At current prices, the state of Louisiana would have to spend $800 million per year on hepatitis C drugs in order to treat everyone in the public system who has the disease.
That’s five times more than the state’s annual budget for higher education — something one of the nation’s poorest states clearly cannot afford.
Instead, state officials led by Rebekah Gee, secretary of the Louisiana Department of Health, are calling on drug companies to cut a deal that would see the state pay a flat rate for enough medication to treat all 35,000 hepatitis C patients the state is responsible for treating.
That includes Medicaid enrollees, individuals without insurance, and those in prisons.
And if pharmaceutical companies don’t go along, the state would consider invoking a federal law that could compel the manufacture of generic versions of hepatitis C drugs to address a public health crisis.
Effective drug treatment for hepatitis C costs more than $20,000 per person, according to a panel of experts in law, economics, and public-health policy convened by the state of Louisiana.
“The price that drug companies are charging cannot withstand the scrutiny of the public or any kind of moral compass we might have,” Gee told Healthline.
Currently, fewer than 400 hepatitis C patients in Louisiana get the publicly funded drug treatment they need, she noted.
“Hepatitis C is our leading infectious disease killer, but this is a solvable and winnable problem,” said Gee.
Compelling pharmaceutical companies
Under federal law (28 U.S.C. §1498), the U.S. Department of Health and Human Services (HHS) can compel pharmaceutical companies to produce needed quantities of patented medications at low cost to address public health emergencies.
Up until 1910, the U.S. government frequently made patented medications without compensating manufacturers.
A law passed that year required that the government pay for the drugs they made, but it preserved the right to compulsory licensing, according to Louisiana’s expert panel.
“In the late 1950s and 1960s, the federal government routinely used 28 U.S.C. §1498 to obtain medications at reasonable prices,” the report noted. “Over one three-year period in the 1960s, the federal government used 28 U.S.C. §1498 to obtain 50 drugs for a total savings of $21 million.”
In 2002, HHS moved to invoke the law to combat HIV and AIDS. That prompted a voluntary agreement by Bayer, the maker of Cipro (ciprofloxacin), to lower the cost of the drug to under $1 per dose.
States combine forces
The state of Louisiana, allied with a bipartisan group of governors and public health officials in 11 other states, is proposing a subscription model to drug makers.
This would offer to pay pharmaceutical companies exactly what they are currently receiving in public funds in exchange for enough drug supply to treat every hepatitis C patient in each state.
That would include funds currently committed to treating the disease in the Medicaid population, the uninsured, and in corrections.
“They’d get exactly [the money] they got before, and can show that they care about public health,” said Gee, who termed the proposal a “win-win” for states and pharma.
Gee noted that some pharmaceutical companies have a track record of discounting drugs to address public health crises in other countries.
Gilead Sciences, for example, has agreements in place to allow generic versions of its HIV and hepatitis C drugs to be made in Malaysia, Thailand, Ukraine, and Belarus.
“Louisiana needs some of that creative thinking that has been deployed in other parts of the globe,” Gee said. “I do believe the leadership in these companies care about people and want to become part of the solution. There are lots of ways to do this that are market friendly.”
Appealing to drug companies
If not, there’s always the option of seeking the power under federal law to compel pharmaceutical companies to manufacture inexpensive versions of their drugs.
Bill Remak, chairman of the International Association of Hepatitis Task Forces and California Hepatitis C Task Force, expressed skepticism that individual states could adequately prevent the supply of such generics from spilling over state lines and into the nonpublic market.
“The idea is not to disturb the marketplace so that it ends up biting the hand that feeds it,” he told Healthline.
Remak said that California agencies have pooled their purchasing power as leverage to bring drug prices down while still allowing drug companies to make a “substantial” profit.
“I think there are many ways to appeal to manufacturers to be more reasonable in their pricing,” he said.
Remak believes that momentum for lowering hepatitis C drugs will grow as more states include these medications in their Medicaid formularies — the list of drugs that can be paid for and prescribed to patients in the public healthcare program — and start seeing the data showing the long-term savings that can accrue from early treatment of hepatitis C.
“It has happened with cancer drugs and heart medications. We’ve seen this before,” he said.