Hep C medicines: too high a price to pay?


One of the key health-related tasks of the re-elected Coalition government will be to ensure a solution to the supply of the expensive new Hepatitis C medicines.

The scale of the issue, simmering since the medicines were listed on the PBS on 1 March has been brought to light by a recent AJP poll that showed more than one-fifth of pharmacies are not supplying the medicines for economic reasons. Others say they are reconsidering their initial decision to supply the medicines.

And even those who are continuing to dispense say they have faced issues of gaining stock of the expensive treatments. 

The federal government has invested more than $1 billion in subsidising the medicines; but in the short term, financial effects are also being felt by pharmacies, as stocking the products has cash flow, GST and insurance implications for pharmacists.

The listing

The medicines listed as available for dispensing as General Schedule (S85) prescriptions were:

  • Harvoni® (ledipasvir with sofosbuvir)
  • Sovaldi® (sofosbuvir)
  • Daklinza® (daclatasvir)
  • Ibavyr® (ribavirin),
  • Pegasys-RBV® (peginterferon alfa-2a with ribavirin)
  • Viekira Pak® (paritaprevir with ritonavir with ombitasvir and dasabuvir)
  • Viekira Pak–RBV® (paritaprevir with ritonavir with ombitasvir and dasabuvir and ribavirin).

In its initial advice, the Department of Health said that: “Community pharmacists cannot dispense S100 Public HSD prescriptions for these medicines. You will not be reimbursed if you do so.

Community pharmacies can dispense S100 Private HSD prescriptions for these medicines. Payment will be made in line with the scheduled fees and mark-ups for the Section 100 HSD Program.

“This means that it will be possible for approved pharmacists in the community to dispense the new HCV medications. The S100 listing makes provision for treatment of prisoners through the HSD Program.

In announcing the listing, Health Minister Sussan Ley said that when taken as prescribed, the four breakthrough medicines listed today have a cure rate of over 90% and work faster and with fewer side effects than anything else previously subsidised on the PBS.

“Australia is one of the first countries in the world to publicly subsidise these cures for every one of our quarter-of-a-million Hep C suffers, no matter what their condition or how they contracted it,” she said.

“We are hoping to eliminate one the great disease challenges facing Australia in the 21st century.”

The cost

However, there was one glaring omission from government and departmental missives announcing the launch: the cost of supplying the medicines.

As an example of the costs, the price to pharmacy for each monthly dose of Harvoni is $22,136.61 + GST and for Sovaldi is $19,367.69 + GST.

“Never before has the pharmacy supply chain faced the prospect of dealing with such very expensive medicines at such high levels of patient demand,” said David Quilty, executive director of the Pharmacy Guild of Australia.

Guild member pharmacies quickly raised concerns about serious cash flow issues given the cost of the medicines, with the possibility that some pharmacies would be unable to manage sufficient credit to meet the demand.

The key issues “was to align the payment requirements for these medicines with the timing of the normal PBS reimbursement process, so that pharmacy small businesses are not required to carry the cash flow costs involved in dispensing,” a Guild spokesperson said in April.

The response

Whether delayed by the extended federal election caretaker period, or not, there has still to be a departmental resolution to the issue.

As a result, many pharmacies have avoided stocking the medicines.

A June/July online poll conducted by AJP set out to examine to what extent the cash flow issues around the medicines were affecting pharmacies’ decisions to supply patients with the drugs.

It found that more than one-fifth (22%) of respondents said their pharmacy was not providing the hepatitis C medicines at all.

In addition, while most pharmacies – 59% of respondents – said were filling all scripts for patients who present with them, another 7% said that while they were currently filling the scripts, they were considering changing doing so for economic reasons.

Another 8% were only filling scripts for a limited number of patients, again for economic reasons.

Responding to the poll, a Guild spokesperson said: “Since 1 March, the Guild has been working with many parties to address the immediate issues that our members face in dispensing high-cost hepatitis C medicines.”

“Both the Department of Human Services (Medicare) and the ATO have cooperated in managing their claims and payments processes so that a pharmacy’s cash-flow should not be compromised. Symbion has also changed its trading terms to be consistent with that of the other wholesalers.

