Demonstrating concern over prescription drug costs, the Obama administration wrote state Medicaid programs that they may be violating federal law by restricting access to hepatitis C medicines. At the same time, the Centers for Medicare and Medicaid Services wrote four drug makers asking for information about pricing arrangements with insurers and pharmacy benefits managers.
The move comes as a national debate over drug pricing accelerates. A new crop of hepatitis C treatments have factored heavily in the conversation, thanks to very high cure rates but also high price tags. The medicines cost from $63,000 to $94,500, depending upon the drug and regimen, before any discounts.
“The rhetoric around health care costs can become heated, particularly around the cost of prescription drugs,” Andy Slavitt, the CMS acting administrator, wrote in a blog post disclosing the notice. “At times, it can appear as if some of those who produce the pharmaceuticals and those whose lives often depend on them have unaligned interests. But we will not make progress by polarizing this debate.”
Ever since the new hepatitis C medications arrived nearly two years ago, public and private payers have called them budget-busters. In response, some state Medicaid programs began restricting access based on a number of factors. These included treating only those patients with the most advanced stage of liver disease and limiting treatment for those with a history of drug use and alcohol abuse.
But CMS officials warned the state Medicaid programs against “imposing conditions for coverage that may unreasonably restrict access” to hepatitis C drugs. Placing restrictions may be “contrary to the statutory requirements” of a federal law that requires state Medicaid programs to pay for all medically necessary treatments, CMS officials wrote in their notice to the state programs.
The agency is also eyeing managed-care organizations, which are paid by states to provide health insurance to some Medicaid beneficiaries. In the notice, CMS reminded state officials that MCOs may not apply “more restrictive” policies on hepatitis C drugs than state plans. The agency warned state officials to monitor MCOs to ensure they provide patient access to the medicines.
Patient advocates have regularly complained that restrictions are not included in the prescribed labeling that is approved by the Food and Drug Administration. One advocate applauded CMS. “Denying drugs that can cure people of a deadly infectious disease is just bad public health policy,” said Carl Schmid, deputy executive director of The AIDS Institute, a nonprofit advocacy group, in a statement.
Meanwhile, CMS also wants information from four drug makers about their pricing arrangements with payers, which could affect what state Medicaid programs pay for the drugs. Under federal law, Medicaid is entitled to receive rebates of at least 23 percent of the so-called best price – or lowest price – for which a drug maker sells its products.
The letters were sent to Gilead Sciences, AbbVie, Merck, and Johnson & Johnson. Spokespeople for AbbVie and J&J wrote us that the companies intend to respond to the agency. We asked the other drug makers for a response as well and will update you accordingly. [UPDATE: A Merck spokeswoman wrote us that the drug maker is talking to CMS about its forthcoming hepatitis C drug, while a Gilead spokeswoman declined to comment.]
“That fact that CMS sent letters to each of the companies that make hep C drugs to remind them of their ethical responsibility to patients is a big deal,” said Jeff Myers, chief executive officer and president of Medicaid Health Plans of America, a trade group that represents Medicaid-managed care plans. “It highlights the unsustainability of their current pricing model.”Print This Post