Deal with drug company will cap the states' treatment costs.
This article was first published on Monday, August 12, 2019 in MedPage Today.
By Joyce Frieden, News Editor, MedPage Today August 12, 2019
Is your state wondering how it can possibly afford to pay for expensive hepatitis C drugs for its Medicaid patients and its prisoners? Louisiana officials have a suggestion for you.
Rebekah Gee, MD, MPH, an obstetrician who is secretary of the Louisiana Department of Health in Baton Rouge, said that in her first month on the job nearly 4 years ago, she got a letter from the Centers for Medicare & Medicaid Services (CMS) saying that her state should be providing more hepatitis C treatment.
However, "a much higher 'spend' on it was simply not possible," Gee said last month at an event sponsored by the Brookings Institution, noting that the state at the time was facing a $2 billion deficit. On the other hand, she continued, "here we are with a disease that kills tens of thousands of people and through our research institutions we have a cure, and it's unacceptable that we can't provide it."
Nearly half of the state's hepatitis C population are either on Medicaid or in prison. Officials estimated at the time that it would cost $760 million to eliminate hepatitis C just for Medicaid alone, "and that that would be more than our K-12 budget, our prisoner budget, and all administrative functions of government combined," said Gee. Neither the state itself -- which funds healthcare for prisoners -- nor the Medicaid program would ever have enough money to treat all hepatitis C patients, "so why not this win-win where pharmaceutical companies could have this guaranteed revenue, and yet a state could solve a public health challenge?"
"We were agnostic to the solution as long as we were able to provide individuals with access," Gee said, noting that because programs such as Medicaid also involve a federal component, "we can't just write a check to a pharmaceutical company." In addition, the federal "best price" law meant that any big price discount that a state like Louisiana negotiated with a drug company would need to be offered to everyone else as well. "We knew no pharmaceutical company would give a deal to a state with 4.6 million people that would affect their entire national price."
So the state negotiated a 5-year deal with Asegua Therapeutics -- a division of Gilead -- which makes a generic form of Epclusa (sofosbuvir/velpatasvir), to pay the regular price of the drug up to a cap, and then any prescriptions after that are free. With unlimited access to the drug, "we will be able to eliminate this infectious disease and focus on more difficult challenges," she said. The agreement involves a supplemental rebate arrangement that is exempt from the "best price" law.
The state started the program in mid-July and is really excited about it, Gee said, adding that being able to extend the program to the prison system is very important. "We think about 30% of people with Hep C will pass through a prison during their lifetime. About 95% will get out, and if we aim to eliminate this disease, we can't ignore then. And so we're really, really proud to be the first state to be able to offer this unlimited access to individuals who are incarcerated."
Getting the agreement done took about 3 years -- and a lot of convincing, she said. "We were told 'No' at least 50 times from a variety of people; whether it was the industry, or policymakers, or individuals at the CDC ... because it had never been done before. Now it looks like it was an easy thing." It helped that the market for hepatitis C cures became more competitive during that time, she added. "Then it became an economic impetus to enter into this kind of agreement."
"Part of the consideration here was, how do we provide predictable expenditure for the state and spread the budget impact over time?" said Rekha Ramesh, MPP, executive director for public policy at Gilead. "And that's kind of where we started with this ... while still providing an incentive for the state to want to continue finding patients and curing patients over a 5-year period."
"It took considerable effort to get here and to implement this model," she added. "I think this is the first of its kind ... We believe in what Louisiana is doing, and this does pose a bit of risk on behalf of the company."
This type of payment model -- which experts call a "modified subscription model," could be applied not only to drugs paid for by the state, but also those reimbursed by private insurers, said Neeraj Sood, PhD, professor of public policy at the University of Southern California in Los Angeles. However, he added, for it to work well, three conditions must apply:
- There must be a large access problem. "That's why hep C was such a great example, because we solved the access problem for hep C," he said.
- Cutting the price doesn't lead to inappropriate use. "There could be other drugs where you make the copay equal zero, and maybe it leads to overprescribing of say antipsychotics that we don't want," said Sood. "So we've got to make sure that we limit it to drugs where even if the price is zero, only people who actually need the drug are getting it."
- There must be competition in the drug class. "If there is no competition, the upfront payment that you will pay for a breakthrough therapy is still going to cost you billions and billions of dollars ... because you have a monopoly and there is no other competition," he said. "If there is no competition ... it will solve the access problem, but not the affordability problem."
But Rena Conti, PhD, associate professor of markets, public policy, and law at Boston University, didn't agree that competition was absolutely necessary. "Instead, what is the binding criteria is a willingness by the pharmaceutical companies to want to engage and to really care about access here," she said. "I think that there are many innovator companies that are particularly innovating for these type of conditions for which restraining access is going to be untenable."
“Why not this win-win where pharmaceutical companies could have this guaranteed revenue, and yet a state could solve a public health challenge?”
Rebekah Gee, MD, MPH, secretary of the Louisiana Department of Health
Nearly half of the Louisiana's hepatitis C population are either on Medicaid or in prison.
Officials estimated it would cost $760 million to eliminate hepatitis C just for Medicaid alone, which is more than the combined cost of the state's K-12, prison system, and administrative budgets.
The state negotiated a 5-year deal with Asegua Therapeutics, which makes a generic form of Epclusa, to pay the regular price of the drug up to a cap, and then any prescriptions after that are free.