“The Guild continues to be advised on unexpected logistical problems, noting that these can occur with any medicine.

“Unfortunately, the high-cost of the hep C medicines exaggerates the impact of these problems and the ability to remedy them and can cause problems for patients and prescribers as well as for pharmacists.

 “This is an issue the Guild will be pursuing in the Pharmacy Review. The Guild has worked with government, wholesalers and manufacturers to reduce the impact on pharmacies’ cash flow, but it still continues to be an issue due to the cost of these medicines and the lack of margin ($70 on a $22K medicine) and there is a need in the longer term to find a more sustainable supply chain model for these very high cost medicines.”

The concern

However, the approach of avoiding supply has brought criticism from others, with a leading clinical pharmacist saying the profession needs to be prepared for more of the same when it comes to expensive new treatments.   

Consultant pharmacist Debbie Rigby says “there will be more and more high-cost drugs coming onto the PBS in the future, and community pharmacies do have a responsibility to ensure patients have access to these drugs.”

Rigby, along who with Professor Lisa Nissen and Chris Campbell developed the CPD accredited education package on the subject designed specifically for community pharmacy.

“Pharmacies should be providing these drugs, which are lifesaving to patients with Hepatitis C, because our responsibility is always to care for our patients,” Rigby told the AJP.

“So whilst I can appreciate some of the cash flow problems that have occurred, I don’t think we can pick and choose which drugs we will dispense to patients.”

She highlighted the requirement for pharmacies which do not supply the medicines to advise patients of their options for accessing the drugs.

“It’s like with EC or even the contraceptive pill when there’s a few pharmacies who say they have their own moral issues – the guidelines say that you have to ensure that the patient  has access to the drugs, by helping the patient identify a pharmacy that will dispense them.”

The solution

One industry-based solution highlighted by both Debbie Rigby and the Guild is the AbbVie Pharmacy Program to support dispensing Viekira PAK and Viekira PAK-RBV.

Under this program, AbbVie provides registered pharmacies – known as AbbVie Network Pharmacies – with extended payment terms of up to 120-days, dependent on wholesaler.

The Guild spokesperson sees the AbbVie program as a sign that manufacturers are “taking on board the issues that community pharmacies face” in supplying these medicines.

“I’d like to hear from pharmacies enrolled in the Abbvie Pharmacy Program how it is going with regard to cash flow and supply of these life-saving drugs,” Rigby said.

The pharmacists’ view

Taree pharmacist Ian Carr is one who has had issues with both the cost of, and the supply of the newly listed hepatitis C medicines.

“We’re doing these Hepatitis C antivirals now, and a treatment will typically cost $30,000 a month,” Carr says.

“I have perhaps six to eight customers on this at the moment, and I was up until this point prepared to take on a certain number of these customers if I could ensure that my cash flow was not going to be in the negative.

“I started doing some research about insurance, because if we carry another $100,000 of extra stock, we have to insure it and that costs us roughly $300 a year according to the quote I got. I asked them, ‘If I increase my stock by another $100,000, what’s my extra premium?’ and they said, ‘something like 300 a year’. That’s already four dispensings gone.

“And then there’s the situation where we have to pay GST of $3,000 a month, which we then don’t get back until the following month, the month following purchase.

“Those turned out to be minor concerns when I tell you what happened to me!

“Last Thursday I got a call at 5pm from my supplier at the wholesaler. I wasn’t available at the time, and then the following morning I was off. But my staff rang me to say that [the wholesaler] had not sent our order.

“And when I inquired about this, it was not because I was behind [in payments].

“On Friday 24 June they refused to send my order because my credit limit had been breached. Now, I got upset about this. I had not been informed I had a credit limit at all. We’ve been dealing with [this wholesaler] and its predecessors for 64 years.

“I paid my bill in the next couple of days but they’re telling me that the limit is going to stay there, so it’s possible that halfway through any month, if I’m buying too many of these Hepatitis C antivirals, I won’t get any orders filled at all.

“They’re talking about perhaps considering me for a higher credit limit, because it was going on the average – they said there’s an algorithm that says, if you’re ordering more than usual you can ring them and find out where you are. There’s a formula where at some point they start getting suspicious and apparently their accounting machinery puts this into place without human intervention.

