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This Week in Health Care Reform - August 1st, 2014

A new analysis puts a dollar figure on HCV drug therapies for Part D, as the debate rages over Sovaldi and the future of breakthrough drugs; Medicare trustees report extended solvency for the program, though some aren’t as convinced; the Speaker defends his lawsuit against the President ahead of the House voting to proceed, while polling indicates little public support for the whole endeavor; and, the price tag for the health care law’s troubled website approaches $1 billion.


Week in Review

Hepatitis C & Part D: At the end of last year, the Food and Drug Administration (FDA) approved Gilead Sciences’ new drug, Sovaldi, as a treatment for the hepatitis C virus (HCV).  However, in the intervening months, that drug has gone on to wreak havoc on state balance sheets, while forcing difficult tradeoffs for stakeholders, resulting in increased calls for transparency in pricing determinations for the pharmaceutical industry.  Despite being hailed as a cure for the liver-damaging disease that affects an estimated 3.2 million Americans, there’s growing concern that the cost of administering that drug, alone, threatens to overwhelm the entire health care system.  Already, states have raised the alarm over Sovaldi’s impact on their budgets.  Now, a new study seeks to underscore what the drug is going to do to Medicare’s prescription drug program.  Compiled by Milliman on behalf of the Pharmaceutical Care Management Association (PCMA), their analysis projects that the cost of new HCV drug therapies, including Sovaldi, will increase federal spending on Part D by $2.9 billion in 2015, bringing the total spend for the program to $5.8 billion.  Practically speaking, that translates into a $481 million increase in individual Part D beneficiary premiums to $965 million, or, the equivalent of a 4.3 percent to 8.6 percent increase from this year’s premiums per beneficiary.  Read the report here.   

Breakthrough Drugs:
At $84,000 for a typical course of treatment, Gilead’s breakthrough drug represents what many experts have categorized as an unsustainable trend.  But, despite the hefty price tag, the drug has already become the treatment of choice amongst patients afflicted with hepatitis C.  With that in mind, it should come as no surprise that Gilead reported nearly $3.5 billion in second quarter sales of the drug last week, prompting immediate calls for the manufacturer to lower its price.  As previously mentioned, Sovaldi’s influence extends far beyond its target population.  In fact, a recent commentary from CVS, one of the country’s largest pharmacy benefit managers, estimated that the cost of covering the drug could add as much as $300 to every American’s annual premium.  Staggering to consider that one drug, by itself, could have such far reaching implications.  Taken a step further, it’s not hard to imagine what will happen when the influx of new breakthrough therapies begins to hit the market, something many scientists and analysts predict to be right around the corner.

Medicare Solvency:
This past Monday, the Medicare trustees released their annual report which, amongst other things, maps out the future of the program.  Of particular interest, that Medicare’s financial forecast has improved.  Last year’s report estimated that the program would run out of funds in 2026.  But, owing to decreased spending on hospitalizations this year, Medicare’s solvency has been extended by four years.  While some attribute this slowdown in spending to the Affordable Care Act, others aren’t quite so sure.  Regardless, trustees believe there’s sufficient reason for “cautious optimism” about Medicare’s financial outlook.    

ACA Lawsuit:
On Wednesday, the House voted to proceed with a lawsuit against the President.  The mostly party line vote authorized Speaker John Boehner (R-Ohio) to take the Administration to court on charges that the decision to delay the Affordable Care Act’s employer mandate represented a clear overstepping of executive authority.  Earlier this week, the Speaker took to the press to foment support for the lawsuit, arguing that it was the responsibility of the House of Representatives to defend the Constitution from Executive Branch abuse.  His comments, however, may not find much traction with the public who, late last week, came out against the lawsuit by a 57 to 41 percent margin in a new CNN/ORC poll.

$840 Million:
Yesterday, the House Energy & Commerce Subcommittee on Oversight & Investigations held a hearing seeking an update on implementation of the health care law in which both the Centers for Medicare & Medicaid Services (CMS) and the Government Accountability Office (GAO) were called upon to testify.  In prepared testimony from GAO, a number of extenuating factors were highlighted as contributing to the botched rollout of the website last fall, namely, changing requirements, a rushed schedule, and lax contractor oversight.  The prepared remarks go on to charge that the federal exchange marketplace was developed “without effective planning or oversight practices, despite facing a number of challenges that increased…the level of risk.”  Perhaps most alarming, though, is that the price tag for the website was at $840 million as of this past March.  And, that’s without key features of the platform being built ahead of the next open enrollment period slated to open in November.

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Looking Ahead

On the heels of a last-minute scramble for the finish line, lawmakers are headed out the door for August recess, leaving some to ponder their unfinished business.  And, with open enrollment just three short months away, one expert weighs in with what she sees as the next challenge for the ACA.

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