New Hepatitis C drugs are terrific - but like every new drug they cost a lot of money to develop and took a lot of time to navigate the regulatory system and as a result they are not cheap. Most cost-benefit analyses have found that these new treatments save a lot more than treatment without them would cost, but with the Affordable Care Act already straining under gigantic expenses that politicians didn't consider when approving it, it may be more economical to force people to do without the best treatment in the short term and incur more costs later, after the economy has time to inflate away the ballooning costs of today.

A new report in the Annals of Internal Medicine predicted that the cost of providing 2,000,000 patients their daily regimens with the best medications available could total $136 billion over five years - 10 percent of the country's annual prescription drug spending. Jagpreet Chhatwal, Ph.D., study lead and assistant professor of Health Services Research at MD Anderson, simulated costs of a combination of two drugs - sofosbuvir and ledipasvir - recently approved by the U.S. Food and Drug Administration to treat hepatitis C is cost-effective as opposed to the old standard of care. The budget needed to treat all diagnosed patients, however, is unsustainable.

Their work was done prior to FDA approval of AbbVie's HCV drug, and of Gilead's announcement that discounts on Sovaldi would be discounted up to 46 percent on average. In subsequent analysis using older discounts for 2014 and then applying the 46 percent discount for 2015 onward, the budget needed would be $90 billion over five years (versus $136 billion). Compared with old drugs, new therapies would cost an additional $20 billion (versus $65 billion), with $16 billion in cost offsets.

Still, that is a lot. But the best drugs have never been cheap and as the costs to get a new drug approved have skyrocketed and the patent window has remained the same as when the FDA required far less in the way of clinical trials, companies have to make that money back before generic companies swoop in and make profits doing nothing, or no new drug development can occur at all.

"We have millions of people who need treatment for hepatitis C and payers obviously don't have the budget to cover this tremendous expense," says Chhatwal. "As a result, physicians have to prioritize the new drugs to the sickest of patients, and several payers have added restrictions that only those with the most advanced disease receive treatment." 

But the government has discovered that health care is not as simple as 'insurance companies are the problem', the way they contended in getting the Affordable Care Act passed. Now the administration faces the same choice - the new therapies reduce the clinical burden of the disease but newer, more expensive medications are most beneficial for those with advanced disease, have the HCV genotype 1, or are younger.

And most of those people can pay the least, which means taxpayers will.

The new therapies are cost-effective in the majority of patients. So it will be up to the government to decide whether other patients will get it or not. No more 'my doctor should decide, not insurance companies' rhetoric from Congress and the President.

"Economics need to play an important part of improving the health care system," said Chhatwal. Hepatitis C presents an unusual case where we have cost effective therapeutic options that our health care system cannot afford. While lower drug prices will help, that's not sufficient. Both the government and private insurers will need additional resources to effectively manage this epidemic." 

This study was supported by the National Center for Advancing Translational Sciences of the National Institutes of Health (KL2TR000146). Fasiha Kanwal, M.D. efforts were supported in part by the Houston Veterans Affairs Health Services Research and Development Center for Innovations in Quality, Effectiveness and Safety (#CIN 13-413).  In addition to Chhatwal and Dunn, author of the study include: Fasiha Kanwal, M.D., of Michael E. DeBakey Veterans Affairs Medical Center and Mark Roberts, M.D., of the University of Pittsburgh Graduate School of Public Health.