In recent years, major innovations in Hepatitis C treatments have greatly improved the treatability of this deadly disease. However, the high cost of these drugs has kept many people living with Hepatitis C from enjoying the benefits of treatment. Dr. Rebekah Gee, Secretary of the Louisiana Department of Health, has been leading the way in the fight to lower the cost of life-saving Hepatitis C medications by urging the Department of Health and Human Services to step in and invoke an old but little-known law: 28 U.S.C. § 1498.
Hepatitis C is a blood-borne infection of the liver that often leads to severe liver damage or cancer. Deaths caused by Hepatitis C have been steadily increasing since 2003, and the same 2016 study found that more Americans die of this infection than all other infectious diseases combined. There is no vaccine for the disease, and until recently, available treatments were lengthy and came with severe side effects. Within the past few years, the FDA has approved several drugs that can cure Hepatitis C with a shorter course of treatment (12-16 weeks) and far fewer side effects. However, even before the medication was approved, physicians and insurers were worried about the price tag.
Even a 12-week treatment course can range from $26,000 to $94,500, placing this drug out of reach for many patients living with Hepatitis C. A large portion of those diagnosed with the disease in the US are on Medicaid, uninsured, or in state prison, and they are often at the mercy of state insurers: while over a dozen states do not restrict access to treatment based on disease severity, the majority of state Medicaid programs refuse to pay until the patient has already suffered severe liver damage.
As with Martin Shkreli’s well-known price hike of HIV medication, the drug pricing for Hepatitis C treatment puts patients’ lives at risk. Defenders of the drugs’ pricing schemes draw attention to the drastic increase in quality of treatment, as well as the fact that the ‘list price’ is rarely the actual cost paid by insurers. However, this doesn’t change the reality: the vast majority of people with Hepatitis C are not receiving the necessary curative treatment, and this failure in treatment is due at least in part to the cost of the drugs, which are available at significantly lower prices in certain other countries, such as India and Egypt.
When Secretary Gee was first involved in writing Louisiana’s guidelines for the state’s coverage of new Hepatitis C treatments in 2013, she deemed the task “frankly impossible, from a budget standpoint.” However, through research and consultation with medical and legal experts, Secretary Gee has landed on two parallel approaches: 1) per the recommendation of National Academy of Sciences, Education, and Medicine, work with the U.S. Department of Health and Human Services (HHS) to obtain a license for the medication and produce it at a lower cost, and 2) invoke 28 U.S.C. § 1498, a little known provision that allows the U.S. government to effectively override a patent and authorize the production of the drug at a much lower cost.
The first option, while imperfect, would still be more cost-effective than the current system, and it would provide far more patients with proper treatment. Obtaining a license to produce one of the Hepatitis C medications would likely cost about $2 billion, plus an additional $140 million to actually produce the drugs, while maintaining the status quo would likely cost $10 billion over the next 12 years and would only treat roughly a third as many patients. However, there is no guarantee any of the companies that currently hold patents on Hepatitis C medications would be willing to enter into such a deal.
By invoking 28 U.S.C. § 1498, the state of Louisiana can take a more aggressive stance. Were HHS to invoke this statute, the government would be able to authorize the production of the drug – specifically for sale to the government in order to treat specific disadvantaged populations – while the patent remained in force. This statute has a well-documented history of use to lower the price of pharmaceuticals (particularly in the 1950s and 1960s), and it has been used by many federal agencies. This could all but guarantee the patients with the greatest need are able to receive treatment.
In June, pharmaceutical trade organization PhRMA filed formal comments with the state of Louisiana on the issue, arguing against the use of 28 U.S.C. § 1498; however, the arguments articulated by the organization are weak. First, PhRMA argues the statute cannot be used to lower prices – but the statute has, by PhRMA’s own admission in congressional testimony, been used to do just that.
Second, the group cites averted or lowered overall costs as a justification for the high prices of the medication. However, while individual patients may pay less in total even with the inflated drug costs, the net cost to the health care system is not nearly as clear as PhRMA tries to make it sound. This argument also assumes only a fraction of those with Hepatitis C will actually receive the treatment.
Third, PhRMA turns to the foundational principles of patent law: by overriding company patents, the government would be taking away the incentive to innovate and invest in the expensive research necessary to create such revolutionary cures. However, much of this research was government funded, and these companies have likely already received a significant – and economically motivating – return on investment. Furthermore, the invocation of 28 U.S.C. § 1498 would not detract from the companies’ sales of Hepatitis C medication: the reduced-price medications would be available to populations who are currently without access to treatment, leading to a net increase in purchases of the medication.
By actively pursuing means of lowering drug costs, Secretary Gee is putting Louisiana in the front lines of the fight to lower the prevalence of Hepatitis C in the United States. While her plan may seem radical, she is following well-established precedent and the advice of many top health experts. In order to proceed, Secretary Gee will need the support of HHS. With the recent scandal-laden resignation of Tom Price, former Secretary of Health and Human Services, it is unclear what the administration’s stance will be on this issue. Thus far, pharmaceutical companies have also failed to step up and lower prices of their own accord – another possible solution that would prevent the necessity of federal intervention.
Dr. Rebekah Gee has come up with a viable pathway to make Hepatitis C treatment affordable and save hundreds of thousands of people from pain, suffering, and death. It is up to HHS to act on this plan and ensure the most vulnerable Americans have access to the medical care they need.
Great job, Megan! thanks for writing this. § 1498 should be invoked immediately, not only in Louisiana but in every state. my article, Hepatitis C: how to win the war, is posted here…
At the end of the 3rd paragraph on page 3 you will see a reference to “…only a few devoted litigators” who are Holding insurers accountable for refusing to cover insured patients. as you know, kevin costello and others at the harvard law school center for health law & policy innovation are among the few, and they certainly deserve to be recognized for their great work.