Cost-Effectiveness Studies of New Hepatitis C Treatments

Cost-Effectiveness Studies of New Hepatitis C Treatments

Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 1 Notice of Purpose: TEC Assessments and Special Reports are scientific opinions, provided solely for informational purposes. TEC Assessments and Special Reports should not be construed to suggest that Blue Cross Blue Shield Association or the TEC Program recommends, advocates, requires, encourages, or discourages any particular treatment, procedure, or service; any particular course of treatment, procedure, or service; or the payment or nonpayment of the technology or technologies evaluated.

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© 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. Cost-Effectiveness Studies of New Hepatitis C Treatments EXECUTIVE SUMMARY Background Chronic hepatitis C virus (HCV) is a common infection that is a major cause of chronic liver disease, cirrhosis, and hepatocellular cancer. Newly developed drugs have revolutionized the treatment of hepatitis C and are both more effective and have fewer treatment-related adverse effects. However, concern has been raised about the high cost of these new agents.

Objectives To evaluate current published health economic evaluations of the newest hepatitis C treatments sofosbuvir and simeprevir, focusing on:  The structure and perspective of the relevant studies  Important parameters and assumptions of these studies  Central results of the studies  Interpretation of study findings  Future research needs in economic studies Search Strategy We searched MEDLINE (via PubMed) through November 2014, using the following search terms: (sofosbuvir OR simeprevir) AND “cost-effectiveness.” Selection Criteria Studies identified by this search were examined and selected if they included an economic evaluation of sofosbuvir or simeprevir for treatment of hepatitis C and measured both economic and health outcomes.

We identified 3 studies published in the peer-reviewed literature.

1-3 An economic evaluation from the California Technology Assessment Forum (CTAF) also met selection criteria. 4 Main Results The CTAF economic evaluation estimates the costs and health effects of HCV treatment in 12 different patient groups defined by genotype, interferon eligibility, and prior treatment history. 4 For each patient group, sofosbuvir- and/or simeprevir-based treatments were compared with the best prior standard treatment. In this analysis, health effects are only counted in terms of treatment success, rather than increase in quantity and/or quality of life. This type of analysis precludes evaluation of hepatitis C treatments in relation to other commonly accepted medical treatments.

Results were presented in terms of costs per treatment success (defined as sustained virologic response). Future costs averted due to successful treatment were presented separately as cost offsets, and, in at least 1 treatment scenario,

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 2 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. showed net cost savings at 20 years. We identified several problems in the values and modeling technique used for calculating cost offsets, all of which result in overestimation of cost offsets for all the patient groups evaluated.

A study by Petta et al, estimates the costs and health effects for a single treatment scenario: sofosbuvir- based combination treatment in HCV genotype 1, treatment-naive, interferon-eligible patients compared with standard treatment.

1 The analysis incorporates the perspective of the Italian health care system. In this analysis, treatment health effects are translated into increases in quantity and/or quality of life. Results showing costs below $33,333 per life-year gained were considered to meet willingness-to-pay thresholds and deemed cost-effective. The overall base case estimate for sofosbuvir-based treatment versus telaprevir-based treatment was $33,005 per life-year gained, which met the threshold. Results for different subgroups varied, and were inconsistent with the overall base case estimate. A study by Leleu et al estimates the costs and health effects for several treatment scenarios simulating the spectrum of HCV disease in France.

2 Each scenario compares sofosbuvir-based combination treatment with the appropriate comparator for each type of patient. The analysis incorporates the perspective of the French health care system. In this analysis, treatment health effects are translated into increases in quantity and/or in quality of life. The overall base case estimate for sofosbuvir-based treatment versus the appropriate comparator was $21,704 per quality-adjusted life-year (QALY) saved. Cost-effectiveness ratios varied greatly across liver fibrosis categories, with lower ratios for more severe disease. The model assumed that 40% to 50% of subjects would have cirrhosis, and several characteristics of the base case were not specified.

A study by Saab et al estimates the costs and health effects for treatment-naive, treatment-naive HIV- coinfected, and treatment-experienced patients with HCV genotype 1. 3 The analysis incorporates the perspective of the U.S. health care system. In this analysis, treatment health effects are translated into increases in QALYs. In almost all patient groups, sofosbuvir-based combination treatment was a dominant strategy over either telaprevir- or boceprevir-based combination treatments, meaning that it was both less expensive and produced better health outcomes.

Author Conclusions and Comment The studies have significant limitations and limited value in assessing the health and economic effects of sofosbuvir and simeprevir in the U.S.

health care system. The CTAF analysis measures outcomes as treatment success and is not easily compared with the other studies. Among the 3 studies that translate health outcomes into life-years or QALYs gained, all 3 studies found that sofosbuvir-based treatment was either cost-effective or cost-saving compared with comparator treatments. However, we identified several methodologic problems in each study, making the conclusions suspect. The studies by Leleu et al and Saab et al were funded by the manufacturer of sofosbuvir. We also identified several aspects of economic evaluations that should be addressed in future research to make such studies more relevant to health policy.

