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
November 20, 2014 -- Updated 2012 GMT (0412 HKT)
The plan by President Obama to provide legal status to millions of undocumented adults living in the U.S. leaves Republicans in a political quandary.
November 21, 2014 -- Updated 0313 GMT (1113 HKT)
Despite criticism from those on the right, Obama's expected immigration plans won't make much difference to deportation numbers, says Ruben Navarette.
November 21, 2014 -- Updated 0121 GMT (0921 HKT)
As new information and accusers against Bill Cosby are brought to light, we are reminded of an unshakable feature of American life: rape culture.
November 20, 2014 -- Updated 2256 GMT (0656 HKT)
When black people protest against police violence in Ferguson, Missouri, they're thought of as a "mob."
November 19, 2014 -- Updated 2011 GMT (0411 HKT)
Lost in much of the coverage of ISIS brutality is how successful the group has been at attracting other groups, says Peter Bergen.
November 19, 2014 -- Updated 1345 GMT (2145 HKT)
Do recent developments mean that full legalization of pot is inevitable? Not necessarily, but one would hope so, says Jeffrey Miron.
November 19, 2014 -- Updated 1319 GMT (2119 HKT)
We don't know what Bill Cosby did or did not do, but these allegations should not be easily dismissed, says Leslie Morgan Steiner.
November 19, 2014 -- Updated 1519 GMT (2319 HKT)
Does Palestinian leader Mahmoud Abbas have the influence to bring stability to Jerusalem?
November 19, 2014 -- Updated 1759 GMT (0159 HKT)
Even though there are far fewer people being stopped, does continued use of "broken windows" strategy mean minorities are still the target of undue police enforcement?
November 18, 2014 -- Updated 0258 GMT (1058 HKT)
The truth is, we ran away from the best progressive persuasion voice in our times because the ghost of our country's original sin still haunts us, writes Cornell Belcher.
November 18, 2014 -- Updated 2141 GMT (0541 HKT)
Children living in the Syrian city of Aleppo watch the sky. Not for signs of winter's approach, although the cold winds are already blowing, but for barrel bombs.
November 17, 2014 -- Updated 1321 GMT (2121 HKT)
We're stuck in a kind of Middle East Bermuda Triangle where messy outcomes are more likely than neat solutions, says Aaron David Miller.
November 17, 2014 -- Updated 1216 GMT (2016 HKT)
In the midst of the fight against Islamist rebels seeking to turn the clock back, a Kurdish region in Syria has approved a law ordering equality for women. Take that, ISIS!
November 17, 2014 -- Updated 0407 GMT (1207 HKT)
Ruben Navarrette says President Obama would be justified in acting on his own to limit deportations
November 17, 2014 -- Updated 1321 GMT (2121 HKT)
America will have its hands full in the Middle East for years to come, writes Aaron David Miller.
November 15, 2014 -- Updated 1617 GMT (0017 HKT)
Gene Seymour says it's part of our pioneering makeup to keep exploring the universe
November 14, 2014 -- Updated 1742 GMT (0142 HKT)
Sally Kohn says the U.S.-China agreement to cut carbon emissions is a big deal, and Republicans should take note.
November 15, 2014 -- Updated 2129 GMT (0529 HKT)
S.E. Cupp says the Obamacare advisor who repeatedly disses the electorate in a series of videotaped remarks reveals arrogance and cluelessnes.
November 14, 2014 -- Updated 2200 GMT (0600 HKT)
Reggie Littlejohn says gendercide is a human rights abuse against women, with bad consequences for nations.
November 13, 2014 -- Updated 1657 GMT (0057 HKT)
The massing of Russian forces near Ukraine only reinforces the impression that Moscow has no interest in reconciliation with the West, writes Michael Kofman.
November 12, 2014 -- Updated 1455 GMT (2255 HKT)
It takes a real man to make the moves on the wife of the most powerful man in the biggest country. Especially when the wife is a civilian major general.
November 12, 2014 -- Updated 1347 GMT (2147 HKT)
Proponents of marriage equality LGBT persons have been on quite a winning streak -- 32 states and the District of Columbia now allow same-sex marriage.
November 13, 2014 -- Updated 1358 GMT (2158 HKT)
It has been an eventful few weeks for space news.
November 12, 2014 -- Updated 2014 GMT (0414 HKT)
It's too early to write the U.S. off, and China's leaderships knows that better than anyone, argues Kerry Brown.
November 12, 2014 -- Updated 1821 GMT (0221 HKT)
"How can Jon Stewart hire you to be 'The Daily Show''s senior Muslim correspondent when you don't even know how to pronounce Salaam Al-aikum?!"
ADVERTISEMENT