Balancing Drug Breakthroughs with Rising Drug Costs

Hepatitis C and the price of Sovaldi were, understandably, the main focus of the conversation on rising prescription drug prices at the America’s Health Insurance Plans’ National Conferences on Medicare and Medicaid, and Dual Eligibles Summit in Washington, DC.

To kick the panel off, Mark McClellan, MD, PhD, senior fellow and director of the Initiative on Value and Innovation in Health Care at The Brookings Institution, outlined the increase in specialty drugs, and predicted that the number available will only increase due to recent policy steps.

While overall drug spending trends have been modest as a result of a reduction in broadly targeted drugs, Sovaldi and hepatitis C treatments have been “blowing up drug spending,” he said. Medicaid will need to shift the way it pays for care.

“How do you implement policy reform that could help in cases like hepatitis C treatment to get higher value care in practice,” he wondered.

Matt Salo, executive director of the National Association of State Medicaid Directors, explained the concerns from the perspectives of the state programs, which are constantly confronted with the truth that there will always be more need than there are resources.

“So this is the challenge we face: how do we grapple with, how do we confront, the tsunami of exciting innovation with an acknowledgment that we just don’t have the tools to be able to deal with that from a financing perspective?” Mr Salo asked.

Typically, how Medicaid deals with this conundrum is by either bringing down the cost or by prioritizing those most in need and ensuring they get the treatment first. But those are the only tools available to the state programs.

“I don’t know that the toolkits we have available to us are going to be sufficient,” he admitted.

Mr Salo added that the greatest fear of Medicaid directors is that the way they prioritize treatments will be challenged in the courts by the CDC, the FDA, etc, with the thought that there should not be any limits placed on getting treatment to those in need and that all current protocols will be tossed out.

“Then we’ll be left with no real control on price, no real control on utilization, and this is the area that’s going to put states in a very, very difficult position,” he said.

Sharon Levine, MD, the director and senior advisor of public policy, pharmacy, and professional development at The Permanente Medical Group, Inc, spoke her concerns about the assumptions that the prices are a given and it is Medicaid’s job to either provide long-term finance or triage the sickest patients.

“How do you, as a clinician, sit and tell a patient ‘you’re not sick enough, yet’?” she asked.

Dr Levine admitted that this situation is possibly different from the past, but she added that it’s not the only one the industry is going to face. She used Alzheimer’s disease as an example of a similar situation that may occur in the future if a cure is found.

She addressed Dr McClellan’s earlier comment when he mentioned that if the Medicaid budget has to grow, it may be taking away funding from other important state priorities like childhood education.

“We know that education is the single most likely predictor of someone’s health later in life,” Dr Levine said. “Can we really afford to bankrupt our education systems and our states’ infrastructures in order to treat hepatitis C, because the manufacturer tell us this is the price they have to charge?”

Michael Weinstein, president of the AIDS Healthcare Foundation, also challenged the current costs of specialty drugs and called for addressing the situation and drawing a line now, not later.

“If we accept the idea of a $1000 pill, what’s the next stop?” he asked. “Is it a $10,000 pill? Is it a $100,000 pill? What is the breaking point?”

Mr Weinstein added that while Gilead is justifying the cost of treatment because it is less expensive than a liver transplant, he finds it to be immoral and had strong words for the company.

“It’s like saying, ‘your money or your liver,’” he said. “Gilead is the worst example of corporate welfare.”