(Bloomberg) – Medicaid plan managers are balking at the idea of paying $84,000 per patient for a new hepatitis C treatment.
Studies show that the drug, Solvadi, works better than other hepatitis C drugs and causes fewer side effects.
The manufacturer, Gilead Sciences Inc., says Solvadi will pay for itself by preventing expensive hepatitis C complications, such as liver cancer and organ failure.
"Older therapies were not sufficiently effective or tolerable to continue to be used as the standard of care," said Gregg Alton, an executive vice president at Gilead. "We will continue to work with payers to help them understand the scientific and medical evidence."
But Medicaid program officials say $84,000 is a lot of money.
Because the cost of the drug is so high, many state Medicaid program managers are making the drug available only to the sickest patients, according to health officials and the private insurers that administer the Medicaid plans.
Pennsylvania, for example, covers about 100,000 patients through the state's Medicaid program.
The state had received two applications for Sovaldi as of last month, neither of which were approved by the state, said Terri Cathers, director of pharmacy for Pennsylvania's Office of Medical Assistance Programs.
"I'm not going to deny we were in sticker shock," Cathers said by telephone. "If the drugs are going to give our patients the best therapy and get them to cure, we want to get them. But we want to be prudent about that. 'I think that on a federal level, drug pricing needs to be addressed."
WellPoint Inc. (NYSE:WLP) manages claims for 4.4 million Medicaid patients in 19 states. It won't approve a combination treatment of Sovaldi and another new drug — Johnson & Johnson's Olysio — for anyone but patients with more advanced disease.
Sovaldi "is more costly but offers improved outcomes, particularly coupled with Olysio," said Kristin Binns, a WellPoint spokeswoman. WellPoint plans to limit use of the two drugs together — the most expensive therapy combination — to just those with evidence of liver damage, Binns said.
State officials at Medicaid programs in Louisiana, California, Michigan and Florida said in interviews that they will only approve the use of Gilead's Sovaldi on a case-by-case basis while they study how best to address the drug's cost going forward.
In Colorado, officials advised doctors in a Feb. 19 letter that "new therapies for hepatitis C will not be approved" until the state finishes its review.
"Given the demand for the medication, the generally slow progression of the disease, and the rapidly changing landscape of the treatments available for hepatitis C, the department needs to do further evaluation and review to determine the the appropriate coverage criteria for Sovaldi," officials wrote.
About 2.7 million U.S. residents carry the blood-borne virus that causes Hepatitis C. The virus can lurk quietly in the patient's body for decades, then damage the liver in ways that lead to cancer or, in some cases, organ failure.
Patients with the disease are less likely to have a high school diploma than the average American and more likely to have an average annual income of less than $23,000, according to the U.S. Centers for Disease Control and Prevention (CDC).
Many of the patients qualify for Medicaid.
