Fearful that a new administration will torpedo their plans, they are working hard to win legislative support in California and clear other hurdles at the state and federal level.

California state Sen. Ricardo Lara is carrying a bill to allow people living in the country illegally to purchase health insurance —Ìýon their own dime —Ìýthrough the state exchange.

The proposal needs federal approval to modify the marketplace set up under the Affordable Care Act, which specifically prohibits such immigrants from joining the exchanges. Lara’s bill would compel California to seek that approval.

The measure “is consistent with [President Obama’s] values of immigrant integration,” said Lara. “We’re very confident we’re going to be able to get this done.”

Lara put an urgency clause on the legislation to increase the chances the request will reach Washington, D.C. before Obama leaves office in January. Bills with urgency clauses require a two-thirds majority to pass California’s Legislature, and with the current make-up of the State House, Lara’s measure would need at least a few Republican votes. Its next test is in the Assembly appropriations committee on Wednesday.

Leaders of the California Republican caucus in both legislative chambers declined to comment on whether the bill has enough support to pass. But a Republican strategist said the California GOP might be more likely to support the measure than its national counterpart, to avoid ceding the state’s Latino vote to the Democrats.

“Elected Republicans in California know the party has no future in speaking out [against} those issues,” said Rob Stutzman of Stutzman Public Affairs in Sacramento. “They need to be able to add immigrant voters down the road.”

Proponents say they believe they’ll also get Gov. Jerry Brown’s signature. He’s signed off on other benefits for undocumented immigrants, including and student financial aid.

Even if the proposal is approved by California lawmakers, however, it faces significant obstacles after that —Ìýeven under the Obama administration.

“It would be … a struggle to get a proposal in a form that it could be approved by this administration,” said Michael Kolber, who, as a healthcare associate with the New York law firmadvises the private and public sector on the Affordable Care Act.

For one thing, public comment and federal review requirements could cause delays, Kolber said.

And even if the proposal works its way through that maze and is reviewed by the Obama administration, he said, it may not be approved because of current federal guidelines.

The U.S. Department of Health and Human Services has strict rules for modifying the Affordable Care Act marketplaces. They might have been put in place to avoid creating a precedent that opens the door to future changes the current administration would deem “less palatable,” Kolber said.

Still, advocates would rather bet on this administration than risk dealing with a new one —Ìýparticularly a Trump administration.

The fate of the proposal “does depend on which president is in the White House, and we’re talking about who’s in the White House in 2017,” Kolber said.

Presumptive Republican nominee Donald Trump says he wants to and has vowed to deport undocumented immigrants from the United States.

Both Democratic presidential candidates, former Secretary of State Hillary Clinton and Sen. Bernie Sanders of Vermont, support the idea of unauthorized immigrants buying unsubsidized health coverage. But whether their administrations would be able to follow through is uncertain.Ìý

Administrative hurdles aside, the proposed change in California would have to withstand the storm of the nation’s immigration debate.

Those who seek stronger immigration controls don’t look kindly on extending benefits to people in the country illegally —Ìýa tack California has repeatedly taken, most recently in the realm of health care: This month, undocumented children and dozens of Northern California counties will start covering primary care and prescription drugs for the undocumented.

Allowing adults on the insurance exchange “is another step in California’s relentless effort to … eliminate any kind of distinction between people who are in the country illegally and people who are here legally,” said Ira Mehlman, media director for the Washington D.C.-based Federation for American Immigration Reform.

Mehlman said the Covered California proposal could lead to taxpayer-funded health care for people who have violated the law.

“First you say they should be eligible, then you come back and say no one can afford it, so now we have to start subsidizing it,” he said.

Advocates of the change see it entirely differently. California would be opening up a marketplace to potential buyers, not giving a “handout,” said Sonya Schwartz, a research fellow at Georgetown University’s Center for Children and Families.

“These immigrants “should be able to have a basic quality of life,” Schwartz said, adding that their good health is important to everyone.