References 1. Petta S, Cabibbo G, Enea M, et al. Cost-effectiveness of sofosbuvir-based triple therapy for untreated patients with genotype 1 chronic hepatitis C. Hepatology. May 2014;59(5):1692-1705. PMID 24691835 2. Leleu H, Blachier M, Rosa I. Cost-effectiveness of sofosbuvir in the treatment of patients with hepatitis C. J Viral Hepat. Sep 15 2014. PMID 25219291 3. Saab S, Gordon SC, Park H, et al. Cost-effectiveness analysis of sofosbuvir plus peginterferon/ribavirin in the treatment of chronic hepatitis C virus genotype 1 infection. Aliment Pharmacol Ther. Sep 2014;40(6):657-675. PMID 25065960 4.

Tice JA, Ollendorf DA, Pearson SD. The comparative clinical effectiveness and value of simeprevir and sofosbuvir in the treatment of chronic hepatitis C infection2014.

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 3 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. AUTHORS, STAFF, AND MEDICAL ADVISORY PANEL TEC Staff Contributors Lead Author: David H. Mark, M.D., M.P.H. Executive Director, Center for Clinical Effectiveness: Suzanne E. Belinson, Ph.D., M.P.H. Executive Director, Clinical Evaluation, Innovation, and Policy: Naomi Aronson, Ph.D. Director, Technology Assessment: Mark D.

Grant, M.D., Ph.D.

Research/Editorial Staff: Claudia Bonnell, R.N., M.L.S., Kimberly Hines, M.S., Michael Vasko, M.A. Blue Cross Blue Shield Association Medical Advisory Panel Chair Trent T. Haywood, M.D., J.D., Senior Vice President, Clinical Affairs/Medical Director, Blue Cross Blue Shield Association Vice Chair Suzanne E. Belinson, Ph.D., M.P.H., Executive Director, Center for Clinical Effectiveness, Blue Cross Blue Shield Association Scientific Advisors Steven N. Goodman, M.D., M.H.S., Ph.D., Dean for Clinical and Translational Research, Stanford University School of Medicine, and Professor, Departments of Medicine, Health Research and Policy Mark A.

Hlatky, M.D., Professor of Health Research and Policy and of Medicine (Cardiovascular Medicine), Stanford University School of Medicine; American College of Cardiology Appointee Panel Members Peter C. Albertsen, M.D., Professor, Chief of Urology, and Residency Program Director, University of Connecticut Health Center Ann Boynton, Deputy Executive Officer, Benefits Programs Policy and Planning, CalPERS Virginia Calega, M.D., M.B.A., F.A.C.P., Vice President, Medical Management and Policy, Highmark Inc. Sarah T. Corley, M.D., F.A.C.P., Chief Medical Officer, NextGen Healthcare Information Systems Inc.; American College of Physicians Appointee Helen Darling, M.A., Strategic Advisor, National Business Group on Health Josef E.

Fischer, M.D., F.A.C.S., William V. McDermott Professor of Surgery, Harvard Medical School; American College of Surgeons Appointee Lee A. Fleisher, M.D., Professor and Chair, Department of Anesthesiology and Critical Care, University of Pennsylvania Perelman School of Medicine; Senior Fellow, Leonard Davis Institute of Health Economics I. Craig Henderson, M.D., Adjunct Professor of Medicine, University of California, San Francisco Jo Carol Hiatt, M.D., M.B.A., F.A.C.S., Chair, Inter-Regional New Technology Committee, Kaiser Permanente Saira A. Jan, M.S., Pharm.D., Associate Clinical Professor, Ernest Mario School of Pharmacy, Rutgers, The State University of New Jersey; Residency Director and Director of Clinical Programs Pharmacy Management, Horizon Blue Cross and Blue Shield of New Jersey Lawrence Hong Lee, M.D., M.B.A., F.A.C.P., Vice President and Executive Medical Director for Quality and Provider Relations, Blue Cross and Blue Shield of Minnesota Bernard Lo, M.D., President, The Greenwall Foundation Randall E.

Marcus, M.D., Charles H. Herndon Professor and Chairman, Department of Orthopaedics, Case Western Reserve University School of Medicine and University Hospitals Case Medical Center, Cleveland, Ohio Barbara J. McNeil, M.D., Ph.D., Ridley Watts Professor and Head, Department of Health Care Policy, Harvard Medical School; Professor of Radiology, Brigham and Women's Hospital William R. Phillips, M.D., M.P.H., T.J. Phillips Endowed Professor in Family Medicine, University of Washington; American Academy of Family Physicians Appointee Rita F. Redberg, M.D., M.Sc., F.A.C.C., Professor of Medicine and Director, Women's Cardiovascular Services, University of California San Francisco Maren T.

Scheuner, M.D., M.P.H., F.A.C.M.G., Chief, Medical Genetics, VA Greater Los Angeles Healthcare System; Professor, Department of Medicine, David Geffen School of Medicine at UCLA; Affiliate Natural Scientist, RAND Corporation; American College of Medical Genetics and Genomics Appointee Leslie Robert Schlaegel, M.S., Associate Vice President of Human Resources, Stanford University J. Sanford Schwartz, M.D., F.A.C.P., Leon Hess Professor of Medicine and Health Management & Economics, School of Medicine and The Wharton School, University of Pennsylvania John B. Watkins, Pharm.D., M.P.H., B.C.P.S., Pharmacy Manager, Formulary Development, Premera Blue Cross

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 4 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. Cost-Effectiveness Studies of New Hepatitis C Treatments ASSESSMENT OBJECTIVE Chronic hepatitis C virus (HCV) is a common infection that is a major cause of chronic liver disease, cirrhosis, and hepatocellular cancer. Newly developed drugs have revolutionized the treatment of hepatitis C and are both more effective and have fewer treatment-related side effects.

