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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:

AbbVie represents the latest tax inversion play. "AbbVie Inc. has completed a nearly $55 billion acquisition of drugmaker Shire PLC early Friday morning, the companies announced in a joint statement. The deal, the largest of a year filled with merger and acquisition activity, will allow the North Chicago-based pharmaceutical giant to move its corporate tax headquarters to Britain, a maneuver that would reduce its tax rate substantially. ... News of the deal comes as political pressure from the Obama administration and some members of Congress, who are seeking to halt the practice known as inversion." Peter Frost in the Chicago Tribune.

Is the VA hiding behind a health privacy law? "[HIPAA] is not meant to be a weapon against federal employees who expose wrongdoing at VA or anywhere else. Citing patient privacy, managers have threatened VA employees or retaliated against those who complain about agency misconduct, according to a key congressman and the union that represents most of the department’s employees. 'VA routinely uses HIPAA as an excuse to punish into submission employees who dare to speak out,' said Rep. Jeff Miller (R-Fla.), chairman of the House Committee on Veterans’ Affairs." Joe Davidson in The Washington Post.

Another dominant insurer looks for a big rate increase. "BlueCross BlueShield of Tennessee — the state's dominant health insurance provider — is asking to raise rates by an average of 19 percent for its exchange plans in 2015, according to documents filed with the state of Tennessee. Meanwhile, Cigna is requesting an average rate increase of 7.5 percent in 2015, while Kentucky-based Humana would like to boost marketplace rates by an average of 14.4 percent." Shelly DuBois in The Tennessean.