A handful of federal lawsuits against states that have denied highly effective but costly hepatitis C drugs to Medicaid patients and prisoners could cost states hundreds of millions of dollars.
The drugs boast cure rates of 95 percent or better, compared to 40 percent for previous treatments. But they cost between $83,000 and $95,000 for a single course of treatment.
The class actions, all filed in the last eight months in federal courts in Indiana, Massachusetts, Minnesota and Pennsylvania, present a series of extremes: a deadly epidemic, a treatment that can stop the disease in its tracks and an enormous price tag.
At least Americans have hepatitis C, a virus spread through blood-to-blood contact that is usually contracted through the sharing of needles or other equipment to inject drugs. Left untreated, hepatitis C slowly destroys the liver. Medicaid beneficiaries, a low-income population, have a slightly higher rate of hepatitis C infection than the privately insured, and the rate among prisoners is higher than in the general population.
The U.S. Food and Drug Administration approved the first of the new drugs, Sovaldi, in 2013. Since then, the FDA has also approved two other drugs, Viekira聽Pak and Harvoni.
But because the drugs are so expensive, state Medicaid programs and prisons have been restricting them to people in the advanced stages of the disease.
While they are waiting to meet that standard, patients with less advanced hepatitis C may develop cirrhosis, liver cancer or liver failure, which may necessitate a liver transplant. According to the U.S. Centers for Disease Control and Prevention, 60 to 70 percent of those with hepatitis C will develop chronic liver disease; 5 to 20 percent will develop cirrhosis; and 1 to 5 percent will die of liver failure or liver cancer.
The plaintiffs in the lawsuits argue that by denying the drugs to hepatitis C patients, states are violating the law. Under federal law, states can exclude a drug from Medicaid coverage only if its prescribed use 鈥渋s not for a medically accepted indication鈥� as determined by the FDA.
Federal court cases have established a lower standard for prison health care. Prisons must provide health care to inmates, but can deliver it as they see fit, as long as they don鈥檛 demonstrate 鈥渁 deliberate indifference to serious medical need.鈥�
鈥淎 medically necessary treatment is a medically necessary treatment, no matter what the cost,鈥� said Gavin Rose, an attorney for the American Civil Liberties Union, which brought the聽 in Indiana in December on behalf of Medicaid beneficiaries in that state who have hepatitis C.
Some infectious disease doctors and legal analysts agree.
鈥淭he restrictions states are using are not based on medical evidence,鈥� said Lynn Taylor, an infectious disease doctor in Rhode Island who finding that a large majority of state Medicaid agencies are restricting access to the new drugs. 鈥淭hey make these rules up out of thin air, and they are discriminatory.鈥�
But Matt Salo, executive director of the National Association of State Medicaid Directors, said making the drugs available to all those infected with hepatitis C 鈥渨ould blow up state budgets.鈥�
鈥淲e would be spending more on this one drug than all other drugs combined,鈥� Salo said. 鈥淭here isn鈥檛 the capacity to do that.鈥�
鈥淭here would be no care for any other disease, there would be no day-to-day care, there would be no hospital care, there would be no emergency care, there would be no staff,鈥� Shelton said.
A Leading Killer
At a recent meeting on infectious diseases, Scott Holmberg, chief of the Epidemiology and Surveillance Branch at CDC鈥檚 Division of Viral Hepatitis, that in 2013, more Americans died of hepatitis C than from 59 other infectious diseases combined, including HIV and tuberculosis.
But in December, the U.S. Senate Finance Committee, which investigated the impact of the high price of Sovaldi, found that in 2014, only about 2.4 percent of Medicaid beneficiaries with hepatitis C had received the drug.
Vincent Lo Re, an epidemiologist and infectious disease doctor at the University of Pennsylvania, reported in November that in Medicaid agencies in four states 鈥� Delaware, Maryland, New Jersey and Pennsylvania 鈥� nearly half of all claims for the new hepatitis C drugs had been rejected. Lo Re found a 5 percent denial rate for Medicare beneficiaries and 10 percent for policyholders with private insurance in those same states.
Lo Re said he undertook the study because so many of his patients were being turned down for the new drugs despite his insistence that they needed it. Many of those patients, he said, are advancing to more serious stages of liver disease.
