California faces $6.7 billion decision regarding hepatitis C drug

Gilead Sciences, maker of the pre-exposure prophylaxis drug Truvada, is back in the news with another extraordinarily costly drug for treating hepatitis C, but can states afford to provide it for their Medicaid recipients?

by John Tyburski

Copyright © Daily Digest News, KPR Media, LLC. All rights reserved.

First published at DailyDigest News on July 17, 2014

California is looking at a potential $6.7 billion price tag for treating its Medi-Cal enrollees with hepatitis C with a relatively new drug called Sovaldi. Sovaldi, made by Gilead Sciences, costs $1,000 per person per day, and round of treatment lasts twelve weeks. This works out to be $84,000 per patient. However, Gilead Sciences argues that the cost is reasonable considering that the drug works so well. Research has shown as many as nine of ten patients with the most common form of hepatitis C are cured, and patients are literally clamoring to get it.

The crucial question facing California decision-makers is whether the state can afford it. California is not exactly thriving economically, and providing Sovaldi to all of its eligible Medi-Cal (the state’s version of Medicaid, a federal healthcare program for the poor) enrollees, which includes prisoners, will cost each resident of the state $174 next year. Other states are also facing this fiscal dilemma. In Louisiana, for example, providing the hepatitis C treatment to those on Medicaid who will likely benefit from the drug will cost each resident an estimated $294. This works out to be a substantial Medicaid tax increase for a single drug.

Other states facing enormous price tags for subsidized Sovaldi treatments include Texas, Illinois, New York, and Florida, according to estimates by an outfit called Express-Scripts Holding Company, a large pharmacy benefits manager.

“There is no doubt that Sovaldi is a breakthrough therapy, but unfortunately, it is also likely to break state budgets,” wrote Dr. Steve Miller, Express-Scripts’ chief medical officer, in an analysis of the Sovaldi issue. “Since health care for so many hepatitis C patients is funded by state programs, each citizen will be shouldering the unprecedented cost burden. The unsustainable pricing of this medication has essentially become a tax on all Americans.”

Sovaldi was approved for treatment of hepatitis C back in December 2013. In only one quarter, Gilead saw $2.3 billion in sales, making the drug a record-breaker. Second quarter sales are expected to be strong as well.

Gilead Sciences also sells Truvada, a high-cost drug recently recommended for use in HIV prevention by the U.S. Centers for Disease Control and Prevention. When contacted, Gilead declined comment.