Louisiana Considers Radical Step to Counter High Drug Prices: Federal Intervention

In this city on the east bank of the Mississippi River, Rebekah Gee, Louisiana’s health secretary, presides over what she calls the “public-health-crisis cradle” of America. Poverty and poor health collide here to produce some of the nation’s worst rates of obesity, premature birth and other maladies.

Those problems are deep-rooted and hard to solve. The easy one, at least in theory, is hepatitis C, a liver-damaging virus frequently contracted by illegal substance users that can cause cirrhosis and cancer.

A handful of powerful new medicines offer high cure rates and few side effects. But because the drugs also launched with staggering list prices – as much as $94,500 for a 12-week course of treatment – Louisiana and other states have decided to ration care to Medicaid patients, waiting for people to get severe liver damage before providing access to the medicine.

Now, Gee is considering a radical move to get treatment to the thousands of Louisiana residents who need it but are not sick enough to qualify – asking the federal government to step in to drive prices down, perhaps by overriding the patent protections drug companies hold over the medicines.

“This should be the low-hanging fruit,” Gee said. “What frustrates me as a public policymaker is I can’t solve public-health problems that should be the easy ones.”

Gee will decide over the coming months whether to move forward with the controversial strategy. Gee could ask the federal government to invoke a little-known law that allows it to employ companies’ drug patents for the government’s use. After essentially overriding the patents, the government could pay the companies as little as $1,000 for a 12-week course of treatment.

Pharmaceutical firms say they invest in risky research and development because of the rich reward that come with success – a temporary monopoly on their inventions. Companies argue that any interference in this reward structure would dull the incentives for innovation, undermine the business model that supports the development of new drugs and endanger the next transformative medicine.

If Gee moves forward or is able to leverage the threat of intervention to wring deep concessions on price, it could be a powerful precedent.

“Secretary Gee is . . . directly challenging the power of a drug company to essentially determine who lives and dies by pricing products so high that she can’t buy them for her population,” said Sara Rosenbaum, a professor of health law and policy at George Washington University. “It puts the issue into a much clearer posture than just sitting around saying, ‘We can’t afford these drugs for poor people.’ ”

At the moment, that is Louisiana’s stance. Despite receiving rebates to ameliorate the high list prices, the state says it can afford to pay for treatment for only the patients with significant liver damage, at high risk of progressing to cirrhosis and organ failure. Last year, that meant only 324 of the state’s estimated 35,000 Medicaid or uninsured patients who are infected.

Dominick Crocco, 31, contracted the virus about six years ago. His liver is damaged – his doctor told him he was “lucky” initially, because tests showed his liver function was impaired enough that it met the state’s strict criteria.

Medicaid refused to pay for his prescription, however, because parts of his liver were still not diseased enough.

“I’ll get sick enough, eventually,” Crocco said, wryly.

Crocco and Gee, in their own ways, are experiencing the confluence of medical progress, a health crisis that weighs heavily on the poor and the realities of the safety net. The new generation of hepatitis C treatments represents a promising public-health opportunity to wipe out a disease. But even with the emergence of powerful cures, the rates of hepatitis C increased nationally between 2010 and 2015, driven primarily by drug use fueled by the opioid epidemic. Because private insurance will often cover hepatitis C treatment, lower-income people on Medicaid are among those most affected by the price.

The plight in Louisiana shows how, in an era of limited public finances, the government is forced to decide whom it can afford to treat and whom it can’t.