The new hepatitis C drug Sovaldi has become an $84,000 dilemma for private and public insurers, particularly Medicaid plans.
UnitedHealth Group, the largest private insurer, estimated its Sovaldi treatment costs at $100 million during the first three months of 2014. Aetna tabulated its first-quarter costs for the drug at $30 million, while Cigna estimated spending $10 million so far this year.
WellPoint initially projected costs for hepatitis C virus (HCV) treatment would double in 2014. But after racking up $50 million in costs during the first three months of the year, the insurer announced that it was boosting anticipated HCV-related expenses for 2014 by an additional $100 million. About 40% of WellPoint's expenses were from commercial plans, 35% from Medicaid plans and 25% from Medicare Advantage plans.
“Hep C is the biggest issue right now,” WellPoint CEO Joseph Swedish said on a call with investors last week. “It's the watch item for the industry.”
Sovaldi has a reported cure rate of higher than 80%. But the $84,000 price of the drug for a full 12-week course of treatment has led to fears that many who could benefit won't be able to get it, and that the costs will prove financially unsustainable for insurers and public-healthcare programs. Treating every one of the estimated 3.2 million Americans with HCV would cost about $270 billion, four times the cost of the entire Medicare Part D prescription drug program in 2013, according to a report from the Kaiser Family Foundation.
Jeff Myers, president and CEO of the trade group Medicaid Health Plans of America, estimated that Sovaldi could cost state Medicaid programs as much as $1.5 billion a year. If costs for other current and emerging HCV drugs are added, spending on prescriptions for the disease could top $2 billion annually, he said. Johnson & Johnson's HCV drug Olysio costs $66,000 for 12 weeks of treatment, and Solvaldi's maker, Gilead Sciences, is expected to release another offering in October. “We need to look at how to best provide treatment so that we don't destabilize the program,” Myers said.
Medicare is also at risk. In March, the CMS decided to cover HCV screening for all Medicare beneficiaries born between 1945 and 1965. The agency is expected to release a final rule on covering the screenings by June.
Still, Medicaid programs and plans have the most pressing concerns because a disproportionate share of those with HCV are low-income individuals. Medicaid Health Plans of America estimates that 20% to 35% of individuals with HCV are enrolled in Medicaid, which would make at least 600,000 beneficiaries candidates for the drug.