Around 3.5million individuals in the United States, including over half a millionindividuals in Texasare living with chronic hepatitis C virus infection (HCV). The infection isspread through blood and body fluids. Over 60% of infections are associatedwith injection drug use. Complications of this infection include end stageliver disease, liver cancer and premature death. Total healthcare costsassociated with this infection are estimated to be $4.3 to $8.5 billion.

Due to advances in science, directly acting antiviral (DAA) drugsthat cure 95% of these infections, have been available since 2014. Earlier treatmentswere not as effective. However, less than 1 in 5individuals with HCV have received treatment as of 2017. The reason is the highcost of these drugs.

Wholesale cost of each course of treatment is between $54,000 and $187,000. In addition, access to these drugs is limited because of insurer requirements. None of the currently available drugs will come off patent before 2029. In Texas, Medicaid and most managed care organizations restrict access to those with advanced stage of disease, those meeting strict sobriety criteria, and those with a prescription from specialists in infectious diseases and gastroenterology. Other commercial payers do not have similar restrictions, but most patients are likely to have Medicaid and indigent care.

The National Academy of Sciences recently published a reportwith recommendations for a national strategy to eliminate hepatitis C and B.Per the report, unrestricted access to DAA will reduce new hepatitis C cases by90% by 2030. This is particularly important because there is no vaccine againsthepatitis C. Over 60% of new infections with this virus are due to injectiondrug use, a problem that has received increased attention because of the opioidcrisis. Baby boomers account for 73% of HCV-associated deaths. Because drugcost is a major obstacle to elimination, the NAS strongly recommended voluntarytransactions between federal and state payers and the pharmaceutical industry toimprove access to DAAs.

The solution to high drug costs? A team of experts proposeda disruptivemodel that decouples revenues for the drug company from price per pill forMedicaid beneficiaries. The model is being hailed as the ‘Netflix’ modelbecause access to drugs per this model will be based on subscription with aflat fee from each state, with no limits on the number of prescriptions perstate. The drug companies have to bid the ‘license’ to provide drugs through acompetitive process. This would work because the actual production costs pertreatment course are only a few hundred dollars. A different team of expertsproposed a slight variation of this model and added that the subscriber shouldbe a coalitionof payers and not the state, and that the drug company must commit toincrease outreach and not just provide the drugs.

Gilead, Abbvie, and Merck are the top players in this space,and so far, they are not opposing this model. There may be concerns aboutproduction costs potentially going up with increased demand, but the revenueswould exceed the costs by a large margin.

Louisiana is leadingthe way for other states in this direction and making plans to implementthe novel payment model.

The National Governors’ Association released a whitepaper endorsing subscription-based models for treating HCV infection.

Improving access would incentivize insurers to lift thecurrent restrictions on who can get the drugs. If everyone with HCV weretreated with DAA regardless of the stage of the disease, 6000 cases ofhepatocellular carcinoma and 121 liver transplants per 100,000 patients wouldbe averted.

Who wins with this new subscription-based model? Everyone.Is there a reason for state Medicaid programs to not follow Louisiana’s lead inthis direction? None.

(I would like to thank hepatitis C expert Mamta K. Jain, MD, for her valuable input.)