“That’s what hurts – if I’d been given 48 hours’ warning I could have shifted some cash or did what had to be done. Anybody taking these products on is risking their creditworthiness.

“On the Friday morning they did send some of my order, but at some point the machine said, ‘no more’. One of the items that did not turn up was one of the $22,000 Hepatitis C items, and so I was very, very lucky that I was able to find enough tablets for that particular person to see them over the weekend. It could’ve been a situation where that patient might have been without supplies till Tuesday morning.”

Carr says its obvious the wholesaler had not seen this scenario coming, and he had heard anecdotally that a similar situation had occurred in “several businesses on the same day…”

“The reason I was caught was that it was towards the end of the month. You start the month with a balance of $0, and then towards the end, it goes up. If it was normally $120,000, adding these Hepatitis C medicines makes it approach $300.

“Any clients that come in with those prescriptions now, I’m going to recommend that they go to the public system. I’ve lined this up with the public hospital. If there’s some local pharmacies who are prepared to do it, that’s fine too, but I can’t put my credit at risk for that, and for the three or four patients who would then take precedence over all the others I’ve got in terms of getting their medication. For a fee of $75 plus financing plus GST plus the insurance angle, it’s simply not affordable at this stage.”

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6 Comments

  1. Karalyn Huxhagen
    13/08/2016

    The lack of ability for companies to supply when we order plus the impact of the GST on cash flow makes these and other high cost drugs too expensive for community phcy to carry. It has become clear as this saga has gone on that the midline wholesalers are also struggling as when you contact the parent company they have stock but the pharmacy suppliers have nil.

    If these drugs continue to have GST applied then we are really pushing the envelope to be involved in the supply chain. Take them back to hospitals where these issues do not occur.

    If Govt was fair dinkum about community phcy supplying these drugs then the pricing formula would reflect state hospital purchasing guidelines.

    • Jarrod McMaugh
      13/08/2016

      Karalyn, have you been to one of the King review sessions yet (or planning to go)?

      I was remiss in overlooking GST as an issue and I think it would be very important to raise it as something that should be completely removed from the supply chain (not just for these) – if the final product is GST Free, it should be all along the line.

      They are looking for submissions on specific business cases (and can make these commercial in confidence). If you are able to go, or just to make a submission, this could highlight it as a focal point for the review…

  2. Trevor
    13/08/2016

    Why should community pharmacies be saddled with the burden of having to supply such expensive medicines AT ALL? Given the insane cost of Hep C medicines on the PBS, the patients should be made to go to hospitals to get them. If they don’t like that, because it’s inconvenient, the patient should pay the full cost themselves. If someone is giving you $20 000 of medicine a month for virtually nothing, you should have to pick the medicine up from where you are told to – a hospital. That’s life, and be grateful. The government should NOT be gutting the rest of PBS payments to community pharmacies so it can over-pay for Hep-C medicines, and it should NOT be destroying the cash flow and viability of community pharmacies by lumbering them with said overpayments via suburban supply. When is the Guild going to grow a pair of balls and stop signing up for these anti-pharmacy contracts?

  3. Russell Smith
    13/08/2016

    Just another “great idea” not thought through by govt – Ley would like to take the credit for Hep C drug supplies – now she needs fix the real problems caused – and explain why she basically made millions of other sick people pay full price for delisted items so a minority could benefit. Community pharmacy needs say “no more” – and PGA needs not bother.

    • Jarrod McMaugh
      13/08/2016

      Whether or not you feel the treatment is value for money, the fact is that these medications can eradicate a condition from an individual, and potentially from the population. If this outcome is achieved, they’ve probably been undervalued…. from an economic point of view, a health point of view, and basic human value point of view.

      • Rick
        15/08/2016

        They pay 1% of the price we pay for them here, in overseas countries such as Egypt, for these self-same HepC medicines by the same manufacturers. Google it. If you cut the guts out of other areas of health to pay a punitive price for a medicine, that can’t be good sense, can it? Even a naïve do-gooder should be able to see that.

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