Dive Brief:

  • CMS has approved a Louisiana plan to pay for hepatitis C therapies in Medicaid through supplemental rebate agreements using a Netflix-style subscription model.
  • The green light Wednesday gives legitimacy to the state’s plan, announced mid-January, to find a drug manufacturing partner for unrestricted access to antiviral agents for hepatitis C treatment for Medicaid and incarcerated patients and pay them a fixed monthly cost rather than on a per-prescription basis.
  • The subscription model will go into effect Monday. Louisiana inked a five-year partnership with Gilead subsidiary Asegua Therapeutics in February to manufacture the treatment.

Dive Insight:

Roughly 40,000 people in Louisiana’s Medicaid program or its prisons have the common viral infection, which the health department says kills more people than all other infectious diseases combined. Fewer than 3% of that population were treated in 2018, a problem state officials blamed on the high cost of drugs.

It’s estimated 3 million people in the U.S. are living with hepatitis C, and many may not know they’re infected. Current drugs available on the market from manufacturing giants like AbbVie and Gilead are essentially a cure for hepatitis C in as little as eight weeks of treatment, but can ring in at tens of thousands of dollars per treatment course.

Subscription-based payment models for drugs is a relatively new concept, though industry analysts predict the programs could spread in the future as payers look for innovative ways to lower costs.

Washington state has a similar agreement under Gov. Jay Inslee’s plan to eliminate hepatitis C by 2030, though it has a five-year unlimited license with AbbVie with an expected start date next week. Unlike a pure subscription model, which would require waiver approval from CMS, Washington had drugmakers bid on a price. The state will pay that up to a specific level of total hepatitis C spend and, after reaching that benchmark, it will only shell out pennies per pill.

Louisiana’s program will run the same way. The state will cap gross expenditures at a fixed amount while retaining unlimited access to the needed antiviral hepatitis C treatment for both Medicaid managed care beneficiaries and those covered under fee-for-service.

Under the Medicaid “best price” rule, manufacturers must offer the lower price of a drug they negotiate with any other buyer to all states in Medicaid. However, supplemental rebates are exempt from this rule. CMS approved Louisiana’s program through a Medicaid State Plan Amendment, authorizing the state to negotiate its own supplemental rebate agreements through the model.

Louisiana plans to treat 31,000 people in the next five years, according to Rebekah Gee, secretary of the Louisiana Department of Health.

But “ultimately, our goal is to eliminate this disease in Louisiana, and we have taken a big step forward in that effort,” Gov. John Bel Edwards said.

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CMS approves Louisiana Medicaid ‘Netflix model’ for hepatitis C drugs – Healthcare Dive