Sovaldi, a highly effective treatment for the liver disease hepatitis C, has faced backlash in the U.S. over its price tag: $84,000 for a three-month course of treatment, or about $1,000 a pill. The private insurance industry has pushed back hard on the price. State Medicaid directors have said they are concerned about the cost, and paying for the drug is also problematic for prison systems, which must provide health for a lot of inmates who acquired hepatitis C by sharing needles.
Meanwhile, in the U.K., regulators just approved the use of Sovaldi as part of treatment for hepatitis C. The country’s National Health Service will pay about $700 a pill, roughly what some Medicaid programs will pay in the U.S.
The U.K.’s decision to recommend Sovaldi was far from a sure thing. But once the National Institute for Health and Care Excellence was convinced that Sovaldi is cost-effective, the decision to pay for it is simple, because one entity pays for all the medical care in the U.K. If treating a patient with costly drugs now prevents a more expensive liver transplant in 15 years, that savings accrues to the National Health Service—and ultimately to British taxpayers.
That’s not the case in the U.S., where health care is paid for by a mix of employers, private insurers, and government programs such as Medicaid and Medicare. Hepatitis C can take 20 to 30 years to cause liver scarring that might require a transplant. An insurer paying for Sovaldi now is probably preventing an expensive treatment that would have ultimately been paid for by another part of the health-care system—most likely Medicare, the federal insurance program for Americans 65 and older. Insurers don’t have much incentive to do that, even if it would save the U.S. health system money in the long run.
It’s still fair to question how drugmaker Gilead Sciences (GILD) came up with the price for Sovaldi, and why it will sell an entire course of treatment in Egypt for less than the price of one pill in the U.S. And treatment of Sovaldi isn’t the final verdict on whether a single-payer health-care system is better on the merits than the patchwork of private and public insurance programs the U.S. has. But Americans sometimes accuse Britain’s single-payer system of rationing of health care. In the case of a cure for hepatitis C, it seems the single-payer model is doing the opposite.