Laird Harrison

November 18, 2015

SAN FRANCISCO — Medicaid programs in Delaware, Maryland, New Jersey, and Pennsylvania denied nearly half of all claims in recent months for direct-acting antiviral hepatitis C drugs, according to an analysis of pharmacy data presented here at the Liver Meeting 2015.

The finding confirms anecdotal reports from physicians in the United States that they are unable to provide these life-saving medications to some of their most impoverished patients, said Vincent Lo Re, MD, assistant professor of medicine, biostatistics, and epidemiology at the University of Pennsylvania in Philadelphia.

"The only thing that that was surprising was the magnitude of the denial rate," he told Medscape Medical News. "It's so much higher than Medicare."

Dr Lo Re and his colleagues found that Medicare denies just 5% of claims for the drugs in these four states, whereas commercial insurers deny 10%.

To understand what factors are actually leading to the rejection of patient claims, the researchers analyzed data from Burman's Specialty Pharmacy, which fills prescriptions for a large number of people with hepatitis C in the mid-Atlantic states.

They focused on direct-acting antiviral prescriptions written for patients with hepatitis C genotype 1, 2, or 3 infections from November 1, 2014 to April 30, 2015. Prescriptions that required prior authorization by outside pharmacies were excluded from the analysis, as were patients covered by insurers that mandated the use of a different pharmacy and patients with no health insurance.

Of the 2342 eligible patients, 517 were covered by Medicaid, 800 were covered by Medicare, and 1025 were covered by commercial insurance.

There was no significant difference in age, race, or history of treatment for hepatitis C between the Medicaid, Medicare, and commercially insured patients.

Medicaid patients were more likely than Medicare patients to be women, have genotype 1 infections, and have HIV infections, but these differences were small.

In each insurance group, at least 80% of the prescriptions were for ledipasvir, sofosbuvir, plus ribavirin; prescriptions for sofosbuvir plus ribavirin were a distant second.

Twenty-one patients had incomplete prior authorization. Of the remaining 2321 patients, coverage was denied for 16.2%. One patient whose claim was denied received patient assistance from a drug company.

Denial was significantly more common in Medicaid patients than in those covered by Medicare or commercial insurance (46% vs 5% vs 10%; P < 0.001). And the median wait for prescriptions was longer for Medicaid patients than for those covered by Medicare or commercial insurance (24 vs 14 vs 14 days).

Insurers most often cited "incomplete data to determine medical need" and "lack of medical necessity" as reasons for denying a claim.

Table: Reasons for Denial of Coverage

Reason Medicaid, % (n = 503) Medicare, % (n = 795) Commercial Insurance, % (n = 1023)
Incomplete data to determine medical need 22 1 2
Lack of medical necessity 14 2 5
Unknown (no denial letter received) 8 2 3
Drug or alcohol use 2 0 1
Nonpreferred direct-acting antiviral drug 0 1 0


The researchers found no correlation between absolute denials and age, race, sex, viral genotype, hepatitis C treatment history, or HIV infection.

But they found that patients who did not have signs of cirrhosis were more likely to be denied coverage (odds ratio [OR], 2.85; 95% confidence interval [CI], 2.00 - 4.07), which is consistent with the theory that states are denying coverage for people with the least-advanced disease.

Patients with prescriptions written in the earlier part of the study period — from November 1, 2014 to January 31, 2015 — were more likely to be denied coverage than patients with prescriptions written in the later part of the study (OR, 3.16; 95% CI, 2.21 - 4.50).

The study fills an important gap in the conversation about coverage for hepatitis C treatments, said Ronald Sokol, MD, from the University of Colorado Anshutz Medical Campus in Denver. "We lack this type of data," he told Medscape Medical News.

States Can't Afford to Treat Everyone

New drugs can cost more than $80,000 for a course of treatment, putting them out of reach for many people whose insurance won't cover them.

But states can't afford to treat everyone infected with the virus, said Matt Salo, executive director of the National Association of Medicaid Directors.

We would be spending as much on that one drug as all the other drugs in Medicaid combined.

"We would be spending as much on that one drug as all the other drugs in Medicaid combined. That's not a sustainable factor to deal with," he said. The proportion of people infected with hepatitis C is higher in the Medicaid population than in the Medicare population.

Medicaid is run by states, and states are under more pressure to balance their budgets than the federal government, which runs Medicare.

