As state governments struggle to find a balance between access to hepatitis C drugs and being able to afford them, it appears that individual deals with drug manufacturers will be the way to get these drugs to a wider portion of the population.

Most recently, MassHealth , Massachusetts’ state Medicaid agency, negotiated with Gilead Sciences on new rebates that the agency said will “significantly” lower the cost on the hepatitis C drug Harvoni.

“I think it probably is the direction we are going in hepatitis C coverage,” Matt Salo, executive director of the National Association of Medicaid Directors (NAMD), said in an interivew. “Pricing has been a real challenge nationwide, certainly for Medicaid itself. Medicaid’s got an obligation to … like state budgets, balance a budget every single year. When we’ve got massive cost spikes in any one particular area, it generally tends to come with trade-offs you have to make elsewhere that aren’t necessarily in the best interest of everybody involved.”

According to the deal, Harvoni will be the exclusive drug used to treat hepatitis C for about 80% of patients in need. MassHealth also negotiated rebates for Gilead’s Sovaldi and Bristol-Myers Squibb’s Daklinza, which are indicated for about 20% of hepatitis C patients. The state expects to be able to cover most people in the state with hepatitis C.

Given the cost of hepatitis C drugs, which can reach into the $90,000 range for a course of treatment, state Medicaid agencies were putting access restrictions on the drug. However, as lawsuits were limiting states’ abilities to apply utilization management, negotiations with the drug companies became another avenue.

“When those lawsuits hit and were decided, most recently in Washington state and Delaware, it basically said and basically confirmed that Medicaid has to cover everybody,” Mr. Salo said. “That put the pricing issue right back in the forefront, because states like Massachusetts, Florida, and New York are going down this road of trying to figure out if we are going to open up coverage to everybody. How do we manage this?”

He noted that competition has helped make the price more manageable, but challenges still remain because of the cost of these drugs and prices still need to come down.

“Now that you’ve got three manufacturers – Gilead, AbbVie, and Merck – there is a little bit more of a competitive market at play,” Mr. Salo noted. “When the Merck product came on, they intentionally priced it lower than the other stuff in the market, which is good. These are all good things, but I still think the challenge we are going to face now is it’s still not gotten down to a price that’s low enough to really make it affordable to cover a million people in the Medicaid program.”

However, Mr. Salo said he does not see prices themselves coming down much further, unless perhaps a new competitor can come in and shake the market up further. As such, NAMD is looking toward legislative solutions to address the hepatitis C drug market.

He narrowed it down to three areas: price, cost, and access control.

Mr. Salo was quick to note that Congress doing something about price would look very much like price controls and would probably be a tough sell politically.

However, the federal government could help in other ways, such as creating a fund similar to the one the government uses to help pay for HIV/AIDS drugs.

“These are a bunch of things that wouldn’t touch on the manufacturers’ profit margin but might be things like an increased federal match for the drugs or perhaps creating a separate standalone federal program to provide hepatitis C treatments for patients much in the same way that Congress created the Ryan White program when it was clear that the cost of HIV/AIDS treatments were too much for the market to bear,” he said.

He also suggested that perhaps Medicare could help pay for the Medicaid coverage of hepatitis C drugs.

“If you think about cost savings to the system, the savings will be reaped by Medicare because it won’t be until those folks are 65 and older that the liver fibrosis and other types of things will really start to take effect,” he said. “Is there a way to bring Medicare in to offset some of the cost?”

Finally, he suggested Congress give state Medicaid agencies explicit authority to apply utilization management to help prioritize patients in need of these treatments.


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