Prescription drug spending has been a key driver of the recent increase in Medicaid spending. After many years of low to moderate growth, Medicaid prescription drug spending increased 24.6 percent in 2014 and 13.6 percent in 2015 according to the Centers for Medicare & Medicaid Services, primarily due to increased spending for hepatitis C drugs.
These drugs, which can effectively cure many types of hepatitis C, also come with high list prices. The initial list price for Sovaldi—which has been one of the two most popular hepatitis C treatments along with Harvoni—was about $84,000 for a standard 12-week regimen when it launched in 2013. Before accounting for rebates, Medicaid programs nationwide spent more than $2.8 billion in 2015 on Sovaldi and Harvoni, almost five percent of total drug spending.
To better understand the impact of these hepatitis C drugs on states and managed care plans, MACPAC engaged George Washington University to conduct a series of interviews with 11 states and representatives from Medicaid managed care associations about their experiences in covering these new hepatitis C drugs since their introduction in late 2013. The interviews covered three main topics:
- How states developed coverage and prior authorization policies for the new hepatitis C drugs, starting with Sovaldi in 2013, and how those policies changed as more drugs entered the market and the economic, social, and political landscape evolved.
- How states addressed the effects of the new hepatitis C drugs on Medicaid budgets and the finances of managed care plans serving Medicaid enrollees.
- How their experiences with the new hepatitis C treatments affected state Medicaid officials’ and managed care plan representatives’ thinking about policies for other high-cost drugs.
This report was prepared under contract to the Medicaid and CHIP Payment and Access Commission (MACPAC). The findings, statements, and views expressed in this report are those of the authors and do not necessarily reflect those of MACPAC.