Battle in Washington State over Hepatitis C Medications Changes Target from Insurers to Medicaid

In early February, the Seattle Times reported on the case of David Morton, the face of a class-action lawsuit against private insurers Group Health and BridgeSpan Insurance.  In the case, Morton and others allege that the Washington state private insurers failed to pay for a new drug called Harvoni.  This drug not only treated Hepatitis C, but has the ability to cure it.  Group Bridgespan has already updated its policy to allow coverage of all Hepatitis C patients, while Group Health has expanded to coverage of those with lower levels of liver damage.

The insurance companies were limiting use of the drug, which costs more than $1,000 per pill or $95,000 for a 12-week course, to only those with a more “severe” infection.  Therefore, the class alleged that the decision by the insurance company was a cost-based one, not one of medical necessity.  This was further evidenced by the fact that other insurers in the state did cover the drug.

It is not only private insurers who are rationing the drug, but the Washington state Medicaid program (among others) which limits the use of the drug to people with the most severe fibrosis, or liver scarring.  This is despite the fact that the American Association for the Study of Liver Diseases (AASLD) espoused the benefits of the drug for all those with Hepatitis C.  This was a reversal of their previous recommendation which prioritized use of the drug with those of “greatest need” based on level of liver disease, due to the cost and availability of the drug.  The new recommendations from the AASLD have even been accepted by the Washington Insurance Commissioner, who is encouraging insurers to follow the guidelines as it considers what the standard of care should be.

However, not everyone is convinced of the drug’s effectiveness.  A report from the Center for Evidence-based Policy released in May 2014 evaluated the effectiveness of sofosbuvir, which is the active component in both Harvoni and another Hepatitis C drug called Sovaldi.  They noted that despite the claims of curing Hepatitis C, relapse is possible in patients who received a full treatment regimen.  Some figures suggest anywhere from a 5 to 28 percent relapse rate.

Two weeks after the case against the private insurance companies was filed, another case was filed, this time against the Health Care Authority (HCA), Washington State’s Medicaid provider.  Just as in the case against the private insurers, this one is alleging that cost – not medical necessity – is the determining factor in hepatitis drug coverage.  The Washington Medicaid Director, in a September letter to the U.S. Senate, estimated that it would cost $242 million just to cover the high risk patients.  If that coverage expanded to all Hepatitis C patients, it would balloon to $3 billion.

This issue has expanded well beyond Washington State.  All states across the country vary in coverage for the drug.  For example, Michigan has just decided to cover the drugs under its Medicaid programs while New York has decided to investigate the practices of its private insurers, and New Mexico begins to contemplate the financial effects of covering the medicine.  Even as far away as India, there are challenges to the patent itself in hopes of opening up more access to the drug.

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