According to a report that Express Scripts released state legislatures will need to find billions in their budgets to purchase costly new hepatitis C therapy, according to a new state-by-state analysis released today by Express Scripts (NASDAQ: ESRX). But their report is near sighted only looking at the immediate costs of the prescription, instead of the longterm cost stagings this therapy can provide.
More than 750,000 Americans with chronic hepatitis C receive state-funded healthcare through Medicaid or the prison system. Given the pricing that drug manufacturers are currently offering to these public programs, Express Scripts projects states will spend more than $55.2 billion if they are to provide all of these patients the latest therapy regimen of Sovaldi® and ribavirin.
No drug category has gotten more attention in recent months than the new Hepatitis C therapies, which are expected to increase total Hepatitis C drug spending 209% by 2015. Yet long-term savings for treatment of chronic conditions, liver transplants and lost productivity may ultimately offset the cost of specialty drugs. In most serious cases, for example, compare the $270,000 in treatment over a decade for patients with compensated cirrhosis, or scarring of the liver, to the average $86,000 for a course of the new medication, believed to be a cure. The challenge may lie in targeting the patient most in need of the more expensive course of therapy
“There is no doubt that Sovaldi is a breakthrough therapy, but unfortunately, it is also likely to break state budgets,” said Steve Miller, M.D., Chief Medical Officer at Express Scripts. “Since healthcare for so many hepatitis C patients is funded by state programs, each citizen will be shouldering the unprecedented cost burden. The unsustainable pricing of this medication has essentially become a tax on all Americans.”
In its Drug Trend Report released earlier this year, Express Scripts forecast that the U.S. will spend 1,800 percent more on hepatitis C medications in 2016 than it did in 2013. No major therapy class has experienced this high of a spending increase in the 21 years Express Scripts has measured drug trend data.
According to the new analysis released today, the impact is already being felt in California, where the state is expected to spend $6.6 billion if it treats all 93,000 of its Medicaid enrollees and prisoners who are estimated to have chronic hepatitis C. The other top five states in terms of highest total projected spend are Texas ($5.3 billion), Florida ($3.8 billion), New York ($3.6 billion) and Illinois ($2.3 billion).
The largest per capita expense will be paid by the State of Louisiana. An estimated 18,000 state-funded chronic hepatitis C patients reside in Louisiana, and providing the new medicine to these patients will cost the state $1.4 billion, or $294 for every man, woman and child living in Louisiana. The other top five states in terms of highest per capita spend will be Delaware ($265), Mississippi ($259),Oklahoma ($223) and Texas ($200).
As a result of paying for the new treatment regimen, states legislatures may need to make financial tradeoffs elsewhere within Medicaid, prisons or other important public programs.
- For Florida, Georgia, Illinois and Nevada, each state’s anticipated Medicaid spend on hepatitis C medications is equivalent to nine percent of its annual Medicaid budget.
- Compared to what they spent last year educating a public school student, Utah and Arizona are projected to spend 10 times more to provide medication to a state-funded hepatitis C patient.
- Thirteen states, led by Georgia and Louisiana, may spend more on hepatitis C medications than they spent last year on transportation.
Payers, physicians and patients have all wanted drugs that make a real difference, drugs that provide real VALUE. They are less interested in paying tens of thousands of dollars for a drug that simply extends life by a few months. As companies develop life-saving medications and cures, compounds that truly make a difference, they need to be rewarded with favorable pricing. Without this, the biopharmaceutical industry will continue to contract and fewer such breakthroughs will be discovered.