Skip to main content

We all pay for $1,000 a pill drug

By Karen Ignagni
July 24, 2014 -- Updated 2110 GMT (0510 HKT)
Activists protest drug maker Gilead Sciences to denounce the price of hepatitis C drug Sovaldi in April in Montpellier, France.
Activists protest drug maker Gilead Sciences to denounce the price of hepatitis C drug Sovaldi in April in Montpellier, France.
STORY HIGHLIGHTS
  • Karen Ignagni: A new drug holds hope in eliminating epidemic of hepatitis C in U.S.
  • Ignagni: But drug costs outrageous $1,000 per pill, or $84,000 for entire treatment
  • She warns cost will raise premiums and prices all across the heath care spectrum
  • Ignagni: Drug makers must stop trend of charging astronomical prices that hurt us all

Editor's note: Karen Ignagni is president and CEO of America's Health Insurance Plans, a trade group for the health insurance industry. She directed the AFL-CIO's Department of Employee Benefits and was a professional staff member on the U.S. Senate Labor and Human Resources Committee and worked at the U.S. Department of Health and Human Services. The opinions expressed in this commentary are solely those of the author.

(CNN) -- Health care experts recently gathered at the Centers for Disease Control and Prevention in Atlanta to discuss the public health crisis of hepatitis C, which is ravaging communities across America, and the budding hope that we may soon be able to eliminate it with a prescription medicine called Sovaldi.

Hepatitis C, a chronic, potentially fatal liver disease, afflicts more than 3 million Americans. Solving the hepatitis C epidemic is a goal we should all embrace, which is why health plans are hard at work identifying at-risk patients so they can be screened and receive necessary treatment.

Karen Ignagni
Karen Ignagni

Sovaldi, the brand name for sofosbuvir, holds remarkable promise. But the manufacturer of this drug, Gilead Sciences, has created an enormous obstacle that is straining our health care system: its eye-popping price.

At $1,000 per pill, Sovaldi costs $84,000 for a single course of treatment, and well over $100,000 when combined with other medications, as is generally the case. If every person with hepatitis C were treated with Sovaldi alone at this price, the cost would be more than $268 billion. For some perspective, consider that in 2012, the United States spent $263 billion for all prescription drugs.

This pricing, which Gilead attempts to justify as the cost of medical advancement, will have a tsunami effect across our entire health care system. Because the cost of health insurance is fundamentally a reflection of the price of health care services, the excessive price of Sovaldi unavoidably puts upward pressure on premiums for everyone with private coverage. It will also strain state Medicaid and Department of Veterans Affairs programs.

A recent analysis found that senior citizens on Medicare Part D could see premiums as much as 8% higher next year because of the price of this one drug. And it's been projected that California's Medicaid spending on Sovaldi and the accompanying drugs could potentially outpace what the state spends in a year on K-12 and secondary education combined.

High-priced drugs are not a new phenomenon. Drug makers have long used monopolies to inflate prices. But the trend with so-called specialty drugs is a game changer. Startling as the price of Sovaldi is, it's just the canary in the coal mine.

More and more specialty drugs are coming on the market, with tremendous promise to save and improve lives but also with exorbitant price tags. Although these specialty drugs only account for 1% of the prescription drugs in this country, they already represent 25% of the total cost, on the way to 50%.

This pricing will have a tsunami effect across our entire health care system.
Karen Ignagni

Until now, policymakers and stakeholders have looked the other way as specialty drug prices have gone higher and higher. In fact, any discussion of price has been quashed as an assault on innovation.

But asking for a blank check in the name of innovation won't work anymore. Not when it stands in the way of solving a public health crisis. Not when it threatens state Medicaid budgets and the success of Medicare Part D, and not when the pricing threatens the very innovation that is giving so many hope.

Opinion: Hepatitis drugs save money in long run

We cannot have sustainable medical innovation in America without prices that the health care system can sustain. Just think, could we have eradicated polio or smallpox if the treatments were priced like hepatitis C?

Today's public health challenge is to find a balance that rewards research and development and brings breakthroughs to patients, without upending family budgets, employer benefit systems and crucial public programs. That's going to require an end to the sky's-the-limit pricing that threatens the progress we all want.

Now is the time for stakeholders to begin the process of working together to meet this challenge.

Read CNNOpinion's new Flipboard magazine.

Follow us on Twitter @CNNOpinion.

Join us on Facebook.com/CNNOpinion.

ADVERTISEMENT
Part of complete coverage on
August 1, 2014 -- Updated 1812 GMT (0212 HKT)
By now it should be painfully obvious that this latest round of the Israeli-Palestinian crisis in Gaza is fundamentally different than its predecessors.
August 1, 2014 -- Updated 2124 GMT (0524 HKT)
Sally Kohn says like the Occupy Wall Street protesters, Market Basket workers are asking for shared prosperity.
July 31, 2014 -- Updated 2331 GMT (0731 HKT)
President Obama will convene an Africa summit Monday at the White House, and Laurie Garrett asks why the largest Ebola epidemic ever recorded is not on the agenda.
August 1, 2014 -- Updated 1803 GMT (0203 HKT)
Seventy years ago, Anne Frank made her final entry in her diary -- a work, says Francine Prose, that provides a crucial link to history for young people.
July 31, 2014 -- Updated 2350 GMT (0750 HKT)
Van Jones says "student" debt should be called "education debt" because entire families are paying the cost.
July 30, 2014 -- Updated 1941 GMT (0341 HKT)
Stuart Gitlow says pot is addictive and those who smoke it can experience long-term psychiatric disease.
July 31, 2014 -- Updated 2300 GMT (0700 HKT)
Marc Randazza: ESPN commentator fell victim to "PC" police for suggesting something outside accepted narrative.
July 31, 2014 -- Updated 1845 GMT (0245 HKT)
Mark O'Mara says working parents often end up being arrested after leaving kids alone.
July 30, 2014 -- Updated 2031 GMT (0431 HKT)
Shanin Specter says we need to strengthen laws that punish auto companies for selling defective cars.
July 30, 2014 -- Updated 1645 GMT (0045 HKT)
Gabby Giffords and Katie Ray-Jones say "Between 2001 and 2012, more women were shot to death by an intimate partner in our country than the total number of American troops killed in the Iraq and Afghanistan wars combined."
July 30, 2014 -- Updated 1158 GMT (1958 HKT)
Vijay Das says Medicare is a success story that could provide health care for everybody, not just seniors
July 30, 2014 -- Updated 1743 GMT (0143 HKT)
S.E. Cupp says the entrepreneur and Dallas Mavericks owner thinks for himself and refuses to be confined to an ideological box.
July 30, 2014 -- Updated 1311 GMT (2111 HKT)
A Christian group's anger over the trailer for "Black Jesus," an upcoming TV show, seems out of place, Jay Parini says
July 30, 2014 -- Updated 2028 GMT (0428 HKT)
LZ Granderson says the cyber-standing ovation given to Robyn Lawley, an Australian plus-size model who posted unretouched photos, shows how crazy Americans' notions of beauty have become
July 30, 2014 -- Updated 1939 GMT (0339 HKT)
Carol Dweck and Rachel Simmons: Girls tend to have a "fixed mindset" but they should have a "growth mindset."
ADVERTISEMENT