“These are families who are in our same supermarket —Ìýwe want to make sure they’re getting inoculations,” she said.

As many as 320,000 immigrants now excluded from coverage on the exchange in California could be in the market to buy plans through Covered California, according to the

Though these immigrants may already purchase health plans on the private individual market, proponents of the change say allowing them to enroll through Covered California would make it easier for families with mixed immigration status. Family members could enroll all at once through the state exchange system —Ìýthough Covered California insurance would not necessarily be less expensive than the private market for the ones who are in the country illegally.

The potential new market for health plans sold on the exchange would include the landscapers, restaurant owners and bakery workers whom Covered California enrollment assistant Adriana Jimenez meets every year in Anaheim.

Many times the parents are here illegally and are ineligible for Covered California or Medi-Cal —Ìýbut their kids qualify for coverage, said Jimenez, program director at , a nonprofit that helps low-income families navigate the healthcare system.

Jimenez acknowledged that even if the families were allowed to buy insurance through Covered California, they could be priced out of the market without government subsidies.

“But at least they [would] have the option to buy something” to cover everyone, she said.

This <a target="_blank" href="/insurance/rushing-to-move-excluded-immigrants-into-obamacare-before-obama-exits/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

The low-income patients hope to be prescribed new breakthrough drugs, such as Sovaldi or Harvoni, which offer cures with almost no side effects. But treating the virus comes with a high price tag: at least $84,000 for a course of treatment. Getting Medi-Cal to pay for such drugs can involve a long, arduous process of tests and paperwork to prove infection has progressed to liver damage.

“If you’re practically dead … they’ll approve you,” said Laura Castillo, 54, who has been navigating the Medi-Cal system for four months to get Sovaldi. The former legal clerk said she contracted the virus from a blood transfusion in the early 1980s. Patients can live for years symptom free with hepatitis C, but left untreated, it can eventually lead to liver disease and death. Castillo has waited for treatment with substantial liver damage, which burdens her with overwhelming fatigue, depression and what she describes as a “brain fog.”

“It’s very, very frustrating, knowing that you have an illness and there is a cure, and you can’t do anything about it,” Castillo said.

Castillo’s physician, Dr. Catherine Moizeau, says she treats hundreds of Medi-Cal patients who wait months to get approval for the hepatitis C drugs. Moizeau says health plans, under state guidelines, are rationing the drugs because of the high cost. But Medi-Cal officials say patients receive the treatments based on medical necessity, not on cost.

Hepatitis C drugs are not the only part of California’s troubling drug spending picture. Despite recent cost-cutting measures, such as putting tighter controls on which patients get coverage for which drugs and when, California’s spending on pharmaceuticals has gone up, and so has the number of pricey drugs it is covering. It’s not clear state agencies have the means to balance drug cost pressures in a way that serves the best interests of patients, taxpayers and public health.

“There are very few tools in our toolbox” to control pharmaceutical spending, said Diana Dooley, secretary of California’s Health and Human Services. She says high prescription drug costs are a problem across California’s public and private health insurance, and should be addressed on a national level.

Dooley’s agency convened a working group, called for in Gov. Jerry Brown’s January 2015 budget proposal, “to address the state’s approach regarding high‑cost drug utilization policies and payment structures.” High-level discussions continue behind closed doors.

Drug price concerns will also be a matter of public policy debate this year. California voters are expected to decide in November on a measure to put a ceiling on what the state pays for drugs, and lawmakers have proposed drug price transparency requirements on pharmaceutical manufacturers and health insurers.

“We all have to do everything we can to try to control these drug costs,” Dooley said.

A CALmatters analysis found that state prisons, a California public pension system, and a subset of the Medi-Cal program spent $600 million more on pharmaceuticals in 2014 than in 2012. That does not include the Medi-Cal population in a health plan, nor does it account for discounts the state may have received from drugmakers.