However, concern has been raised about the high cost of these new agents. Although the consequences of chronic hepatitis C infection can be severe, most patients with infection are asymptomatic and the consequences of the infection are years in the future. Because of the cost of new treatments and the potentially large number of persons eligible to receive them, the economics of these new drugs have been the subject of considerable controversy.

This Special Report evaluates current published health economic evaluations of the newest hepatitis C treatments sofosbuvir and simeprevir, focusing on:  The structure and perspective of the relevant studies  Important parameters and assumptions of these studies  Central results of the studies  Interpretation of study findings  Future research needs in health economic studies BACKGROUND Disease The HCV virus is transmitted by blood-borne exposure and the principal risk factor is intravenous drug use. Before universal blood screening, blood transfusion was also a common cause of HCV infection.

It is unclear whether HCV can be transmitted through sexual contact; if it is, the risk is thought to be very low. Only 20% to 30% persons infected with HCV will become symptomatic. Long-term consequences of HCV may occur in persons who develop chronic infection; 75% to 85% of infected persons will remain chronically infected.

It is estimated that there are 3.2 million persons with chronic HCV infection in the United States. Based on a synthesis of studies, Holmberg et al (2013) estimated that of those 3.2 million persons, 1.6 have been diagnosed, 1 to 1.2 million have been referred to care, 220,000 to 360,000 have been treated, and 170,000 to 200,000 have been successfully treated. 1 Chronic HCV infection progresses slowly, with only a minority of patients progressing to liver cirrhosis over many years. In a review by Freeman et al (2001), depending on the type of subjects enrolled in the study, the proportion of patients progressing to cirrhosis over 20 years varied from 4% to 24%.

2 Factors that were associated with more rapid disease progression included older age at HCV infection, male gender, and heavy alcohol intake. The staging of HCV infection is assessed and classified by liver biopsy. The Metavir score assesses both fibrosis (F0-F4) and inflammation activity (A0-A3). Another staging instrument commonly used is the Ishak scale, which ranges from 1 (no fibrosis) to 6 (cirrhosis). There are 3 predominant genotypes of HCV infection in the United States. The most common is genotype Abbreviations and Acronyms CTAF California Technology Assessment Forum QALY quality-adjusted life-year FDA Food and Drug Administration RBV ribavirin HCV hepatitis C virus SVR sustained virologic response pegIFN pegylated interferon

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 5 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. 1 (70%-75%), followed by genotype 2 (13%-17%), and genotype 3 (8%-12%). 3 Standard treatment for HCV infection varies by genotype, prior treatment history, and other patient factors. The response to treatment of both standard and novel drugs has been shown to vary by genotype and these other factors. Treatment Prior to the development of protease inhibitors, the primary treatment for HCV was pegylated interferon plus ribavirin (pegIFN/RBV).

In clinical trials, a sustained virologic response (SVR) to this treatment for patients with HCV genotype 1 (HCV-1) ranged from 40% to 50%.

4 SVR has become the standard metric for reporting HCV treatment outcomes. SVR measured at some point after treatment has been demonstrated to strongly predict long-term cure of HCV infection. However, outside clinical trials, observed response rates have been much lower, possibly due to low rates of treatment completion. 5 The response rate to pegIFN/RBV of patients with genotypes 2 and 3 is much higher than genotype 1, in the range of 75% to 85% in clinical trials. PegIFN is an injectable medication that commonly causes fatigue, headache, and fever. Other adverse effects include anemia, pruritus, and psychiatric symptoms.

First-generation protease inhibitors, boceprevir and telaprevir, were approved by the U.S. Food and Drug Administration (FDA) in 2011 for treatment of patients with HCV-1. Treatment with boceprevir or telaprevir in combination with pegIFN/RBV resulted in SVR rates up to 65% to 75%, which were superior to pegIFN/RBV alone in head-to-head randomized controlled trials.

6-8 However, disadvantages of treatment with boceprevir and telaprevir include a significant burden of treatment in terms of large pill burden at precisely spaced and frequent time intervals. The adverse effects associated with pegIFN/RBV increase with the addition of these drugs. The newest generation drugs, simeprevir and sofosbuvir, were approved by FDA in 2013. These drugs reduce the pill burden to a single tablet per day, have reduced adverse effects compared with boceprevir and telaprevir, and have higher SVR rates. Several clinical trials evaluating simeprevir plus pegIFN/RBV versus pegIFN/RBV alone in patients with HCV-1 have shown superior SVR rates.

9,10 The clinical trials of sofosbuvir are more varied in the types of patients enrolled (eg, genotype, prior treatment history), and many trials had no control group. However, the SVR rates to treatment have all been higher than the SVR rates historically associated with prior standard treatments.

