Could ESI block Sovaldi from its formulary?

According to published reports, Express Scripts may be looking to start a "price war" among the makers of the latest generation of drugs for hepatitis C — which promise much shorter treatment times than standard therapies, but also cost significantly more — in an effort to bring down prices.

The stakes are certainly high. According to the Centers for Disease Control and Prevention, there are 3.2 million people in the United States chronically infected with hepatitis C and hence at risk for liver cancer, and the CDC recommends that anyone born between 1945 and 1965 get tested for the virus.

That means the new treatments have strong blockbuster potential, and it's estimated by some that Gilead Sciences' Sovaldi, approved by the Food and Drug Administration on Dec. 6, could reach annual sales of between $6 billion and more than $9 billion.

The problem is the high cost. While the $84,000 that a full course of treatment with Sovaldi is estimated to cost isn't necessarily unusual for specialty drugs in general, which can cuts hundreds of thousands of dollars per year, it's still a hefty sum, including for payers. That's why Express Scripts is hoping to play it against Johnson & Johnson's Olysio (simprevir) and a possibly upcoming drug by AbbVie that clinical trials have shown has a cure rate of 96%, while ESI chief medical officer is talking about "some really tough formulary decisions." It plans to do this by threatening to drop Sovaldi from its formulary if it can get a lower price for the others.

And compared with the new medications, the average cost for a standard-of-care treatment was $3,284.27 per prescription last year, according to ESI, which lists Genentech's Pegasys (peginterferon alfa-2a), branded and generic versions of ribavirin and Vertex Pharmaceuticals' Incivek (telaprevir). Even though Sovaldi marks a tremendous improvement over such complex drug regimens, the price difference is hard to ignore.

ESI has already shown a willingness to drop dozens of drugs from its formulary when it thinks it can find alternatives for less, but it's even willing to drop a drug widely touted as a "breakthrough" if it can get the others for less.