To Pay For Hepatitis C Drugs, Medicare Might Face A Steep Bill

The federal Medicare program for the elderly and disabled will cover two new drugs that can cure hepatitis C, a liver disease that can cause cancer and lead to death. The drugs are very expensive, but they cure hepatitis C in most cases. The government and insurers are concerned about these costs; three million Americans have hepatitis C, most of whom don't know they have it.

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And I'm Melissa Block.

Hepatitis C is the leading cause of liver failure and liver cancer. There are new drugs to fight the virus. They cure infection in nearly all patients but they're expensive. This week on MORNING EDITION, we've heard about an Arizona man with hepatitis C who needs the drugs. He couldn't get them because Medicare wouldn't pay. Well, now Medicare has reversed its decision. And officials say they'll follow recent guidelines that recommend the medications that patients need.

Richard Knox reported that story earlier this week. And he joins us now to talk about Medicare's reversal. And first, Richard, hepatitis C seems to be getting a lot of attention these days. Why is that?

RICHARD KNOX, BYLINE: There's several reasons. First of all, up to five million Americans are infected with this virus, which, just to put it in context, is almost five times the number infected with HIV. Most people who are infected don't know it. They don't get seriously ill for decades after they're infected. So a lot of people who were infected back in the '60s are just now getting into serious trouble with liver damage.

It's been very hard to cure until recently. But, now as you say, new drugs have come along that have boosted cure rates and almost everybody can be cured if they get the right treatment - but they're very expensive. It could cost hundreds of billions of dollars to treat everybody who will need the new drugs. Some say it could even bankrupt health insurers and government programs.

So, you know, it's gotten a lot of attention in the past six months since these new drugs were approved.

BLOCK: And how does the Arizona patient that I mentioned fit into this picture?

KNOX: Walter Bianco who is 65, lives in Mesa, Arizona, semi-retired, he's had hep C for 40 years. He's getting into trouble. He may represent thousands or even tens of thousands who have failed earlier treatments for hep C. His doctors want to treat him with two pricey new drugs that were approved six months ago. But the private insurer that handles this Medicare coverage said no and then they said no again when he appealed.

And then, before Monday when our story aired, Medicare officials didn't want to talk about hep C drug coverage. But after that, they hopped on the case - within a few hours, within a day, they reversed his denial. And then late yesterday, they gave us a statement that opens the door for many other patients.

BLOCK: Many other patients. And you mentioned earlier, Richard, this could cost hundreds of billions of dollars, if you're going to treat everybody with hepatitis C who would need these drugs. Is that the price tag for Medicare?

KNOX: Nobody really knows for sure. Medicare says it will be maybe the end of the year when they have a better idea of what the cost might be for the program. Meanwhile, other payers like Medicaid, private insurers, Veterans Affairs, correctional institutions are all very anxious about the impact on them. The biggest issue hovering over hepatitis C is the pricing of these drugs. One costs $1,000 a pill or $84,000 per course. Other drugs are in the pipeline. They may cause competition to lower the prices over time, but that's not clear.

I think the interesting thing about Medicare's new stance this week is that it suggests they're going to try to avoid rationing, something nobody wants to do. And whatever Medicare does in this question is going to have enormous influence on what other insurers do.

BLOCK: In other words, trying to steer away from rationing care simply because it costs too much?

KNOX: Yes. I think everybody is concerned not only for hep C patients but beyond that, that if you start to say no, we can't provide this life-saving treatment because it costs too much, then you're really entering a different kind of era of explicit rationing of health care.

BLOCK: But as you say, Richard, if the cost of these drugs is so prohibitively expensive and it runs the risk of bankrupting these programs, how do they make that calculation?

KNOX: They're going to try to identify patients who need to be treated - and it's a very tricky thing - not too late but not so early that you're going to cause the overall price tag to go up. It remains to be seen how this is all going to get managed.

BLOCK: That's reporter Richard Knox. Richard, thank you so much.

KNOX: You're welcome, Melissa.

BLOCK: Richard's reporting is part of a partnership with Kaiser Health News.

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