11-13 Practice Guidelines Recent American Association for the Study of Liver Diseases guidelines recommend inclusion of sofosbuvir in a first-line treatment regimen for every category of patient (defined by genotype, treatment history, IFN eligibility). 14 Simeprevir is recommended as a first-line treatment only for a few categories of patients with HCV-1 (treatment-naive IFN-ineligible, prior treatment failure regardless of IFN eligibility, both regimens in combination with sofosbuvir) and as an alternative regimen in patients with HCV-1 who are eligible to receive IFN. Regimens with telaprevir or boceprevir are specifically not recommended for any category of patient.

The guidelines mention limitations of workforce and societal resources in providing treatment to all HCV- infected patients, but do not specify who should or should not be treated. The guidelines identify categories of patients who should have higher priority for treatment. Patients with advanced fibrosis (Metavir F3), compensated cirrhosis (Metavir F4), and patients with severe extrahepatic manifestations of HCV (eg, cryoglobulinemia, proteinuria, nephrotic syndrome) should have highest priority for treatment. Other patients at high risk for complications, such as those with fibrosis (Metavir F2), HIV coinfection, or debilitating fatigue, received the next highest priority for treatment.

Fundamentals of Economic Evaluation of Novel Treatments A new treatment that is more expensive than an existing treatment, particularly for a common condition such as HCV, can raise concerns from the patients, payers, and governmental entities that finance and pay for health care services. The introduction and diffusion of a novel expensive treatment will have

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 6 © 2015 Blue Cross Blue Shield Association.

Reproduction without prior authorization is prohibited. differing economic impact on various stakeholders in the health care system. For this reason, it is often difficult to analyze and compare different economic evaluations of a particular clinical problem. It is beyond the scope of this Special Report to describe the full spectrum of economic evaluations of health care interventions. However, the goal of certain types of evaluation is to attempt to assess the “value” of the novel treatment, ie, the value of the new treatment in terms of its health benefits relative to its cost. Using the scenario of the new HCV treatments sofosbuvir and simeprevir, we will attempt to illuminate some fundamental principles of this type of economic evaluation 15 of novel health care interventions.

The economic studies of sofosbuvir and simeprevir will be evaluated according to these principles.

Novel Treatment and Comparator Sofosbuvir and simeprevir are novel treatments for HCV. Accordingly, it is important to define the treatment(s) to which these novel treatments are being compared. For HCV, the comparator differs based on the genotype and other patient characteristics. Analysis depends as much on the comparator treatment as it does on the novel treatment. In general, the results of an economic evaluation hinge on the difference in treatment efficacy and costs between the novel and comparison treatment, rather than the absolute values of treatment efficacy and cost. For example, a difference in treatment efficacy between a novel and a comparator treatment of 5% will generally produce a similar result in any economic evaluation, regardless of where in the range the 5% difference falls—whether it is between 20% and 25% or 80% and 85%.

The larger the improvement in treatment efficacy attributable to the novel treatment, the more favorable the economic evaluation should be toward the novel treatment.

In the case of HCV treatment, the difference in treatment efficacy between 2 specific treatments often varies by patient characteristics, and thus the analysis will show a different result for different subgroups of patients. For example, Table 1 displays the treatment efficacy parameters for sofosbuvir and telaprevir as reported in 2 of the studies we included in this Special Report. Petta et al 16 assumed a greater SVR difference between the 2 drugs than the California Technology Assessment Forum 17 (CTAF) analysis (14% vs 9%). If all else was similar between the studies, the Petta et al analysis would show a more favorable result for sofosbuvir.

Similarly, the difference in costs between the novel and comparator treatments is the critical issue in the analysis, rather than the absolute cost. The greater the difference in the cost between the novel and the comparator treatments, the greater the impact on the analysis. Table 1 also shows the cost estimates used for sofosbuvir and telaprevir in the 2 studies. Although the absolute cost values differ, the difference between sofosbuvir and telaprevir within each study is similar. (However, subtraction of the 2 values is not quite an accurate measure of the difference in treatment cost due to differences in length of treatment and other costs associated with each drug regimen.) Table 1: Comparison of Some Critical Study Parameters for Analysis in the CTAF and Petta et al Studies for Similar Patient Scenarios in Analysis Study Parameter CTAF 17 Petta et al 16 Sofosbuvir SVR in base case, % 83 89 Telaprevir SVR in base case, % 74 75 SVR difference, % 9 14 Weekly cost sofosbuvir, $U.S.

7000 4667 Weekly cost telaprevir, $U.S. 4920 2777 Euro values in Petta et al converted into dollars using €0.75 = $1 U.S. CTAF: California Technology Assessment Forum; SVR: sustained virologic response.

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 7 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. Costs The types of costs included in the analysis will influence the results. In general, the costs of the novel and the comparator treatments are always included, as are additional costs generated during treatment due to concomitant treatment and adverse effects. For the typical economic study, which includes a longitudinal perspective, the improvement in health outcomes caused by the better treatment should result in reduced future health costs due to eliminating or reducing costs associated with treating the disease.

For patients with HCV, curing the infection should reduce or eliminate the risk of progression of liver disease, cirrhosis, and liver cancer. Future costs are generally discounted at some specific amount, typically 3%. This discounting converts the future costs into present-value costs, which can then be directly compared with the costs of the initial HCV treatment. All costs also are defined from a specific economic perspective, such as payer type, and assigned values consistent with that particular perspective. The estimate of these future costs is complex due to the need to integrate information on natural history, prognosis, and health care costs from often less than ideal data sources.

