A subscription-based payment model for expensive hepatitis C virus medicines may improve access to the drugs, while also reducing costs for cash-strapped state programs and other payers grappling with how to treat a large volume of patients without going bankrupt, a U.S. senator and two health experts said.

The subscription model for hepatitis C virus, or HCV, medicines could operate like the video-streaming service Netflix Inc., where subscribers pay a flat recurring fee for unlimited content, said Sen. Bill Cassidy, R-La., who is a gastroenterologist; Peter Bach, director of Memorial Sloan Kettering's Center for Health Policy and Outcomes; and Mark Trusheim, strategic director at the MIT Center for Biomedical Innovation.

For drugs, the biopharmaceutical manufacturers would enter into contracts with states or other payers for a negotiated price for a certain volume of a medicine supplied over a specified period.

The subscription models could vary and could involve a lump-sum payment or an up-front payment with additional payments and discounts rendered at certain milestones or at the end of the contract, depending on volume or other stipulations.

Given there are multiple effective treatments for HCV from companies like Gilead Sciences Inc., AbbVie Inc. and Merck & Co. Inc., drugmakers would still face a competitive marketplace where they would need to negotiate their prices through an open bidding process to win customers, Cassidy, Bach and Trusheim wrote in an Oct. 29 article in the Journal of the American Medical Association.

They noted Louisiana — Cassidy's home state — has been considering employing a Netflix-like subscription payment model for HCV drugs and Gilead has shown some interest in participating.

The National Governors Association has backed the subscription idea for states for HCV and other expensive drugs critical to addressing public health crises, like the opioid overdose-reversal agent naloxone.

Few treated

The top HCV drugs, like Gilead's Harvoni and Sovaldi, are considered curative products, but they are highly expensive, at least in terms of costs up front, so only about 15% of the estimated 3 million people in the U.S. with the disease have been treated with the medicines.

State Medicaid programs and prison systems have responded to the expense of the HCV drugs by limiting access to the products, even though it would be better in the long run if people infected with the virus were treated as rapidly and broadly as possible, Cassidy, Bach and Trusheim said.

"The optimal way to treat HCV is at the population level, that is, by treating every patient possible, with as much speed as is possible," they said. "Doing so would reduce the health consequences for those infected, generate the most future savings from improved health, and help decrease future transmission of HCV from person to person."

The current shortfall in HCV treatment was due in part to the reliance of the per-prescription revenue model, Cassidy and his co-authors said.

"Often what generates the most revenues and profits for drug corporations is charging a higher price per prescription, even if that approach leads to a lower number of filled prescriptions," they said.

Under the per-prescription model, the states' only alternatives for covering HCV drugs is to raise taxes or reallocate funds from other parts of their discretionary budget, including other priorities in healthcare.

Pilot testing

The model's subscribers would be coalitions consisting of various payers, like from state programs, private insurers and agencies that cover federal employees and others, Cassidy, Bach and Trusheim said.

They noted that before implementing it broadly, the Netflix-type subscription idea could be tested by the Center for Medicare and Medicaid Innovation, or CMMI, which was established by Congress in 2010 under the Affordable Care Act to test new payment and delivery models that might reduce expenditures.

The subscription model, however, raises some regulatory questions, such as whether it could be interpreted as a new best price under the Medicaid drug rebate program or if granting preference to one manufacturer would run afoul of its rules, Cassidy and his co-authors said.

Medicaid is the federal government's insurance program for the poor. Under its drug rebate program, biopharmaceutical companies that want their products covered by the federal government must offer states a price that includes a minimum rebate or, if lower, the best price the manufacturers provide to private-sector purchasers, like hospitals.

The Trump administration has been considering using the CMMI to test a number of ideas, including a subscription-based reimbursement model for antibiotics, in which hospitals would pay a flat-rate fee for access to a certain number of doses of new drugs in the class, according to U.S. Food and Drug Administration Commissioner Scott Gottlieb.

Most recently, the administration said it wants to use CMMI's authority to test an international pricing index payment model for injectable drugs covered by the government's Medicare program for seniors and disabled Americans.