Over the past decade, Medi-Cal has seen a 57 percent increase in the drugs it covers that cost $600 or more per prescription. And when it comes to hepatitis C drugs alone, Medi-Cal estimates it will spend almost $482 million over this fiscal year and last. As of September 2015, only 4,200 Medi-Cal patients had received the drugs in that time period, out of 237,000 who are estimated to have the disease.

These cost trends exist despite new protocols various state agencies have introduced to tamp down on pharmaceutical spending.

In 2012, the California Public Employees’ Retirement System started requiring members to pay the difference for brand name drugs when a generic is available. Members now also experience more “step therapy,” where they must try cheaper drugs first before getting covered for more expensive drugs.

More drugs — about a 38 percent increase between 2012 and 2015 in one portion of the program — were placed on a list of drugs where a doctor had to get approval from a pharmacy benefits manager before a prescription is covered. Tens of thousands more people in CalPERS faced more controls on prescribed treatments because of the new policies.

“No one has (an) unlimited budget … not even in America,” says Melissa Mantong, a pharmaceutical consultant who makes recommendations to CalPERS management. “At some point, the resources we have, it’s not going to be able to take care of all the people that we need to take care of if we don’t use our resources wisely.”

Other California health programs are also cutting costs by getting stricter about which patients get which prescription drugs and how. In 2010, the California Department of Corrections and Rehabilitation introduced a computer system to steer providers to pre-authorized health care decisions, with anything outside of the standards needing approval. The prison system introduced tighter management of painkiller use, and patients taking 10 or more drugs. While the Department of Corrections says it has saved tens of million of dollars this way, drug prices are driving spending back up.

Medi-Cal says pharmaceutical costs are kept under control by a strong push toward generic drug use for the 10 million enrollees who get health services through health plans. Up to 95 percent of the prescriptions dispensed by these plans are lower-cost generics.

The Department of Health Care Services, which manages Medi-Cal, says it has a 20-year practice of controlling drug costs by negotiating deep discounts with drugmakers.

“We are negotiating as hard as we ever have been,” said Jennifer Kent, director of the Department of Health Care Services.

When Medi-Cal does not get a state-negotiated discount on a particular drug, medical providers have to request approval for coverage for the treatment.

“The people that pay for healthcare, be it the government or employers, are asking for more prior authorization because we’re having to scrutinize every penny we spend now,” said Steve Miller, senior vice president and chief medical officer at Express Scripts, which manages pharmacy benefits for health plans nationally, including 7.5 million Californians.

Miller said involvement from the payer is meant to get “the right patient, the right drug, at the right dose.” But the process, can be “clunky” and cause delays and frustrations for patients like Laura Castillo.

“Some of that steering … is appropriate,” Anthony Wright, executive director of Health Access, a nonprofit consumer advocacy coalition, said about when health insurers and other payers get involved with patient-doctor decisions to cut costs. Using generics can be just as effective and save money for taxpayers, he said. But waiting for approvals can put a barrier between patients and the care they need.

“It may be additional time, additional pain, additional health problems before you get to take the drug,” Wright said.

Drugmakers say the value of the new hepatitis C drugs, the first of which hit the market at the end of 2013, is worth the cost, and in the long term, may eventually even bring cost savings to the overall health system.

The new hepatitis C drugs involve only a few months of treatment, and produce a cure in about 90 percent of patients. The older generation of treatments are cheaper, but are also about half as effective, and have side-effects that resemble the flu.

“These patients are now healthier. They’re more productive. They’re functioning,” said Priscilla VanderVeer, deputy vice president of communications at the Pharmaceutical Research and Manufacturers of America (PhRMA).

PhRMA-funded research suggests health care services can be avoided because of the hepatitis C cure, and will add up over time. The average annual cost of a Medi-Cal enrollee with hepatitis C is $27,409, and includes almost three times the average days of hospitalization as someone without infection. Treating a patient without the virus costs the California Medicaid program an average of $15,018 a year.

