As a number of healthcare partnerships, mostly in the form of accountable care organizations (ACOs), have recently formed, agreements between stakeholders outside of these ACOs are less common as many companies see the healthcare market as a zero-sum game. Contract negotiations between payers and providers over reimbursement levels or the exclusion of Gilead’s hepatitis C drugs by Express Scripts are more representative of the conflicts between stakeholders in the healthcare ecosystem.
Yet late last week, there was a glimmer of hope for a new type of partnership. Andrew Slavitt, acting administrator for the Center for Medicare & Medicaid Services (CMS), sent a letter to AbbVie, Gilead, Johnson & Johnson and Merck asking for help treating hepatitis C.1 Slavitt realizes that he may share a common interest with these four companies: increasing Medicaid patients’ access to innovative hepatitis C drugs. Given the volume of criticism lobbed at these manufacturers by various organizations, Slavitt’s departure from this script is not something that should be quickly dismissed.
Currently, state Medicaid programs have severely limited patient access to these new drugs, impacting patients, manufacturers and CMS.2 Twenty-seven states restrict access to patients that exhibit advanced liver fibrosis or cirrhosis, while 37 states have drug or alcohol eligibility requirements. As these restrictions are in conflict with medically established treatment standards, CMS has recently notified states that they likely violate federal law.3
The shortsighted nature of these restrictions becomes even more apparent as you consider the cost of treating patients with hepatitis C in the absence of these new, innovative drugs. Hepatitis C is currently the leading cause of liver transplants in the United States and contributes to a high average patient cost that is estimated to exceed $24,000 per year and causes over 15,000 patients to die annually.4,5
In the long run, Medicaid is expected to make back the cost of curing hepatitis C by avoiding these types of medical costs.4,6,7 However in the short term, these new treatments have strained state Medicaid budgets, leading Slavitt to reach out to the four pharmaceutical companies with an open-ended request. In his letter, Slavitt indicated, “CMS would like a better understanding of the types of value-based purchasing arrangements … being offered to payers and to state Medicaid agencies.”8 He goes on to inquire, “What other ideas do you have to assist states in the affordability of these new, unbudgeted pharmaceuticals?”8
While the safe response would be to wait for lawsuits to challenge the state’s current access restrictions, are manufacturers willing to go beyond Slavitt’s initial request and respond with a proposal for an innovative partnership? Would these companies be willing to delay payment for these drugs by loaning their products to the state Medicaid plans in exchange for adhering to established hepatitis C treatment standards? Would Medicaid be willing to carry a loan balance with these manufacturers so more patients can have access to the treatment?
While this novel payment structure is contrary to historical transactions between Medicaid and the pharmaceutical companies, a potential partnership represents an opportunity to deliver more value to patients and the U.S. healthcare system. State Medicaid programs would trade a large, upfront investment for an installment plan decreasing the short-term impact to their budget. Manufacturers would increase their sales, albeit with the payments spread out over time. Though most important, more patients would have access to a cure. While the devil will be in the details of such an agreement, it is in everyone’s best interest to seriously consider such a partnership to fight this deadly infection.