Good news, hep C drugmakers: VA stops rationing your pricey treatments

David Shulkin

Hep C drugmakers are struggling against restrictive coverage decisions that often limit treatment to the sickest patients. But now, companies are enjoying a bright point after the Veterans Affairs Department said that it's expanding hep C treatment to all veterans.

The VA will offer hep C treatment to all 174,000 veterans who have the virus, regardless of their disease stage, it said in a statement. The move comes after Congress last year doled out more funding for hep C meds, which opened the door for increased spending from the VA.

Before, the VA had "limited resources," so it had to limit treatment to patients in the worst condition, VA Under Secretary for Health David Shulkin said in a statement.

Now, with more funding in tow, the VA can loosen its purse strings. In 2015, the VA shelled out about $696 million for new hep C drugs. This year, the VA plans to spend about $1 billion on hep C treatments.

"We're honored to be able to expand treatment for Veterans who are afflicted with hepatitis C," Shulkin said. "Additionally, if Veterans are currently waiting on an appointment for community care through the Choice Program, they can now turn to their local VA facility for this treatment or can elect to continue to receive treatment through the Choice Program."

The VA's move also comes after drugmakers such as Gilead ($GILD) and AbbVie ($ABBV) struck cost-cutting deals with payers. Gilead's Harvoni, which runs at about $94,500, and AbbVie's Viekira Pak, which sells for $83,319, sparked fury from payers and set off a pricing war last year. Both companies offered substantial discounts in exchange for coverage for their meds on PBMs' formularies.

Now, with Merck's ($MRK) hep C treatment Zepatier recently hitting the market, Gilead and AbbVie are teeing off with a new rival. After Zepatier got approved in January, Merck said that it would set its list price at $54,600 for a 12-week regimen--much lower than its hep C peers' stickers, though higher than some now-discounted prices, according to analysts.

Merck CEO Kenneth Frazier

The VA isn't saying which hep C treatments will be offered under its expanded program, but Merck seems to think that its drug will make the cut. The company recently said that it priced Zepatier "to broaden and accelerate access to treatment for patients covered in commercial or public plans, including our country's Veterans," Merck said in a statement.

And the VA's decision to expand hep C treatment "is a good example of how government and industry can work together toward a shared goal in the best interests of public health--particularly for our Veterans who are so deserving," Merck CEO Kenneth Frazier said in a statement.

The VA also seems on board for a potential partnership. The VA has treated 42,000 hep C patients with Gilead's Sovaldi since 2014, but that doesn't mean that other treatments are ruled out.

"As the single largest provider of chronic hepatitis C care in the United States, our goal has been to treat every Veteran with HCV infection," said Sloan Gibson, deputy secretary for the VA, said in a statement. "We are grateful to Congress and to pharmaceutical leaders like Merck that are committed to our Veterans who have nobly served our nation."

- read the VA's statement
- get Merck's release

Special Reports: Top 15 pharma companies by 2014 revenue - Merck - AbbVie- Gilead | Biopharma posts a chart-topping 41 new drug approvals in 2014 -Harvoni - Viekira Pak

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