Direct measurement of these costs from randomized controlled trials is rarely available and often limited to a relatively short future time horizon. Health Outcomes The health improvement associated with novel treatments may be accounted for in different ways. We will discuss the method of assessing health outcomes in the context of each of the studies we reviewed in this Report.

FDA Status On May 13, 2011, boceprevir was approved by FDA for the treatment of chronic hepatitis C genotype 1 infection, in combination with pegIFN-/RBV, in adult patients, 18 years of age and older, with compensated liver disease, including cirrhosis, who are previously untreated or who have failed previous IFN and RBV therapy. On May 23, 2011, telaprevir was approved by FDA for use in combination with pegIFN-/RBV, for the treatment of chronic hepatitis C genotype 1 infection in adult patients with compensated liver disease, including cirrhosis, who are treatment-naive or who have been previously treated, including prior null responders, partial responders, and relapsers.

On November 22, 2013, simeprevir was approved by FDA for use as a component of a combination antiviral regimen for the treatment of chronic hepatitis C infection. On December 6, 2013, sofosbuvir was approved by FDA for use as a component of a combination antiviral regimen for the treatment of chronic hepatitis C infection. METHODS Search Strategy We searched MEDLINE (via PubMed) through November 2014, using the following search terms: (sofosbuvir OR simeprevir) AND “cost-effectiveness.” Study Selection Studies identified by this search were examined and selected if they included an economic evaluation of sofosbuvir or simeprevir treatment for hepatitis C and measured both economic and health outcomes.

We identified 3 studies published in the peer-reviewed literature.

16,18,19 An economic evaluation of hepatitis treatment completed by the Institute for Clinical and Economic Review performed on behalf of CTAF. 17 This analysis also met selection criteria. This Special Report evaluates these 4 studies.

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 8 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. Medical Advisory Panel Review This Special Report was reviewed by the Blue Cross and Blue Shield Association Medical Advisory Panel (MAP) on September 18, 2014.

To maintain the timeliness of the scientific information in this Report, literature search updates were performed subsequent to the Panel's review (see Search Strategy section above). If the search updates identified any additional studies that met the criteria for detailed review, the results of these studies were included in the tables and text where appropriate. Following the meeting, a search through November 2014 identified 2 additional studies that were included in this Special Report. FORMULATION OF THE ASSESSMENT We reviewed the selected studies to identify the scope of each, the structure of the analysis, and certain key assumptions of the analytic model.

Because the studies vary in the health outcome metrics used, we describe and discuss the implications of the difference. The overall base case results or a representative set of results are presented and explained. We then discuss particular aspects of each analysis that are potentially problematic in terms of the validity, generalizability, or applicability of the analysis. We identified these points based on our knowledge of health economic evaluations and quantitative modeling of health outcomes, and consideration of the impact of the problem on the study results. A comprehensive critique of all the analytic assumptions and parameter estimates used in each study is beyond the scope of this Special Report.

REVIEW OF EVIDENCE CTAF Economic Study The CTAF economic analysis 17 was part of a technology assessment performed by the Institute for Clinical and Economic Review on behalf of CTAF. CTAF commissions evidence reports on a broad variety of topics to improve the quality and value of health care. The report, which also reviewed the evidence on clinical efficacy of sofosbuvir and simeprevir, attempted a comparative effectiveness analysis of hepatitis C treatments using network analysis methods. Scope of Study The CTAF report evaluated several treatment comparisons in HCV patients defined by genotype, prior treatment experience, and IFN eligibility.

The report examined all combinations of genotypes (1, 2, 3), treatment experience (naive vs experienced), and IFN eligibility (yes vs no), evaluating a total of 12 patient groups. Within these patient groups, secondary cost and outcomes analyses were conducted among patients with different stages of liver disease, either none-to-mild liver disease (Metavir F0-F2) or advanced liver disease (Metavir F3-F4).

In each of the 12 patient groups analyzed, the costs and outcomes of sofosbuvir or simeprevir (and, for some groups, combination therapy with sofosbuvir and simeprevir) were compared with best prior standard therapy. For all IFN-ineligible groups, the comparator was no treatment. For all IFN-eligible groups with HCV-2 or -3, the comparator was 24 weeks of pegIFN/RBV. For patients with HCV-1 who were IFN-eligible, the comparator was telaprevir plus pegIFN/RBV. Table 2 shows the scope of the CTAF analysis with the SVR rate parameter used.

