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NM aims to control hepatitis C costs

Copyright © 2016 Albuquerque Journal

Last year, the New Mexico Medicaid program spent $36.5 million for hepatitis C treatments, and this year’s expenses are expected to be even higher.a00_jd_06nov_medicaid-spending

With each case costing well over $50,000, hepatitis C drugs have become a major new expense for New Mexico’s Medicaid program, which enrolls an estimated 14,000 people infected with the blood-borne virus, according to a new state report.

Medicaid paid nearly $17 million in the first quarter this year to treat just 301 patients, making hepatitis C the most expensive condition treated under the state and federally funded health insurance program, a Legislative Finance Committee report shows.

The state’s hepatitis C costs are likely to increase under a state plan to treat 1,750 infected Medicaid patients a year through 2020.

Medicaid spent $424 million for all prescription drugs in fiscal year 2016, up 83 percent from the 2014 figure of $232 million, according to the report. The program evaluation reports are prepared for state lawmakers to improve their understanding of state finance and policy.

“Hepatitis C is at the top of the list of Medicaid’s most costly conditions,” the report said. “Because of the association between poverty and untreated or undiagnosed HCV (hepatitis C virus), the burden of treating HCV has fallen most heavily on public payers, primarily Medicaid, Medicare and prisons.”

Hepatitis C drug costs have rippled through state agencies and insurance plans, helping raise New Mexico’s total spending for prescription drugs by 54 percent in two years, to $680 million in fiscal year 2016.

The New Mexico Corrections Department’s cost for treating hepatitis C spiked to about $6 million in the year ending June 30, up from $83,000 the previous year, the report found. Hepatitis C drugs comprised nearly two-thirds of the agency’s $9.5 million spending for pharmaceutical drugs in 2016.

About 40 percent of New Mexico inmates are infected with hepatitis C, the highest rate of any state prison system in the U.S., according to a new nationwide survey.

Alex Sanchez, NMCD’s deputy secretary of administration, said the agency has treated 75 inmates for hepatitis C at a cost of about $80,000 per inmate. The agency expects to treat a similar number this fiscal year, which ends June 30, 2017.

15,000 deaths a year

Hepatitis C is a liver-wasting virus that infects an estimated 3 million people in the U.S. and up to 45,000 in New Mexico. The chief risk factor is intravenous drug use and needle sharing.

The disease causes an estimated 15,000 deaths a year in the U.S., mostly from cirrhosis and liver cancer. It is the leading cause of liver transplants, which can cost $250,000 per surgery.

A new class of drugs introduced three years ago provided a highly effective cure for hepatitis C, at a cost.

California drugmaker Gilead Sciences released the drug Sovaldi in late 2013, offering a one-pill-a-day therapy that cured 90 percent or more of patients in 12 weeks. With a retail cost of $1,000 a pill, a single treatment cost about $84,000.

The following year, Gilead released the drug Harvoni, with a price of $1,350 a pill, pushing the cure rate to 95 percent at a cost of $93,000 per treatment.

The treatments provide a one-time cure, and patients can become reinfected.

The New Mexico Department of Human Services, which oversees Medicaid, developed a hepatitis C action plan last year and issued treatment guidelines in December to the state’s four Medicaid managed care organizations.

The plan called for treating 1,750 patients a year through 2020 to clear the “backlog” of infected patients, said Dr. David Scrase, acting medical director of HSD’s Medical Assistance Division, which oversees Medicaid.

HSD’s goal is to treat all Medicaid patients with hepatitis C within a decade, Scrase said.

“Our goal is to treat everybody,” he said. “We just have to do it in a fiscally responsible way, where we get the people who most benefit from treatment first.”

Under the guidelines, the program pays for all infected Medicaid patients with moderate-to-advanced liver fibrosis, cirrhosis or cancer of the liver, and those with certain complications, including HIV, diabetes and kidney disease.

“The advocacy community is really with us on this,” Scrase said. “They understand that we don’t have all the money in the world here in New Mexico and we need to go step by step.”

The per-treatment cost has declined in two years, from $83,819 in 2014 to $56,014 this year, according to HSD data.

Scrase attributed the lower cost to contracts negotiated by the MCOs and the introduction of new hepatitis C drugs, which has increased competition between drugmakers.

Screening guidelines

The guidelines also call for enhanced screening to identify people with hepatitis C. Up to half of all Americans infected with the virus do not know they have it, Scrase said.

Anyone born from 1945 to 1965 or who has nonprofessional tattoos or a history of injection drug use should be screened. Baby boomers are the primary risk group for hepatitis C.

“People not knowing they have it is the biggest obstacle to treating everybody,” Scrase said.

New Mexico agencies also operate programs intended to prevent the spread of hepatitis C, including the Department of Health’s needle-exchange program and education programs for state prison inmates.

But Medicaid and the Corrections Department are not the only state programs affected.

The drugs have also driven up prescription costs for seven health insurance plans that cover public employees and retirees.

Hepatitis C drug costs for publicly funded insurance plans have more than quadrupled in two years, from $2.97 million in 2014 to $12.2 million in fiscal year 2016, which ended June 30, according to the LFC report.

Those agencies provide health insurance for public employees and retirees, including Albuquerque Public Schools, the University of New Mexico and UNM Hospital.

Hepatitis C drugs aren’t the only cause of soaring drug costs.

Spending climbed 50 percent for generic drugs and 64 percent for brand-name drugs during that period.

But “specialty drugs” such as those used to treat hepatitis C have experienced the steepest price spike in prescription drugs. Specialty drugs are used to treat complex diseases such as cancer, hepatitis C and multiple sclerosis.

New Mexico’s cost for specialty drugs increased 212 percent in two years, from $37 million in 2014 to $115 million in 2016, the report said, based on responses from state agencies.

“Specialty drugs are a key cost driver,” the report said. “As a class, specialty drugs are not new, but there are more of them today.”

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