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A handful of federal lawsuits against states that have denied highly effective but costly hepatitis C drugs to Medicaid patients and prisoners could cost states hundreds of millions of dollars.
The drugs boast cure rates of 95 percent or better, compared to 40 percent for previous treatments. But they cost between $83,000 and $95,000 for a single course of treatment.
The class actions, all filed in the last eight months in federal courts in Indiana, Massachusetts, Minnesota and Pennsylvania, present a series of extremes: a deadly epidemic, a treatment that can stop the disease in its tracks and an enormous price tag.
At least 3.5 million Americans have hepatitis C, a virus spread through blood-to-blood contact that is usually contracted through the sharing of needles or other equipment to inject drugs. Left untreated, hepatitis C slowly destroys the liver. Medicaid beneficiaries, a low-income population, have a slightly higher rate of hepatitis C infection than the privately insured, and the rate among prisoners is 30 times higher than in the general population.
The U.S. Food and Drug Administration approved the first of the new drugs, Sovaldi, in 2013. Since then, the FDA has also approved two other drugs, Viekira Pak and Harvoni.
But because the drugs are so expensive, state Medicaid programs and prisons have been restricting them to people in the advanced stages of the disease.
While they are waiting to meet that standard, patients with less advanced hepatitis C may develop cirrhosis, liver cancer or liver failure, which may necessitate a liver transplant. According to the U.S. Centers for Disease Control and Prevention, 60 to 70 percent of those with hepatitis C will develop chronic liver disease; 5 to 20 percent will develop cirrhosis; and 1 to 5 percent will die of liver failure or liver cancer.
The plaintiffs in the lawsuits argue that by denying the drugs to hepatitis C patients, states are violating the law. Under federal law, states can exclude a drug from Medicaid coverage only if its prescribed use “is not for a medically accepted indication” as determined by the FDA.
Federal court cases have established a lower standard for prison health care. Prisons must provide health care to inmates, but can deliver it as they see fit, as long as they don’t demonstrate “a deliberate indifference to serious medical need.”
“A medically necessary treatment is a medically necessary treatment, no matter what the cost,” said Gavin Rose, an attorney for the American Civil Liberties Union, which brought the class action in Indiana in December on behalf of Medicaid beneficiaries in that state who have hepatitis C.
Some infectious disease doctors and legal analysts agree.
“The restrictions states are using are not based on medical evidence,” said Lynn Taylor, an infectious disease doctor in Rhode Island who co-authored a study finding that a large majority of state Medicaid agencies are restricting access to the new drugs. “They make these rules up out of thin air, and they are discriminatory.”
But Matt Salo, executive director of the National Association of State Medicaid Directors, said making the drugs available to all those infected with hepatitis C “would blow up state budgets.”
“We would be spending more on this one drug than all other drugs combined,” Salo said. “There isn’t the capacity to do that.”
Corrections officials agree. Dr. Steven Shelton, medical director of Oregon’s state prison system, estimated it would cost more than $200 million to treat Oregon prisoners with the disease, an amount four times greater than the system’s entire annual health care budget.
“There would be no care for any other disease, there would be no day-to-day care, there would be no hospital care, there would be no emergency care, there would be no staff,” Shelton said.
A Leading Killer
At a recent meeting on infectious diseases, Scott Holmberg, chief of the Epidemiology and Surveillance Branch at CDC’s Division of Viral Hepatitis, reported that in 2013, more Americans died of hepatitis C than from 59 other infectious diseases combined, including HIV and tuberculosis.
But in December, the U.S. Senate Finance Committee, which investigated the impact of the high price of Sovaldi, found that in 2014, only about 2.4 percent of Medicaid beneficiaries with hepatitis C had received the drug.
Vincent Lo Re, an epidemiologist and infectious disease doctor at the University of Pennsylvania, reported in November that in Medicaid agencies in four states — Delaware, Maryland, New Jersey and Pennsylvania — nearly half of all claims for the new hepatitis C drugs had been rejected. Lo Re found a 5 percent denial rate for Medicare beneficiaries and 10 percent for policyholders with private insurance in those same states.
Lo Re said he undertook the study because so many of his patients were being turned down for the new drugs despite his insistence that they needed it. Many of those patients, he said, are advancing to more serious stages of liver disease.
