Sen. Bill Cassidy (R-La.) vividly remembers his worst day as a doctor. His patient, an 18-year-old woman with hepatitis B, needed a liver transplant, and he arranged to have her airlifted to Shreveport for the procedure.

“I was sitting there thinking, if we had vaccinated this girl with a $50 vaccine, we could have saved a $250,000 operation and a lifetime of $50,000-a-year medical bills,” Cassidy recalled in a recent interview. There's a happy ending to the story: The patient's liver began to recover, avoiding the need for a transplant. But Cassidy didn't know that as the helicopter took off. He was motivated to set up a vaccination program to prevent the infection. Over six years, 36,000 schoolchildren in his state were vaccinated.

Cassidy has been in the spotlight recently as one of the holdouts on the current version of the Senate health-care bill, because of his concern that people may not have access to affordable and adequate health care coverage. He has authored his own proposal to replace the Affordable Care Act and has suggested that whatever replaces that law needs to pass the “Jimmy Kimmel test” — a term he coined after the late-night host told a moving story about his newborn son's heart condition and pleaded for a bill that would not allow discrimination against people with preexisting conditions.

Cassidy's experience as a doctor gives him an unusual perspective among politicians when thinking about health care. And the dilemmas states are likely to face if Medicaid's federal funding is cut are already hitting his state in its decisions on how to treat Medicaid patients with hepatitis C, a liver-ravaging virus for which there are now a handful of very effective, expensive treatments.

From his years as a liver doctor, Cassidy knows the tremendous human and financial cost if the virus progresses to the point where a patient needs a transplant. But he also sees how quickly medicine has progressed: Early in his medical career, there wasn't even a test for hepatitis C; today, there are safe and effective cures. To Cassidy, it's important to ensure that future innovations and breakthroughs in medicine will continue.

And that gives him serious reservations about a plan his state's health secretary is mulling: whether to ask the federal government to invoke a law that allows the government to override drug patents for its own purposes. If the federal government used this authority — referred to as “marching-in” — it could pay drug companies a small fraction of the current cost of the drug.

“My concern about marching-in is that we would quell that sort of innovation,” Cassidy said. “I think we would be foolish to think that might not be the case. And once you march-in once, it lowers the threshold to march-in on another, so I'm very concerned about that.”

Those reservations do not mean Cassidy accepts the status quo in Louisiana, which is to wait for Medicaid patients' livers to worsen before giving them the expensive drug. Instead, Cassidy is enthusiastic about a series of spreadsheets he has been working on — an analysis that shows the state could save money by treating most of its infected population in the next few years. During a recent interview in his Senate office, he leapt up and sketched on a whiteboard a curve showing how the disease progresses over time, transforming a healthy liver to cirrhosis over years. He circled the ideal time to intervene — early in the disease, before significant liver damage has occurred. The benefit to the patient is obvious, but it carries a public health benefit, too, by preventing the possible spread of the disease.

“What currently happens is those who either have cirrhosis, the most advanced disease, or are at risk of developing it, are who is treated now,” Cassidy said, “and you’re putting out a fire, as opposed to putting out a match,” Cassidy said.

To pay for it, Cassidy is looking for innovative financing solutions. The state could strike a payment plan with a drug company. The company could provide drugs early on, allowing the state to treat the bulk of the population in the first few years. Then the state could pay off the costs over time, similar to a mortgage. If the state committed to a treatment plan for its whole patient population now, instead of spread over two decades, Louisiana could perhaps negotiate a price close to the expected price when the drug became generic. Cassidy is also interested in what he calls a Netflix model, in which the state could pay an annual subscription fee and treat as many people who need it in that time frame.

Discussions of the new generation of hepatitis C drugs have often centered on their value. Although the treatment is expensive, the drugs are extremely effective. Avoiding liver transplants and cancer down the road could ultimately save money. But one of the issues for states that have to balance their budgets each year is that they will be paying an upfront cost today, while savings won't be realized for years, even decades — perhaps when those who were infected have moved on to Medicare, which is funded by the federal government.

“I am particularly interested as an economist in the mismatch between who pays for the therapy and who may benefit from the therapy over time,” said Rena Conti, an economist at the University of Chicago. “This is kind of a classic market failure … more along the lines of the market failures that we see in developing countries.”

The debate over how to solve that market failure is far from settled. Cassidy said he's hopeful about new financing solutions. Rebekah Gee, Louisiana's health secretary, is considering a more radical move to ask the federal government for help in getting drug companies to lower their prices.

To patients and physicians, the question isn't how to pay for the drug but why the status quo is to put people in a holding pattern.

Nicholas Sells, an infectious-disease physician at University Hospital and Clinics in Lafayette, La., said that when he sees hepatitis C patients, he draws a diagram on the paper on the exam table — a horizontal line labeled with “F0, F1, F2, F3, F4” — categories that denote how far the liver damage has progressed. He explains to patients that the state has drawn a restriction so they can't qualify for drugs until they reach F3, just a step away from cirrhosis.

“This is a motivated population. They've gone through six to seven hoops to even get an audience like this,” Sells said. “From a financial point of view, the state can’t afford it. I get it. The hard part is, the patient doesn’t see that. The patient sees it like, ‘It’s nonsensical to wait until my liver is so sick and I need a transplant.’ ”

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