La. official tries to force cut in price of hepatitis C drugs

State explores using 1910 patent law to produce a cheaper version

The public outrage over high-priced hepatitis C drugs is taking a new twist as Louisiana’s top health official proposes using an obscure federal law to get the medicines at a much lower cost. If successful, other states could reap the benefits.

Right now, covering treatment for the 35,000 of Louisiana’s uninsured and Medicaid-dependent residents with hepatitis C would cost the state $764 million, a staggering sum that would have to be pulled from schools, public services and infrastructure programs. Louisiana’s budget runs $31.2 billion a year, but its discretionary line items, such as health care, account for just $3.6 billion.

“We don’t have the resources,” said Dr. Rebekah Gee, the state’s health secretary.

In an April 12 letter, Gee reached out to the nation’s top health experts to explore tapping a patent law created in 1910 that gives federal regulators the power to appropriate inventions and develop a product in the interest of the public good.

The law has been used before by government agencies, including the Department of Defense. In the 1960s and early ’70s, the government used it to buy several medicines at a lower cost, according to Hannah Brennan, a co-author of a 2016 paper on the law.

In response to Gee’s request, Dr. Joshua Sharfstein, an associate dean at Johns Hopkins Bloomberg School of Public Health, spent a recent afternoon with some of the country’s top academic and legal health officials considering the challenges of using the law, called U.S. Code Section 1498 under Title 28.

They concluded it should be tried.

“This is the path that would be the most viable to be able to get what you need for people in Louisiana,” Sharfstein told the group. Sharfstein, a former Maryland health secretary, was also the Food and Drug Administration’s deputy commissioner in the Obama administration.

Under the law, the Trump administration could sidestep patents and contract with a generic supplier to provide a lower-priced version of expensive antiviral drugs such as Sovaldi and Harvoni, which are made by industry leader Gilead Sciences.

The government would have to pay the drugmaker only reasonable compensation and prove that using the product benefits the U.S. government. And a favorable ruling for Louisiana would mean the strategy could be used across all 50 states.

Gee, who is working to raise bipartisan support to force a change in hepatitis C drug prices, said she believes the use of the patent law could be a “win-win” for the state and industry.

“Pharma needs to think about different approaches to profitability,” Gee said. “Sometimes quantity can be an important driver of profit, not just the price of each unit of this drug.”

Her proposal would ultimately need approval from Health and Human Services Secretary Tom Price, who oversees the federal agency that administers Medicaid. During his confirmation hearings, Price said he would be committed to making certain that drug prices “are able to be afforded by individuals.”

Hepatitis C infections, which spread through blood or other bodily fluids, are usually silent for many years until the virus damages the liver enough to cause symptoms such as jaundice and fatigue. People can spread the disease unwittingly and an estimated 2.7 million Americans now have chronic hepatitis C.