“You’re going to have less people who need long-term medication therapy for their hep C, they’re not going to need liver transplants, they’re not going to need significant hospitalizations,” VanderVeer said.

Without these cures, VanderVeer argued, hundreds of thousands more hepatitis C patients would have advanced liver disease in a decade, which would incur billions of dollars nationally in Medicaid programs.

Health consumer advocates and economists argue that paying a lot for some drugs that only treat a limited population may not serve larger public health interests, or be the best use of taxpayer dollars.

For example, Wright says, if the cost of the new hepatitis C drugs were cheaper, the hundreds of millions of dollars spent on treating just a few thousand patients could have been spent to help eradicate the disease.

“You could imagine a strategy to provide this cure in a much more broad population strategy,” Wright said.

Specialty drugs, which the federal government defines as costing $600 or more a month, are raising concern among health insurers and state agencies. In CalPERS, for instance, specialty drugs are taking up a larger share of total drug expenditures, despite the fact that they account for a small percentage of prescriptions.

Drugmakers are investing more into these types of drugs, said pharmaceutical economist Joel Hay of the University of Southern California, because “the profits are very high.”

But paying a high price for drugs that treat a small number of patients raises an equity question, Hay said. It may not be fair to the larger patient population for a health system to pay a high price for cancer drugs that extend a patient’s life by three weeks.

“You can get a lot more lives saved if you take that budget and put it into colon cancer screening or any number of other more efficient, more effective interventions,” Hay said.

The cost pressure from specialty drugs may not go away soon. Pharmaceutical benefits manager Express Scripts estimates that this class of drugs will continue to grow in Medicaid programs by 13.6 percent over the next three years.

Other new treatments meant for the larger public could also soon weigh heavily on public health programs, says Miller of Express Scripts. Treatments for Alzheimer’s, liver disease and high-cholesterol are around the corner.

“Are we going to have a sustainable (pharmaceutical) industry where we are making sure the drug companies make enough money where they can bring great new products to the marketplace, yet we control cost well enough that people — all people, even the most vulnerable, have access to the drugs they need?” asked Miller.

State Medi-Cal administrators say it’s too soon to assess the sustainability of current prescription drug spending trends. If more high-cost drugs come on the market and treat small populations, it won’t have a major budget impact, said Kent of California’s Department of Health Care Services.

But if new drugs are similar in scope to the hepatitis C drugs; priced very highly, and with the potential to treat a million people in the state, that would be a different story.

“Is that sustainable? Probably not,” said Kent.

Meantime, access to new hepatitis C drugs is slowly opening up in Medi-Cal. As of July 2015, patients with a less advanced stage of liver disease can get covered for the drugs, as well as IV drug users and women who want to get pregnant.

In the Sacramento clinic waiting room to see Dr. Moizeau one Thursday, a woman clutched her box of Sovaldi, which arrived by FedEx that morning. Another patient was moved to tears, when, after four weeks of being treated with the new generation of hepatitis C drugs, Dr. Moizeau announced to the group that her virus was undetectable.

Laura Castillo just got her medication in March, after an attorney helped her challenge denied coverage for Sovaldi through a health insurance regulator. Castillo says she’s glad she’s in treatment now, but she doesn’t know why her Medi-Cal health plan made it so hard for her to get the medicine.

“They need to get it together,” she said. “It’s our health and our life that they’re messing with.”

CALmatters data reporter Matt Levin contributed to this article. is a nonprofit journalism venture dedicated to explaining state policies and politics. Pauline Bartolone wrote this article while participating in the a program of the at USC’s Annenberg School of Journalism.

This <a target="_blank" href="/news/whats-californias-prescription-for-rising-drug-costs/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

Fearful that a new administration will torpedo their plans, they are working hard to win legislative support in California and clear other hurdles at the state and federal level.

