By JoNel Aleccia and Barbara Feder
Ostrov and Donna Gordon
Blankinship October 25, 2019
When a
long, black bus bearing the logo of drugmaker AbbVie rolls through Washington
state next year, it will promote a new effort to eradicate hepatitis C
infections.
The
state is paying for the marketing campaign as part of a deal to give AbbVie the
exclusive right to treat its citizens who have the potentially deadly liver
disease. Armed with its medication, Mavyret, AbbVie beat out rivals Merck and
Gilead Sciences in a blind bidding process.
It’s
the second time this year that a state has struck a novel deal with a
pharmaceutical company to obtain drugs that can cure hepatitis C ― with
discounts from a price that came to market at $84,000 for a course of
treatment.
The
drugmakers are in a race to treat the 2.4 million people in the U.S. with the viral
infection. Left untreated, its most chronic form can cause liver damage,
including cirrhosis, as well as liver cancer and death. States are weighing the
price of curing those infected with hep C using the new drugs against the
medical and economic costs of long-term care for those with untreated
infections. The state bears the medical expenses of the Medicaid and prison
populations as well as public employees and retirees.
The
money paid to AbbVie buys a package of services that includes outreach and
testing to identify patients as well as the drugs to treat them. But the price
and other details of the deal are secret under the Washington state Public
Records Act, even though they involve massive commitment of taxpayer dollars.
Washington
officials said they’re prohibited from releasing details by federal rules that hide drug pricing to
protect what companies consider trade secrets. Lawyers for the three
pharmaceutical firms that submitted bids vowed to go to court to halt the
release of bid documents requested by Kaiser Health News under state public
records laws.
Without
transparency about the details, however, it is impossible to evaluate whether
the spending amounts to smart public policy or a boondoggle that primarily
benefits manufacturers hoping to lock down payments of perhaps $10,000 per
patient for drugs from Medicaid. The same drugs from the same manufacturers can
cost less than $100 per course of
treatment in other parts of the world.
The
secrecy troubles Dr. John Scott, medical director of the University of
Washington’s Hepatitis and Liver Clinic at Harborview Medical Center in
Seattle, which treats most of the 65,000 hepatitis C patients in the state ―
even as he welcomes the curative drugs and wider access to treatment.
“I
absolutely support greater transparency,” Scott said. “I think the public needs
to know how much these things cost.”
Many
people don’t realize that such obscurity is “baked into the system,” said Pam
Curtis, director of the Center for Evidence-Based Policy at Oregon Health &
Science University.
“That
definitely hamstrings our ability to weigh the facts in front of us,” she said.
“You want policy to be driven by the highest-quality evidence.”
Other
states are eyeing the experiments “with a healthy skepticism but a high level
of interest,” said Jennifer Reck, project director for the National Academy for
State Health Policy.
In
Washington, officials would describe the terms of the AbbVie contract only in
the broadest terms. After federal rebates, the state spent about $80.4 million
in 2018 on the drugs, known as direct-acting antivirals, to treat more than
3,300 patients, figures show.
Under
the new contract, officials expect to spend about the same amount of money per
year, while treating twice as many patients, said Dr. Judy Zerzan, chief
medical officer for the Washington State Health Care Authority.
That
works out to more than $321 million to treat about 30,000 patients over four
years, with options for two-year extensions.
But
that would be an improvement over the nearly $387 million state officials have spent since 2014 to
treat just 10,377 people, according to state records. That works out to an
average cost of $37,259 apiece, though actual fees vary by program.
Washington’s
request for proposals included a provision that other states could join its
program in the future ― also a potential benefit to AbbVie.
“There’s
probably an alignment of interests all the way around here,” said Alan Carr, a
senior analyst focusing on biotechnology with the Wall Street firm Needham
& Co.
Another
reason it’s a race for the drugmakers: The overall market for hepatitis C drugs
has been “falling fast,” as more patients are treated and cured, Carr said.
“The
companies are trying to find a way to ensure the remaining patients use their
drug,” Carr said. “[They] have a lot less leverage than they once had, and
that’s why they’re willing to do these deals.”
Many
patients with hepatitis C have no symptoms and are silent carriers. Only a
fraction of people with the virus will develop the serious consequence of the
disease, liver failure or cancer. Still, most public health experts urge
screening ― and treatment.