Table 2: Treatment Groups Analyzed in CTAF Report by Genotype, Prior Treatment Status, and IFN Eligibility, With Treatment and Control Percent SVR Used in the Analysis Model Prior Treatment Genotype 1 SVR, % Genotype 2 SVR, % Genotype 3 SVR, % Treatment-naive IFN eligible C: TEL + pegIFN/RBV T: SIM + pegIFN/RBV T: SOF + pegIFN/RBV 74 84 83 C: pegIFN/RBV T: SOF + RBV 78 97 C: pegIFN/RBV T: SOF + RBV 62 93 IFN ineligible C: no treatment T: SOF + RBV T: SOF + SIM 72 90 C: no treatment T: SOF + RBV 93 C: no treatment T: SOF + RBV 63

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 9 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. Treatment-experienced IFN eligible C: TEL + pegIFN/RBV T: SIM + pegIFN/RBV T: SOF + pegIFN/RBV T: SOF + SIM + RBV 70 70 71 90 C: pegIFN/RBV T: SOF + RBV 71 88 C: pegIFN/RBV T: SOF + RBV 51 77 IFN ineligible C: no treatment T: SOF + RBV T: SOF + SIM + RBV 61 90 C: no treatment T: SOF + RBV 88 C: no treatment T: SOF + RBV 63 C: control treatment; CTAF: California Technology Assessment Forum; IFN: interferon; pegIFN: pegylated interferon; RBV: ribavirin; SIM: simeprevir; SOF: sofosbuvir; SVR: sustained virologic response; T: treatment; TEL: telaprevir.

Structure of Analysis Health Outcome In the type of evaluation referred to as cost-effectiveness analysis in most of the health care literature, the benefits of treatment are translated into an increase in life expectancy, which is also typically adjusted for quality of life. This adjustment for quality of life allows for comparison between treatments that may vary in relative benefit of quality and quantity of life. Translating the benefits of treatment into a measure of quality-adjusted life extension allows for comparison of the disease being analyzed with other diseases; for example, to compare treatment for hepatitis C with colon cancer screening.

Novel treatments, which have been estimated to show cost-effectiveness values of $25,000 to $50,000 per quality-adjusted life- years (QALYs), have often been declared to be cost-effective.

The CTAF analysis takes a different approach from that outlined above. Instead of evaluating the increase in life expectancy due to HCV treatment, the results are presented in terms of the additional numbers of patients with SVR given the novel treatment compared with the standard treatment. Use of this outcome may be useful when comparing treatment strategies in which SVR is the sole outcome, and the value of SVR is uniform. However, in the context of HCV, this assumption is violated, because the health benefit of curing HCV is greater for persons at later stages of disease. Over 2 time horizons, 5 years and 20 years, the number of patients with liver complications averted is estimated, and the dollars saved by preventing that number of liver complications is presented as a cost “offset” to the increased costs of treatment with the novel drug.

Lower expenses due to reduced medical costs of patients with SVR independent of liver complications also contribute to the cost offset. Although a higher SVR and avoidance of liver complications should lead to greater life expectancy, the analysis stops short of this calculation. The analysis allows a calculation of “cost per additional SVR,” and provides other estimates that might allow a calculation of a “cost per liver complication avoided.” Other Key Assumptions of Analysis Although economic simulation analyses such as the CTAF analysis have a large number of model assumptions and parameter estimates, it is important to note a few of the more critical assumptions and the potential effects they have on the analysis.

The CTAF analysis assumes no mortality over the 5- and 20-year time horizons. Patients are assumed to survive for the entire 20-year time horizon of the study and to accumulate costs of care due to HCV infection either with or without liver complications. This assumption not only precludes any ability to conduct a classic cost-effectiveness analysis (with cost per quality of life calculation) but also affects calculations of cost offsets due to failed treatments. The CTAF analysis estimates risks of liver-related complications over a 5-year and a 20-year time horizon for all patients and for the subset with advanced fibrosis.

The overall risk of liver-related complications is estimated at 6% at 5 years and 24% at 20 years. For patients with advanced fibrosis, the risk of liver- related complications is 12% at 5 years and 48% at 20 years. Annual costs of care are higher for patients with liver complications than patients with unsuccessfully treated chronic HCV ($25,728 vs $10,149). However, in responding to comments on their modeling of the incidence of liver-related complications, the CTAF authors state that “one might consider our approach to be less than conservative, as we applied

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 10 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. the annual cost of liver-related complications to each year of the 5- or 20-year time horizon; in many cases, these events will occur toward the end of the timeframe, and increased costs will only be realized for a portion of that time” (p. 84). This assumption, the authors admit, will overestimate the lifetime costs of treating liver complications, and thus also overestimate the cost offset of the more effective treatment.

Results of Representative Treatment Scenario The CTAF analysis presents results for 12 treatment scenarios. We will examine in detail the results for a particular treatment scenario, and simplify the comparisons to clarify the discussion. We will first show the results of an analysis comparing sofosbuvir plus pegIFN/RBV with telaprevir plus pegIFN/RBV for HCV-1, treatment-naive, IFN-eligible patients. This scenario corresponds to the principal base case in one of the other studies (Petta et al 16 ) identified for this Report. Table 3 shows the analysis of short-term clinical and economic outcomes.

Treating 1000 patients with sofosbuvir plus pegIFN/RBV instead of telaprevir plus pegIFN/RBV results in 90 additional patients with an SVR. This translates to a number needed to treat of 1000/90 or 11. Given the difference in costs of the 2 initial treatment regimens, the cost of initial treatment per additional patient SVR is $139,000. However, patients in these groups will incur some additional drug costs due to retreatment and other costs. The difference in total drug costs between the 2 regimens narrows to $4275 per patient when taking into account additional short-term costs other than the initial treatment.

