ELIMINATING HCV TRANSMISSIONMAY REQUIRE STRUCTURAL CHANGEIN HOW PRISONS PURCHASE MEDICATIONS

MADELINE ADEE CMPHMADEE@EMORY.EDU

ANNE SPAULDING MD MPHASPAULD@EMORY.EDU

Outline 1. HCV Screening in Correctional Facilities• Current status

• Barriers

2. Who Pays for Treatment?

3. Current Work• Barriers to decreasing price for treatment

• What correctional facilities pay for DAAs

• How to get less expensive drugs in to prisons

Current Status of Screening in Prisons and Jails

• Many states do not have routine screening

• Inconsistencies in prevalence estimates based on choice of numerator and denominator• Inclusion of known positives?• Out of tested or entire prison

population?

Disincentive to Screen in Prisons

Newly identified medical issues

Greater responsibilityto treat

8th amendment of the Constitution prohibits cruel and unusual punishment, which includes

“deliberate indifference to health needs” (Estelle v. Gamble 1976)

Increased medical costs

This becomes an issue with hepatitis C when prisons cannot afford

costly DAAs

Primary challenge is cost. Who is paying?

Prisons bear up-front costs:• Screening• Counseling• Drugs and medical care• Connection to care after release

• Society and individuals benefit • Gain life years• Avert medical costs • Prevent new infections

Cost-effectiveness in Prisons: Hepatitis C Treatment

Our Research

•Collaboration with Lawyer: Bill von Oehsen

•Infectious Disease Clinics of North America – will be published online soon

Barriers to Decreasing Price

•Pharmaceutical company can’t just negotiate with a DOC to very low price due to federal pharmaceutical pricing regulations

•Negotiating too low with prison systems disrupts even bigger markets, such as Medicaid. • In order to participate in the Medicaid Drug Rebate Program (MDRP), must give Medicaid the “best

price”

Barriers to Decreasing Price•State prisons are not eligible for the same discounts as safety-net hospitals, VA, or FBOP-- they all purchase through mechanisms that are exempt from best price• Safety net hospitals: 340B Program

• Veterans Administration: Federal Ceiling Price Program

• Federal Bureau of Prisons: Federal Supply Schedule

• AWP: Average wholesale price. The “list” price.

• 340B: Maximum price that can be charged to a 340b covered entity.

SOURCE: Based on unpublished Georgia Department of Corrections data, supplied November 2017

$69,773

$49,657

$38,186

$4,966$400

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

AWP AMP 340B, MDRP Nominal PriceCeiling

Cost to Produce

Estimated Price per Course of Treatment, DAAs for Hepatitis C

• AWP: Average wholesale price. The “list” price.

• AMP: Average manufacturer price. The average price paid to the manufacturer by wholesaler or other direct purchaser.

• 340B: Maximum price that can be charged to a 340b covered entity.

SOURCE: Based on unpublished Georgia Department of Corrections data, supplied November 2017

$69,773

$49,657

$38,186

$4,966$400

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

AWP AMP 340B, MDRP Nominal PriceCeiling

Cost to Produce

Estimated Price per Course of Treatment, DAAs for Hepatitis C

• AWP: Average wholesale price. The “list” price.

• AMP: Average manufacturer price. The average price paid to the manufacturer by wholesaler or other direct purchaser.

• 340B: Maximum price that can be charged to a 340b covered entity.

• Nominal Price: Price that is less than 10% of AMP. Certain “safety net” providers can negotiate nominal price with manufacturers, without there being a violation of federal drug pricing laws.

SOURCE: Based on unpublished Georgia Department of Corrections data, supplied November 2017

$69,773

$49,657

$38,186

$4,966$400

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

AWP AMP 340B, MDRP Nominal PriceCeiling

Cost to Produce

Estimated Price per Course of Treatment, DAAs for Hepatitis C

• AWP: Average wholesale price. The “list” price.

• AMP: Average manufacturer price. The average price paid to the manufacturer by wholesaler or other direct purchaser.

• 340B: Maximum price that can be charged to a 340b covered entity.

• Nominal Price: Price that is less than 10% of AMP. Certain “safety net” providers can negotiate nominal price with manufacturers, without there being a violation of federal drug pricing laws.

SOURCE: Based on unpublished Georgia Department of Corrections data, supplied November 2017

$69,773

$49,657

$38,186

$4,966$400

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

AWP AMP 340B, MDRP Nominal PriceCeiling

Cost to Produce

Estimated Price per Course of Treatment, DAAs for Hepatitis C

$20,000

$14,234$10,946

$1,423 $400$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

AWP AMP 340B, MDRP Nominal PriceCeiling

Cost to Produce

Estimated Price per Course of Treatment, DAAs for Hepatitis C

Ways of Decreasing Price1. Pooled procurement

2. Contracts with entities eligible for discounts under the 340B Drug Pricing Program

3. Nominal pricing

4. Section 1115 waiver

5. Change best price rule statutorily

6. Purchasing a patent◦ Recommended in A National Strategy for the Elimination of Hepatitis B & C: Phase Two

Report

7. Invoke 28 U.S.C. §1498oRecently considered as a potential strategy by Louisiana

Nominal Pricing: a Possible Solution for Correctional Facilities

•Hurdles to nominal pricing

• Finding a willing seller

• DHHS determining that prisons can count as a “safety net provider”

• Prisons may still need to expand budget for HCV testing and treatment

•Requires cooperation on the part of the manufacturer, but could be beneficial to them as well

• Prisons are an untapped market

• At a nominal price of $4,000 per course of treatment, drugs could still be produced for a small fraction of sales price

• Wouldn’t disrupt other DAA markets

• Nominal price by definition must be less than 10% of AMP – very substantial discount

Gap in the Marketplace: HCV Therapy Demand Curve

Number of Persons with Chronic Hepatitis C Hypothetically Treated and Missed under Three Pricing Strategies. • FY 2017, Georgia

Department of Corrections treated 219 Patients with DAAs

• At AWP prices, this would cost $15,280,287

• The same amount of money could treat 400 people at 340B pricing, or 3,820 people at a nominal price of $4,000.

under 3 Schema: AWP,

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

Average WholesalePricing

340B Pricing Nominal Pricing

Nu

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Treated Not Treated

Data Source: Georgia Department of Corrections, FY 2017- FY 2018

Questions?

CONTACT I NFO:

MADELINE ADEE CMPH

MADEE@EMORY.EDU

ANNE SPAULDING MD MPH

ASPAULD@EMORY.EDU