A new report on the high price of a breakthrough hepatitis C drug affirms what state health care officials have known for some time: That the regimen’s $84,000 price tag limited the number of patients who could access it, while straining the budgets of state Medicaid programs that had to pay for it.
What state officials don’t expect to see is relief from high drug prices in the near future.
According to a U.S. Senate report released this month, when Gilead Sciences introduced its innovative hepatitis C treatment, Sovaldi, two years ago, the company knowingly priced it above what many people could afford to pay.
The company also tried to set a precedent that would allow it to charge a similar price for its subsequent hepatitis C drug, Harvoni, according to the investigation by the U.S. Senate Finance Committee. Harvoni came on the market late last year at a wholesale price of $94,500 for a 12-week treatment regimen.
But despite the U.S Senate report that accused Gilead — and potentially other drug companies — of putting profit before the well-being of patients and government health programs, state Medicaid officials say they expect the cost of specialty drugs to become an even bigger challenge going forward.
“As the science gets more sophisticated, the cost of these specialty drugs gets higher,” said Charissa Fotinos, deputy chief medical officer for Washington’s Health Care Authority, which runs the state’s Medicaid program. “Hepatitis C is really just the first challenge in saying, ‘How do we do this?’ ”
In an emailed statement, Gilead officials said they “respectfully disagree with the conclusions” of the Senate report. A company spokeswoman wrote that the company offers discounts to make its hepatitis C drugs more affordable, including a mandatory 23 percent discount for state Medicaid programs.
As the science gets more sophisticated, the cost of these specialty drugs gets higher. Hepatitis C is really just the first challenge in saying, ‘How do we do this?’
Charissa Fotinos, deputy chief medical officer for Washington state’s Health Care Authority
But even factoring in those discounts, Washington’s Health Care Authority expects to spend $242 million treating eligible Medicaid patients for hepatitis C in the 2016 fiscal year — and that’s under its current policy of treating only the sickest patients, according to a letter the state’s Medicaid director wrote to the U.S. Senate committee in September. “If HCA were to pay for hepatitis C treatment for all Medicaid clients infected with hepatitis C, the cost would be three times the current total pharmacy budget,” Medicaid director MaryAnne Lindeblad wrote. The agency’s total pharmacy budget is $1 billion, she said.
Both Harvoni and Sovaldi are highly recommended to treat hepatitis C, as they boast a high cure rate while causing fewer side effects than previous treatment regimens. But the state is currently limiting coverage for the drugs to Medicaid patients with severe liver scarring or cirrhosis, which are some of the most severe complications that can arise if the blood-borne disease goes untreated.
Fotinos and Lindeblad said other expensive drugs to treat multiple sclerosis and high cholesterol will soon create similar budget challenges for state Medicaid programs.
“The new hepatitis C treatments represent ‘the tip of the iceberg,’ ” Lindeblad wrote in September.
$84,000 Wholesale price for 12 weeks of the hepatitis C treatment Sovaldi when it debuted in late 2013
$94,500 Wholesale price for 12 weeks of the hepatitis C drug Harvoni when it debuted in late 2014
For instance, Lindeblad said two new cholesterol-lowering medications, known as PCSK9 inhibitors, will present “staggering” costs for the health care system. Those drugs cost $14,000 per year and, unlike the one-time hepatitis C treatments, need to be taken continually throughout a patient’s lifetime, she said.
Fotinos said that could result in the state pitting one group of patients against the other, trying to decide who needs treatment most.
“What becomes the challenge for us is we will eventually perhaps end up deciding who gets what,” Fotinos said. “Who is more important? Are people with hepatitis C more important, or is another group with a really expensive drug more important? With limited resources, how do we decide?”
Michael Ninburg, the executive director of the Hepatitis Education Project in Seattle, said there is some hope that new, competing drugs could soon help drive down the cost of the hepatitis C treatments, at least.
We will continue to see downward pressure on pricing. I don’t anticipate a great deal of it. But we will see.
Michael Ninburg, executive director of Hepatitis Education Project in Seattle
Even then, however, the drugs still would still be expensive, Ninburg said.
“We will continue to see downward pressure on pricing,” Ninburg said. “I don’t anticipate a great deal of it. But we will see.”
If prices don’t drop, that could mean the state Health Care Authority will have to continue limiting how many Medicaid patients can receive the specialty hepatitis C drugs.
While Medicaid officials have asked the Legislature for an additional $33 million to help treat more hepatitis C patients next year, they’re competing against requests to boost wildfire fighting capacity and improve the state’s beleaguered mental health system, among other needs.
This month, Gov. Jay Inslee didn’t include the money for expanding hepatitis C treatment eligibility in his proposed 2016 supplemental budget.
Rich Pannkuk, a senior analyst in Inslee’s budget office, said that with the money the state currently has available, many of the governor’s priorities couldn’t be included in his proposed spending plan for next year, including the additional hepatitis C funding.
Fotinos said coming back every year and seeking money for new, expensive drug regimens is quickly becoming the new normal.
“The cost just can’t keep going up and us not get more money,” she said.