Thus a better estimate of short-term cost per additional SVR than provided in the CTAF report is $4,275,000/90 or $47,500 per additional SVR. Table 3: Short-Term Clinical and Economic Impact of Sofosbuvir Plus PegIFN/RBV and Telaprevir Plus PegIFN/RBV in Genotype 1, Treatment-Naive, IFN-Eligible Patients, Adapted From the CTAF Report 17 Regimen SVR per 1000 NNT for Additional SVR Initial Treatment Cost, $ Incremental Cost of Initial Treatment per Additional SVR, $ Average 1- Year Total Drug Cost, $ Incremental 1-Year Total Drug Cost per Patient, $ TEL+ pegIFN/RBV 740 83,976 107,713 SOF + pegIFN/RBV 830 11 96,468 139,000 111,988 4275 CTAF: California Technology Assessment Forum; NNT: number needed to treat; pegIFN: pegylated interferon; RBV: ribavirin; SOF: sofosbuvir; SVR: sustained virologic response; TEL telaprevir.

These short-term results represent only additional expenditures needed to produce additional SVRs, and do not show any recoupment of cost due to prevention of liver complications. Table 4 shows modeled long-term effects of this treatment comparison. At 5 years, among the 90 additional patients in whom SVR was achieved, they estimated that liver complications in 5 patients were prevented. In addition to the liver complications avoided, ongoing treatment costs of persons with SVR are less than persons with unsuccessfully treated HCV infection. The estimated cost offset per patient is $2154 in present-value dollars at 5 years, which amounts to about half of the additional incremental cost per patient of $4275.

At 20 years, the number of liver complication events averted and the cost offsets were considerably greater. The cost offset per patient at 20 years was estimated to be $6957 in present-value dollars, which is greater than $4275 and represents cost savings. Under the assumptions of the study, even without a formal cost- effectiveness analysis in which the health benefits are translated into increased life expectancy or improved quality of life, this would mean that sofosbuvir plus pegIFN/RBV improves health and decreases costs compared with telaprevir plus pegIFN/RBV and would be classified as a dominant strategy.

Table 4: Modeled Long-Term Effects of Achieving Sustained Virologic Response Regimen Comparison Incremental Liver Complication Events Averted per 1000 Patients at 5 Years, n Cost Offset at 5 Years, Present Value, per Patient, $ Incremental Liver Complication Events Averted per 1000 Patients at 5 Years, n Cost Offset at 20 Years, Present Value, per Patient, $ TEL + pegIFN/RBV vs ‒ SOF + pegIFN/RBV 4 2154 17 6957 pegIFN: pegylated interferon; RBV: ribavirin; SOF: sofosbuvir; TEL telaprevir.

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 11 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. Critical Commentary A particular aspect of the CTAF analysis we identified as problematic was the modeling and estimation of long-term cost offsets. There are at least 2 modeling assumptions that result in overestimation of cost offsets. First, the analysis assumes no mortality, and thus annual cost differences between groups due to differences in numbers of patients achieving SVR and suffering liver complications persist throughout the time horizon of the analysis.

Most cost-effectiveness analyses incorporate both mortality due to unrelated reasons and mortality due to disease into the cost accounting. With an assumption of no mortality in the analytic model, cost differences between treatment groups are inflated, because the group with the poorer outcomes continues to accrue treatment costs. This results in overestimation of the cost offsets attributable to the better HCV treatment.

Second, the costs of incident liver complications, which result in much higher annual medical costs, were calculated based on their occurrence at the beginning of the time horizon and persistence throughout the whole time horizon. These liver complications would actually occur at a fairly constant rate throughout the time horizon. The probable effect of this modeling assumption is at least to double the present value of the cost of liver complications, but, due to the effects of discounting, it is difficult to calculate precisely. Yet another source of overestimation of cost offsets are the values used for costs of care of unsuccessfully treated HCV prior to onset of liver complications.

The CTAF analysis uses results from a study by Manos et al (2013) to assume that patients with SVR have annual medical costs of $6301 versus costs of $10,149 for patients who do not achieve SVR, a difference of $3848, in the years prior to onset of liver complications.

20 From examining the report by Manos et al, we learn that the cost estimates incorporated in the CTAF model are unadjusted average costs. When adjusted for differences in baseline characteristics between the 2 groups, the Manos study shows that the difference is reduced to $2648, which is 69% of the unadjusted difference. In addition, the sample of subjects in the study by Manos et al included a number of patients with preexisting cirrhosis (10.6%). There were a number of liver-related hospitalizations contributing to the costs, and thus some costs of liver-related complications are imbedded into these cost estimates, whereas the CTAF model was supposed to incorporate those costs separately.

Thus the absolute values of the costs are inflated beyond what they are supposed to represent. In addition, the cost estimates used in the CTAF analysis are assumed to be constant over the posttreatment time period. The actual trajectory of costs observed in the study by Manos et al varied over the time period, rising from years 1 to 3, and then falling in years 4 and 5. It is unknown what the trajectory of medical costs are beyond 5 years, but the CTAF analysis assumes the same average costs for any number of years before liver complications occur. In sum, for all these reasons, the CTAF analysis overestimates the cost offset of the more effective treatment.