And because hepatitis C takes a long time to cause serious liver damage, most of the infected people now covered by Medicaid will be covered by Medicare by the time they need transplants or other expensive care, Salo told Medscape Medical News.

As a result, state Medicaid programs are "prioritizing coverage to those who need it the most," he explained.

States are using the extent of a patient's liver fibrosis and whether or not the patient is addicted to alcohol or using illegal drugs to prioritize coverage, he said. Patients with substance abuse problems might not complete their courses of treatment and might become reinfected, which increases the risk that more resistant strains of the virus will evolve.

This approach raised a red flag at the Centers for Medicare and Medicaid Services (CMS), prompting letters to be sent to all 50 state Medicaid directors, warning them that they could be breaking the law if they deny coverage to patients with appropriate prescriptions.

States are free to develop criteria for coverage, but "the effect of such limitations should not result in the denial of access to effective, clinically appropriate, and medically necessary treatments," wrote Alissa Mooney DeBoy, acting director for the CMS Disabled and Elderly Health Programs Group.

States Respond

A spokesperson for the Maryland Medicaid program declined to comment on the study or the CMS letter, and no one from the New Jersey program responded to a request for comment.

Kathleen Gillis, from the Pennsylvania Department of Human Services, said that the state revised its guidelines for providing hepatitis C care after the study ended.

As of July, it covers direct-acting antivirals for patients with "less severe liver damage and patients at a higher risk for disease progression or complications, such as people with HIV or hepatitis B virus coinfection."

It has removed a requirement for 6 months abstinence from drugs or alcohol before treatment and abstinence during treatment. Instead, it requires counseling on the risks of alcohol or intravenous drug abuse and referrals for substance abuse treatment.

Cynthia Denemark, pharmacist administrator for the Delaware Division of Medicaid and Medical Assistance, questioned whether the findings apply to the current Delaware program. During the study period, the program's "entire drug benefit was in transition from fee-for-service to being part of the managed care benefit," she said told Medscape Medical News.

But Steve Groff, Delaware's Medicaid director, confirmed that the state requires screening for illegal substance use and evidence of fibrosis stage 4 or cirrhosis before covering the cost of hepatitis C drugs.

And Jeff Myers, chief executive officer of Medicaid Health Plans of America, told Medscape Medical News that his association believes such restrictions are legal because they are "clinically appropriate and medically necessary."

Asking the Manufacturers to Step In

Myers said that another letter from CMS, written to the drug manufacturers, is more significant. This letter asked Gilead, AbbVie, Johnson & Johnson, and Merck & Company what pricing programs they offer to various types of payers, and how they plan to help states pay for the drugs.

Johnson & Johnson and Merck are both working on new direct-acting antiviral drugs for hepatitis C.

Johnson & Johnson did not respond to an inquiry from Medscape Medical News about the CMS letter, but a spokesperson for Merck said in an email that the company is in "exploratory discussions with CMS on how we can work together on this unprecedented opportunity to address the burden of hepatitis C in the United States."

An AbbVie spokesperson said only that the company is preparing to reply to the letter.

But Gilead defended its pricing. "Gilead believes the price of Sovaldi [sofosbuvir] and Harvoni [ledipasvir and sofosbuvir combination] reflects the innovation of the medicines," said Cara Miller, a spokesperson for the company.

With rebates and discounts, the cost of treatment with sofosbuvir or the combination of ledipasvir and sofosbuvir is now less than the cost of previous treatment regimens, she explained. The company provides a discount of more than 21% to Medicaid, and the Department of Veterans Affairs "pays less than half of the published wholesale acquisition cost or list price."

So how can these treatments be made available to everyone who needs them?

Competition has already lowered the cost of treatment, said Salo. For example, the price dropped from $1000 a pill when Gilead had the only direct-acting antiviral on the market to $600 a pill now that Gilead is competing with AbbVie.

But even with several other drugs in development, Salo is not optimistic that market forces alone will drive the price low enough.

What might help is an Act of Congress or some other intervention by the federal government, which is a possibility, he said, pointing out that the Department of Health and Human Services has organized a national summit on the issue of drug costs for this Friday.

Dr Lo Re has disclosed no relevant financial relationships. Dr Sokol reports relationships with Gilead and AbbVie.

The Liver Meeting 2015: American Association for the Study of Liver Diseases (AASLD). Abstract LB-5. Presented November 16, 2015


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