The new
contracts ― sometimes referred to as “the Netflix model”
because they mimic that media-streaming service
― call for capped costs or flat-rate subscriptions for cheap access to the
drugs.
But the
plan is much broader than creating a drug discount for the state, said Michael
Staff, AbbVie’s vice president of U.S. market access.
“Simply
stating you want to eradicate hepatitis C without a very detailed plan is
probably not going to be effective,” he said. AbbVie’s contract includes
payments for services that include outreach, such as the bus, to identify
infected patients.
In
Washington, the arrangement would
treat about half of those in the state infected with hepatitis C, but the
average per-patient cost would be about 40% less than before the deal, Zerzan
said.
In
Louisiana, the first state to announce a flat-rate hepatitis C drug agreement, Asegua, a
subsidiary of Gilead, will provide an unlimited amount of its drug, Epclusa,
for a set price — roughly $58 million a year for five years, or up to $290
million. Louisiana plans to treat about 31,000 of 39,000 Medicaid patients and
prisoners believed to have the disease. Costs could drop to less than $10,000
per patient, according to the contract, which the state health agency made
available after a public records request.
The flat-rate concept was
put forward by Dr. Peter Bach, director of Memorial Sloan Kettering’s Center
for Health Policy and Outcomes, and his colleagues. Australia implemented a similar arrangement in its national health
plan. England’s National Health Service has one as well.
In
Egypt, which has the highest hepatitis C rate in the world, negotiations and
generic pricing have reduced costs to $84 for a course of treatment.
U.S.
drugmakers likely wouldn’t have considered such a plan when they first
introduced their medications. Gilead’s Sovaldi, the first antiviral for
hepatitis C, launched at $84,000 for a course of treatment; the second,
Harvoni, started at $94,500. Three years later, AbbVie introduced Mavyret at
$26,400.
Now,
Bach said, drugmakers are staring down a sharp decline of their once-hot
market.
“They
were losing market share and price per share,” Bach said. “If payers [like
state Medicaid programs] can give them the same revenue with much more
certainty, they’ll prefer that to uncertainty over what’s happening now.”
Hepatitis
C poses dilemmas for public health officials and drugmakers alike.
Louisiana
has been under pressure from the American
Civil Liberties Union regarding prisoners who said they were denied effective
hepatitis C treatment. And Washington state’s Department of Corrections faces at least one lawsuit
from a prisoner who said he was denied timely care for his disease.
In
Washington, Gov. Jay Inslee directed health officials
last year to negotiate the best deal to eliminate hepatitis C in the state by
2030, which mirrors goals of global health agencies.
The
federal Centers for Disease Control and Prevention warned last month that new
hepatitis C infections are on the rise ― 44,300 in 2017, the
seventh consecutive annual increase. New cases of hepatitis C have spiked among
adults in their 20s and 30s, largely because of the opioid epidemic, according
to the CDC.
Between
15% and 25% of people with acute hepatitis C will clear the infection on their
own; the rest become chronically infected with the virus.
Hundreds
of thousands of people have been treated ― and cured ― since the drugs were
introduced early this decade. Deaths from hepatitis C fell from almost 20,000
in 2014 to a little more than 17,000 in 2017, which could be an effect of the
new drugs.
“It’s
just been transformational,” said Scott, of the University of Washington’s
Hepatitis and Liver Clinic. Previous treatments for hepatitis C had to be taken
for a year, had toxic side effects and helped only 40% of patients, he added.
The
Center for Evidence-Based Policy has advised Washington state in the effort to
eradicate hep C, Curtis said. She noted that the arrangements Washington and
Louisiana struck share an overall goal of reining in runaway drug prices,
especially in state-run Medicaid programs, which can’t shift costs like the
commercial market and would be forced instead to cut services.
“States
are already struggling,” Curtis said. “A larger and larger part of their budget
is being eaten up by these new high-cost drugs.”
“This
is not a solution,” she said, “but it’s a step in the right direction.”
JoNel
Aleccia: jaleccia@kff.org,
@JoNel_Aleccia Barbara Feder Ostrov: barbarao@kff.org,
@barbfederostrov
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