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Does Medicaid help its enrollees with Hepatitis C to obtain Sovaldi? (Part 3 of 3 on Sovaldi)

(Read Part 1 and Part 2)

Last year we discussed the cost of hepatitis C (“Hep C”) wonder drug Sovaldi for Americans paying in cash or using their health insurance. Notably absent, in both analyses, were how our most economically challenged citizens could afford the $84,000 treatment. According to Governing, “Many of the estimated 3.2 million people living with Hep C in the United States are poor, imprisoned or elderly, which means the cost of Sovaldi falls disproportionately on Medicaid and Medicare.”

To treat every one of the 750,000 Americans with Hep C who receive state-funded treatment through Medicaid or the prison system with Sovaldi would cost $55 billion, according to Express Scripts, and budget realities mean that that simply won’t happen. Public health officials will use prior authorization guidelines in determining who will be covered, similar to the way benefits administrators with private health plans determine eligibility.

Unlike private insurers, drug manufacturers must give Medicaid a 23% discount. The lower price is helpful but does not necessarily make Sovaldi affordable. Current models of drug pricing under Medicaid are not tailored to handle Sovaldi and other specialty medications. According to a letter sent from National Association of Medicaid Directors, “Simply put, the federal Medicaid statute is not designed to allow states to respond to this new pricing approach for pharmaceuticals. Sovaldi is just the first of many such exceptionally high-cost ‘curative’ specialty drugs.”

That letter recommends several federal policies to address Sovaldi and other high priced medications, including the creation of a special federal fund for specialty meds, similar to Ryan White federal funds for AIDS; additional rebates for specialty medications that reach a certain threshold in the percent of the population affected; and, my favorite because of the ludicrousness of international price disparities where U.S. prices are twice the average of other rich countries, “Modify the ‘best price’ policies for breakthrough drugs to include the selling price in other countries.”

There are more suggestions by the NAMD, and they are good future possibilities, but we’ve got to get down to the bottom line here: if you have Medicaid, then under what circumstances will you get Sovaldi? The states are all over the place in terms of coverage policies, but usually a person has to be very sick to get Sovaldi!

The Sovaldi Squeeze, written for Medicaid Health Plans of America (MHPA) by Viohl and Associates, takes a good stab at identifying Medicaid coverage policies. Thirty-five states require prior authorization. Most, if not all, of those states require enrollees to take a liver biopsy; the results of which determine whether or not Sovaldi will be covered. Some states will only cover someone who has not used illicit drugs and alcohol for three years. Other states, including Illinois, Florida, and Louisiana will limit coverage terms to make sure the patient is complying properly with the regiment. For example, Louisiana will only cover Sovaldi for 28 days at a time.

The most extraordinary criterion I saw is referred to as the “once in a lifetime” rule in the MHPA report. As you imagined, if a patient doesn’t adhere to their covered Sovaldi treatment then it won’t be covered again.

Like we discovered with private health insurance and certainly for people who must pay the full price in cash, there are serious obstacles to obtaining Sovaldi even if you’re covered on Medicaid. The costs are just too prohibitive. Yes, Gilead is right that unlike maintenance medications Sovaldi (and other new Hep C meds we’ll discuss below) can cure the patient, which means lower healthcare costs overall. Nonetheless, the market is not established to handle such insane upfront costs.

You might expect that more treatments with the curative-type power of Sovaldi would add competition to bring down prices. Indeed, there are three new Hep C specialty meds on the market. Olysio, marketed by Jansen is cheaper than Sovaldi, but still sells for $840 per pill. Harvoni is actually more expensive than Sovaldi, carrying a price tag of$94,500 for three months, about ten grand more than Sovaldi. Unfortunately, like Sovaldi it is made by Gilead so the competition factor is diluted! Harvoni does have the advantage of being a stand-alone treatment, however, whereas Sovaldi is taken in conjunction with ribavirin.

Viekira Pak, marketed by Abbvie, was approved just last month. Express Scripts wisely decided to make a deal with Abbvie that it would exclude Sovaldi in exchange for lower prices on Viekira Pak! Sure enough, Gilead fought back against Abbvie by making a deal with CVS Health that Harvoni and Sovaldi would be the preferred Hep C medications for CVS’ PBM business.

And which drug is the best? We’re not going to touch on that but the online magazine, Hep Mag, has an excellent summary on all the new Hep C medications discussed above, which could prove helpful.

The market dynamics for Sovaldi and other breakthrough medications like it are highly complex but largely stacked in favor of pharmaceutical company profits against taxpayers and consumers. Neither Medicaid nor private health insurers can afford to treat the millions of people who are infected with Hep C.

