As states limit Medicaid coverage of an extremely expensive but potentially game-changing hepatitis C medication, it’s becoming clear that their actions will have legal consequences. But what’s less clear is which side will win.
Since the drug Sovaldi got approval from the U.S. Food and Drug Administration (FDA) late last year, it's generated headlines and sparked Congressional inquiries into its high cost ($84,000 on average for a 12-week treatment) as well as its effectiveness (a rate of more than 90 percent when paired with other drugs in FDA trials). It’s not exactly a cure, but the trials showed it suppresses the virus to undetectable levels and has fewer side effects and a shorter treatment period than other drugs.
Hepatitis C is a viral infection that eventually leads to liver failure, cancer or other life-threatening health problems. In the developed world, it’s most commonly spread through intravenous drug use. Many of the estimated 3.2 million people living with hepatitis C in the United States are poor, imprisoned or elderly, which means the cost of Sovaldi falls disproportionately on Medicaid and Medicare. One analysis put the potential cost to states at $55 billion if they covered their entire hepatitis C populations.
States typically have to cover drugs from makers that participate in Medicaid’s drug rebate program, which includes Gilead Sciences, the company that sells Sovaldi. According to the company, 47 states are covering the drug for their Medicaid populations. But in order to limit its use, about half are enforcing “prior authorization,” essentially creating lists of criteria that patients must meet before a doctor can prescribe the drug. Most commonly those criteria require a patient to be in the worst stage of hepatitis C, which is cirrhosis, and that they be drug-free for a period of time. The goal is to restrict Sovaldi to people who already have severe liver damage, which opponents argue is too late. Among the states limiting Sovaldi are California, Florida, Louisiana and Oregon, which typically have larger Medicaid populations and more patients with hepatitis C.
Prior authorization is legal if a state is trying to ensure that a drug is medically necessary and there are other equally effective alternatives that cost less. The question, then, becomes whether there really is an equally effective alternative, said Sara Rosenbaum, a health law expert at George Washington University. But some health officials in the states limiting the drug question its claims of effectiveness. Rosenbaum, other legal experts, advocates for hepatitis C patients and policy analysts say there’s no question lawsuits will come. Donna Cryer, a lawyer who runs the Global Liver Institute, told the publication Inside Health Policy that she’s working with patients in several states who plan to sue over coverage denials, though she declined to specify which states.
The state that’s taking one of the hardest lines against Sovaldi is also the state with the broadest authority to do so. When Oregon expanded Medicaid in the 1990s, it also got a federal waiver that gives it broad rights to determine what’s covered. Providing care for more people, the state argued, requires prioritizing spending. So in Oregon, if a Medicaid patient has severe liver damage and meets other criteria, such as a lack of success with older therapies, doctors can prescribe the drug -- but the state won't pay for it.
Lorren Sandt, director of a hepatitis C advocacy group in the Portland area, argues defunding the drug entirely goes too far, as does limiting it to people with the most severe liver damage, which can lead to cancer and other problems. The state is still funding older therapies that are still considered effective, but Sandt argues the state’s waiver won’t allow it to cover older hepatitis C therapies while placing Sovaldi “below the line” of reimbursable drugs, effectively creating a tiered system without a medical basis to do so.
“Per their waiver, none of their practices are supposed to harm their population, and if you allow people to reach cirrhosis of the liver before you’ll treat them for a curable virus, I think you’re in violation of the waiver,” she said.
Tom Burns, Oregon's director of pharmaceutical programs, said the Centers for Medicare & Medicaid Services told state officials they’re acting legally within the waiver. He said since liver damage from the disease is slow moving, there's time for cheaper drugs to enter the market in the next year or two. The state is partly basing its decision on a study of Sovaldi from the Center for Evidence-based Policy at Oregon Health and Science University that found Gilead produced limited results from a small body of research over a relatively small period of time under an accelerated FDA “breakthrough drug” path, which focuses more on quickly bringing the drug to the market than on effectiveness.
Other states are citing the same study in defense of decisions to limit coverage or as a reason the drug is still under review. Dr. Arvind Goyal, the medical director for Illinois Medicaid, said Gilead did only one study on the most common type of hepatitis C, and there’s no indication that they included the kinds of Medicaid patients who will most likely have the infection -- the poor, minorities and people who abuse drugs or alcohol.
“We don’t even know [if] a person who drinks a pint of beer a day will keep [Sovaldi] in their system,” he said.
Texas -- which is one of the three states yet to cover the drug -- is raising similar questions in a months-long review that could leave a final decision until the fall.
“We’re also concerned that we haven’t yet seen larger, long-term studies about the effectiveness of some of these drugs,” said Linda Edwards Gockel, a spokeswoman with the state's Health and Human Services Commission. “If we’re going to pay those high prices, we want to make [sure] it’s a sound use of tax dollars.”
Matt Salo, who heads the National Association of Medicaid Directors, said Oregon’s restrictions might not hold up in court. As influential groups like the Centers for Disease Control and Prevention, Veterans Affairs and the FDA urge states to cover the drug without limitations, he said public health concerns could overwhelm arguments questioning the drug’s effectiveness and cost.
“If this gets kind of couched as a public health crisis, as a push to eradicate a communicable disease, then I don’t think Oregon’s distinction makes a difference,” he said.
What will become clearer is the need for some kind of federal policy solution, Salo argues. High-cost specialty drugs are a relatively new phenomenon arising with the decline of revenue from previously lucrative medications that now face steep competition from generic versions. The highest-profile lawsuit over state prior authorization rules has already been filed in Arkansas over coverage of a $300,000 cystic fibrosis medication. More are bound to come.