Medicaid programs can’t withhold a Hep C cure.

It was only a matter of time. Last Friday, a federal judge in Washington State entered a preliminary injunction ordering the state’s Medicaid program to pay for direct-acting antivirals—think Harvoni or Sovaldi—for any beneficiary diagnosed with Hepatitis C.

Like many states, Washington has a policy of refusing to supply the drugs until the disease has progressed far enough to seriously scar the patient’s liver. The reason is money: state Medicaid programs all over the country are buckling under the cost of paying for the new Hep C drugs. Limiting their availability is a rough-and-ready way to spread the costs of the new drugs over a number of years.

But it’s not good medical care. Prominent clinical guidelines say that the new direct-acting antivirals should be offered to anyone with Hep C—no matter what their stage of disease. Why should your liver have to start turning into a raisin before you’re cured?

In a clash between financial and medical necessity, the Medicaid statute sides with medical necessity. Under §1927(d), a state Medicaid program can decline to cover a drug if “the prescribed use is not for a medically accepted indication” or if the drug doesn’t have a “clinically meaningful therapeutic advantage” over alternatives. You can’t withhold cures just because they’re expensive.

CMS apparently thinks so too. Back in November of last year, the agency published a letter expressing its “concer[n] that some states are restricting access to [direct-acting antivirals] drugs contrary to the statutory requirements in section 1927 of the Act by imposing conditions for coverage that may unreasonably restrict access to these drugs.”

For the Washington judge, then, this was an easy case. Although the state argued that monitoring was medically appropriate for people with early-stage Hep C, it didn’t “address the liver damage that enrollees could suffer during this ‘monitoring’ period.” The state also claimed that limiting availability of the Hep C drugs might avoid “the currently ill-defined risks of these new medications.” The judge was scornful: “This assertion of ‘ill-defined risks’ is not supported by any clinical evidence and is contradicted by the [state’s] own documents.”

A similar lawsuit has already been brought against Indiana’s Medicaid program, and I expect the outcome to be the same. The legal question here is not remotely difficult: under federal law, Medicaid beneficiaries diagnosed with Hepatitis C are entitled to a cure. The states may be under fiscal pressure, but that doesn’t make the drugs any less medically necessary. (Other cases have been brought against state prison systems for withholding the drugs, including in Pennsylvania. Those cases present somewhat different legal questions.)

That’s not to slight Washington’s concerns with the extraordinary one-time costs of the new therapies. As Austin has written recently, innovation is likely to yield breakthrough drugs that puts even greater pressure on state budgets: “The day that [a] life-extending $1 million ‘miracle’ pill arrives (or the precision-medicine equivalent of a collection of drugs), we may look back on the current hepatitis C treatment funding problems nostalgically.”

Before that day arrives, we need to think hard about how to afford state Medicaid programs more flexibility to spread the one-time costs of a breakthrough drug over a number of years. More generally, we’ll need to have a difficult conversation about how much we’re willing to spend on new therapies given other, competing priorities.

In the meantime, though, I expect that the states will keep losing these Hep C lawsuits.


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