The ongoing controversy over the cost of hepatitis C treatments took a new twist late last week when the New York State attorney general filed a lawsuit against a health insurer for denying coverage.

In the lawsuit, the state claims that Capital District Physician’s Health Plan, which has about 450,000 members in upstate New York, refused to pay for hepatitis C drugs unless patients had an advanced stage of the disease, such as moderate or severe liver scarring.

The state further alleged the insurer restricted coverage due to the cost of the drugs but never disclosed that cost was a factor. The hepatitis C treatments range in price from $54,600 to $94,500, depending upon doses and regimen, although this is before any rebates or discounts are applied.

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By failing to disclose that cost is a consideration when deciding “medically necessary” treatment, New York Attorney General Eric Schneiderman alleged that the insurer is misleading consumers and violating state laws, according to the lawsuit, which was filed in state Superior Court in Manhattan.

The hepatitis C medicines — Gilead Sciences sells Harvoni and Sovaldi, while AbbVie markets Viekira Pak, and Merck recently began selling Zepatier — boast cure rates exceeding 90 percent. As we have previously noted, their arrival over the past two-plus years marked a turning point because older treatments were less effective and caused difficult side effects.

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However, the price tags helped trigger a national outcry over the cost of pharmaceuticals.

The drug makers, which are not named as defendants in the lawsuit, have consistently maintained their medicines offer good value because they lower the potential for long-term costs of treating liver disease, liver cancer, and transplantations. But payers have complained that the drugs are budget busters, and many have taken steps to restrict coverage.

Over the past year, however, consumers have been fighting back by filing their own lawsuits against insurers in California and Washington, as well as the Medicaid program in Washington and the Massachusetts prison system. In some cases, insurers have responded by relaxing their coverage restrictions on hepatitis C treatments.

In New York, for instance, where Schneiderman has sent subpoenas to 16 commercial health insurers, Empire Blue Cross Blue Shield last month eased its restrictions, according to a spokesman for the attorney general. Capital District Physician’s Health Plan refused to take that step, which prompted the lawsuit, he explained.

A Capital District spokeswoman wrote us to say the insurer “currently covers hepatitis C prescription drug treatments in a manner comparable to virtually every other health plan — and in some cases our coverage goes further. Our policies are developed by an independent medical policy committee (that) … determines the scope of coverage, utilizing scientific and evidence-based analysis.

“The guidelines for coverage are comparable with the state’s own guidelines for Medicaid,” she added. “Despite an ongoing dialogue between the entire industry and the state, the attorney general’s office has chosen Capital District to initiate litigation on this matter. Our coverage decisions are made based upon the use of evidence-based clinical criteria, not upon political agendas or actions.”

Nonetheless, the effort by Schneiderman may provide drug makers with a boost, since any moves to loosen formulary restrictions can be expected to increase prescribing and, therefore, ring registers.

Another state official, meanwhile, has pursued a different strategy to lower the cost of hepatitis C drugs. Earlier this year, Massachusetts Attorney General Maura Healey threatened to sue Gilead for violating consumer protection laws if the drug maker refuses to lower its prices. We asked a spokeswoman for Healy for an update and will pass along any reply that we hear.

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  • Why don’t the insurance companies compare the long term costs of treating someone with Hepatitis C with the shorter term of an expensive drugs? Let alone the quality of life for the person that has Hepatitis C knowing they have a good chance of developing liver cancer. Thank goodness these new drugs are available. The insurance companies should work closer with the pharmaceutical companies in sharing costs when the drugs are being developed. This will lessen the burden of costs when they are approved by the FDA.

  • The cure saves money big time since it costs $10000 a year average to treat a Hep C patient. Businesses would borrow to lock in these future savings. Government can’ t see or plan for this gift. Take out health bonds and cure now. Plan payments with future savings as win win for all.
    The insurers may even participate with financing in 5 or 10 year time line.

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