Medicaid calls on Gilead, AbbVie to answer hep C drug pricing questions

Some state Medicaid programs have held back on covering pricey hep C meds from Gilead ($GILD) and AbbVie ($ABBV), limiting access to the drugs to the sickest individuals to save cash. But the Centers for Medicare and Medicaid Services (CMS) is not pleased with this approach and is calling on hep C drugmakers including Gilead, AbbVie and Johnson & Johnson ($JNJ) to lay out some pricing options that could help expand coverage for patients.

The CMS sent letters asking Gilead, AbbVie, J&J and Merck ($MRK) to provide information about deals they make with health insurers that tie payments to treatment outcomes, potentially lowering costs and making the drugs more accessible for patients. Drugmakers are required to offer Medicaid programs their "best price" for hep C meds, the CMS points out. But drugs such as Gilead's Sovaldi and Harvoni and AbbVie's Viekira Pak run at more than $80,000 per treatment course, prices that are difficult for some Medicaid programs to stomach no matter how many discounts companies offer.

"As the agency works with states on these matters, now and in the future, we cannot do that without addressing affordability concerns," the CMS said in a letter addressed to AbbVie CEO Richard Gonzalez. The agency is asking the drugmakers to respond to its questions by the end of the year.

CMS acting administrator Andy Slavitt

The CMS is also putting the heat on states to make sure that poor people with hep C have access to potentially lifesaving meds, Bloomberg reports. The agency sent a letter to state Medicaid programs to remind them "of their obligation to provide access to these promising therapies based on the medical evidence, and that they have tools available to manage their costs," CMS acting administrator Andy Slavitt said in a blog post.

The move comes as hep C drugmakers duke it out in a fiercely contentious market and respond to pricing pushback for their meds with discounts. AbbVie's battle with Gilead for market share has allowed some state Medicaid programs to negotiate discounts of 40% or more for the drugs, which could widen coverage as a result.

Still, most states are hesitant to open access to all eligible patients in light of costs. Texas, which has the third-largest Medicaid population after California and New York, did not spend a penny on Sovaldi during the first 9 months of 2014; a state spokeswoman said earlier this year that "price was the biggest issue" affecting coverage. California spent about $86 million on the drug during the same period, but is still restricting meds to patients with the most advanced stages of the disease.

"Total costs will go up," Matt Salo, executive director of the National Association of Medicaid Directors, said earlier this year. "While we're fortunate that the price per pill has come down from $1,000, it's still too high to provide complete access for the millions of infected patients in this country."

- here's the CMS' letter to AbbVie (PDF)
- read the CMS blog post
- get the Bloomberg story

Special Reports: The top 15 pharma companies by 2014 revenue - Gilead Sciences - AbbVie | New drug approvals of 2014 - Harvoni