Medi­care spend­ing for hep­ati­tis C drugs surges

The Washington Post Sunday - - POLITICS & THE NATION - BY CHARLES ORN­STEIN ProPublica health-sci­ence@wash­

Medi­care’s pre­scrip­tion drug pro­gram spent nearly $4.6 bil­lion in the first half of this year on ex­pen­sive new cures for the liver dis­ease hep­ati­tis C — al­most as much as it paid for all of 2014.

Re­bates from phar­ma­ceu­ti­cal com­pa­nies — the amounts of which are con­fi­den­tial — will re­duce Medi­care’s fi­nal tab for the drugs, by up to half. Even so, the pro­gram’s spend­ing will likely con­tinue to rise, in part be­cause of strong de­mand.

Medi­care’s stun­ning out­lays, spelled out in data re­quested from the gov­ern­ment by ProPublica, raise trou­bling ques­tions about how the tax­payer­funded pro­gram can af­ford not only th­ese pricey med­i­ca­tions but a slew of oth­ers com­ing on the mar­ket.

Medi­care’s drug pro­gram, known as Part D, al­ready spent an eye-pop­ping $4.8 bil­lion for hep­ati­tis C drugs in 2014, not in­clud­ing re­bates. The high amount partly re­flected the med­i­ca­tions’ break­through na­ture. Be­fore the new drugs, there was no cure for hep­ati­tis C; the new drugs cure the dis­ease in more than 90 per­cent of pa­tients.

But the cure comes at enor­mous cost: A 12-week course of treat­ment with the most pop­u­lar drug has a list price of about $95,000, or $1,100 a day.

Phar­ma­cies filled more than 183,000 pre­scrip­tions for hep­ati­tis C drugs from Jan­uary to June and were on track for all of 2015 to far out­pace the nearly 288,000 pre­scrip­tions filled in 2014, the data shows.

In terms of both pa­tients treated and money spent, “2015 will be big­ger than 2014,” said Michael Klein­rock, di­rec­tor of re­search de­vel­op­ment for the IMS In­sti­tute for Health­care In­for­mat­ics, which re­searches health-care use and spend­ing pat­terns.

Klein­rock projects that 2016 spend­ing will out­pace that of 2015 but by a slower rate. The rea­son: Many peo­ple with acute liver dis­ease will be cured by then, and treat­ment will shift to those with less se­vere dis­ease.

The Cen­ters for Medi­care and Med­i­caid Ser­vices, which over­sees Part D, de­clined to com­ment for this story. Ear­lier this year, of­fi­cials said they were watch­ing the costs care­fully.

“We’re all wait­ing to see when it plateaus or when it pos­si­bly goes back down,” said Sean Cavanaugh, di­rec­tor of Medi­care and deputy ad­min­is­tra­tor at CMS. “When will that pent-up de­mand be sated?”

The cost of the new hep­ati­tis C drugs is picked up largely by tax­pay­ers, who cover most of Part D’s ex­penses. But it may also trans­late into higher de­ductibles and max­i­mum out-of-pocket costs for the drug pro­gram’s nearly 40 mil­lion en­rollees, who pay a smaller share of its cost, ex­perts and fed­eral of­fi­cials have said. Se­niors and the dis­abled are el­i­gi­ble for cov­er­age.

The data for 2015 also makes clear that one drug, Har­voni, made by Gilead Sciences, is crush­ing its com­peti­tors. Wall Street an­a­lysts had ex­pected a pitched bat­tle be­tween Har­voni and an­other drug made by Ab­b­Vie, called the Viekira Pak, but that has not been the case.

From Jan­uary to June, Medi­care paid for 119,033 pre­scrip­tions of Har­voni, 35 times as many as the 3,352 it cov­ered for the Viekira Pak. Pa­tients us­ing Har­voni need to take only one pill a day, com­pared with four for the Viekira Pak.

So­valdi, which was the first of the new drugs to come to mar­ket and is also made by Gilead, was pre­scribed 23,933 times in the first half of the year, the data shows.

In a writ­ten state­ment, Gilead spokes­woman Cara Miller said, “Gilead con­tin­ues to work with pub­lic and pri­vate pay­ers to fa­cil­i­tate broad pa­tient ac­cess to our hep­ati­tis C cures” and pro­vides dis­counts off its list price. She de­clined to an­swer spe­cific ques­tions. Ab­b­Vie did not re­spond to re­quests for com­ment.

Hep­ati­tis C drugs aren’t the only costly new treat­ments con­fronting Medi­care. Two drugs, known as PCSK9 in­hibitors, were ap­proved this year, promis­ing to re­duce the level of “bad” LDL choles­terol far more than cheaper drugs called statins. But they come with a list price of more than $14,000 per year be­fore re­bates. A num­ber of new, ef­fec­tive can­cer med­i­ca­tions have also been ap­proved this year.

“At some point, this march up­ward in drug spend­ing has to stop,” said Walid Gel­lad, an as­so­ciate pro­fes­sor of medicine at the Univer­sity of Pitts­burgh and codi­rec­tor of its Cen­ter for Phar­ma­ceu­ti­cal Pol­icy and Pre­scrib­ing.

Some stud­ies have shown that, de­spite their price tags, the new hep­ati­tis C drugs jus­tify their cost based on the bet­ter qual­ity of life they pro­vide and the health ex­penses that pa­tients avoid in the fu­ture. There is still an on­go­ing de­bate, how­ever, about whether they will ac­tu­ally save the broader health sys­tem any money over­all by avoid­ing trans­plants, hospi­tal care and other costs as­so­ci­ated with liver fail­ure.

A few days ago, Texas re­tiree Michelle Mynier took to Face­book to tell her friends that af­ter 40 years with hep­ati­tis C, in­clud­ing failed treat­ments and a liver trans­plant, she was cured. “Some­thing won­der­ful hap­pened to­day. They called from the liver cen­ter. Af­ter 40 years of hav­ing Hep-c, I am cured! Thank God, and har­voni. #sob­lessed.”

Mynier, 64, is a re­tired unit main­te­nance su­per­vi­sor for the Texas Depart­ment of Crim­i­nal Jus­tice and qual­i­fied for Medi­care be­cause of her dis­abil­ity. While she has heard of oth­ers hav­ing dif­fi­culty be­ing ap­proved for the new drugs by their in­sur­ers, she said her co-pay for Har­voni was only $35 per month.

“I was very lucky,” she said. “My in­sur­ance didn’t hes­i­tate.”

Mynier said she views her cure as a new lease on life. If her trans­planted liver had failed, she said, she might have been out of op­tions. “It’s so hard for me to be­lieve,” she said. “I still keep think­ing maybe they had me con­fused with some­body else.”

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