- Louisiana selected Gilead Sciences to be the drug-providing contractor in a first-of-its-kind payment program for hepatitis C medication, state officials said Tuesday.
- The state will now work to negotiate a contract with the biotech's recently launched subsidiary, Asegua Therapeutics, to gain unrestricted access to an authorized generic of the hepatitis C treatment, Epclusa.
- State health officials said they expect to have an agreement in place by June 1, with an official start date of July 1. The deal will give five years of access to Epclusa, with a state goal to treat more than 10,000 Medicaid-enrolled or incarcerated people by the end of 2020.
Dubbed the "Netflix model," Louisiana's initiative flips the script on how states pay for drugs. Instead of paying per prescription, the contract will give Louisiana an unrestricted license of use at a fixed monthly cost.
Gilead beat out AbbVie and Merck & Co. with its pitch. Louisiana has a particularly low treatment rate, with less than 3% of hepatitis C patients on Medicaid receiving treatment last year, according to the state's Department of Health.
In 2014, Gilead's decision to price its antiviral Sovaldi (sofosbuvir) at a cost of roughly $1,000 per pill for the 12-week treatment course spurred national criticism, and is frequently pointed to as a shift in the debate over drug pricing. Yet Sovaldi, and the drugs Gilead subsequently won approval for, are essentially curative.
With new competition, particularly from AbbVie's Mavyret (glecaprevir/pibrentasvir), net prices for hepatitis C medications have come down significantly, although patients can still be exposed to the higher list prices.
"We were extremely pleased that three manufacturers offered proposals, with the plan submitted by Asegua offering us a clear path forward to offer a hepatitis C cure to our most vulnerable patients," Rebekah Gee, the state's health secretary, said in a statement.
Medicaid is among the biggest line items for states, leading them to search for ways to lower costs, such as through managed care. Pharmas and biotechs, meanwhile, have faced intense public and political pressure over drug prices during the Trump administration.
A 2017 report from the National Academies raised the subscription service idea. Released almost exactly two years ago, an expert committee said the U.S. could get rid of hepatitis B and C with better prevention, screening and creative financing of treatments.
The panel concluded there was a need for new financing methods due to no antiviral agent coming off patent before 2029. Experts proposed the government buy a license and use it in market segments with limited access, specifically in Medicaid and prisons.
The idea gained more steam last year, with Louisiana putting out a request for comment last July. The National Governors Association listed subscription models as a viable alternative payment option, particularly for the Medicaid and prison populations.
And last November, Republican Senator Bill Cassidy of Louisiana outlined the merits of the "Netflix model" in a JAMA opinion piece with Peter Bach and Mark Trusheim, two influential health policy thinkers.
The state of Washington is advancing a similar initiative. Health officials requested hepatitis C treatment proposals from manufacturers in January. The proposal submission deadline closed earlier this month, leaving Washington to choose a partner.
Washington Gov. Jay Inslee, also a Democratic presidential candidate, laid out the idea as part of an ambitious directive to eliminate hepatitis C in the state by 2030.
For Gilead, the subscription payment could help offset some of the revenues decline hitting its hepatitis C business. Epclusa sales were down 44% last year after posting $3.51 billion in 2017. Total sales from Gilead's hepatitis C products have gone from making up 50% of the company's total product sales in 2016 to 17% last year.