To conclude, I’ll leave you with the words of Caroline, who commented on our Part 1 post about paying for Sovaldi in cash, as she sums it all up perfectly:

“Well I’m insured but this medication is not on the formulary for either health care companies offered at my job. They are two well-known companies and according to my GI doctor, none of the insurance companies are approving this drug unless you are at least at stage 3 liver disease. So I’ll have to get a little sicker before I can get it. Thanks Gilead!”

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High Drug Prices Fuel Medicaid Fraud and U.S. Drug Safety Problems

48 people bought HIV medications and other prescription drugs from Medicaid recipients and sold them to unsuspecting buyers.
Picture from CNN coverage of the Medicaid Fraud

The pharmaceutical industry and FDA seem to want us to buy medicine at high prices. They say it’s dangerous to import cheaper medicine, even though it’s been shown to be safe when done through pharmacies approved by In fact, recent events show that their supported high drug prices can cause major drug safety problems right here at home.

Forty-eight people in a nationwide Medicaid fraud syndicate were recently arrested for buying prescription drugs from Medicaid recipients and re-selling them. The medications included Zyprexa for Schizophrenia, Atripla and Trivizir for HIV/AIDS, and also asthma medications.  As reported in the Wall Street Journal and CNN, the drugs made their way through a black market to a supply chain of “collectors” and “aggregators”, eventually working their way into wholesale companies and pharmacies in New York, New Jersey, Pennsylvania, Massachusetts, Utah, Nevada, Louisiana, and Alabama. The medications were also sold in bodegas on the street.

Medicaid fraud is not new but the scope of this will cost taxpayers $500,000,000.  The scariest thing about this fraud is that the drugs made it into licensed pharmacies throughout the United States. These drugs could have been adulterated, mishandled, or improperly stored – they may no longer be safe.

What lessons should we learn from this? Here are two to consider:

  1. High drug prices helped create this black market, weakening the U.S. drug supply
  2. As a result, American taxpayers bear the burden of higher healthcare costs.

High drug prices helped create this black market, weakening the U.S. drug supply
Medicaid patients sold their drugs because it was highly profitable, despite consequences to their own health. Pharmacies bought from black market wholesalers because their prices were cheaper. End-users bought medicine they needed from bodegas and street corners because it was cheaper than a trip to the pharmacy.

In countries with much lower drug prices there is less incentive for this type of fraud. We’ve made price comparisons among the types of prescription drugs fraudulently sold in the U.S. by looking at U.S. and international pharmacy prices.


Savings On Popular Medications Found in Fraud

Drug US Bricks-and –Mortar price Lowest International Price Found on Savings Percent Savings 1 year savings
Atripla $18,000.00 $4,012.20 $13,987.80 77.71% $55,951.20
Truvada $4,500.00 $1,716.00 $2,784.00 61.87% $11,136.00
Zyprexa Generic 5mg $1,161.00 $40.50 $1,120.50 96.51% $4,482.00
Advair 250-50 mcg $947.97 $139.00 $808.97 85.34% $3,235.88

All prices collected on 7/19/2012. Bricks-and-Mortar pharmacy located in New York City

American taxpayers bear the burden of higher healthcare costs:
We paid taxes for Medicaid beneficiaries to not take their medicine as prescribed, and to instead sell their medicine. We paid the costs of hospitalization and emergency room visits for these people who went without needed medication and maybe even the end-users, who took potentially adulterated medicine.

It’s also likely that Medicaid was double-billed for the same exact pills: the first time when a Medicaid recipient received it; the second time when it was dispensed again from another pharmacy that received it from black market channels.

Despite problems with our distribution system, the U.S. has one of the world’s safest pharmaceutical supplies. However, the U.S. is not alone in having safe medication – not even close. The pharmaceutical industry and their supported groups fool consumers, elected officials and the media into believing that online pharmacies outside the United States are all dangerous, which, to be polite, is factually inaccurate. Let’s bring some balance to the issue and look at the drug supply problems in our own backyard. The problems here are serious, too, and fraud like this could even be prevented if there were easier access to safe and affordable medication.

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Candidate Rick Santorum Defends High Drug Prices In America

During a recent campaign appearance in front of a Tea Party crowd, as reported by ABC News, Republican presidential candidate Rick Santorum told a mother and her sick son that high drug costs are fair because they are determined by free market forces. It appears that Mr. Santorum doesn’t understand the crisis of prescription drug prices and that the market is failing to price prescription drugs within reach for 10s of millions of Americans.

According to ABC News, “Santorum told a large Tea Party crowd here that he sympathized with the boy’s case, but he also believed in the marketplace,” and that companies wouldn’t be making the life-saving drugs if they didn’t believe they would turn a profit doing so. The former senator from Pennsylvania seemed to be lecturing the American people when he said: “People have no problem paying $900 for an iPad…but paying $900 for a drug they have a problem with — it keeps you alive. Why? Because you’ve been conditioned to think health care is something you can get without having to pay for it.” (more…)

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