18 years and found that routine testing for all adults ≥18 years was cost-effective in compared to risk-based screening, and potentially cost-saving compared to testing only in people aged ≥30 years or ≥40 years (barocas, 2018). the study further found that routine testing remained cost-effective unless hcv infection had no impact on health care utilization or quality of life. Another research group similarly found that routine testing of all adults aged ≥18 years is likely to be cost-effective compared with risk-based screening, provided that the prevalence of HCV among those born after 1965 exceeds the 0.07% (eckman, 2019). notably, these studies reached similar conclusions despite being conducted entirely independently and employing different simulation modeling approaches. Additionally, a variety of studies have examined the cost-effectiveness of routine HCV testing in specific settings, including correctional settings (He, 2016), antenatal care settings (Chaillon, 2019); (tasillo, 2019), substance use treatment centers (schackman, 2018); (Schackman, 2015), and Federally Qualified Health Centers (Assoumou, 2018). all found routine HCV testing and treatment to be cost-effective, even when linkage to HCV treatment after testing was poor, and even when the rate of HCV reinfection among injection drug users is common.
In general, routine HCV testing is cost-effective because HCV incidence and prevalence remain high in people who inject drugs, with a markedly increasing prevalence in young adults who may not readily report their behaviors stigmatized risk. Studies conducted in urban emergency departments in the United States, for example, reveal that 15% to 25% of patients with previously unidentified HCV infection were born after 1965 and/or have no reported history of use. injection drug users and thus miss even perfect implementation of risk-based screening (Schechter-Perkins, 2018); (hsieh, 2016); (Lions, 2016). reinfection among active drug users is common, but because screening is a low-cost intervention and therapy is highly effective and cost-effective, routine testing provides good economic value (i.e., is cost-effective) even when many people need to get tested. and treated more than once during his life.
many studies have shown the economic value of hcv screening (chaillon, 2019); (Eckman, 2019); (tassel, 2019); (Assoumou, 2018); (baroques, 2018); (Schackman, 2018); (Schechter-Perkins, 2018); (lions, 2016); (hsieh, 2016); (schackman, 2015) and treatment (goel, 2018); (Chatwal, 2017); (he, 2017); (Chahal, 2016); (Chatwal, 2015); (Chidi, 2016); (martin, 2016a); (lines, 2015); (najafzadeh, 2015); (rein, 2015); (tice, 2015); (younossi, 2015a) and made it clear that hcv screening and therapy are cost-effective. In response, in 2020, both the United States Centers for Disease Control and Prevention (CDC) and the United States Preventive Service Task Force (USPSTF) recommended a one-time, routine HCV test for all asymptomatic adults aged 18 to 79 years without known liver disease (owens, 2020); (schillie, 2020). the high cost of hcv drugs and the high prevalence of the disease have limited access for some patients. the issue is complex although wholesale procurement costs of hcv drugs often make treatment seem unaffordable, the reality is that prices are negotiated by insurers, pbms, and government agencies, and few actually pay this price so hyped. However, the negotiated prices and cost structure of pharmaceuticals in the United States are not transparent. therefore, it is difficult to estimate the true budgetary impact of providing HCV drugs. Competition and negotiated prices have reduced prices substantially, but cost continues to limit the public health impact of DAA therapies. insurers, the government, and pharmaceutical companies must work together to bring drug prices to the point where everyone who needs treatment can afford and easily access it. only 3 us states uu. and only 24% of high-income countries are on track to meet the who’s hepatitis c elimination targets by 2030 (gamkrelidze, 2021); (Sulkowski 2021).