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Impact of Expensive Hepatitis C Drugs on Part D Spending

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Medicare recently reversed its decision to deny coverage of expensive hepatitis C drugs and adopted a new policy that requires beneficiaries who demonstrate medical necessity to have access to new treatments. Sovaldi, made by Gilead Sciences, costs $1,000 a pill and an estimated $84,000 for a standard 12- week regimen. Furthermore, other drugs are often needed in conjunction with Sovaldi and some patients will need to take the drug for 24 weeks. Sovaldi is expected to cure over 90 percent of patients, which is a major advancement in hepatitis C treatment. Prior options took 24 to 48 weeks, had a 75 percent cure rate, and involved more pills as well as injections. These high treatment costs create a financial burden for Medicare, Medicaid, and private insurance companies. First-quarter sales of Sovaldi exceeded $2 billion, of which 90 percent was paid for by Medicare and private health insurers, and 7 percent by Medicaid. UnitedHealth, the nation’s largest health insurer, reported that it spent more than $100 million covering Sovaldi within three months. Additionally, Part D beneficiaries can pay as much as $7,000 in cost sharing for a 12-week regimen. The hepatitis C virus affects approximately 3 million Americans and is most prevalent among baby boomers. A Health Affairs blog piece (link below) estimates that 350,000 Part D beneficiaries have the hepatitis C virus. At current prices, providing 25,000 beneficiaries with a 12-week regimen would increase Part D spending by approximately $2 billion. Premium bids from the 2015 contract year will likely reflect the anticipated costs of covering Sovaldi and other expensive specialty drugs. Article Blog 

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