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Hepatitis C drug costs challenge corrections budget

Covering the cost of a new treatment for hepatitis C treatment for a growing number of patients is a challenge for the Department of Corrections.

By Hillary Borrud

Capital Bureau

Published on September 27, 2015 7:45PM

Last changed on September 28, 2015 3:34PM

Two Rivers Correctional Institution in Umatilla. The Department of Corrections faces the challenge of paying for expensive new treatments for hepatitis C.

Courtesy of the state Department of Corrections

Two Rivers Correctional Institution in Umatilla. The Department of Corrections faces the challenge of paying for expensive new treatments for hepatitis C.


Oregon faces budget-busting costs for expensive new treatments for hepatitis C, and the issue is not limited to the state’s Medicaid program.

The prison system also faces higher costs from a new drug that cures many people of the potentially deadly disease, but costs the Department of Corrections roughly $70,000 per inmate for the 12-week treatment. The Legislature already approved an additional $3.2 million in a supplemental budget bill earlier this year to cover the drug Harvoni for inmates, after the number of inmates treated rose sharply in December. The increase was also part of the reason the Legislature boosted the Department of Corrections’ latest two-year budget for medical supplies by nearly 32 percent.

At the same time, it remains difficult for low-income people insured under the state’s Medicaid program, the Oregon Health Plan, to get approved for the newer hepatitis C drugs unless they have reached the more advanced stages of the disease.

Hepatitis C can eventually cause liver failure and cancer. The death rate from hepatitis C in Oregon has been higher than for HIV for more than a decade, and an average of 441 people died from the virus each year from 2009 to 2013, according to an epidemiological report released by the Oregon Health Authority this year. A majority were men and people aged 45 to 64, and blacks and Native Americans were roughly twice as likely to die from the virus.


Higher rate among inmates


There is a higher prevalence of hepatitis C among current and former inmates, and in Oregon researchers think that 30 percent of people in state prisons might have chronic hepatitis C infections, according to the report. Although many people were infected through pre-1992 blood transfusions, researchers identified injection drug use as the most common route of transmission for new hepatitis C infections in Oregon. Nationally, young injection drug users who get the virus are white, live in rural areas and initially got hooked on prescription opiates.

Wendy Smith, professional services administrator at the Department of Corrections, said the agency does not have a specific budget for Harvoni in the current two-year budget. However, the agency spends approximately $1.2 million per month on its pharmacy, Smith wrote in an email.

A budget report by the Legislative Fiscal Office earlier this year said the average number of inmates receiving Harvoni rose from nine to 35 per month, which based on the cost provided by the agency would translate to a monthly cost of approximately $816,000 for Harvoni alone. The treatment usually takes 12 weeks to complete.


‘A significant cost driver’


In a statement, Steve Robbins, the agency’s chief financial officer, said medical treatment “continues to be a significant cost driver” for the department. However, Robbins added, “The agency is constitutionally mandated to provide medically necessary care to a community standard, without regard to treatment cost. The use of Harvoni has become community standard as recommended by the American Association for the Study of Liver Diseases (AASLD) and Infectious Diseases Society of America (IDSA).” The Eighth Amendment to the U.S. Constitution prohibits cruel and unusual punishment.

The agency’s last two-year medical supply budget, which is mostly medication, started at $25.9 million and was ultimately increased to $30.4 million, in part because of the hepatitis C drug costs, Robbins wrote. The current two-year medical supply budget is $34.2 million. Robbins wrote that more inmates are also choosing the treatment because it does not have some of the side effects of earlier treatments.

Without discounts, Harvoni can cost as much as $94,500 for a 12-week treatment, according to published news reports. Although the Department of Corrections is part of a large pharmaceutical buying consortium, it still appears to be paying more than the price at which drug manufacturer Gilead Sciences reportedly offered to sell the drug to Medicaid patients in Oregon.

A year ago, The Oregonian reported Gilead representatives said they offered the drug to Oregon at a price close to what Canada paid, $55,000 for the 12-week treatment.

The Capital Bureau is a collaboration between EO Media Group and Pamplin Media Group.



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