Expensive New Drug Worries Government

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Months before Gilead Sciences’ breakthrough hepatitis C treatment hit the market, Oregon Medicaid official Tom Burns started worrying about how the state could afford to cover every enrollee infected with the disease. He figured the cost might even reach $36,000 per patient.

Then the price for the drug was released last December: $84,000 for a 12-week treatment course.

At that price, the state would have to spend $360 million to provide its Medicaid beneficiaries with the drug called Sovaldi, just slightly less than the $377 million the Oregon Medicaid program spent on all prescription drugs for about 600,000 members in 2013. It potentially would be a backbreaker.

Faced with those steep costs, Oregon and several other states are looking to limit who has access to the drug that nearly everyone acknowledges is a revolutionary treatment for the disease affecting more than 3 million Americans.

Expensive specialty drugs aren’t new to health care. But Sovaldi stands out because it is aimed at helping millions of Americans who carry hepatitis C, and a large share of those infected are low-income and qualify for government coverage.

The revolutionary treatment is feared to be too expensive to provide without exploding health care budgets. Medicaid officials are debating how to stifle the anticipated costs.