The new Hepatitis C treatment drugs Sovaldi and Harvoni could cost the California state government $512 million a year — or 10 times that amount in total — for patients in prison, state hospitals or on Medi-Cal, according to the California Association of Trade Plans (CATP).

What’s the Problem?

According to CATP, the expense range for Sovaldi and Harvoni is so large because it’s still unknown whether there will be manufacturer discounts or how many people would use the medications. It has been estimated that up to 50% of people with Hepatitis C don’t know they have it.

Harvoni and Sovaldi are potentially revolutionary drugs, with extremely high cure rates for a life-threatening infection that an estimated 750,000 Californians have. Sovaldi has been reported to cure more than 90% of patients with the most common form of Hep C within 12 weeks with few side effects.

The Cost of a Cure for Hepatitis C

An infographic (PDF) accompanying the CATP report estimates the 1-year cost of treatment for 10% of the California Hepatitis C population would cost:

  • Medi-Cal – $1 billion
  • Prisons – $336 million
  • California Public Employees’ Retirement System (CalPERS) – $41 million
  • AIDS Drug Assistance Program (ADAP) – $4 million

Price estimates for Hep C treatments have ranged from $65,000 to nearly $200,000; however, the infographic indicates that 12 weeks of Sovaldi and Harvoni cost $84,000 and $94,500, respectively. Even with medical insurance and government assistance, the cost of these drugs seems to dictate a business model with a high-end clientele. Large price markups can compensate for a small market.

State Governments May Spend $55B on Hep C Treatments

Considering the astronomical cost of Harvoni and Sovaldi, as well as the huge number people suffering from Hepatitis C, it’s hard to see how governments could pay the price for treatment. Express-Scripts Holding Co., the largest pharmacy benefits manager in the U.S., estimated that it would cost states upwards of $55 billion to treat all Hep C patients with Sovaldi.

“There is no doubt that Sovaldi is a breakthrough therapy,” said Dr. Steve Miller, Express-Scripts’ chief medical officer. “But unfortunately, it is also likely to break state budgets.”

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