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The American Journal of Managed Care Special Issue: HCV
Real-World Outcomes of Ledipasvir/Sofosbuvir in Treatment-Naïve Patients With Hepatitis C
Zobair M. Younossi, MD, MPH, FACG, AGAF, FAASLD; Haesuk Park, PhD; Stuart C. Gordon, MD; John R. Ferguson; Aijaz Ahmed, MD; Douglas Dieterich, MD; and Sammy Saab, MD, MPH
Sofosbuvir Initial Therapy Abandonment and Manufacturer Coupons in a Commercially Insured Population
Taruja D. Karmarkar, MHS; Catherine I. Starner, PharmD; Yang Qiu, MS; Kirsten Tiberg, RPh; and Patrick P. Gleason, PharmD
Improving HCV Cure Rates in HIV-Coinfected Patients - A Real-World Perspective
Seetha Lakshmi, MD; Maria Alcaide, MD; Ana M. Palacio, MD, MPH; Mohammed Shaikhomer, MD; Abigail L. Alexander, MS; Genevieve Gill-Wiehl, BA; Aman Pandey, BS; Kunal Patel, BS; Dushyantha Jayaweera, MD; and Maria Del Pilar Hernandez, MD
Does Patient Cost Sharing for HCV Drugs Make Sense?
Darius N. Lakdawalla, PhD; Mark T. Linthicum, MPP; and Jacqueline Vanderpuye-Orgle, PhD
A Way Out of the Dismal Arithmetic of Hepatitis C Treatment
Jay Bhattacharya, MD, PhD, Center for Primary Care and Outcomes Research, Stanford University School of Medicine; Guest Editor-in-Chief for the HCV special issue of The American Journal of Managed
Value of Expanding HCV Screening and Treatment Policies in the United States
Mark T. Linthicum, MPP; Yuri Sanchez Gonzalez, PhD; Karen Mulligan, PhD; Gigi A. Moreno, PhD; David Dreyfus, DBA; Timothy Juday, PhD; Steven E. Marx, PharmD; Darius N. Lakdawalla, PhD; Brian R. Edlin, MD; and Ron Brookmeyer, PhD
The Wider Public Health Value of HCV Treatment Accrued by Liver Transplant Recipients
Anupam B. Jena, MD, PhD; Warren Stevens, PhD; Yuri Sanchez Gonzalez, PhD; Steven E. Marx, PharmD; Timothy Juday, PhD; Darius N. Lakdawalla, PhD; and Tomas J. Philipson, PhD
Currently Reading
Costs and Spillover Effects of Private Insurers' Coverage of Hepatitis C Treatment
Gigi A. Moreno, PhD; Karen Mulligan, PhD; Caroline Huber, MPH; Mark T. Linthicum, MPP; David Dreyfus, DBA; Timothy Juday, PhD; Steven E. Marx, PharmD; Yuri Sanchez Gonzalez, PhD; Ron Brookmeyer, PhD; and Darius N. Lakdawalla, PhD

Costs and Spillover Effects of Private Insurers' Coverage of Hepatitis C Treatment

Gigi A. Moreno, PhD; Karen Mulligan, PhD; Caroline Huber, MPH; Mark T. Linthicum, MPP; David Dreyfus, DBA; Timothy Juday, PhD; Steven E. Marx, PharmD; Yuri Sanchez Gonzalez, PhD; Ron Brookmeyer, PhD; and Darius N. Lakdawalla, PhD
Expanding private-payer coverage of hepatitis C treatment may yield significant long-term cost savings for private payers, reduced costs to Medicare, and increased social value.
Alternative Simulation Results
In the simulation of the private-payer treatment expansion for the Other Adults group only, we assessed the Medicare spillovers driven solely by individuals transitioning into Medicare at age 65. We found that the Other Adults group accounts for 88% of the 20-year spillover effect when treatment is expanded to F2-F4 and 84% when treatment is expanded to F0-F4. This suggests that the majority of the net benefits to Medicare result from improved health of currently infected patients rather than reduced transmission.
 
Next, we assessed the impact on private payers’ costs, attributable to Medicare expanding treatment coverage from F3-F4 to F2-F4, holding private-insurer treatment coverage constant at the baseline. In this simulation, because individuals do not transition from Medicare to private insurance, private insurers benefit from reduced treatment costs and medical expenditures exclusively due to a reduced transmission effect. Therefore, the spillovers generated by expanded Medicare treatment coverage are smaller than those generated by expanded private insurance treatment. After 20 years, private insurers experience cost savings of $0.97 billion compared with the $4.4 billion Medicare saves in the analogous private expansion scenario. Additionally, Medicare requires 25 years to reach positive net benefits of expanding treatment coverage to F2-F4.
 
Finally, we explored the impact of expanding Medicaid treatment coverage simultaneously with private insurance coverage. If both Medicaid and private payers expand treatment from F3-F4 to F2-F4, Medicare saves $5.1 billion over 20 years—an additional $0.6 billion in savings, relative to a private-payer expansion alone. Simultaneous expansion by Medicaid and private insurers from F3-F4 to F0-F4 saves Medicare $12.8 billion in total costs—an additional $1.2 billion in savings. Given the significantly larger size of the privately insured population relative to the Medicaid population, it is not surprising that private insurance treatment expansion generates the majority of spillovers to Medicare.
 
Expanding Medicaid treatment coverage also has a small effect on costs to private payers through reduced transmission rates. Over 20 years, private payers experience an additional $0.3 billion in total cost savings when Medicaid expands treatment to F2-F4 and an additional $0.82 billion in total cost savings when Medicaid expands treatment to F0-F4.
 
The eAppendix presents additional sensitivity analyses conducted on model parameters and assumptions; specifically, sensitivities to changes in treatment costs and in the value of a QALY. Our findings suggest that increasing treatment costs by 50% does not substantively change spillovers to Medicare.6 For example, when treatment costs increase by 50%, expanding treatment to F2-F4 results in a $5.1-billion savings to Medicare compared with a $4.4-billion savings in the main analysis. We also found that reducing the value of a QALY to $50,000 yields a positive net social value by year 10 compared with year 8 in the main analysis.
 
DISCUSSION
Investments in HCV treatment pay off over the long term; unfortunately, however, private payers face patient turnover, which makes it difficult for them to enjoy the long-term return on their investment. Although most enrollees switch insurers within 10 years, it takes roughly 15 years for private-payer treatment investments to pay off, from their own individual perspective. Therefore, enrollee turnover creates a short-term focus among private payers that might discourage HCV treatment and other similar long-term investments. The costs of this incentive problem are borne by all future payers—including Medicare and private payers.
 
The vast majority of HCV-positive baby boomers will transition from private insurance coverage to Medicare within the next decade. Our analysis shows that when private payers expand treatment coverage to fibrosis stages F2-F4, they accrue cost savings over the next 20 years and save Medicare $4.4 billion over the same period. However, if private insurers expand coverage to all fibrosis stages (F0-F4), the spillover benefits to Medicare increase to $11.1 billion over 20 years.
 
Future costs are also borne by private payers. This may seem counterintuitive since these costs result from private payers’ own decisions; however, this is a classic economic problem of “free-riding.” Private payers recognize that other firms today cover the enrollees they will cover in 15 years; thus, they understand that their current treatment decisions have a smaller impact on the health of their enrollee population 15 years from now. Consequently, a single insurer can only hope that other payers will treat its future beneficiaries. Unfortunately, all private payers face the same harsh calculus, which discourages short-term treatment investments and imposes long-term costs on everyone.
 


 
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