‘Amazing’ drug to cost NM Medicaid $140M

Copyright © 2015 Albuquerque Journal

A revolutionary but expensive treatment for hepatitis C will cost New Mexico’s Medicaid program an estimated $140 million this year, even though the drugs are available only to the sickest patients who number fewer than 1,800, according to a recent report by the state Legislative Finance Committee.

The report offers the first public data about costs New Mexico faces for new “near-perfect” treatments for hepatitis C, a deadly viral disease that attacks the liver.

The high cost of the drugs – up to $93,000 for a single course of treatment – has led New Mexico and most other states to limit Medicaid coverage to patients diagnosed with advanced liver disease.

Hepatitis C infects an estimated 3 million people in the U.S. and up to 35,000 in New Mexico. The disease is the leading cause of liver transplants, which can cost $250,000 per surgery.

A new barrier to treatment arose July 1 when Gilead Sciences, a California company that makes the leading hepatitis C drugs, stopped providing free drugs to patients denied insurance coverage, said Dr. Sanjeev Arora, a University of New Mexico physician.

“Before July 1, for people denied by the managed care plans, we used to go to Gilead and get the drug free for them,” said Arora, a hepatitis C specialist.

But on July 1, Gilead ended its patient-assistance program that has provided free drugs for some 2,000 New Mexicans in the past two years.

Gilead said in a July 1 letter to physicians that insurance companies have used the free-drug program as an opportunity to deny coverage to patients.

“This has become a huge difficulty for us,” Arora said. “Now, all of a sudden, our patients can’t get treatment when they need it.”

Gilead has marketed two drugs that have revolutionized hepatitis C treatments, which had previously been difficult to treat.

In 2013, the federal Food and Drug Administration approved Sovaldi, which offered a one-pill-a-day therapy that cured 90 percent or more of patients in 12 weeks. At a cost of $1,000 a pill, the treatment cost about $84,000.

Last year, Gilead released a new drug called Harvoni, with a price of $1,350 a pill, pushing the cure rate to 95 percent or greater and costs to $93,000 per patient.

The introduction of Harvoni was “a game changer,” said Arora, who has treated hepatitis C for 30 years. Harvoni this year has replaced Sovaldi as the preferred treatment for most patients, he said.

“It’s an amazing drug,” Arora said of Harvoni. “For most patients, the treatment is one pill a day for three months, and it just cures the problem.”

The new drugs have few side effects and have expanded the market to virtually anyone diagnosed with hepatitis C.

But the huge cost of the drugs is a key factor driving up costs in the state’s $5 billion-a-year Medicaid program, the LFC said in a June 24 report.

LFC staff used Medicaid enrollment figures to calculate a $140 million cost for hepatitis C treatments for calendar year 2015, based on the Human Services Department’s estimate of 1,750 cases.

The report also recommends that HSD negotiate discounted prices for hepatitis C drugs.

Human Services Department spokesman Matt Kennicott confirmed the accuracy of the data. He also said in a written statement that the four insurance companies that manage the state’s Medicaid program already negotiate discounted prices for pharmaceutical drugs.

The four managed care organizations under contract with the state are Molina Healthcare, Presbyterian Health Plan, United Healthcare and Blue Cross Blue Shield of New Mexico.

The MCOs “negotiate directly with the manufacturers to obtain rebates and discounts,” Kennicott said.

Arora estimated that each of the MCOs have negotiated prices for hepatitis C drugs that are about half those of retail prices. Harvoni treatments cost Medicaid about $45,000 per patient, he estimated.

Even at the discounted prices, the cost of treatments remains huge, Arora said.

“I certainly understand that the state has tremendous budgetary constraints and we don’t have unlimited money,” Arora said.

But policies adopted by the state to limit costs often delays treatment until patients develop severe illness, he said.

HSD issued a rule last year that requires patients to show they have Stage 3 or Stage 4 fibrosis to be eligible for Medicaid coverage. Stage 4 fibrosis, also called cirrhosis of the liver, renders the liver “hard as a rock,” Arora said.

“Treating someone for hepatitis C after they have developed cirrhosis is a little bit like closing the barn door after the horse has left,” he said. “The liver is already damaged very seriously.”