Monthly Archives: March 2017

What is WAC and is it Outdated?

HEAL Blog is the recipient of the ADAP Advocacy Association’s 2015-2016 ADAP Social Media Campaign of the Year Award
By: Marcus J. Hopkins, Blogger

Every time we mention Hepatitis C (HCV) drugs, we talk about price; specifically, we speak about “Wholesale Acquisition Costs” (WACs), and how that company-designated measure sets the baseline for pricing throughout the healthcare landscape. But, the reality of pharmaceutical pricing is far messier than just the WAC cost. In response to last week’s HEAL Blog entry regarding HCV drugs and Medicare, one quite savvy worker within the public healthcare arena rightly noted that “nobody really pays that price,” which brings up a couple of equally (if not more important) questions: (1.) If nobody pays that price, why is it even used; and (2.) Why does no one actually pay those prices?

A WAC “…is, with respect to a pharmaceutical or biological, the manufacturer’s list price for the pharmaceutical or biological to wholesalers or direct purchasers in the United States, not including prompt pay or other discounts, rebates or reductions in price, for the most recent month for which the information is available, as reported in wholesale price guides or other publications of pharmaceutical or biological pricing data (PharmaLink, n.d.).” That definition is pretty loaded, because it really spells out the ingredients (and the problems) in the drug pricing sausage that is so frustrating to advocates and patients, alike. What one program, insurer, or individual pays for drugs may or may not be the same price paid by another, and that makes determining the actual cost of drugs problematic.

Flow chart demonstrating the confusing nature of the Wholesale Acquisition Costs

Photo Source: National Academy of Sciences

Pharmaceutical companies like to bandy about the phrase, “What the market will bear,” in relation to how they price their products, which isn’t really a fair statement, because they essentially have a captive market. They know that the products they manufacture are going to be purchased by government healthcare programs like Medicare, Medicaid, Ryan White Part B, and the Veterans Affairs (V.A.), and that those programs are essentially (and sometimes literally) required to provide their products to their clients. Outside of the U.S., in more civilized First World healthcare climes, private insurers are essentially nonexistent, as Universal Healthcare Coverage is the norm, and they can set the price they’re willing to pay, manufacturer be damned. So, “what the market will bear” really ends up meaning, “How much we can get U.S. government programs to pay without kicking up too much of a fuss.”

When the aforementioned reader says that we know it to be the case that “nobody really pays that price,” he’s 100% correct. Medicare programs are Federally-funded, state-administered programs, meaning that all fifty states, the District of Columbia, and the territories all have the ability to individually negotiate directly with manufacturers to get drug rebates and discounted prices, meaning that each individual program may pay entirely different prices, and those prices are not public information, due to existing Trade Secrets laws that prevent that data from being released from official sources. The V.A. automatically gets the “best price,” meaning that they’ll ostensibly pay the lowest price, so they’re not really in the equation. Medicare Part D, however, is a different kettle of fish, because it is essentially a market of private insurers who are reimbursed through the national Medicare program for their expenditures, and price negotiations are, for better or worse, left up to those private insurers’ employees. According to research, while having more insurers on the Part D marketplace lowers costs to consumers, the Medicaid approach of state employees doing the negotiating actually works out to be cheaper than those “Free Market” solutions.

Because the WAC is a baseline measure against which all discounts and rebate agreements are measured, it makes determining the actual end price of drugs very difficult to determine publicly, and frankly, it’s a terrible model for the U.S. to continue participating in if programs are expected to exist in perpetuity. At some point, “what the market will bear” will become “What tuned-in Americans are willing to tolerate.”

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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Hepatitis C and Medicare Part D

HEAL Blog is the recipient of the ADAP Advocacy Association’s 2015-2016 ADAP Social Media Campaign of the Year Award
By: Marcus J. Hopkins, Blogger

HEAL Blog has consistently covered the cost of new Direct Acting Agents (DAA) used to treat Hepatitis C (HCV), as well as the impact those prices have had on state Medicaid and AIDS Drug Assistance Programs (ADAPs). What we haven’t really covered is how those costs have impacted Medicare and the Medicare Part D program.

In addition to writing for HEAL Blog, I also serve as the Project Director for the HIV/HCV Co-Infection Watch. Last year, we looked into expanding our reporting of HCV drug coverage to include Medicare Part D markets, and what we found was that it was simply too much data to fit into an already then-76-page report. In June, I went ahead and looked at coverage for the Part D Standalone drug plans, and wound up scouring 923 different plans across the country and in five territories. What I discovered was that 922 plans covered the two most expensive HCV drugs on the market at that time – Sovaldi and Harvoni (Gilead).

That translates into staggering figures for Medicare Part D expenditures, as outline in reports from the Centers for Medicare and Medicaid Services (CMS). In 2014, spending on the three most-prescribed HCV drugs – Sovaldi, Harvoni, and Olysio (Janssen) – totaled $4.665 billion (CMS, 2016). Preliminary data obtained by the Associated Press (AP) from CMS estimate that the cost of HCV drugs to Medicare in 2015 nearly doubled, coming in at roughly $9.2 billion (Alonso-Zaldivar, 2015). This figure comes despite the introduction in 2015 of HCV therapies with lower Wholesale Acquisition Costs (WACs) than the $87,000 Sovaldi or $94,500 Harvoni.

