New Hepatitis C Cure Could Strain VA Finances

The high cost of Sovaldi, a new drug that cures Hepatitis C, could cost the Veterans Administration (VA) $1.3 billion in the next two years. The high cost of the drug could force the agency to make budget cuts in other areas.

Chronic Hepatitis C infections can destroy the liver. Eventually, sufferers will require a liver transplant or will die from the disease. The VA is the nation’s single largest care provider for Hepatitis C, with 174,000 veterans currently documented as having the virus and as many as 42,000 undocumented cases.

In July, the VA gave the Senate Veterans Affairs Committee a $17.6 billion wishlist of resources. At that time, VA officials stated that the high cost of Sovaldi was cutting into their resources. Congress approved the new funding, but none of the funding was specifically earmarked for Sovaldi.

Sovaldi was developed by Gilead Sciences and approved by the Food and Drug Administration last year.

The drug cures 90 percent of Hepatitis C cases. Patients who are cured of the disease no longer carry the virus or show symptoms, making it by far the most effective treatment available.

But the cure comes at a high cost. Each pill costs $1,000, with a full 12-week course clocking in at $84,000. If all 3.2 million Americans with Hepatitis C were treated, the total cost of treatment would exceed the amount that the United States currently spends on all drugs.

Sovaldi may be at the frontline of a new trend of specialty drugs that provide dramatic results for specific illnesses but come with huge, perhaps uncarryable, costs. Experts worry that Sovaldi and other drugs could eventually strain Medicaid, Medicare and the prison system, as well as the VA.

In the fiscal year that ended on September 30, the VA spent $220 million on Sovaldi. The agency was able to negotiate the price of one tablet down to $543 from $1,000.

Gilead recently came under investigation by the Senate Finance Committee, which inquired as to how Gilead came to set the high price of the drug. Gilead blamed the high price on the amount it spent developing the drug.

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