- The state of Washington said Friday it has selected AbbVie to provide hepatitis C medication through an unconventional subscription payment program that seeks to expand patient access while containing drug costs.
- The contract is part of the state's plan to eliminate the common viral infection by 2030. "Last year, I committed Washington to a first-in-the-nation approach to eliminate hepatitis C in our state in the next 10 years," Gov. Jay Inslee said. "This is a great step in helping us achieve that goal."
- Washington's selection of AbbVie mimics a move by Louisiana, which last month chose a Gilead subsidiary to provide hepatitis C drugs through a similar program. In both programs, the state effectively pays for an unlimited license to treat residents with these therapies, which has been dubbed a "Netflix model."
Subscription-based contracts for pharmaceuticals is a relatively new concept. But it's one quickly moving into practice, with Louisiana and Washington both expecting to start these programs this summer.
One industry analyst predicts these programs could spread.
"We fully expect other states to step in and take advantage of these contracts," Ronny Gal, an analyst at Bernstein wrote in an email to BioPharma Dive. "The public health value is compelling."
Gal added that these types of deals also make sense for the companies, as long as the final discounts they concede are relatively modest. "The predictability of earnings is worth a lot," he added.
That's particularly the case in the hepatitis C market, where declining patient starts have made revenue growth a more uncertain prospect.
Washington hopes to finalize the contract and begin the program by July 1, Judy Zerzan, chief medical officer for the Washington State Health Care Authority, said in an interview with BioPharma Dive. That will coincide with the state completing the drafting of its broader plan to eliminate hep C in a decade.
Zerzan said there were three bidders on the contract. The state is seeking a five-year deal to start and cannot disclose pricing or discount information until the deal is finalized.
In addition to AbbVie and Gilead, Merck & Co. and Bristol-Myers Squibb also sell hepatitis C medicines.
Roughly 65,000 Washington residents have hepatitis C, and about 30,000 are covered by the state, Zerzan estimated. The majority of that latter group, about 25,000, are covered through Medicaid.
"The thing that sets hep C apart in many ways is that it's a relatively short course that you can get your arms around and define well, which I think is a good place for starting," she said.
Washington's program is not a pure subscription model, Zerzan explained. Paying a flat fee for unlimited drug volume would require a specific waiver from the Centers for Medicare and Medicaid Services, so the state modified their program to not need a waiver.
According to Zerzan, Washington state asked drugmakers to bid on a price, which the state would pay up until a certain level of total spending for treating hepatitis. After that point, the state would receive drugs for an “extremely low” price, akin to “a penny a pill.”
“We would still be paying for medication, but our cost would go dramatically down,” Zerzan said.
Drugs like AbbVie's Mavyret (glecapravir/pibrentasvir) and Gilead's Epclusa (sofosbuvir/valpatasvir) essentially cure most patients with the infectious disease in as little as eight weeks of treatment. Earlier hepatitis C drugs came in at wholesale costs of $84,000 and $94,000 per treatment course, but competition has pressured net prices of newer entrants sharply downwards.
AbbVie introduced Mavyret at a list price of $13,200 per four-week course of treatment. Depending on condition, patients receive the drug for anywhere from eight to 16 weeks.
Washington used the State Plan Amendment Authority for this modified program, which is in the process of being approved by CMS.
For hepatitis C, Zerzan said she has been talking with other states that are interested in launching similar programs.
"I think these other states are also figuring out how they're going to use this new value-based template and think about different ways of paying for drugs," she said.
"That's an exciting area to try to get some innovation and work on the high prices of certain drugs."