California state Sen. Ricardo Lara is carrying a bill to allow people living in the country illegally to purchase health insurance —Ìýon their own dime —Ìýthrough the state exchange.

The proposal needs federal approval to modify the marketplace set up under the Affordable Care Act, which specifically prohibits such immigrants from joining the exchanges. Lara’s bill would compel California to seek that approval.

The measure “is consistent with [President Obama’s] values of immigrant integration,” said Lara. “We’re very confident we’re going to be able to get this done.”

Lara put an urgency clause on the legislation to increase the chances the request will reach Washington, D.C. before Obama leaves office in January. Bills with urgency clauses require a two-thirds majority to pass California’s Legislature, and with the current make-up of the State House, Lara’s measure would need at least a few Republican votes. Its next test is in the Assembly appropriations committee on Wednesday.

Leaders of the California Republican caucus in both legislative chambers declined to comment on whether the bill has enough support to pass. But a Republican strategist said the California GOP might be more likely to support the measure than its national counterpart, to avoid ceding the state’s Latino vote to the Democrats.

“Elected Republicans in California know the party has no future in speaking out [against} those issues,” said Rob Stutzman of Stutzman Public Affairs in Sacramento. “They need to be able to add immigrant voters down the road.”

Proponents say they believe they’ll also get Gov. Jerry Brown’s signature. He’s signed off on other benefits for undocumented immigrants, including and student financial aid.

Even if the proposal is approved by California lawmakers, however, it faces significant obstacles after that —Ìýeven under the Obama administration.

“It would be … a struggle to get a proposal in a form that it could be approved by this administration,” said Michael Kolber, who, as a healthcare associate with the New York law firmadvises the private and public sector on the Affordable Care Act.

For one thing, public comment and federal review requirements could cause delays, Kolber said.

And even if the proposal works its way through that maze and is reviewed by the Obama administration, he said, it may not be approved because of current federal guidelines.

The U.S. Department of Health and Human Services has strict rules for modifying the Affordable Care Act marketplaces. They might have been put in place to avoid creating a precedent that opens the door to future changes the current administration would deem “less palatable,” Kolber said.

Still, advocates would rather bet on this administration than risk dealing with a new one —Ìýparticularly a Trump administration.

The fate of the proposal “does depend on which president is in the White House, and we’re talking about who’s in the White House in 2017,” Kolber said.

Presumptive Republican nominee Donald Trump says he wants to and has vowed to deport undocumented immigrants from the United States.

Both Democratic presidential candidates, former Secretary of State Hillary Clinton and Sen. Bernie Sanders of Vermont, support the idea of unauthorized immigrants buying unsubsidized health coverage. But whether their administrations would be able to follow through is uncertain.Ìý

Administrative hurdles aside, the proposed change in California would have to withstand the storm of the nation’s immigration debate.

Those who seek stronger immigration controls don’t look kindly on extending benefits to people in the country illegally —Ìýa tack California has repeatedly taken, most recently in the realm of health care: This month, undocumented children and dozens of Northern California counties will start covering primary care and prescription drugs for the undocumented.

Allowing adults on the insurance exchange “is another step in California’s relentless effort to … eliminate any kind of distinction between people who are in the country illegally and people who are here legally,” said Ira Mehlman, media director for the Washington D.C.-based Federation for American Immigration Reform.

Mehlman said the Covered California proposal could lead to taxpayer-funded health care for people who have violated the law.

“First you say they should be eligible, then you come back and say no one can afford it, so now we have to start subsidizing it,” he said.

Advocates of the change see it entirely differently. California would be opening up a marketplace to potential buyers, not giving a “handout,” said Sonya Schwartz, a research fellow at Georgetown University’s Center for Children and Families.

“These immigrants “should be able to have a basic quality of life,” Schwartz said, adding that their good health is important to everyone.

“These are families who are in our same supermarket —Ìýwe want to make sure they’re getting inoculations,” she said.

