Express Scripts 2013 Drug Trend Report included a jaw-dropping prediction that spending on hepatitis C treatment would surge by more than 100% this year and by more than 200% in both 2015 and 2016.

For comparison, Express Scripts (ESRX) estimates average specialty-drug spending will climb just shy of 17% this year and roughly 18% in 2015 and 2016. That's pretty heady growth, so what's behind the spending spike?

Source: Express Scripts

Shifting standards of care
Over the past five years, hepatitis C drugs have been among the most anticipated therapies. First, doctors, patients, and investors focused on Vertex Pharmaceuticals' (NASDAQ: VRTX) Incivek, a novel hepatitis C drug that promised shorter treatment duration and better cure rates.

Doctors began delaying patient treatment with the previous standard of care, a side-effect laden combination of PEG interferon and ribavirin in anticipating of Incivek's launch. Once Incivek won the FDA green-light in 2011, sales of the drug, which was priced nearly double that of the interferon and ribavirin regimen, jumped to more than $1 billion in less than a year, making Incivek among the quickest drugs ever to reach that plateau.

But Incivek's dominance was short-lived. Pharmasset, a small clinical development stage company, was already working on a very promising pill therapy that could eliminate the use of patient-unfriendly injections. Pharmasset's promise was so great, that Gilead (GILD -0.56%) bought the company for more than $11 billion in 2011.

Following promising late-stage studies, doctors once again began warehousing patients ahead of a potential FDA approval and, sure enough, Gilead's Sovaldi won the FDA go-ahead this past December.

Escalating costs of care
Like Incivek, Gilead's Sovaldi isn't only reshaping how we approach treating hepatitis C, but how we view the cost of treating the disease, too. While many fretted over Incivek's seemingly heady price, many more shouted "foul!" when Gilead announced a treatment course of Sovaldi would cost nearly $85,000.

That pricing decision has elicited a string of payer and provider push back including a threat by Express Scripts not to cover the drug in its formulary, and questions from House representative Henry Waxman on how Gilead plans to make sure low-income patients can receive Sovaldi.

Despite those objections, it's unlikely Gilead will budge, particularly given other competing drugs from Johnson & Johnson (JNJ 0.22%), Bristol-Myers (BMY -0.87%), and AbbVie (ABBV 1.05%) are carrying, or will likely come with, similarly shocking price tags.

Johnson's Olysio, for example, was priced at $67,000 when it won approval a week before Sovaldi. Bristol-Myers' daclatasvir has big-time potential to win market share given it may be among the first truly ribavirin and PEG interferon free approaches. And AbbVie hopes to win FDA approval for its own multidrug combination therapy that has shown significant cure rates in trials.

Price hawks may hope that all these competitors may spark a price war of sorts, but Express Scripts forecast suggests it's likely to be more of the same. Sovaldi is arguably a better drug for a majority of patients than Olysio given Olysio stumbled in treating patients with a Q80K polymorphism that's common among hepatitis C patients.

Daclatasvir is intriguing, but it may find the majority of its use is in combination with Sovaldi rather than instead of it. During phase 2 trials, a daclatasvir and Sovaldi combination cleared the disease from up to 100% of patients, depending on the genotype. And while hope remains that AbbVie can earn significant support among doctors, it's unclear whether its three-drug combination would prove any better or cheaper than a two-drug combination therapy that Gilead is developing.

Gilead has already filed for FDA approval of its two-drug, one-pill therapy and, if approved, the Sovaldi and ledipasvir mash-up may become the standard given that up to 96% of patients treated were cleared of the disease after 12 weeks without the help of ribavirin and interferon.

Fool-worthy final thoughts
The cost of treatment is growing across specialty medicine as higher-priced compounds offering better efficacy and safety displace prior generation approaches. In hepatitis C, the issue is especially front and center given doctors have been very willing to shift patients to the newest drugs rather than stick with other options. Whether Express Scripts' projection bears out will of course be determined by actual approval and pricing for Sovaldi competitors, but for now it seems clear that the cost of hepatitis C treatment is heading in one direction -- and that direction is higher.