In a new report, California is projected to spend $4.77 billion on new treatments for hepatitis C virus infection over the next 12 months to aid people with the infection, according to a press release from the California Association of Health Plans.
“With a host of potentially six-figure priced drugs due to hit the market this year, this report shows how just one new treatment can blow a hole in state and federal budgets,” Charles Bacchi, president and CEO of the California Association of Health Plans (CAHP), said in a press release. “These findings illustrate that this pricing trend is not sustainable for our state, its taxpayers and our public programs.”
In the report, insurance researchers at The Taylor Feldman Group conducted a fiscal analysis of the projected costs of new HCV drug treatments over the next year using a linear model. The report used estimates of the number of people who are positive for HCV and receiving health coverage or services in state programs such as Medi-Cal, CalPERS, prisons, state hospitals and the AIDS Drug Assistance Program. Using the population counts, HCV prevalence, HCV treatment rates and specialty drug treatment regimen pricing, they found that if 10% of the HCV population in California was treated with the specialty HCV drugs at full price, the total expenditures would be $4.77 billion for the next year, including $2.05 billion for the state-funded population, according to the report.
“We first determined a distribution of HCV drug regimens based on input from health plan pharmacy representatives,” according to the report. “We then used the wholesale acquisition cost to derive a weighted average [wholesale acquisition cost] price of $117,000.”
The wholesale acquisition cost price of $117,000 is based on the following regimens: 8, 12 and 24 weeks of Harvoni (ledipasvir/sofosbuvir, Gilead Sciences) and 12 and 24 weeks of Sovaldi (sofosbuvir, Gilead Sciences) plus ribavirin.
Also found in the analysis, the costs for California would remain in the billions even when considering treatment rate and drug discounts. For example, if a 10% treatment rate and 30% discount rate were applied, the projected drug cost would be $3.34 billion for those treated, including $1.43 billion for the state-funded population, according to the report.
“In addition to the baseline treatment rate of 10%, the cost modeling uses a range of treatment rates from 5% to 25% for the first year,” according to the report. “Over additional years, the cumulative treatment rate would rise, perhaps as high as 40%.”
The report also indicates 1-year estimates for low-, mid- and high-range drug discounts combined with low, mid and high-range treatment rates. For the entire state population, the low treatment cost estimate is $1.41 billion, based on a 41% drug discount and 5% treatment rate. The high estimate of $5.51 billion is based on a 23% drug discount and 15% treatment rate.
In populations of interest because the state is the principal player, the low treatment cost estimate is $604 million, based on a 41% drug discount and 5% treatment rate. The high estimate of $2.36 billion is based on a 23% drug discount and 15% treatment rate.
The release states that the governor of California has already included $228 million in additional funding for state programs for HCV treatment in the 2015-2016 budget. In addition, the Secretary of the California Health and Human Services Agency has had meetings with workgroups over the soaring prices of the drugs.
Bacchi states in the release that the governor is working with the association, a group that focuses exclusively on health care coverage and plans in California, to ensure transparency.
“We look forward to working with the administration and the legislature — both of which have acknowledged the challenges posed by high-priced drugs — to ensure we have greater transparency around the cost of these drugs and to identify additional strategies that will sustain the long-term affordability of our health care system,” Bacchi said.