As many as 320,000 immigrants now excluded from coverage on the exchange in California could be in the market to buy plans through Covered California, according to the

Though these immigrants may already purchase health plans on the private individual market, proponents of the change say allowing them to enroll through Covered California would make it easier for families with mixed immigration status. Family members could enroll all at once through the state exchange system —Ìýthough Covered California insurance would not necessarily be less expensive than the private market for the ones who are in the country illegally.

The potential new market for health plans sold on the exchange would include the landscapers, restaurant owners and bakery workers whom Covered California enrollment assistant Adriana Jimenez meets every year in Anaheim.

Many times the parents are here illegally and are ineligible for Covered California or Medi-Cal —Ìýbut their kids qualify for coverage, said Jimenez, program director at , a nonprofit that helps low-income families navigate the healthcare system.

Jimenez acknowledged that even if the families were allowed to buy insurance through Covered California, they could be priced out of the market without government subsidies.

“But at least they [would] have the option to buy something” to cover everyone, she said.

This <a target="_blank" href="/insurance/rushing-to-move-excluded-immigrants-into-obamacare-before-obama-exits/">article</a&gt; first appeared on <a target="_blank" href="">KFF Health News</a> and is republished here under a <a target="_blank" href=" Commons Attribution-NonCommercial-NoDerivatives 4.0 International License</a>.<img src="/wp-content/uploads/sites/8/2023/04/kffhealthnews-icon.png?w=150&quot; style="width:1em;height:1em;margin-left:10px;">

The low-income patients hope to be prescribed new breakthrough drugs, such as Sovaldi or Harvoni, which offer cures with almost no side effects. But treating the virus comes with a high price tag: at least $84,000 for a course of treatment. Getting Medi-Cal to pay for such drugs can involve a long, arduous process of tests and paperwork to prove infection has progressed to liver damage.

“If you’re practically dead … they’ll approve you,” said Laura Castillo, 54, who has been navigating the Medi-Cal system for four months to get Sovaldi. The former legal clerk said she contracted the virus from a blood transfusion in the early 1980s. Patients can live for years symptom free with hepatitis C, but left untreated, it can eventually lead to liver disease and death. Castillo has waited for treatment with substantial liver damage, which burdens her with overwhelming fatigue, depression and what she describes as a “brain fog.”

“It’s very, very frustrating, knowing that you have an illness and there is a cure, and you can’t do anything about it,” Castillo said.

Castillo’s physician, Dr. Catherine Moizeau, says she treats hundreds of Medi-Cal patients who wait months to get approval for the hepatitis C drugs. Moizeau says health plans, under state guidelines, are rationing the drugs because of the high cost. But Medi-Cal officials say patients receive the treatments based on medical necessity, not on cost.

Hepatitis C drugs are not the only part of California’s troubling drug spending picture. Despite recent cost-cutting measures, such as putting tighter controls on which patients get coverage for which drugs and when, California’s spending on pharmaceuticals has gone up, and so has the number of pricey drugs it is covering. It’s not clear state agencies have the means to balance drug cost pressures in a way that serves the best interests of patients, taxpayers and public health.

“There are very few tools in our toolbox” to control pharmaceutical spending, said Diana Dooley, secretary of California’s Health and Human Services. She says high prescription drug costs are a problem across California’s public and private health insurance, and should be addressed on a national level.

Dooley’s agency convened a working group, called for in Gov. Jerry Brown’s January 2015 budget proposal, “to address the state’s approach regarding high‑cost drug utilization policies and payment structures.” High-level discussions continue behind closed doors.

Drug price concerns will also be a matter of public policy debate this year. California voters are expected to decide in November on a measure to put a ceiling on what the state pays for drugs, and lawmakers have proposed drug price transparency requirements on pharmaceutical manufacturers and health insurers.

“We all have to do everything we can to try to control these drug costs,” Dooley said.

