Gilead, AbbVie Asked by U.S. for Hepatitis C Pricing Options

  • Treatment course for liver disease carries $80,000 list price
  • U.S. Medicaid program reminds states of drug-coverage rules

Drugmakers including Gilead Sciences Inc. and AbbVie Inc. were contacted by the U.S. government’s Medicaid agency to discuss options for how to pay for hepatitis C cures whose costs have eaten into state budgets.

The companies, along with Johnson & Johnson and Merck & Co., were asked in letters from the Centers for Medicare and Medicaid Services to provide information on arrangements they make with health insurers to link payments to the outcomes of their treatments. Such arrangements may affect the prices that drugmakers are required to offer under the Medicaid program, the agency said Thursday.

The agency is also pushing states to make sure poor people with hepatitis C have access to cures for the disease. Some states have been restricting the treatments to individuals with severe liver damage or otherwise limiting their use, the agency said in a letter to state Medicaid programs, also dated Thursday. Medicare provides health insurance for the elderly and disabled, while Medicaid covers the poor.

“Our notice to state Medicaid directors reminds states of their obligation to provide access to these promising therapies based on the medical evidence, and that they have tools available to manage their costs,” CMS Acting Administrator Andy Slavitt said in a blog post.

Billions in Sales

Gilead’s Harvoni and Sovaldi hepatitis C treatments are now the best-selling drugs of all time, with $18.1 billion in sales over the last four quarters. The pills have also helped fuel a 14 percent rally in Gilead’s shares this year. A course of treatment can cost more than $80,000, though discounts typically reduce the price. Drugmakers are required to offer Medicaid programs their “best price” for pharmaceuticals, according to CMS.

AbbVie’s treatment hasn’t proven to be as popular, while Merck’s isn’t expected to be available until next year. Sales of J&J’s Olysio have also been falling amid the competition.

Merck said it’s begun “exploratory discussions” with the Medicare and Medicaid agency as the Food & Drug Administration reviews its hepatitis C treatment.

“We look forward to having discussions specific to our product and potential contracting opportunities upon FDA approval of our product,” the drugmaker said by e-mail.

Medicaid Spending

Medicaid programs spent $1.3 billion on Sovaldi in 2014, its first full year after regulatory approval, according to a letter in the New England Journal of Medicine in September. In some states, including New York and Nevada, the drug represented more than 5 percent of Medicaid spending, according to the letter by Joshua M. Liao and Michael A. Fischer of Brigham and Women’s Hospital in Boston.

Gilead spokeswoman Cara Miller confirmed the drugmaker had received the letter from CMS, and said the company had no additional comment at this time.

AbbVie also got the letter and plans to respond, said Jackie Finley, a spokeswoman. “AbbVie remains focused on supporting access to treatment for people living with hepatitis C,” she said.

J&J is “actively engaged in responding to the request,” said spokeswoman Lisa Vaga.

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