Another example from the CTAF reports illustrates a different potential issue in the presentation and interpretation of the CTAF results. For IFN-ineligible patients, there is no comparison treatment available for certain categories of patients. Sofosbuvir-based treatments are highly effective in these patients, and produce a large quantifiable health benefit (900 SVR per 1000 patients treated vs zero), but at a great incremental increase in cost (vs zero cost of no treatment). Table 5, adapted from the CTAF report, shows the short-term clinical and economic outcomes for treatment-naive, genotype 1 patients who are IFN-ineligible, and who are treated with sofosbuvir plus simeprevir plus RBV compared with no treatment.

Due to the difference in the comparator, treatment of these patients with the sofosbuvir plus simeprevir combination regimen appears to be much more costly than that for IFN-eligible patients. The incremental cost of initial treatment for additional SVR for these patients is $172,000, which is much higher than that for IFN-eligible patients. The comparable estimate to the $47,500 one-year cost per SVR calculated previously for IFN-eligible patients is $169,990,000/900 or $188,900 per SVR for IFN-ineligible patients. The values, as presented in the CTAF report, give the impression that treatment in this group of patients is of less “value” than treatment of IFN-eligible patients, despite the large absolute gain in number of SVR patients.

The modeled long-term effects of this treatment comparison show similar findings. Rather than showing full offset of initial treatment costs at 20 years as was estimated for IFN-eligible patients, which implies eventual cost savings, the cost offset for IFN-ineligible patients is $69,566 of $169,990 per patient, which is only 41% of initial treatment costs. This further appears to emphasize a poorer value in

TEC SPECIAL REPORT Cost-Effectiveness Studies of New Hepatitis C Treatments Volume 29, No. 10 http://www.bcbs.com/blueresources/tec/vols/ Publication Date: January 2015 Page: 12 © 2015 Blue Cross Blue Shield Association. Reproduction without prior authorization is prohibited. treating this particular group of patients. This result arises because the analysis does not emphasize or account for the initial advantage that IFN-eligible patients have in terms of a previously available effective but expensive treatment (telaprevir plus pegIFN/RBV). The presentation of these results in the CTAF report does not address particular findings, which arise due to preexisting inequities in the availability of effective treatments, that give the appearance of poor value of novel treatments in certain patient groups.

Table 5: Short-Term Clinical and Economic Impact of Sofosbuvir Plus Simeprevir Plus RBV and No Treatment in Genotype 1, Treatment-Naive, IFN-Ineligible Patients, Adapted From the CTAF Report 17 Regimen SVR per 1000 NNT for Additional SVR Initial Treatment Cost, $ Incremental Cost of Initial Treatment per Additional SVR, $ Average 1- Year Total Drug Cost, $ Incremental 1- Year Total Drug Cost per Patient, $ No treatment 0 0 0 SOF + SIM + pegIFN/RBV 900 1 154,536 172,000 169,990 169,990 CTAF: California Technology Assessment Forum; NNT: number needed to treat; pegIFN: pegylated interferon; RBV: ribavirin; SIM: simeprevir; SOF: sofosbuvir; SVR: sustained virologic response.

Petta et al Scope of Study Compared with the CTAF analysis, Petta et al 16 evaluates the cost-effectiveness of sofosbuvir-based treatments for a narrow spectrum of patients. Petta et al only considered patients with previously untreated IFN-eligible HCV-1. This amounts to only 1 treatment comparison of the 12 treatment comparisons carried out in the CTAF analysis, shown in Table 2. However, within this group of patients, analyses were carried out with patients stratified by IL28B genotype (CC, CT/TT), genotype 1 subtype (G1a, G1b), and stage of fibrosis (Metavir F0-F3, Metavir F4). SVR rates varied according to these patient characteristics, consistent with the results of clinical trials of sofosbuvir, boceprevir, and telaprevir.

For all comparisons, sofosbuvir plus pegIFN/RBV was compared with boceprevir plus pegIFN/RBV response- guided therapy or telaprevir plus pegIFN/RBV response-guided therapy. Structure of the Analysis Health Outcome The study by Petta et al is a cost-effectiveness analysis in which treatment effects are translated into increased quantity and quality of life. The principal outcome is the estimation of a cost per QALY, where cost-effectiveness ratios are compared between nondominated treatment strategies. Cost-effectiveness ratios below a certain value (in this analysis, €25,000 [U.S. $33,333] per life-year gained) are considered reasonably good value and societally worthwhile expenditures.

Other Key Assumptions of Analysis The investigators used Markov models to simulate the probability of future events and medical costs that vary because of the differing HCV treatment strategies. For patients in whom SVR is not achieved, the progression of liver disease from chronic infection to compensated cirrhosis to decompensated cirrhosis and ultimately to death is modeled using parameters estimated from studies of the natural history of HCV infection. The model was validated by comparing outcomes it generated with models developed by other researchers. Death due to other causes is incorporated into the analysis for all subjects regardless of treatment.

The model used a base case of a cohort of white male patients, 50 years old, with a weight of 70 kg. The model assumed treatment at that age and then modeled health outcomes over a lifetime horizon. The cost perspective used is that of the Italian National Health Service. We did not identify any major assumptions or parameter estimates that might produce a predictable bias.

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