A CALmatters analysis found that state prisons, a California public pension system, and a subset of the Medi-Cal program spent $600 million more on pharmaceuticals in 2014 than in 2012. That does not include the Medi-Cal population in a health plan, nor does it account for discounts the state may have received from drugmakers.

Over the past decade, Medi-Cal has seen a 57 percent increase in the drugs it covers that cost $600 or more per prescription. And when it comes to hepatitis C drugs alone, Medi-Cal estimates it will spend almost $482 million over this fiscal year and last. As of September 2015, only 4,200 Medi-Cal patients had received the drugs in that time period, out of 237,000 who are estimated to have the disease.

These cost trends exist despite new protocols various state agencies have introduced to tamp down on pharmaceutical spending.

In 2012, the California Public Employees’ Retirement System started requiring members to pay the difference for brand name drugs when a generic is available. Members now also experience more “step therapy,” where they must try cheaper drugs first before getting covered for more expensive drugs.

More drugs — about a 38 percent increase between 2012 and 2015 in one portion of the program — were placed on a list of drugs where a doctor had to get approval from a pharmacy benefits manager before a prescription is covered. Tens of thousands more people in CalPERS faced more controls on prescribed treatments because of the new policies.

“No one has (an) unlimited budget … not even in America,” says Melissa Mantong, a pharmaceutical consultant who makes recommendations to CalPERS management. “At some point, the resources we have, it’s not going to be able to take care of all the people that we need to take care of if we don’t use our resources wisely.”

Other California health programs are also cutting costs by getting stricter about which patients get which prescription drugs and how. In 2010, the California Department of Corrections and Rehabilitation introduced a computer system to steer providers to pre-authorized health care decisions, with anything outside of the standards needing approval. The prison system introduced tighter management of painkiller use, and patients taking 10 or more drugs. While the Department of Corrections says it has saved tens of million of dollars this way, drug prices are driving spending back up.

Medi-Cal says pharmaceutical costs are kept under control by a strong push toward generic drug use for the 10 million enrollees who get health services through health plans. Up to 95 percent of the prescriptions dispensed by these plans are lower-cost generics.

The Department of Health Care Services, which manages Medi-Cal, says it has a 20-year practice of controlling drug costs by negotiating deep discounts with drugmakers.

“We are negotiating as hard as we ever have been,” said Jennifer Kent, director of the Department of Health Care Services.

When Medi-Cal does not get a state-negotiated discount on a particular drug, medical providers have to request approval for coverage for the treatment.

“The people that pay for healthcare, be it the government or employers, are asking for more prior authorization because we’re having to scrutinize every penny we spend now,” said Steve Miller, senior vice president and chief medical officer at Express Scripts, which manages pharmacy benefits for health plans nationally, including 7.5 million Californians.

Miller said involvement from the payer is meant to get “the right patient, the right drug, at the right dose.” But the process, can be “clunky” and cause delays and frustrations for patients like Laura Castillo.

“Some of that steering … is appropriate,” Anthony Wright, executive director of Health Access, a nonprofit consumer advocacy coalition, said about when health insurers and other payers get involved with patient-doctor decisions to cut costs. Using generics can be just as effective and save money for taxpayers, he said. But waiting for approvals can put a barrier between patients and the care they need.

“It may be additional time, additional pain, additional health problems before you get to take the drug,” Wright said.

Drugmakers say the value of the new hepatitis C drugs, the first of which hit the market at the end of 2013, is worth the cost, and in the long term, may eventually even bring cost savings to the overall health system.

The new hepatitis C drugs involve only a few months of treatment, and produce a cure in about 90 percent of patients. The older generation of treatments are cheaper, but are also about half as effective, and have side-effects that resemble the flu.

“These patients are now healthier. They’re more productive. They’re functioning,” said Priscilla VanderVeer, deputy vice president of communications at the Pharmaceutical Research and Manufacturers of America (PhRMA).

