American Foundation for AIDS Research, April 2003
Dave Gilden

With the long awaited FDA approval last fall of Hoffmann-La Roche’s products Pegasys and Copegus, Schering-Plough is suddenly facing competition for the hepatitis C market. In January, Roche heightened the rivalry by launching Copegus, its formulation of the standard drug ribavirin, for 43% less than Schering’s price for its ribavirin brand, Rebetrol.

Price competition among prescription brand-name drugs is very unusual. How real is it in this case? Both companies are offering a modestly more effective version of interferon alfa and ribavirin for treating persons with chronic infection with hepatitis C virus (HCV). And the bill for even Roche’s hepatitis C therapy is enormous. It has doubled since 1998 and is now more than twice the price of HIV therapy.

Pegasys and the two-year-old Schering product, Peg-Intron, are pegylated versions of interferon alfa, which has been the backbone of HCV treatment since 1991. Interferon alfa enhances cells’ internal defenses against invading viruses and stimulates antiviral immunity. Pegylation involves joining interferon alfa to polyethylene glycol. This amalgamation stabilizes interferon in the body, allowing for higher average blood levels and once-weekly dosing.

When Schering introduced Peg-Intron two years ago, it charged a premium price – more than double that of its standard interferon, which was approved in 1992. Interferon alfa is usually taken with ribavirin, which alters cellular metabolism. Ribavirin further adds to the cost. The current price of Peg-Intron plus Schering’s ribavirin is about $3,500 a month. Therapy lasts up to 12 months, so the total cost can exceed $40,000.

Price Backlash
During community meetingsover the past threeyears, Roche promised to price responsibly. Activists felt betrayed when Roche introduced Pegasys at a price of $1,500 per month, almost exactly the same as Peg-Intron. Pegasys offered no relief to cash-strapped state AIDS Drug Assistance Programs and Medicaids, which are now cutting coverage to millions of people.

A national protest letter signed by some 40 organizations and individuals complained: “Earlier on, many advisory board members, activists and HCV coalition members worked with the FDA to clear the path for regulatory approval of Pegasys, stressing the need for competition because of the incredible price charged by Schering. Most of all, we warned Hoffmann-La Roche not to use the Schering price as a standard of reference, but rather make its pricing decision on a higher moral and ethical plane…. We expected a lower price for Pegasys and got one even higher than anyone imagined.” (This letter was circulated by Project Inform in San Francisco.)

Referring to the ribavirin price break, Roche marketing official Jesus Leal said, “I couldn’t have done this without the community support.” The 43% saving over Schering leaves Roche’s ribavirin costing around $6.50 per capsule at the retail level. Patients take four to six capsules per day, depending on their weight. The mathematics is formidable, and the 12-month combined retail cost for Roche’s two products amounts to over $30,000.

Brian Klein, of the Hepatitis C Action and Advocacy Coalition (HAAC) in San Francisco, was partially mollified. “Roche did come in significantly better than I expected. I would have expected that generics would come in at that price. I thought they would have charged about 25% less than Schering because Schering pays royalties on ribavirin. This price will put pressure on the generics whenever they are finally allowed onto the market.”

The Generic Players
Aside from Roche and Schering, ribavirin is also available from Fisher’s SPS, a compounding pharmacy in Pittsburgh. Fisher’s custom packs its own ribavirin capsules from the bulk drug purchased in China. Fisher’s price – $1.50 per capsule – is much lower than the big companies. Klein claims that “it only costs ten cents per capsule for the [Chinese] bulk drug.”

There is plenty of room for price competition on ribavirin, and generic drug companies geared up to market it after its patent expired last June. Schering has blocked these moves with lawsuits. FDA approval of generic ribavirin has also been delayed by a technical dispute over the wording of the official package insert.

Roche sidestepped much of the legal blockade by developing a new brand-name ribavirin, whose approval entailed new clinical trials. Of course, these excess development costs add to the final price. The generic companies, on the other hand, are only required to prove that their product is chemically equivalent to the brand-name drug. They don’t have to engage in special clinical trials. The generic companies will probably charge about a fifth less than Roche, which has set the new benchmark.

Patients Drop Out as the Healthcare System Flounders
The introduction of pegylated interferon was heralded as a great advance, but improvements in the response to therapy have been small (see table). Particularly disappointing were the responses in people with high viral load genotype 1 HCV. A majority of Americans with hepatitis C have stubborn infections of this sort.

Recent reports from clinics in Boston and Cleveland indicate that about 70% of potential patients are found ineligible for treatment because medical or psychological factors make them unlikely to endure its rigors. Eligible patients face a long list of side effects even with pegylated interferon. These include fatigue, flulike symptoms, muscle aches and gastrointestinal upset, diabetes, vision loss, rashes, anemia, low white blood cell counts, kidney damage, agitation and depression. The frequent ribavirin-induced anemia is managed with Procrit, an injectable red blood cell growth factor. Procrit adds another $7,500 to $15,000 to the cost of treatment.

Other steps to make therapy tolerable include Neupogen for low white blood cell counts, insulin-sensitizing drugs for diabetes, SSRIs for depression and many lab tests. A patient’s out-of-pocket costs can amount to as much as $1,000 per month, said Ken Fornataro, Director of the AIDS Treatment Data Network in New York. Many hepatitis C patients stop therapy in the third month. “ They kind of hit a wall at 12 weeks,” he said, “they actually have more toxicities than ever while having a harder time dealing with the care system.” The 12-week point is the time for initial evaluation of the therapy’s effectiveness. If viral load has declined dramatically, treatment continues, but the doctors now turn their attention to newer patients who are struggling to cope with starting therapy. Continuing patients lose the priority they once had. They have to wait for appointments or even to talk to healthcare providers.

“It all has to do with cost of staff, resources and efficiency of referrals to specialists,” said Fornataro. “At 12 weeks, patients decide that therapy isn’t working for them. Stopping appeals more than the promise of a sustained virologic response.”

The cost of hepatitis C treatment is like a tidal wave cutting through the doctor’s office. It carries away all the funding available from private insurers and public health agencies, leaving little for ongoing case management.

The New Ribavirins
Three safer alternatives to ribavirin are on the way, promising to ease the burden of HCV therapy. Vertex Pharmaceuticals’ VX-497, like ribavirin, inhibits the cellular enzyme IMPDH. VX-497 is now in phase II trials. Also in the works are levovirin, a mirror image of the ribavirin molecule and viramindine, a ribavirin prodrug preferentially absorbed by liver cells. These should hit the market in two or three years. The current price of ribavirin will not have a long-term impact on hepatitis C treatment, except that it establishes a floor for the new drugs. Their developers will charge a premium over ribavirin based on the drugs’ attractive features.

Pegylated interferon will remain the expensive mainstay of hepatitis C therapy for many years to come. True antiviral drugs, analogous to the ones for HIV, will not arrive until late in the decade. These are still in early stages of development, and it is hard to speculate on their role, much less their price. There is a good chance that they will require help from the older drugs to stop HCV. Triple combinations of interferon alfa, a ribavirin-like drug and an antiviral are likely. If the current pricing trends do not change, the new antivirals will represent a huge additional expense even as prices continue to rise for the older drugs.

The cost of therapy for HCV may double again by the end of the decade. In principle, treatment will be more effective than ever, but the medical system will find it still more difficult to provide adequate care.

Pegylated vs. Standard Interferon: Sustained Virologic Response*

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