Facing ballooning costs for a $1,000 pill to treat hepatitis C, Illinois' Medicaid program is putting tight restrictions in place, including requiring patients to meet 25 criteria and get prior approval before the government program will pay for the new drug.
After spending an estimated $16 million this fiscal year on Sovaldi, which holds promise for a cure for the liver-damaging disease, the state agency headed by Julie Hamos approved the restrictions July 10.
The rules limit the drug to sicker patients and bar it for anyone with a history of drug or alcohol abuse within the past year. Hepatitis C spreads today mostly among drug users sharing needles, although some people became infected before widespread screening of the blood supply through blood transfusions and transplants.
The restrictions prohibit doctors from using Sovaldi in ways that seem promising in preliminary research but haven't been approved by federal regulators. And a "once in a lifetime" rule will give Medicaid patients only one chance at the treatment.
Doctors who have seen Sovaldi wipe out the virus find the rules too restrictive. Dr. Steven Flamm of Northwestern University Feinberg School of Medicine said the constraints could eliminate all but 30 percent of the Medicaid patients he'd like to treat with Sovaldi.
"It's going to ratchet down the numbers and lead to significant outrage in the community and among patients," said Flamm, who is involved in research and accepts consulting fees from several drug companies.
The limit on early treatment is what bothers Dr. Nikunj Shah of Rush University Medical Center. He'd rather treat with Sovaldi before severe liver damage occurs. Treating earlier could prevent expensive liver transplants. "I think this would be much better investment of the money for the state," Shah said.
Like Illinois, most other states are restricting Sovaldi's use, according to a July 23 earnings call held by the drug's maker, California-based Gilead Sciences Inc. The company reported second-quarter profits of $3.66 billion, or a net margin of 56 percent.
The Food and Drug Administration approved Sovaldi in December. Illinois' $16 million spending since then represents more than 70 percent of the cost of all the state's Medicaid hepatitis C treatment for fiscal 2014 so far. And it dwarfs the $6.7 million paid for all hepatitis C treatment in fiscal 2013. Nearly 600 Sovaldi prescriptions have been written for Illinois Medicaid patients this year.
"When you multiply the people who have hepatitis C by the cost of the therapy, it gets to be a very big number pretty quickly," said Matthew Eyles, an analyst at market research firm Avalere Health. States get rebates on FDA-approved drugs from drugmakers, but it's unknown how much Gilead will rebate to Illinois.
Dr. Arvind Goyal, Illinois Medicaid's medical director, said the cost -- a 12-week course of treatment is $84,000 -- led to the restrictions, along with a lack of research in minority patients and in people who have tried other treatments first.
"It is unfortunate the medication is so expensive that we have to think of expense before we treat a patient," Goyal said. Illinois Medicaid now covers 3 million low-income and disabled residents with a budget of about $18 billion.
By the end of 2014, half of Illinois Medicaid patients will be covered by a managed care plan. The private insurers with Medicaid contracts are writing their own Sovaldi rules. Illinois has agreed to pay the managed care plans more to account for the new drug, but not by as much as the plans would like.
"The medical world is a dynamic one and we would like a universal solution to fit the needs of health plans, the state and consumers," said Samantha Olds of the Illinois Association of Medicaid Health Plans, which represents nine health insurers with state contracts.
In contrast to Medicaid, people with private insurance have out-of-pocket costs such as copays, which get them thinking critically about whether a drug is worth it, Goyal said. Medicaid patients pay nothing. The cost falls on taxpayers, leaving governments to make the call.
"We will have this debate time and time again," Goyal said. "As soon as a drug hits the market, we need to be more enthusiastic, prompt and deliberate in deciding when we will cover it."