Discriminatory Restrictions?
Taylor鈥檚 study, published last summer, examined how state Medicaid agencies decide who will get Sovaldi, which is manufactured by the pharmaceutical company Gilead.
At least 34 states restricted treatment to patients who had reached an advanced stage of liver disease, as determined by the level of scarring on the liver. Thirty-seven states permitted their Medicaid agencies to determine whether the potential recipient was abusing alcohol or drugs, and some required some period of abstinence. And 29 states would only consider approval if the prescriber was a specialist in gastroenterology, hepatology, infectious diseases or liver transplantation.
Some state Medicaid agencies, such as Pennsylvania鈥檚, have recently lifted the restrictions. A spokesperson for the state Medicaid office acknowledged that the policy change would result in a 鈥渟ignificant fiscal challenge鈥� and the state was pressing hard for any discounts that might be available.
Separate from the lawsuits, Massachusetts Attorney General Maura Healey, a Democrat, late last month threatened Gilead with an investigation of its possible 鈥渦nfair trade practice in violation of Massachusetts law鈥� if it doesn鈥檛 lower its prices for Sovaldi and Harvoni, which it also manufactures.
The drugmaker, which has consistently said that its hepatitis C drugs are worth the price because of their effectiveness, has asked to meet with Healey.
鈥淕ilead responsibly and thoughtfully priced Sovaldi and Harvoni,鈥� the company said.
Taylor said states鈥� restrictive practices are discriminatory because they aren鈥檛 applying the same standards to treatments for any other diseases. 鈥淲e don鈥檛 withhold cancer treatment to only those with the most advanced stages of the disease,鈥� she said. 鈥淲e don鈥檛 deny smokers treatment for lung cancer.鈥�
Many doctors point out that while the new hepatitis C drugs can arrest the disease, they cannot undo liver damage.
Stopping the Spread
Advocates for universal treatment also argue that treating patients sooner rather than later spares the health system the greater costs of treating liver cancer or undertaking transplants. It also prevents the spread of the infection to others.
Several medical societies, including the Infectious Diseases Society of America and the American Association for the Study of Liver Disease, recommend early treatment for hepatitis C. The American College of Correctional Physicians says that prison doctors should decide which inmates to treat based on medical evidence, not cost. It , however, that to eradicate the virus in prisons, 鈥淲e must be allocated adequate resources to implement the goal in a medically responsible way, including funding for disease surveillance, screening, medically appropriate evaluation and complete disease treatment.鈥�
But paying for treatment for everyone now is unimaginable for states, which are required to balance their budgets every year, said Salo of the Medicaid directors group.
He said the penny wise and pound foolish argument isn鈥檛 relevant to the real world of state budget-making.
鈥淚t鈥檚 true if you take a time horizon of 30 years, but that鈥檚 not reasonable or rational or realistic in Medicaid,鈥� he said. 鈥淲e budget on a one-year or a two-year cycle.鈥�
Several legal analysts said the plaintiffs in the Indiana lawsuit, which concerns Medicaid beneficiaries, might have a better chance than the prison plaintiffs in suits in ,听 and .
鈥淎t first glance, I鈥檇 say the plaintiffs [in Indiana] have a strong case,鈥� said Nicholas Bagley, a health law professor at the University of Michigan Law School. 鈥淚鈥檒l be very curious to see what justification Indiana presents for their denials.鈥�
The state said it could not comment on pending litigation.
John V. Jacobi, a professor at Seton Hall Law School who specializes in health policy, said the medical necessity standard does not apply to prisoners. The question in the prison cases, Jacobi said, will be whether the denial of the drugs qualifies as 鈥渄eliberate indifference.鈥�
Joel Thompson, an attorney with Prisoners鈥� Legal Services, who is representing prisoners in the Massachusetts case, said he thinks it does.
鈥淧eople knew for years these new drugs were coming,鈥� he said. 鈥淧risoners were counseled for years away from the treatments that were then available because better stuff was coming with no side effects and a guaranteed cure. A fair amount of money got saved because of that, and it got saved at the expense of our clients, who only got sicker.鈥