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"Subscription" model for hepatitis C drugs could help states to limit drug costs: shots



Dr. Louisiana Department of Health Secretary Rebekah Gee negotiated a deal with a drug maker to give the state a better price for expensive hepatitis C drugs for his Medicaid and prison populations.

Tom Williams / CQ-Roll Call Inc.


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Tom Williams / CQ-Roll Call Inc.

Dr. Louisiana Department of Health Secretary Rebekah Gee has entered into a deal with a drug manufacturer to provide the state with a cheaper price for expensive hepatitis C drugs for its Medicaid and prison populations.

Tom Williams / CQ-Roll Call Inc.

Louisiana officials announced Wednesday that they have signed an agreement with Asegua Therapeutics, a subsidiary of Gilead Sciences, that would allow the state to treat its Medicaid and prison populations with hepatitis C. They also secured the necessary approval from the federal government for a novel approach to paying for the drugs and expect the program to begin on July 15.

In Louisiana, at least 39,000 people are either on Medicaid or in The Prison System suffers from Hepatitis C, a viral infection that attacks the liver. It is a curable disease, but this cure is expensive – generic costs up to $ 30,000 per treatment cycle – and some states have been able to ration care to limit the burden on their budgets.

When the Louisiana Department of Health began providing treatment, it estimated that it would cost $ 760 million, which is "more than the state spends on education, veteran affairs, and corrections in combination," Louisiana Health Minister Rebekah said Gee, wrote recently.

For this reason, the state limited who could get the drug and only paid for people who had already suffered damage to their livers from the virus.

Louisiana Governor John Bel Edwards said in an announcement Wednesday at the CrescentCare clinic in New Orleans how the new deal with the drug maker would work. Asegua will provide an approved generic version of its drug Epclusa. "The state will receive full coverage of this life-saving drug while limiting our spending," he said.

And he explained what the drug maker is into: "This model gives the company exclusive access to the markets for Medicaid and corrections in that state."

Gee said her department's goal is to treat at least 31,000 people by the end of 2024. "An elimination plan and an innovative payment model will ensure that we can remedy this deadly disease and prevent long-term illness and disability for those who have it," she said in a statement.

Gee began negotiations with Gilead in early 2018, NPR reported last July. She argued that it would be better for the company to give the state as much of the drug as he needed in return for a fixed amount of money, which she calls a subscription or "netflix" payment model. The alternative, she argued, was that her department could afford to buy very little of the drug.

In the meantime, the disease most commonly transmitted by intravenous drug use would continue to spread.

Now Louisiana can preload the treatment, quickly ridding people of the virus and halting its spread. In the initial years of the deal, the state is likely to get more of the drug than it pays. In later years, Louisiana can pay for more than it uses.

The deal allows the state to potentially eradicate the disease in a short time while maintaining a stable budget by spreading costs over several years.

"We expect other states to enter into a deal with these manufacturers for these drugs," said Rena Conti, a health economist at Boston University. "It is likely to be replicated not only for hepatitis C but for other diseases as well."

Conti says the state does not "reinvent the wheel" with this plan – and from a public health perspective, that's a good thing. It points to hospitals that buy large quantities of certain medicines used in emergency medicine, both lowering prices and ensuring supplies.

"The other important precedent is Vaccines for Children, which offers vaccine manufacturers an upfront payment and hedge in return for lower prices," she says. This is a program that has been around for decades.

"It's a proven model – and that's exactly what makes it possible from the manufacturer's point of view, but also from the perspective of the federal government," says Conti. "The state is doing something that has already been done in these two vulnerable, underserved populations."

In its announcement to approve Louisiana's plan, the Centers for Medicare & Medicaid Services encouraged other states to submit a request for approval of a subscription attempt to provide drug payment models for other expensive treatments. Such arrangements can give states more certainty about their Medicaid budgets while providing a steady source of revenue for drug makers.

It remains to be seen, however, whether such a model can be extended to the expensive drugs that treat chronic diseases and devour most of the states' Medicaid budgets, such as AIDS drugs or antipsychotics.

At the announcement Wednesday in New Orleans, Nicole McArthur spoke as a Medicaid recipient who suffers from hepatitis C and could not receive treatment. "I've always been told that I can not be treated without stage 4," she said, referring to the progression of the disease. "In Stage 4 you die. So that was not helpful."

"Knowing that I can now get treatment and live the rest of my life, knowing that I'm free of this deadly disease, is a wonderful thing," she said.


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