Louisiana Proposes Using Obscure Federal Law to Slash Hepatitis C Drug Prices

Trump administration could sidestep patents, commission cheaper generics

The public outrage over high-priced hepatitis C drugs is taking a new twist as Louisiana’s top health official proposes using an obscure federal law to obtain the medications at a much lower cost, according to a report from Kaiser Health News (KHN). If the move is successful, other states could reap the benefits.

Right now, covering treatment for the 35,000 of Louisiana’s uninsured and Medicaid-dependent residents with hepatitis C infection would cost the state $764 million, a staggering sum that would have to be pulled from schools, public services, and infrastructure programs. Louisiana’s budget runs $31.2 billion a year, but its discretionary line items, such as health care, account for only $3.6 billion.

In April, Dr. Rebekah Gee, the state’s health secretary, sent a letter to the nation’s top health experts to explore tapping a patent law created in 1910 that gives federal regulators the power to appropriate inventions and develop a product in the interest of the public good.

The law has been used before by government agencies, including the Department of Defense. In the 1960s and early 1970s, the government used it to buy several medications at a lower cost.

In response to Gee’s letter, Dr. Joshua Sharfstein, an associate dean at the Johns Hopkins Bloomberg School of Public Health, spent a recent afternoon with some of the country’s top academic and legal health officials considering the challenges of using the law, U.S. Code Section 1498 under Title 28. They concluded that it should be tried.

A favorable ruling for Louisiana would mean the strategy could be used across all 50 states.

Under the law, the Trump administration could sidestep patents and have a generic supplier provide lower-priced versions of expensive antiviral drugs, such as Sovaldi (sofosbuvir) and Harvoni (ledipasvir/sofosbuvir), which are marketed by industry leader Gilead Sciences. The government would have to pay the drug-maker only “reasonable compensation” and prove that it would benefit from using the product.

“The federal government has a direct financial interest in controlling hepatitis C,” said Rachel Sachs, associate professor of law at Washington University in St. Louis. Many of those infected are covered by public programs, such as Medicaid or the prison system.

Gee, who is working to raise bipartisan support to force a change in hepatitis C drug prices, said she believes the use of the patent law could be a “win–win” for the state and industry.

“Pharma needs to think about different approaches to profitability,” Gee said. “Sometimes quantity can be an important driver of profit, not just the price of each unit of this drug.”

Her proposal would ultimately need approval from Health and Human Services Secretary Dr. Tom Price, who oversees the federal agency that administers Medicaid. During his confirmation hearings, Price said he would be committed to making certain that drug prices “are able to be afforded by individuals.”

When contacted by KHN, the Pharmaceutical Research and Manufacturers of America, the trade association for drug-makers, declined to comment on the potential use of the law. Gilead did not return calls for comment.

Source: Kaiser Health News; May 4, 2017.