The Louisiana Department of Health is seeking a drug manufacturing partner for unrestricted access to curative treatment for hepatitis C for Medicaid and incarcerated patients. Rather than pay the partner by prescription, the state would agree to pay a subscription fee, similar to the Netflix model of paying a fixed monthly cost rather than per movie.
The state said the plan is an attempt to help end the hepatitis C epidemic in Louisiana. At least 39,000 people in the state's Medicaid program or in its prisons have the disease, which the health department said kills more people than all other infectious diseases combined.
However, fewer than 3% of Medicaid patients in Louisiana with hepatitis C were treated last year. State officials blamed the lack of treatment on high drug prices.
The state's effort is a way to confront a health crisis and control costs. Rebekah Gee, secretary of the Louisiana Department of Health, said in a statement the subscription model will "put a cure within reach for our most vulnerable populations while keeping healthcare costs stable."
A recent HHS Office of the Actuary report on Medicaid projected the program's expenditures will grow at an average annual rate of 5.7% over the next decade. That's faster than the gross domestic product.
Hepatitis C drug treatments in particular have come under scrutiny recently for high price tags. In response, Gilead Sciences said in September it would sell authorized generics of its blockbuster hepatitis C drugs Harvoni and Epclusa through a subsidiary at an annual list price of $24,000 for the most common therapy. As of late, multiple drugmakers have faced vitriol from lawmakers and President Donald Trump for high list prices.
Meanwhile, states across the country are trying to finds ways to bend Medicaid's cost curve. Some have implemented work requirements for eligibility. A more common policy is Medicaid managed care. Almost a quarter of Americans are covered by Medicaid and a large number of them are on a managed care plan run by a private insurer.
Nearly all of Louisiana Medicaid recipients receive coverage through a managed care company. The thinking goes that the company handles the day-to-day coverage, which makes Medicaid costs more stable for states.
This new model is another way to potentially control state costs. Other Medicaid programs will likely follow this initiative closely to see whether it's worth trying to replicate.
The partnership will allow enrollees unlimited access to antiviral treatments for five years. The plan will cap state spending on hepatitis C drugs and seeks to "treat as many infected people as possible," Louisiana Gov. John Bel Edwards said in a statement.
Edwards said the current cost of hepatitis C drugs is too high. The new model will allow the state to improve access to the drug while offering a fixed revenue stream for a pharmaceutical partner.
The department of health hopes to treat more than 10,000 Medicaid enrollees and incarcerated people by the end of 2020 through the new model. Officials hope to begin the partnership in July.
Supporters of the new model celebrated the announcement on Twitter.
"Announcement came with a solicitation for drug companies to submit bids for the contract."— David Mitchell (@DavidP4AD) January 11, 2019
This is direct govt negotiation w/drug companies, full access & budget caps. Sounds like promised land to me https://t.co/I4PDqIfj9p