A hand writing "Hepatitis C" with a green marker

A guidance letter from the Centers for Medicare & Medicaid Services may force Medicaid programs to re-evaluate how hepatitis C drugs are administered.

Drugs such as Sovaldi and Harvoni are a cure, but that cure comes at a cost of around $84,000 and $100,000, respectively, for a 12-week course of treatment. That cost could break the budgets of Medicaid programs if all hep C Medicaid beneficiaries were to receive these drugs at this cost.

According to data provided by state Medicaid programs from all 50 states and the District of Columbia, Sovaldi was among the top five drug spending items for 33 of those state Medicaid programs (Sen. Chuck Grassley press release, accessed Feb. 17, 2016).

Because of the cost, many states approve the use of these direct-acting antiviral hepatitis C drugs only if patients have advanced liver damage, have had a liver transplant, or have HIV. There also may be other restrictions, such as Medicaid beneficiaries who suffer from drug or alcohol abuse abstaining for a certain period of time.

While states may have prior authorization processes and preferred drug lists, CMS is concerned that Medicaid programs are not in compliance with section 1927 of the Social Security Act and are placing unreasonable restrictions on DAA HCV drugs, such as requiring patients to be in the late stages of the disease.

CMS also noted that states must ensure Medicaid recipients have access to the DAA HCV therapies and that coverage under managed Medicaid cannot be more restrictive than fee-for-service Medicaid.

However, CMS acknowledges the burden that paying for these drugs places on Medicaid programs and has sent a letter to the manufacturers of DAA HCV drugs asking about value-based purchasing arrangements states might be able to take part in. CMS also believes that competition in this drug class could result in lower prices and increase states’ ability to negotiate supplemental rebates.

Of course, this all looks good on paper. The costs of these drugs and the impact on state Medicaid programs has been a hot-button topic for a couple of years, without a solution everyone has agreed upon. So, will state Medicaid programs and drug manufacturers take CMS’ words to heart? Possibly, but it’s just as likely that CMS should brace for a wave of letters marked “return to sender.”

Follow Joyce Caruthers on Twitter @JCaruthersDRG

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