Message received. That would seem to be the case regarding the guidance letter the Centers for Medicare & Medicaid Services sent to states about hepatitis C drugs for Medicaid beneficiaries, which was explored in a previous DRG blog post.

Since CMS sent the guidance letter in November 2015, and with some states being sued or facing lawsuits over the availability of HCV drugs for Medicaid beneficiaries, some states have eased or removed restrictions for drugs such as Sovaldi and Harvoni. These drugs are a cure but cost 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 HCV patients were to receive treatment at that cost.

In fact, when Sovaldi entered the market in 2014, just 2 of 26 managed Medicaid plans Decision Resources Group surveyed reported an operating loss in the first and second quarters directly because of HCV drug spending. By the third quarter, the percentage of plans reporting losses from HCV drugs had jumped from 8 percent to 23 percent and hit 27 percent in the fourth quarter. This likely was attributable to more patients and healthcare providers being aware of drugs Sovaldi and Olysio, which costs more than $66,000 for a 12-week treatment. Half of pharmacy directors and medical directors for the surveyed Medicaid managed care organizations were concerned about their MCOs being able to continue participating in the Medicaid program due to the costs of HCV drugs (2015 Access & Reimbursement report [formerly Physician & Payer Forum] on HCV by Decision Resources Group).

CMS is aware of the cost and sent a letter to the manufacturers of direct-acting antiviral hepatitis C 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.

Nevertheless, states have taken action:

  • In June 2016 Delaware, under the threat of a lawsuit, removed the restrictions for HCV drugs for Medicaid members. Effective July 1, 2016, drugs will be covered for Medicaid members for whom the drugs are deemed a medical necessity. By Jan. 1, 2018, all Medicaid members with HCV will be approved for treatment based on their HCV genotype (The News Journal, June 10, 2016, accessed June 15, 2016).
  • Effective mid-June 2016, Florida will require Medicaid plans to provide the drugs earlier in the disease stage instead of waiting for the disease to progress to a fibrosis level of three or four.
  • In April 2016, New York’s Drug Utilization Review Board eliminated the criteria related to liver scarring. The board also approved adding Harvoni, Sovaldi, Daklinza, Technivie, and Zepatier to the Medicaid fee-for-service preferred drug list. Clinical restrictions remain in place for the drugs (Decision Resources Group 2016 New York Health Plan Analysis).
  • In May 2016, a federal judge ordered Washington state’s Medicaid providers to make expensive HCV treatments available to all Medicaid patients, not just the sickest.
  • In January 2016, Pennsylvania launched a $13 million program to offer free antiviral drugs to low-income residents who have both HCV and HIV (Modern Healthcare, Jan. 28, 2016, accessed June 15, 2016). In addition, a state advisory panel recently recommended that the Medicaid program treat all patients diagnosed with HCV ( website, May 19, 2016, accessed June 15, 2016).

While more Medicaid programs are likely to follow suit, there’s no denying the cost. Now, the question is, will drug manufacturers get the same message?

Follow Joyce Caruthers on Twitter @JCaruthersDRG

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