Editor's note: This feature is the fourth in BioPharma Dive's new series, Unblinded, profiling individuals who play central roles in the stories that matter to biotech and pharma. See the rest here.
It took three years, but Rebekah Gee found a way for one of the poorest and least healthy states in the nation to get the attention of the pharmaceutical industry — and now the rest of the country is listening, too.
Earlier this summer, a new drug payment model went live in Louisiana. Effectively, Gilead granted Louisiana a five-year license for an unlimited supply of its hepatitis C drug Harvoni for use in treating the state's Medicaid and prison populations. In return, the state will pay roughly $60 million each year, which is approximately what Louisiana spent last year on hepatitis C treatments.
Gee, the state's health secretary, championed the approach over the past three years. In an interview with BioPharma Dive, Gee said she found public and political pressure a useful tactic in drawing the industry to the negotiation table.
"This was a David and Goliath situation," Gee said. "We are a small state, we're a poor state and our leverage is extremely minimal."
Gilead, meanwhile, is one of the largest U.S. drugmakers and the dominant player in hepatitis C therapeutics.
Gee built a wide-ranging body of support that included national figures such as billionaire philanthropist John Arnold, drug pricing expert Peter Bach and Louisiana Republican Sen. Bill Cassidy. By the time the hepatitis C plan materialized, even the drug industry voiced support.
Some policy experts see what Louisiana has done as a prelude to more states using it across more diseases. Others have applauded Gee's effort, but cautioned of the amount of work required to overcome the bureaucratic and political challenges.
"It's one state, it's one drug company, and it took a lot of time of very talented people to get where they are at," said Wendell Primus, the leading healthcare aide to House Speaker Nancy Pelosi, at a recent Brookings Institution event about the Louisiana model. Primus added that national solutions would more effectively bring sweeping change.
As much as anything, the deal illustrates the challenges of bringing a new payment system to an entrenched, highly regulated system.
While the plan has become known as the "Netflix model," Gee rejects that nickname, describing it instead as "modified subscription model." The contract isn't directly with Gilead nor is it for Harvoni, but rather with a new Gilead subsidiary called Asegua Therapeutics that sells an authorized generic version of the drug. And the deal uses a supplemental rebate agreement to avoid triggering Medicaid best price regulations, another pharma deal-breaker.
If Louisiana — as one of the nation's poorer states — could make it work, Gee said other states certainly can too. Washington state, for example, recently agreed to a similar deal for AbbVie's hepatitis C drug Mavyret.
Joshua Sharfstein, an associate dean at Johns Hopkins' public health school, worked closely with Gee over the past few years, and said her choice to surround herself with experts and push them for creative solutions was critical.
"A lot of times, people go too quickly to what is conventionally possible," Sharfstein, a former FDA deputy commissioner, said in an interview. "Rebekah kept thinking big."
A long road.
When Gee took over as Louisiana's health secretary in 2016 after John Bel Edwards won the governorship, two of the first letters she received had the same message — the Centers for Medicare and Medicaid Services and patient advocates both pressed Gee to provide more access to hepatitis C treatments.
At the time, the state was struggling to afford Harvoni for its poorest populations. Gilead introduced the drug in 2014 with a $94,500 list price. Like many other states feeling the pressure for balanced budgets, Louisiana restricted its use to the most serious and advanced cases through prior authorization requirements.
Gee decided to prioritize acting on hepatitis C a few months after Louisiana became one of the only southern states to start expanding Medicaid under its new Democratic governor.
While Gee built her coalition, the National Academy of Sciences was concurrently working on a national solution to eliminate hepatitis B and C. That expert group recommended a subscription model solution in early 2017.
Around the same time, Gee encouraged Sharfstein to assemble a panel of experts to assess Louisiana's situation. They concluded a subscription model would be preferable, but also said if drugmakers wouldn't voluntarily go along, the federal government could look to strip patents using a century-old law.
That alternative drew national media coverage in May 2017, leading to a cold call from Arnold, a co-founder of Houston-based philanthropy Arnold Ventures who had a particular interest in drug pricing. Arnold wanted to support her hepatitis C efforts, Gee said.
By 2017, the market had shifted under Gilead's feet. Sales of its hepatitis C drugs peaked at near $20 billion in 2015, but began sharply declining in subsequent years as patient starts on treatment slowed and new competition arose.
Even with the company's position weakened, negotiating with Gilead was a "delicate dance," to get a deal the state could financially afford, while avoiding villainizing a drugmaker that had been a symbol of drug pricing excesses.
One state and one drug, or a new strategy?
Despite adoption in Louisiana and Washington state, broader uptake of the payment plan is far from guaranteed.
Neeraj Sood, a health economics professor at the University of Southern California, singled out lengthy implementation timelines as one hurdle.
"When I talk to states, a lot don't want to do anything because they are just daunted by the timeline," Sood, who served on the National Academy of Sciences panel that devised a national subscription model in 2017, said at the July Brookings event.
Additionally, Gilead's executive director of public policy voiced skepticism over the Louisiana's model scalability to other states.
"I don't necessarily think there's a one-size-fits-all solution on the stateside," Gilead's Rekha Ramesh said. "What works for Louisiana may not work for another state."
Even with those challenges, the idea has shown legs. Beyond Washington state, 10 other states have demonstrated interest through the National Governors Association. Gee said she's received calls from about a dozen states since the model went live, and the U.K. is testing a subscription model to incentivize antibiotic development.
Ronny Gal, an analyst at the investment research firm Bernstein, told BioPharma Dive earlier this year he expects other states to adopt the subscription model, given its public health value. For drugmakers, a reliable revenue stream from the deals is also attractive, Gal added.
'We cannot say no.'
While experts mull the idea's potential, Gee's challenge is getting Louisiana's money's worth by rapidly expanding treatment with a blitz of public education and testing.
The deal also doesn't change the structural problems Medicaid state programs face. One of those biggest is the lack of negotiating authority beyond PBMs and managed care plans.
"Whatever their list price is, we have to pay it and we cannot say no," Gee said of pharma companies' products.
For hepatitis C, Gee found a new way to negotiate, if not say no. But overall, the system makes tamping down rising drug prices difficult.
"Predominantly, they're high because policymakers created this system that allows them to be high," she said. "I think just blaming for-profit pharma is a mistake."