Why one state wants to slow down use of a new hepatitis C cure

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In the ongoing battle over the $84,000 price tag of the new hepatitis C treatment Sovaldi, big news came out of Oregon this week — the state is advancing recommendations to limit the drug to only the sickest patients enrolled in its Medicaid program. The recommendations haven't been finalized, but a state committee will consider them by the end of the month.

For Oregon, the recommendations stem from the drug's cost. States have expressed major concern that Gilead Sciences' Sovaldi, which appears to be far more effective and safer than any previously available hepatitis C treatment, would strain their Medicaid budgets if they covered the drug  for each person who is infected with the liver-attacking disease.

Medicaid programs are generally required to cover all Food and Drug Administration-approved drugs unless other effective treatments are available. Oregon's Medicaid program is a bit different, though, thanks to a federal waiver it's held for more than 20 years. The waiver allows Oregon to consider cost-effectiveness of a treatment, meaning the state can be choosier about what it covers.

Tom Burns, who heads drug purchasing for the Oregon Health Authority, explained to me this week the thinking behind the Sovaldi coverage recommendations. It would have cost the state about $360 million to cover all 5,600 Medicaid enrollees who are infected with hepatitis C that the state knows about. By targeting the sickest patients, Oregon figures it will instead spend $40 million on Sovaldi.

The recommendations are "aimed at trying to get those patients that are just about over the top — where the liver is so damaged that the patient is going to need a transplant but not so damaged that they can wait," Burns said.

Also, the 5,600 figure is a conservative estimate, Burns said, because there's still one major unknown — how many of the nearly 325,000 people Oregon added to its Medicaid program since Affordable Care Act enrollment opened last fall may be infected with hepatitis C. It's also not clear yet how many of those 325,000 are newly eligible under the ACA (and come with full federal funding through 2016) or previously eligible under existing program guidelines but hadn't enrolled.

Burns said Oregon can afford to wait to see how other hepatitis C treatments develop. Gilead is expected to win approval for another drug in October. AbbVie and Merck are also developing hepatitis C cures that could compete with Sovaldi.

There's been some pushback from patient groups who say the treatment should be more broadly available right away, Burns said. In response, he said the state can't afford to cover everyone, and there's still time to make a more informed coverage decision for people who don't have an immediate need for treatment.

"We recognize that there are those patients who must be treated, and we're going to treat them," he said. "But the vast majority could wait while we figure out a policy that doesn't bankrupt this state."

Top health policy reads from around the Web:

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Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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