“There isn’t an endless bank account,” said Darin Gordon, Tennessee’s former Medicaid director, who was in charge when the hepatitis C cure was launched. “States have to balance budgets, and this came in and hijacked our budget.”
Tennessee quickly limited the treatments to the sickest patients. After reviewing the scientific literature, Gordon’s medical team determined that it was only medically necessary to treat patients whose livers had begun to show scarring, a sign that the disease had progressed beyond the initial latent stage. Even if patients’ conditions stabilize while they await the treatment, they are still contagious. Once the treatment is finished, they no longer can spread the virus.
Under this policy, less than 10 percent of diagnosed Medicaid patients have been treated, still costing the program more than $100 million in the past two years. Patients like Scott, whose liver has no significant scarring, were forced to wait for the disease to progress before being prescribed any of the new drugs.
The state denied Scott’s request for the cure in March 2016. But she wouldn’t let that stop her. She appealed and was granted a hearing in Knoxville, which she had to attend by phone because it was two and a half hours’ drive from her home. She explained to the judge that she was a single mother of two young boys and could not risk her health declining. A few days later, she received a court order in the mail, denying her access to the treatment.
By forcing Tennessee Medicaid and other public payers to delay coverage, the high price of the hepatitis C drugs incurs a social cost. While waiting to become sick enough for treatment, patients may transmit the disease. Some, including Scott, begin to feel symptoms like fatigue and muscle pains, which may hinder their ability to work.
“The drug companies do not have people’s interest in mind, they have money in mind,” Scott said. “It’s not fair that they are playing with people’s lives.”
Since the firm’s sale in 2015, Precision Health Economics’ three founders have taken roles in its parent company. Goldman is an executive economist at Precision for Value and chairs an advisory board focused on “value and evidence.” Lakdawalla is the chief scientific officer, and Philipson is listed as chief economist and the chair of the strategy and innovation board.
On its website, Precision for Value lays out how it can help biotech companies with “preliminary pricing, access, and evidence strategy” and “launch price strategy.” The company says that it can “pressure test” a company’s proposed messaging strategy on value with key stakeholders and determine how willing the market might be to pay future drug prices.
Under its new ownership, Precision Health Economics recently launched a group focused explicitly on assessing the value of innovative drugs. The firm’s three founders are involved with this Innovation and Value Initiative, which bills itself as an “unparalleled convergence of academic leaders and scientific experts.” Lakdawalla serves as executive director of the initiative. On the initiative’s health advisory panel, which is supposed to steer the research agenda, Goldman and Philipson sit alongside mostly executives from pharmaceutical companies and trade groups.
The initiative also has a scientific advisory group for internal peer review. All of its members are current or former Precision Health Economics consultants or staffers. Lakdawalla said in an email that all of its projects “either undergo academic peer review at a journal, or include an external peer reviewer outside [the firm].”
To promote the new initiative, Precision Health Economics has launched an extensive advertising campaign, sponsoring content in Health Affairs, writing op-eds in The Washington Post and Forbes, and even buying ads on Google.
In a phone conversation, Goldman was asked whether the stratospheric drug prices bolstered by the professors at Precision Health Economics deprive low-income patients, like Emily Scott, of vital treatments. He responded that it’s important to take a longer-term view.
“You worry about access for the people for whom there is a treatment,” he said. “I’m worried also for the access for people for whom there isn’t a treatment.”
Correction, Feb. 23, 2017: This article previously gave the incorrect name for the CEO of Amgen. His name is Robert Bradway, not Richard Bradway.
Originally published on ProPublica