Aug 12, 2022 - Health

HHS watchdog finds low uptake of cheaper hepatitis C drugs

Illustration of the score line on a pill in the shape of an upward arrow instead of straight across.
Illustration: Gabriella Turrisi/Axios

Usage of cheaper generic hepatitis C drugs was lower among Medicare beneficiaries than Medicaid enrollees in 2020, costing seniors thousands of dollars in extra out-of-pocket spending, according to a new HHS Office of Inspector General report.

Why it matters: The report underscores that just because a generic version of a drug exists, patients are not necessarily benefitting from it — and supports arguments that Medicare's prescription drug benefit structure incentivizes insurers to favor brand-name drugs over generics.

Background: Medicare spent billions of dollars on hepatitis C drugs after the introduction of Gilead's Sovaldi, which came to market with a list price of $84,000 per course of treatment. Gilead later introduced a second hepatitis C drug, Harvoni, at a list price of $94,500.

  • In 2019, Gilead introduced two generic versions — called authorized generics — in response to affordability concerns.
  • Other lower-cost brand options also became available.

What they found: In 2020, uptake of the authorized generics was faster in Medicaid than Medicare, and some Medicare Part D plans didn't even cover them.

  • "The lack of coverage may largely explain why so few Medicare beneficiaries received an authorized generic to treat hepatitis C in 2020, and instead so many received the more expensive brand-name version," the IG report stated.

Rebates on the higher-cost drugs lowered Medicare spending overall, but seniors' out-of-pocket costs remained high.

  • Seniors without financial assistance paid $2,200 more out-of-pocket for higher-cost hepatitis C drugs than those receiving lower-cost drugs, per the report.
  • The program spent $155 million more in catastrophic coverage payments for higher-cost hepatitis C drugs than lower-cost drugs, even though a similar number of seniors were in each group.

The bottom line: "Part D’s programmatic structure may lead to plan sponsors preferring higher-cost versions, resulting in beneficiaries paying thousands more out-of-pocket and nearly double Medicare reinsurance," the report concludes.

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