A `Netflix`-style pricing agreement that allows the
Australian government to treat an unlimited number of people with hepatitis C
for AU$1 billion may result in savings close to US$5 billion, according to an
analysis published recently in the New
England Journal of Medicine.
The so-called `Netflix` model, also being explored by the US
state of Louisiana, allows treatment for an unlimited number of people during a
fixed period, just as subscription to the streaming entertainment channel
Netflix allows unlimited viewing.
For pharmaceutical companies, the attraction of such deals
is a predictable income stream, especially if income streams are being eroded
over time by competitors. These deals also fail to fix a unit price that can be
used by other countries in price negotiations, say Suerie Moon of the Institute
of Development Studies, Geneva, and Elise Erickson of the Harvard T.H. Chan
School of Public Health, Boston.
For governments, the deals also offer budget predictability
without restricting access to treatment, and the potential to achieve public
health goals without large increases in health expenditure – if ambitious
targets for screening, diagnosis and treatment can be met.
The Australian government concluded a deal with
pharmaceutical companies to treat an unlimited number of people with hepatitis
C for AU$1 billion (US$ 766 million) between March 2016 and 2020.
Using publicly-available data, Suerie Moon and Elise
Erickson calculated the per-patient price of treatment with direct-acting
antivirals under the Australian deal, and the total cost of treatment under
previous pricing arrangements (estimated as 23% below the published list price taking
into account negotiated rebates).
The Australian government went into the deal estimating that
61,500 people would be treated at a price of AU$16,260 (US$12,460) per patient.
But if treatment uptake continues at the rate established in year 2, a total of
104,223 people will be treated at a per-patient cost of AU$9,595 (US$7,352).
Even if treatment uptake gradually declined, so that only
71,732 people were treated by 2020, the per-patient cost would fall to
If everyone were treated at traditional prices, it would
cost AU$7.424 billion (US$5.688 billion).
The deal will save the Australian government AU$6.424
billion (US$4.922 billion), Moon and Erickson estimate.