Since the introduction of Sovaldi and Olysio in 2013, HCV drugs have consistently ranked in the top ten drug expenditures for Medicare Part D, as they have for Medicaid and the Veterans Administration (VA). The primary difference is that both Medicaid and the VA pay lower prices for the drugs as a result of state Medicaid negotiating power and the VA’s “Best-Price” rule that requires pharmaceutical companies to provide drugs at the lowest possible price. Medicare, however, is prohibited from negotiating drug prices as a result of the Medicaid Modernization Act (2003) that established Medicare Part D. One of the main provisions of the Act states that, “…in order to promote competition,” the Health and Human Services (HHS) Secretary “…may not interfere with the negotiations between drug manufacturers and pharmacies and prescription drug plans.”

President Donald J. Trump

Photo Source: UPI

Democrats have long attempted to pass legislation that would amend this provision, and may have found a new, not-so-secret weapon – President Donald Trump (Tribble, 2017). He has repeatedly stated that he believes Medicare should have this power, much to the consternation of Tom Price, Trump’s own Secretary of Health and Human Services, and Republicans, who have long held that Medicare negotiating drug prices amounts to Federal tyranny, Big Government, and anti-“Free Market” practices. But, even those Republicans are balking at the high cost of HCV drugs.

HEAL Blog will continue to watch in the coming months how this situation plays out, but we can be certain that, like every Trump initiative, the path will be fraught with confusion, disarray, and uncertainty.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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Data Analyses Indicate HCV Treatment for All Saves Money; Part 2

HEAL Blog is the recipient of the ADAP Advocacy Association’s 2015-2016 ADAP Social Media Campaign of the Year Award
By: Marcus J. Hopkins, Blogger

Last week, HEAL Blog discussed some of the thinking behind a “Treatment for All” paradigm for dealing with America’s burgeoning Hepatitis C (HCV) problem. The argument put forth in the study released in the American Journal of Managed Care (AJMC; Younossi et al, 2017) suggests that adopting a policy of treating every HCV-infected client on government-funded healthcare rosters will ultimately lead to long-term cost savings by reducing the incidence of multiple co-morbidities, such as cirrhosis, hepatocellular carcinoma, and the number of liver transplants. This is a position that advocates (including HEAL Blog) have been arguing for years – since the release of Sovaldi (Gilead) and Olysio (Janssen) in 2013. The pharmaceutical companies who manufacture Direct Acting Agents (DAAs) to treat HCV have been arguing this position, as well.

Read Part 1, “Data Analyses Indicate HCV Treatment for All Saves Money

All of these parties are coming up against the stark reality of the budgetary process. Rather than being calculated based on long-term expenditures, they are calculated using estimated yearly expenditures using the amount of money given to them by the Federal and state governments – resources that are limited, and unlikely to increase without significant increases in tax revenues generated by tax hikes (business, corporate, and personal) or some unexpected increase in profits that comes out of nowhere. Medicaid directors and drug purchasing officials have repeatedly made the claim that treating everyone on their rosters infected with HCV will outstrip their pharmacy budgets several times over. Tom Burns, head of drug purchase for the Oregon Health Authority in 2014, said in an interview that “…Oregon can afford to wait” to see how other HCV drugs develop, and that “…the vast majority [of the 5,600 clients infected with HCV] could wait while we figure out a policy that doesn’t bankrupt this state” (Millman, 2014).

Image of a stethoscope wrapped around a $20 bill , laying next to an open medication bottle

Affordable Healthcare

This line of thinking has been echoed by virtually every state’s Medicaid program. The Centers for Medicare and Medicaid Services (CMS), however, didn’t buy that line, and in 2015 issued an official guidance that reminded Medicaid programs that they are required by law to cover these drugs under section 1927(b) of the Social Security Act (CMS, 2015). Furthermore, states facing litigation related to treating HCV patients have found little sympathy from the Judicial Branch. In May 2016, Federal U.S. District Court Judge John C. Coughenour ordered Washington state’s Medicaid provider to cover HCV drugs for all patients by granting a preliminary injunction that forced the state Health Care Authority (HCA) to halt a 2015 policy that restricted access to the drugs based on a fibrosis score (Aleccia, 2016). This injunction was in response to a class action lawsuit against Apple Health, Washington’s Medicaid program, on behalf of two clients and 28,000 other enrollees. Another Federal U.S. District Judge, Robert Mariani, ordered the Pennsylvania Department of Corrections (DOC) to provide HCV treatment to well-known inmate, Mumia Abu-Jamal (Moran, 2017). While his ruling applied only to Abu-Jamal, the judge went on record, stating that the DOC’s interim protocol for treating HCV “…presents deliberate indifference to the known risks which follow from untreated chronic Hepatitis C.”

