Have high-cost drugs left the state of California scrambling?

Tammy Lovelace quit heroin years ago. But her 17-year addiction led to another affliction: hepatitis C. It wasn’t so easy transitioning to drug-free living with that disease.

“I can sleep 20 hours a day, literally, with no interruptions, just sleep," she said when I interviewed her earlier this year for a story about who qualifies for a new generation of hepatitis C drugs in Medi-Cal, the state’s Medicaid program.

Lovelace was told she wasn’t sick enough to receive a highly effective — and expensive — hepatitis C treatment, which can run $85,000 per regimen. The state says the expense of the pharmaceuticals has nothing to do with who is prescribed them. But the question lingers: With an estimated 200,000 people living with hepatitis C in Medi-Cal, is cost a factor in determining who — or how — patients access high-cost treatments?

As a fellow in USC Annenberg’s 2015 California Data Fellowship, I’ll explore how much new drugs are costing the state of California, and what the state is doing to manage the costs.

There’s reason to believe California is grappling with the expense of new drugs like Sovaldi and Harvoni in its public health programs. Governor Jerry Brown’s first budget proposal this year penciled in an additional $300 million dollars just for high-cost drugs like those that treat hepatitis C. He also called for a task force “to address the state’s approach regarding high‑cost drug utilization policies and payment structures.”

But hepatitis C treatments are not the only specialty drugs that pose challenges to patients, private health plans and state budgets. New cancer drugs are entering the market. And state agencies such as the health exchange Covered California have recently launched policies to control out-of-pocket costs for consumers.

On a national level, specialty drug spending has been significant. The pharmaceutical benefits management company, Express Scripts, says the increase in drug spending in 2014 was the highest it’s been since 2003. It reports that Medicaid specialty drug spending went up 35.8 percent in 2014, even though utilization of these drugs had slightly decreased.

Drug pricing and its impact will soon be before California voters. A proposition currently trying to qualify for the 2016 ballot seeks to limit state spending on a prescription drug to no more than the lowest price paid by the Department of Veterans Affairs.

And drug pricing is now a presidential campaign issue. Hillary Clinton says she wants to stop drug company profiteering and make drugs more affordable to patients.

The new wave of expensive pharmaceuticals affects all Californians: low-income patients on public programs, taxpayers, and private health insurance consumers whose premiums may be affected by increased costs. My goal is to understand how a large health care payer — the state of California — is managing under the new cost pressures, so that we can understand how the public as a whole may be affected in the future.

[Photo by Charlie Kaijo via Flickr.]