Louisiana seeking comments on 'Netflix' model for hepatitis C drugs

As drug costs continue to capture national attention and the Trump Administration tries its hand at providing relief, Louisiana has rolled out a proposal it thinks can help solve the state afford the high cost of hepatitis C drugs.

The state is proposing a "subscription-based payment model" in which it would partner with a hep C drugmaker to pay a fixed annual cost for unlimited access to drugs to treat Medicaid recipients and prisoners. In a request for comments on the proposal, the state notes that the patients are underserved by current payment systems, and that the model could benefit the state and drugmakers alike.

Louisiana Department of Health Secretary Rebekah Gee said in a statement that such a model "would create an incentive for us to find and treat as many people as possible." 

For an industry partner, Gee noted the proposal "would guarantee a fixed purchase price for a contracted period of time, and would allow the drug manufacturer to expand their product reach into populations that otherwise would not have received treatment." 

Louisiana rolled out its request for comments earlier this month and comments are due late next week. Previously, the state explored a plan to request that the federal government break Gilead hep C patents. 

At an event in New Orleans last week, HHS Secretary Alex Azar called the subscription idea "interesting," according to The Advocate. He declined to comment further because no formal proposal has been submitted, the publication reports. 

Meanwhile, the National Governor’s Association Center for Best Practices recently named (PDF) the model as a strategy to control pharmaceutical costs while ensuring access. In an op-ed in The Hill, Dana Goldman, part owner of industry consultancy Precision Medicine Group, wrote that the proposal "makes a lot of sense" because manufacturing costs are low for the drugs and the contracts would reward innovation. He likened it to the "Netflix model" for prescription drugs.

A spokesperson for Gilead said the company welcomes Louisiana's "consideration of a subscription-based model for hepatitis C medicines as an opportunity to increase access for patients that need them."

"Our commitment to helping make these medicines accessible to those who need them includes exploring innovative approaches that address access gaps in today’s healthcare system," she added. "We are optimistic that innovative approaches like the proposed subscription-based model will help increase access to curative HCV treatments for people across the state."

Gilead set off a global debate over drug pricing when it launched hep C med Solvaldi back in 2013 at a price of $84,000 for a 12-week course. At the time, many states said the cost of the drug could deplete their Medicaid budgets. Since then, other hep C drugs have hit the market and prices have fallen dramatically, but the debate over pharma's pricing has not died down. 

A representative for drug industry trade group PhRMA said in an email the organization is reviewing Louisiana's proposal "with great interest." She added that PhRMA looks "forward to engaging with policymakers in Louisiana and beyond to ensure affordable access to innovative medicines for patients."

The proposal comes as the Trump Administration works to implement its drug pricing "blueprint" aimed at increasing competition and negotiation for pharmaceuticals and lowering costs. Meanwhile, many states have taken drug pricing into their own hands after years of gridlock in Washington, D.C. 

California, Nevada and Oregon are among states that have passed drug pricing legislation recently. Maryland passed a bill focused on "unconscionable" generic price increases, but the law didn’t stand up to a legal challenge from the generics industry.  

All told, state legislators are looking at dozens of bills focused on pharmacy benefit managers, transparency, rebates and more, according to the National Academy for State Health Policy.  

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