The report in the AJCM found that if Medicaid in the U.S. continues its use of restrictions to treatment, the estimated total cost of treating the HCV cohort will come to $9.7 billion, with the majority of costs (50.4%) attributable to downstream costs of care (i.e. – hospitalization costs, outpatient costs, and non-Harvoni pharmacy costs). Conversely, treating all Medicaid patients with Chronic HCV using Harvoni led to a 39.4% savings – $3.8 billion – over the model time horizon and decreased the relative proportion of total costs attributable to downstream costs of care to 18.3% (Younossi).

While most of the cost savings were related to downstream medical cost offsets, even the pharmacy costs attributed to Harvoni treatment over non-Harvoni treatment decreased 2%, from $4.84 billion to $4.75 billion. This is due in part to the 9,618 patients in the cohort potentially eligible for an 8-week regimen of Harvoni to achieve a Sustained Virologic Response (SVR), rather than the traditional 12-week regimen. Treating all Medicaid patients with Harvoni led to a 19.8% savings per SVR, given that earlier treatment of HCV resulted in better health and cost outcomes (Younossi).

Though this analysis is a fantastic tool, another harsh reality is the [potential] repeal and replacement of the Affordable Care Act (ACA). It was announced, last week, that the Fiscal Year 2018 budget resolution has been put on hold, pending the repeal of the ACA (Shutt, 2017). This means that any type of Federal budgeting process for Medicaid (as well as the Centers for Disease Control, and other domestic spending programs) has stalled for the foreseeable future, leaving virtually everyone involved in those organizations in the lurch, waiting for their fates to be handed down to them. Most HIV and HCV advocates, however, are heartened by Tom Cole (R-OK) saying, “We thought it was wrong when Democrats said for every increased dollar on defense, you had to increase domestic. It’s just as wrong to say for every increase on defense you have to cut domestic.” He finished that statement, however, by saying that he believes those increases should be offset on “…the entitlement side of the ledger.” That statement is considerably LESS heartening.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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Data Analyses Indicate HCV Treatment for All Saves Money; Part 1

HEAL Blog is the recipient of the ADAP Advocacy Association’s 2015-2016 ADAP Social Media Campaign of the Year Award
By: Marcus J. Hopkins, Blogger

Since the introduction of Sovaldi (Gilead) and Olysio (Janssen) in 2013, Hepatitis C (HCV) advocates have argued several points: (1.) that the price for these drugs was/is too high; (2.) that Medicaid is required to pay for these treatments by law; (3.) that ensuring that HCV-infected patients achieve a Sustained Virologic Response (SVR – “cure”) will reduce the cost of care over time. This last point was the subject of a recent report published in the American Journal of Managed Care (AJMC).

The argument goes like this: HCV is a deadly virus that results in liver cirrhosis, eventual liver failure, and ultimately death; it is also can result in a number of co-morbidities that are costly to treat, including cancer, liver disease, connective tissue disease, abdominal pain, and upper and lower respiratory infections. That said, state Medicaid programs consistently place incredibly stringent Prior Authorization (PA) prerequisites on patients in order for their treatment to be covered, that can include mandatory enrollment in a drug or alcohol recovery program or treatment facility, a mandatory period of abstinence from all drugs or alcohol, failure of other, less easily tolerated treatment regimens, and meeting a certain stage of liver fibrosis (F-Score). These prerequisites are put in place in order to defray the high cost of treatment, ultimately resulting fewer patients being approved and less money being spent.

Advocates and economists, alike, have been arguing for years that the long-term costs associated with leaving HCV patients either untreated, or treated with older Pegylated Interferon-based regimens rather than with newer Direct Acting Agents (DAA) that are more easily tolerated and have a higher SVR rate will ultimately cost Medicaid and other government agencies (as well as private payers) more over time. Medicaid officials from several states have argued that treating every patient on their rosters would not just outstrip their existing pharmacy budgets, but do so four-times over, thus bankrupting the program. Drug manufacturers – Gilead Sciences, in particular – have argued that the cost of one-time treatment for a cure is less expensive than the cost of treating other serious conditions, whose cure rate is far lower, and takes far longer, ranging a period of years, to end in a positive result. The reality is that none of these parties are wrong.

The report in the AJMC, “Treating Medicaid Patients With Hepatitis C: Clinical and Economic Impact,” does an excellent job of outlining all the various consequence related to allowing HCV to go untreated until liver decomposition reaches a certain stage and concludes that adopting a “treat all” strategy will ultimately result in a 39.4% ($3.8 billion) savings and decrease the proportion of total costs attributable to downstream costs of care to 18.3% (Younossi, 2017). It also looks at how Medicaid programs arrived at the current “wait for treatment” model that prevents many patients from being approved for newer DAA regimens.

In next week’s post, HEAL Blog will get into the details of their analysis, their methodology, and their recommendation, as well as look into the feasibility of their proposal – that all state Medicaid programs adopt a “treat all” approach to approving HCV regimens.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

 

 

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