Medicaid Adds $1,000-a-Pill Drug

Apr 29, 2014

A panel that makes decisions about which drugs Florida Medicaid should cover has added the new hepatitis C drug Sovaldi, which costs over $80,000 for one course of treatment per patient.

Sovaldi offers 90 percent cure rate.
Credit Courtesy of Gilead Sciences Inc.

Members of the Pharmaceutical & Therapeutics (P&T) Committee -- doctors and pharmacists who are appointed by the governor -- added Sovaldi to the Medicaid preferred drug list  four weeks ago over the pleas of Medicaid health plans.

When the HMOs signed contracts of up to five years with the Agency for Health Care Administration in November, Sovaldi hadn't even come onto the market. The Food and Drug Administration, which had fast-tracked it, approved it in December.

"This was not a consideration when those (payment) rates were being established, so of course the plans are concerned," said Audrey Brown, CEO and President of the Florida Association of Health Plans.

Her group has been in talks with AHCA since the P&T committee's decision.  Shelisha Coleman, spokeswoman for the agency, said its actuaries are looking at whether there is a need for a rate adjustment or some other way to address the enormous cost. The agency can't just ignore the problem; it is required to provide rates that are actuarially sound.

The cost to the prison system and to private insurers and employers is expected to  be huge, as well. Epidemiologists estimate that 300,000 Floridians are infected with hepatitis C, which untreated can cause life-threatening liver damage -- cirrhosis or cancer.

If one-third of those infected in Florida end up getting the new drug, the cost would approach $8 billion. Some of that would come from the private sector, and some from taxpayers.

Complicating things, most who carry the Hepititis C virus don't know it, because in early stages there are no symptoms. But now that a pill offers a 90-percent cure rate, it is likely that more people will be tested and treated. The manufacturer, Gilead Sciences, is encouraging testing in an ad campaign.

Hepatitis C is transmitted when blood from an infected person is introduced into another person's body, such as through shared needles by intravenous drug users or a needlestick injury in a health-care setting,  according to the Centers for Disease Control and Prevention. Before screening of the blood supply became routine in 1992, some cases were acquired through blood transfusions.  Occasionally but not often, hepatitis C is transmitted through sex, CDC said.

It's not clear how many of Florida's hepatitis C patients are in Medicaid, or are at a stage of the disease in which they need Sovaldi.  

A P&T committee member, Dr. Mark Hudak, said the panel was very concerned about the price, which is far higher in the United States than in any other country. That's because other countries negotiate with pharmaceutical companies, but the U.S. does not.

"One member pointed out that the cost was 99 percent less in Egypt than in the United States," said Hudak, chair of pediatrics at the University of Florida College of Medicine-Jacksonville. "Nevertheless there was recognition that this could be a disease-curing, life-saving medication in some patients."

Which patients? "We decided to refer this back to the (Drug Utilization Review) Board to develop criteria for appropriate use," Hudak said.  That board is made up of a similar mix of physicians and pharmacists.

The usual course of treatment for Sovaldi is one pill a day for 12 weeks; the manufacturer, Gilead Sciences Inc., is charging $1,000 a pill, or $84,000, in the United States.  Some physicians are combining Sovaldi with another new drug, Olysio, which propels the total bill to about $150,000.

Gilead's pricing decision caused such consternation that three high-ranking members of Congress demanded an explanation from the company's CEO in a letter last month. "Our concern is that a treatment will not cure patients if they cannot afford it," they wrote.

Some state Medicaid and prison programs are limiting Sovaldi's use to only the sickest, those who already have developed potentially fatal liver disease. 

State Medicaid programs are entitled to a rebate from the pharmaceutical company, which AHCA's Coleman said the agency can't disclose under federal law.  Some of those who have been in discussions on the matter say the rebate for Florida Medicaid is only 6 percent, which would still leave the price at around $80,000 per patient.

Florida Medicaid managed-care plans have been worrying ever since Sovaldi was added to the formulary four weeks ago. They are not the only ones faced with the steep new cost -- prison systems and private payers are too -- but the timing is bad.

The Legislature has to have the finished budget for 2014-15 on lawmakers' desks today, 72 hours before the session can be concluded. There is no time to amend it later once there is a clearer idea of what the cost of Sovaldi will be.

Medicaid is in the midst of implementing its Statewide Managed Medical Assistance program, in which private HMOs and doctor networks assume financial responsibility for almost all 3.5 million beneficiaries. The rollout is under way through August.