Insurers Say Hepatitis C Drugs Could Cost State Government $5.1 Billion

Thursday, July 09, 2015

By all accounts, the pharmaceutical industry is about to unleash a raft of new wonder drugs that will dramatically change the treatments of certain illnesses and cost a fortune.

A new report (pdf), paid for by the California Association of Trade Plans (CATP), estimates that medications for one of those illnesses, hepatitis C, could cost California state government $512 million a year—or 10 times that amount—for patients in prison, state hospitals or on Medi-Cal. CATP is an insurers’ trade group.

They are really good drugs, with high cure-rates for a debilitating and deadly infection that an estimated 750,000 Californians have. It is said one the drugs, Sovaldi, can cure more than 90% of patients with the most common type of hepatitis C.

The expense range is so large because it’s unknown if there will be manufacturer discounts and how many people would take the drug. At least half the people with hepatitis C don’t know they have it.

An infographic (pdf) accompanying the report estimates the one-year cost of treatment for 10% of the hepatitis C population, with a 30% discount, would cost Medi-Cal $1 billion, prisons $336 million, California Public Employees’ Retirement System (CalPERS) $41 million, state hospitals $11 million and the AIDS Drug Assistance Program (ADAP) $4 million.

Price estimates for months-long treatments have ranged from $65,000 to $189,000, but the infographic shows 12 weeks of Sovaldi and Harvoni costing $84,000 and $94,500, respectively. Even with insurance and government help, those prices would seem to dictate a business model with a high-end clientele in mind. A big price markup can compensate for a small market.

It’s hard to see how governments would pay the price. Express-Scripts Holding Co., the nation's largest pharmacy benefits manager, estimated last July that it would cost the states $55 billion to treat all hepatitis C patients with Sovaldi. “There is no doubt that Sovaldi is a breakthrough therapy,” Express-Scripts’ chief medical officer Dr. Steve Miller wrote, “but unfortunately, it is also likely to break state budgets.”

It’s not clear how these new drugs are going to be rolled out. Emalie Huriaux, with the patient advocacy group Project Inform, told Anna Gorman at Kaiser Health News she had her doubts about the CATP report and said the pharmaceutical and insurance industries are “throwing rocks at each other.”

The drama playing out over hepatitis C medications is just the beginning of a battle over prescription prices and a larger debate over how we allocate medical services in a nation growing more economically unequal by the day.    

Gorman wrote that expensive drugs for high cholesterol and heart disease are expected to win approval from the Federal Drug Administration (FDA) within a few months. And high-priced cancer drugs are coming soon.

–Ken Broder


To Learn More:

Study Predicts Huge Toll of Hepatitis C Drugs on California Budget (by Anna Gorman, Kaiser Health News)

Project Inform Applauds California Lawmakers for Supporting Hepatitis C and HIV Services in the 2015-16 State Budget (Project Inform)

Would California Spend $6.7 Billion for Hepatitis C Drug? (by Stephanie M. Lee, San Francisco Chronicle)

Three-Quarters of People with Hepatitis C were Born Between 1945 and 1965 (by Steve Straehley and Noel Brinkerhoff, AllGov)

Hepatitis C Specialty Drugs: Prevalence, Treatment and Cost Projections For State of California (California Association of Health Plans) (pdf)

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