Through Medicare, Taxpayers Spent $4.5 Billion Last Year on New Hepatitis C Drugs…but they Work

Tuesday, March 31, 2015
Hepatitis C drug Solvaldi being made at Gilead Sciences (photo: David Paul Morris, Bloomberg/Getty Images)

Medicare spending on new hepatitis C drugs has soared in recent years, costing taxpayers more money than ever on these therapies. But the good news, supporters of the spending increase say, the drugs are highly effective in helping patients with liver problems.


In 2014, Medicare allocated $4.5 billion on several new drugs designed to combat hepatitis C, a form of liver disease, according to ProPublica. The spending was more than 15 times higher than what the federal program spent the year before ($286 million) on older hepatitis C drugs.


The new therapies are very expensive, with some costing a thousands dollars or more a day. Sovaldi, one of the new drugs manufactured by Gilead Sciences, costs $84,000 for a three-month treatment. It was responsible for $3 billion of the $4.5 billion spent by Medicare on hepatitis C therapies. Two other new drugs paid for by Medicare are Harvoni ($670 million) and Olysio ($821 million).


Medicare’s outlay for these drugs could continue to rise. It is estimated that there may be 350,000 Medicare beneficiaries who have hepatitis C, but many are unaware they have it, according to an analysis published last year by Health Affairs. That total “is expected to increase as Baby Boomers, the group with the highest prevalence of hepatitis C, become eligible for Medicare,” Charles Ornstein wrote at ProPublica.


But at least the costly drugs are effective—with cure rates of upwards of 90%, and fewer dangerous side effects.


Medicare’s spending on these treatments is much higher than that of Medicaid, which employs a much more restrictive policy for the drugs’ approval—such as requiring liver disease suffered by its poor and low-income patients to be in an advanced stage, said Ornstein. Legal challenges may eventually force a change in that approach. The state Medicaid programs collectively spent $1.2 billion on the medicine in the first nine months of 2014, according to preliminary data.


“Curing hepatitis C will likely go on to prevent liver cancer, go on to prevent patients needing liver transplantation, go on to save health care dollars down the road,” Dr. Adam Peyton told ProPublica. A liver specialist at the University of Miami Health System in Florida, Peyton prescribed $13.5 million worth of hepatitis C drugs in Part D last year. “It’s upsetting that there's been so much negative publicity for such a positive breakthrough in medicine.”

-Noel Brinkerhoff


To Learn More:

The Cost of a Cure: Medicare Spent $4.5 Billion on New Hepatitis C Drugs Last Year (by Charles Ornstein, ProPublica)

This Hepatitis C Drug, Developed with U.S. Government-Funded Research, Costs $300 per Treatment Course in India…and $84,000 in the U.S. (by Noel Brinkerhoff and Steve Straehley, AllGov)

Prisoners with Hepatitis C Can't Get Expensive Drug that Actually Works (by Ken Broder, AllGov California)

Expensive New Hepatitis C Medicine, Seen as Harbinger of Specialty Drugs to Come, Poses Challenge to Health Care System (by Noel Brinkerhoff and Steve Straehley, AllGov)


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