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Louisiana partnered with a pharmaceutical company to provide hepatitis C treatment to Medicaid and incarcerated patients at a fixed cost.
In June, officials in Louisiana unveiled a deal several years in the making: the state would partner with a pharmaceutical company to provide unlimited amounts of hepatitis C drugs to its prison and Medicaid populations over a five-year period.
Under the terms of the deal, Louisiana will pay roughly $60 million each year, approximately what the state spent on treatments for the infectious disease in the last fiscal year. If costs climb beyond that, Asegua Therapeutics, a subsidiary of pharmaceutical giant Gilead, will continue to provide treatment to infected populations for no additional money.
It’s been called the “Netflix model”—an unlimited supply of product for a fixed price; in this case, medication instead of video streaming—but Rebekah Gee, secretary of the Louisiana Department of Health, prefers the term “modified subscription model.” The goal, she said, is to eradicate the disease in Louisiana.
“As health secretary, I wanted to tackle drug prices, particularly as they impact public health and because hepatitis C is the leading infectious disease killer of our time,” she said. “It kills as much as the next 60 infectious diseases combined, so eliminating it is a meaningful goal.”
The subscription model is crucial to that goal because it removes the biggest barrier between poor people with the disease and effective treatment: high drug prices. Hepatitis C, a viral infection that can cause severe liver damage, is curable with a 12-week course of treatment, but the cost of the drug (from $20,000 to $30,000 per course of treatment) puts it out of reach for thousands of residents and makes it difficult for states on fixed budgets to foot the bill for impoverished populations.
In Louisiana, roughly 39,000 people on Medicaid and in correctional facilities have the disease. Treating them all would have cost $760 million, Gee said.
To manage the cost of treating the disease, the state had rationed its distribution of drugs, essentially requiring that people get very sick before becoming eligible for treatment. Even with that practice, Louisiana could afford to treat just 3% of the Medicaid population and 1% of people in state correctional facilities afflicted with hepatitis C.
“Price was such a limiting factor and that was unacceptable to me and to our governor, particularly in this nation where we have the most expensive health-care system in the world,” Gee said. “It did not seem acceptable to us that people would be dying of a preventable disease when we have a cure, simply because we could not afford it.”
Gee and Gov. John Bel Edwards explored a host of options to craft the deal, including the invocation of an archaic provision of patent law that allows the government to appropriate certain technologies in urgent matters of national security or public interest.
“The pharmaceutical industry, predictably, was not favorable to that,” she said. “So we brought up other ideas, and one was this modified subscription model.”
It’s not a new concept, Gee noted. A similar model is in place in Australia and the Vaccines for Children initiative in the United States runs on the same basic idea. But the model hadn't been used by a state government. The success of implementing it in Louisiana, Gee said, came from a bipartisan coalition of support along with the voluntary participation of the pharmaceutical industry rather than a regulatory framework.
“For this to happen in an environment that’s not regulatory we needed to come up with a solution that was acceptable to the industry, and this became it,” she said. “Solidifying the dedication to solve this problem certainly helped create pressure on the industry to change, but I think also the fact that this is a competitive market helped.”
There are now at least three companies manufacturing drugs to treat hepatitis C, Gee said. By participating in the subscription model, one company was guaranteed an exclusive deal to provide the drug to Louisiana, ensuring income and, in the future, potential profits (as cases of hepatitis C decline, the state may eventually pay more for fewer courses of treatment).
The first doses were delivered to patients on July 15. Insurance claims lag, so the state does not have exact data on the number of people who have been treated so far, though Gee estimates it’s in the hundreds. Treatment will run through 2024, by which time the state hopes to have treated 80% of both its Medicaid and correctional populations with hepatitis C.
“Our goal within that five-year space is to eliminate the vast majority of cases in our state,” Gee said. “Being able to cure everyone in our correctional system will allow us to have individuals re-enter their communities better able to work, feeling better, able to have a productive life and, frankly, save a ton of money.”
Gee hopes the model can serve as a blueprint for other states. The Centers for Medicare and Medicaid Services does as well, saying in a statement that “Louisiana’s innovative approach to leveraging a subscription model to promote access to hepatitis C therapy is a great example of how states can lead in designing solutions.”
Several other states, including Washington, now have similar deals in place. The model could be particularly effective for treating opioid addiction, especially in the correctional system, Gee said—but its widespread implementation depends largely on how well this deal works in Louisiana.
“A modified subscription model can certainly be used for opioid addiction and for addiction more broadly; for expensive cancer cures for children—really anything where you have cost constraints and the need for something, where companies would be willing to have a capped amount to guarantee access,” she said. “I think there’s a lot of interest in this. I think, also, a lot of eyes are on Louisiana to see if we’re successful.”
Kate Elizabeth Queram is a Staff Correspondent for Route Fifty and is based in Washington, D.C.
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