Treating 10% of California's Hep C Patients Could Cost the State Billions, Estimates CAHP Report

With Daklinza approved for genotype 3 last week, options for treating hepatitis C patients have widened, but a report released by the California Association of Health Plans (CAHP) projects a huge cost expenditure even if a small proportion of patients are treated with these potentially curative medications. The report evaluates the drastic impact of high-priced drugs such as Harvoni (priced at more than $94,000 for 12 weeks) and Sovaldi ($84,000 for 12 weeks) on state budgets over the next 12 months.

The analysis, conducted by The Taylor Feldman Group, considers pricing and treatment rates for state-funded programs including Medi-Cal (which excludes dual eligibles), prisons, state hospitals, CalPERS, and the AIDS Drug Assistance Program (ADAP).

The report estimated that if 10% of California’s hep C population was treated with specialty drugs at the full treatment price, the state’s projected expenditure would touch $4.77 billion in a year, nearly half ($2.05 billion) of which would be for the State-funded population. Accounting for a 30% drug discount reduced the expenditure by over a billion and brought it down to $3.34 billion, of which $1.43 billion was for the State-funded population.

In the absence of an accurate estimate of California’s hep C prevalence rates, the model used information from a Milliman study that included prevalence rates suitable for the population in the current study—1.1% all state, 1.2% Medi-Cal, 0.5% CaiPERS, 30% prisons, 20% state hospitals, and 25% ADAP. While all of the infected population would not be expected to seek treatment in the next year, the report coupled input from health plan pharmacists and volume of specialty drug sales to estimate the baseline treatment rate at 10% for the next year, with the subsequent cumulative treatment rate estimated at 40%.

While California’s governor included $228 million in supplemental funding for hep C treatments across state programs in the 2015-2016 budget, the analysis provided by the Feldman group shows it may fall far short. CAHP says that while these new therapies offer promise, they’d enforce a tremendous strain on state and federal budgets, and it emphasizes the need for transparency on drug pricing as well as strategies to sustain affordability for the country’s health system.