State braces for cost of ‘game-changer’ hepatitis C drug

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ALBUQUERQUE (KRQE) – It is something close to a miracle drug. A pill a day for three months, sometimes less, and patients are cured of hepatitis C. Not a disease that is knocked back for a few months. Not a lower viral load. Cured.

“This medicine is amazing. It’s a game changer,” said Dr. Sanjeev Arora, a hepatitis specialist at the University of New Mexico Health Sciences Center. “It saves lives. Immediately.”

But the drug Arora is talking about, Harvoni, is expensive. Off the shelf – a price everyone from insurance companies to hospitals to Medicaid programs tries not to pay – the drug can cost $93,000.

Most institutional buyers of Harvoni succeed at avoiding that thousand-dollar-a-pill price tag. But cutting that cost even by as much as half is hardly the victory it seems.

In a poor state with a drug problem, a state like New Mexico, Harvoni threatens to break the bank for many public medical programs.

Hepatitis C virus (HCV) is now primarily transmitted through intravenous drug use, though as recently as 1992, patients who received untested blood transfusions were at risk of contracting the disease. It is a progressive disease which can be fatal if left untreated.

Almost 850,000 people in this Land of Enchantment are on Medicaid. The state’s counties are overwhelmed by drug use and underserved by treatment programs. Often, jail or prison becomes the de facto rehabilitation option. That option disappears when those inmates are released.

“Hepatitis is a poor-man’s disease,” Arora said. In economically depressed parts of the country, the incidence of hepatitis is much higher. Arora leads a groundbreaking effort at UNM, Project Echo, that uses telemedicine not just to treat patients, but to train providers. He estimates 30,000 to 40,000 people in New Mexico have hepatitis.

Because Harvoni is so effective — and because it does the job with few of the usual HCV-treatment side effects like nausea, headaches and extreme fatigue — it has become the drug of choice for doctors to prescribe. Because Harvoni is so expensive, many of those prescriptions get denied by insurance companies or public health programs. The choice for sick patients becomes either use a different combination of drugs that are nearly as effective but come with more complications, or wait to get sicker.

“It is a very difficult conversation,” Arora said. “Just telling a patient that they have to wait for treatment of an infectious disease which is curable, for which treatment is available and they see that every day on television (commercials.)”

Arora’s practice often appeals Harvoni rejections for his patients, but HCV has been around long enough that the progress of hepatitis C is tracked by a complex set of criteria. Insurance companies use those benchmarks to determine when someone qualifies to receive Harvoni. Aurora said that means coverage rejections from private insurance companies are difficult to overturn.

The standards set by New Mexico’s Medicaid program for HCV patients to receive Harvoni are more to Arora’s liking. The state is among the more generous in the country. Both Arora and the state’s Human Services Department, which administers Medicaid, said paying more up front can slow the spread of the disease and prevent even more expensive treatments for patients who have contracted liver cancer or need a liver transplant because of hepatitis.

A liver transplant, Arora explained, can cost $250,000 for the procedure and more than $50,000 in follow-up care every year of a transplant recipient’s life.

The state’s Medicaid programs get Harvoni at a steep discount. On average the state pays $56,700 for a 12-week course of the drug.

At the New Mexico Department of Corrections, which provides medical care to inmates through a private contractor, that cost is just shy of $63,000.

Gregg Marcantel is the man who has to figure out how many inmates he can afford to treat.

A burly man with an impeccable flat-top haircut, an easy smile and a gun strapped to his ankle, Marcantel has seen both ends of the criminal justice system and most points in between. He worked as a cop for the better part of three decades, including a stint early in his career as an undercover narcotics detective. He’s now New Mexico’s Corrections Secretary.

In this state, the budget year runs from July to June. Early in this year’s budget cycle, Marcantel saw what Harvoni would do to his medical budget. “I think, across the nation, people in my position’s heads spun,” he said.

It’s not unheard of for state agencies to return to lawmakers after the annual budget is passed to ask for more money. So-called supplemental appropriations are used to handle unanticipated expenses like building maintenance, federal mandates or rising fuel costs, to name a few.

But as oil prices were plummeting last fall and taking the State of New Mexico’s revenue stream along for the ride, Marcantel went to legislators with a big ask: he wanted $10 million, most of it to treat just 150 inmates with advanced-stage hepatitis C.

Prison health care is the most expensive way to treat a sick person. If there are side effects, inmates have to stay in the infirmary. They can’t be left unguarded and New Mexico’s prisons are seriously short on the corrections officers who guard them. If prisoners don’t want treatment for any given illness, it has to be administered. Being sick in prison is labor intensive and eats up resources in a hurry.

Harvoni’s budget-breaking threat comes through a phenomenon called crowding out. The drug has the potential to pay for itself many times over in the years that follow successful treatment. But the state budgets one year at a time. Every Harvoni prescription comes not just at the cost of the $60,000 in Marcantel’s case, but at the cost of the other treatments that money could have paid for.

Still, Harvoni promises a no-hassle approach to a disease that is shockingly common behind bars. Of the roughly 7,100 inmates under the care of the New Mexico Department of Corrections, 3,125 have hepatitis.

Marcantel said the legislative committee to which he appealed for the money was initially as shocked as he was by the price tag. But the secretary won approval from the Legislature for both supplemental money to treat HCV this year and for more treatment funding in the next annual budget. In a year in which most state agencies will see their budgets slashed, it is a notable achievement. Lawmakers also boosted funding for Medicaid.

If Marcantel — and the state — get lucky, this may be as bad as the hepatitis C headache gets. Late last month, the FDA approved a drug called Zepatier from Merck. While it doesn’t treat as many variants of the hepatitis C virus, Zepatier is similarly effective for the types of HCV it does treat. And its price is $54,600 for a pill-a-day, 12-week regimen.

Many in the medical community, as well as the financial analysts who track drug companies, believe Zepatier may force Harvoni’s maker, Gilead Sciences, to drop the price of the drug that’s earned the company billions in the short time it’s been on the market.

Both Arora and Marcantel said cost is an unfortunate side effect of a societal, and in some cases, governmental obligation to treat those who are seriously sick with HCV.

“I don’t certainly at all subscribe to the argument that somebody is less deserving because he committed a mistake in the past,” Arora said. “I think that there’s much room for forgiveness. That’s how humanity and society improves.”

Marcantel, a self-described conservative, pointed out that the vast majority of people in prison will eventually be people who are out of prison and living their lives among the rest of society. “They’re either going to join our families in the grocery lines and movie lines either sicker and with contagious disease or not.”BELOW: Secretary Gregg Marcantel discusses the need for medical treatment in prison and the changing nature of how New Mexico views its prison system.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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