Progress of “Netflix” subscription model negotiations to pay for HCV Treatment

In 2018, the state of Louisiana spent approximately $35 million to treat 1,000 individuals with chronic Hepatitis C Virus (HCV). Unfortunately, these 1,000 treated individuals comprise only about 1% of the state’s 90,000 individuals living with HCV, including about 39,000 covered by the state’s Medicaid program or prison system. Treating everyone would cost more than “the state spends on K-12 education, Veteran’s Affairs, and Corrections combined,” according to the Secretary of the Louisiana Department of Health, University of Pennsylvania Alumna Dr. Rebekah Gee, in an article for Health Affairs. Using the Louisiana Budget Allocator developed at the Drug Pricing Lab at Memorial Sloan Kettering Cancer Center, experts estimated it would require approximately $760 million to treat everyone who has HCV in Louisiana at current HCV medication prices.

In order to increase access to HCV medication for Medicaid patients and justice-involved individuals, Dr. Gee, the Louisiana Department of Health, and the Centers for Medicaid and Medicare Services (CMS) announced in June  2019 that they have formed an agreement with Asegua Therapeutics,  the generics subsidiary of Gilead Sciences, Inc., to limit the total cost of HCV medication in exchange for unrestricted access to a generic version of Gilead’s HCV combination medication sofosbuvir/ velpatasvir for five years. Their goal is to treat 10 times more patients with HCV each year, without the yearly budget exceeding the amount they spent in 2018. After reaching this expenditure cap for Medicaid patients, Asegua would provide HCV medication for the remaining patients for free to the state of Louisiana through a supplemental rebate arrangement. This modified subscription model effectively reduces the cost per treatment but without violating the federal “best price” law that would require Asegua to provide the same price discounts on HCV medication to other Medicaid programs. Depending on the success of the deal, Louisiana could seek similar deals for other drugs, such as those used for pre-exposure prophylaxis for HIV prevention and naloxone for overdose prevention.

In July 2019, CMS approved negotiation of a similar payment model for HCV treatment in Washington State. Under Washington’s proposed model, the state would pay a fixed annual amount to a pharmaceutical manufacturer to purchase an unrestricted supply of HCV drugs. Previously, the Washington State Health Care Authority had announced that Abbvie, LLC was the apparently successful bidder in response to its request for proposal covering 30,000 people with HCV, although no details of the bid were disclosed. A CMS statement indicated that “CMS welcomes proposals from other states for state plan amendments to allow negotiation of supplemental rebates involving value based purchasing in Medicaid, and the agency has heard additional interest in a “subscription” model for Hepatitis C drugs.”

This “subscription” or “Netflix” payment model is largely based on Australia’s lump-sum remuneration model, in which the Australian government worked with pharmaceutical companies to negotiate a fixed payment over five years in exchange for unlimited volume of HCV medication. Subsequent research showed that the subscription model successfully provided medication for an additional 93,400 patients and saved the Australian government approximately $4.92 billion USD.

These efforts are aimed at achieving a global goal set by the World Health Organization to eliminate hepatitis by 2030. Several other of the 12 countries that are on track to achieve the hepatitis elimination targets – including Georgia and the United Kingdom – have negotiated with pharmaceutical companies to provide discounted or donated medication.