PhRMA-funded research suggests health care services can be avoided because of the hepatitis C cure, and will add up over time. The average annual cost of a Medi-Cal enrollee with hepatitis C is $27,409, and includes almost three times the average days of hospitalization as someone without infection. Treating a patient without the virus costs the California Medicaid program an average of $15,018 a year.

“You’re going to have less people who need long-term medication therapy for their hep C, they’re not going to need liver transplants, they’re not going to need significant hospitalizations,” VanderVeer said.

Without these cures, VanderVeer argued, hundreds of thousands more hepatitis C patients would have advanced liver disease in a decade, which would incur billions of dollars nationally in Medicaid programs.

Health consumer advocates and economists argue that paying a lot for some drugs that only treat a limited population may not serve larger public health interests, or be the best use of taxpayer dollars.

For example, Wright says, if the cost of the new hepatitis C drugs were cheaper, the hundreds of millions of dollars spent on treating just a few thousand patients could have been spent to help eradicate the disease.

“You could imagine a strategy to provide this cure in a much more broad population strategy,” Wright said.

Specialty drugs, which the federal government defines as costing $600 or more a month, are raising concern among health insurers and state agencies. In CalPERS, for instance, specialty drugs are taking up a larger share of total drug expenditures, despite the fact that they account for a small percentage of prescriptions.

Drugmakers are investing more into these types of drugs, said pharmaceutical economist Joel Hay of the University of Southern California, because “the profits are very high.”

But paying a high price for drugs that treat a small number of patients raises an equity question, Hay said. It may not be fair to the larger patient population for a health system to pay a high price for cancer drugs that extend a patient’s life by three weeks.

“You can get a lot more lives saved if you take that budget and put it into colon cancer screening or any number of other more efficient, more effective interventions,” Hay said.

The cost pressure from specialty drugs may not go away soon. Pharmaceutical benefits manager Express Scripts estimates that this class of drugs will continue to grow in Medicaid programs by 13.6 percent over the next three years.

Other new treatments meant for the larger public could also soon weigh heavily on public health programs, says Miller of Express Scripts. Treatments for Alzheimer’s, liver disease and high-cholesterol are around the corner.

“Are we going to have a sustainable (pharmaceutical) industry where we are making sure the drug companies make enough money where they can bring great new products to the marketplace, yet we control cost well enough that people — all people, even the most vulnerable, have access to the drugs they need?” asked Miller.

State Medi-Cal administrators say it’s too soon to assess the sustainability of current prescription drug spending trends. If more high-cost drugs come on the market and treat small populations, it won’t have a major budget impact, said Kent of California’s Department of Health Care Services.

But if new drugs are similar in scope to the hepatitis C drugs; priced very highly, and with the potential to treat a million people in the state, that would be a different story.

“Is that sustainable? Probably not,” said Kent.

Meantime, access to new hepatitis C drugs is slowly opening up in Medi-Cal. As of July 2015, patients with a less advanced stage of liver disease can get covered for the drugs, as well as IV drug users and women who want to get pregnant.

In the Sacramento clinic waiting room to see Dr. Moizeau one Thursday, a woman clutched her box of Sovaldi, which arrived by FedEx that morning. Another patient was moved to tears, when, after four weeks of being treated with the new generation of hepatitis C drugs, Dr. Moizeau announced to the group that her virus was undetectable.

Laura Castillo just got her medication in March, after an attorney helped her challenge denied coverage for Sovaldi through a health insurance regulator. Castillo says she’s glad she’s in treatment now, but she doesn’t know why her Medi-Cal health plan made it so hard for her to get the medicine.

“They need to get it together,” she said. “It’s our health and our life that they’re messing with.”

CALmatters data reporter Matt Levin contributed to this article. is a nonprofit journalism venture dedicated to explaining state policies and politics. Pauline Bartolone wrote this article while participating in the a program of the at USC’s Annenberg School of Journalism.

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