The cure for the liver disease hepatitis C is impressive, so much so that Medicare spent $4.5 billion last year on this new, though pricey, medication. For those with the disease, no amount is too much. But it’s also 15 times higher than what Medicaid spent the year before on older treatments for the disease, according to “previously undisclosed federal data”. With lawmakers screaming cutbacks at every turn, is it worth it to opt for the pricier, though newer, medication that serves the same purpose?
The newer medication can cost up to $1,000 a day. Mostly, federal taxpayers are covering the costs, but it may also mean higher premiums and out of pocket costs for the nearly 40 million recipients.
By contrast, consider that Part D spent $286 million last year for Hepatitis C drugs. This, according to Sean Cavanaugh, director of Medicare and deputy administrator at the Centers for Medicare and Medicaid Services, is one of the biggest challenges his agency is facing.
The drug, Sovaldi, costs $84,000 for a 12-week course of treatment and accounts for more than $3 billion of the spending. Spending on another drug, Harvoni, hit $670 million even though it came on the market only in October. Bills for a third drug, Olysio, often taken in conjunction with Sovaldi, reached $821 million. Not only that, but Medicare also spent $157 million on older hepatitis C drugs in 2014, bringing the total spending for the category to more than $4.7 billion.
There’s nothing historically to compare this to. Over the past decade, the costs of drugs have actually dropped, partly because of the new preventive drugs that are now on the market that keep us healthier for longer versus treating us after we develop an illness or disease.
The drugs for Hepatitis C are impressive, however, they, along with other expensive, threaten to drastically increase the program’s costs. The federal government spent $65 billion on Part D in 2013, according to the Medicare Payment Advisory Commission. That figure doesn’t include monthly premiums paid by patients. But let’s consider another perspective:
According to the health-policy journal Health Affair, it’s believed that 350,000 Medicare beneficiaries have hepatitis C and don’t know it.
It’s alarming, to say the least. But consider the savings compared to say, liver transplants – especially in the elderly.
On average, it takes our government a little more than a year to gather and compile information on spending, but CMS provided the data on hepatitis C drugs to ProPublica in response to a Freedom of Information Act request and follow-up inquiries.
For its part, Medicare officials said they are watching the costs carefully, and early indications suggest that this year’s spending is on track to match or even exceed last year’s, Cavanaugh said. He said, “We’re all waiting to see when it plateaus or when it possibly goes back down,” he said in an interview. “When will that pent-up demand be sated?”
Anytime new drugs are introduced, especially when they’re a cure for a disease, it’s exciting. The challenges are found in ensuring there are ways to pay for those cures.
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