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Assessing the Burden of Illness of Chronic Hepatitis C and the Impact of Direct-Acting Antiviral Use on Healthcare Costs in Medicaid
M. Christopher Roebuck, PhD; Joshua N. Liberman, PhD

Assessing the Burden of Illness of Chronic Hepatitis C and the Impact of Direct-Acting Antiviral Use on Healthcare Costs in Medicaid

M. Christopher Roebuck, PhD; Joshua N. Liberman, PhD
Objectives: To quantify the burden of illness of chronic hepatitis C virus (HCV) infection and estimate the impact of interferon-free direct-acting antiviral treatment on healthcare costs in Medicaid.
Study Design: Observational, retrospective analysis.
Methods: Medicaid claims data from 2012 for nonelderly adult enrollees with chronic HCV in 16 states were used to estimate the burden of HCV in Medicaid. Annual measures of health services utilization and cost for patients with HCV were compared with a control group of patients without HCV exactly matched on a robust set of individual characteristics and stratified according to liver disease severity, Medicaid eligibility group, and plan type. Subsequently, HCV burden-of-illness estimates were used in a separate analysis of Medicaid State Drug Utilization Data on interferon-free drug utilization and expenditures to estimate the annual and cumulative impact of these curative medications on national Medicaid costs from 2013 through 2022.
Results: Annual per-person Medicaid healthcare costs attributed to HCV infection were estimated to range from $10,561 for noncirrhotic disabled adults to $46,263 for nondisabled adults with end-stage liver disease. The costs were due mainly to inpatient hospitalizations and outpatient hospital visits, prescription drug utilization, outpatient physician’s office/clinic visits, and laboratory tests. By 2014, the first full year following the approval of interferon-free treatment, an estimated 12,175 adults with HCV were cured in Medicaid nationwide, each avoiding an estimated $15,907 per year in healthcare costs associated with the disease. As more patients in Medicaid are treated and net savings continue to grow year after year—due to recurring avoidance of health services use and declining drug prices—total cumulative treatment costs since 2013 are expected to be fully offset by total cumulative healthcare expenditure reductions by the end of 2019. By 2022, the recurrent annual avoidance of healthcare costs will have delivered an estimated $12 billion in total cumulative savings to Medicaid, net of DAA drug expenditures.
Conclusions: The introduction of interferon-free HCV treatments enables the avoidance of significant healthcare costs previously associated with treating the disease year after year, producing annual cumulative Medicaid savings beginning in 2019. A main finding from this study is that the cost of a complete DAA treatment course, at 2018 estimated net prices, can be expected to be fully offset by healthcare cost savings after only 16 months, on average, on a per-person basis. Given the tremendous value provided by these curative drugs, Medicaid policies aimed toward restricting access to these treatments based on disease severity or other requirements would be shortsighted.
Am J Manag Care. 2019;25:-S0

More than 2 million people are currently infected with the hepatitis C virus (HCV) in the United States.1 For many, an HCV infection is an asymptomatic condition that often goes undiagnosed. If untreated, the virus increases an individual’s risk of life-threatening conditions such as cirrhosis, hepatocellular carcinoma, and liver failure.2 As such, HCV imposes substantial costs on society. Patients who are infected with HCV have poorer quality of life and decreased productivity,3-5 consume more health services,6-11 and have higher mortality rates.12 Moreover, healthcare needs increase dramatically as HCV disease progresses.7,13-16
Until 2011, the primary treatment for chronic HCV infection was a combination of pegylated interferon and ribavirin. With this regimen, about 50% of patients were able to achieve “cure,” defined by a sustained virologic response (SVR)—no measurable virus in the blood—12 or 24 weeks after the end of treatment.17,18 The duration of treatment was long (up to 48 weeks) and associated with high discontinuation rates.19 In May 2011, the FDA approved the first agent in a new therapeutic class known as direct-acting antivirals (DAAs). Unlike peginterferon and ribavirin, DAAs interfere with the growth and replication cycles of HCV itself.20 DAAs were initially used in combination with peginterferon and ribavirin; however, since late 2013, interferon-free DAA regimens have been available. Clinical evidence indicates that these interferon-free DAA regimens are well tolerated and effective, achieving SVR in 92% or more of patients, although outcomes vary by genotype, prior treatment, and disease severity.21

DAAs were initially more expensive than older treatment options; however, these costs have declined substantially over time with increased competition. Indeed, within a year of the approval of the first interferon-free regimen, additional interferon-free DAAs entered the market, which enabled payers to negotiate large discounts and/or rebates in exchange for favorable formulary placement. Largely because of this increased competition, negotiated supplemental rebates have risen from about 22% off list price in 2014 to as high as 60% in ensuing years.22,23 Moreover, list prices for DAAs themselves have declined drastically, from nearly $100,000 per treatment course in 2014 to as low as $24,000 per treatment course today.24

Despite a reduction in the costs of DAAs, state Medicaid programs have expressed concerns over allowing universal access to these new therapies because of the unique dual challenge of having both the financial constraints of annual public budgets and high numbers of HCV-infected enrollees.25 Consequently, many Medicaid programs have chosen to restrict coverage of DAAs, based on parameters of fibrosis stage (ie, degree of liver damage), abstinence from alcohol and substance use, and prescriber type.26,27 From an economic efficiency standpoint, the appropriateness of these access restrictions depends not only on the costs of DAAs but also on the benefits derived from their use.

Several economic evaluations of DAAs have been published.28-31 Moreover, burden-of-illness studies have been conducted on populations of patients with HCV in commercial insurance,7,10,13,14,32,33 Medicare,9 and the general US population.8,11 However, comparable research in Medicaid is scant, with only 1 published study on a single state’s experience.15 The present study estimates the healthcare costs associated with chronic HCV infection in Medicaid using detailed data from 16 states and more than 5 million Medicaid enrollees, paired with actual interferon-free DAA utilization and expenditure data to measure the annual and cumulative impact of these curative medications on Medicaid costs from 2013 through 2022.


This study was conducted in 2 separate stages using 2 distinct data sources to estimate Medicaid costs attributable to HCV infection and to Medicaid savings resulting from curative DAA treatment. These sources were Medicaid Analytic eXtract (MAX) files, which were used to quantify the per-patient cost burden of HCV infection, and Medicaid State Drug Utilization Data (SDUD) files, which were used to project the number of Medicaid beneficiaries cured of HCV following the release of interferon-free DAAs and to simulate the expected savings associated with these curative therapies.

Medicaid Analytic eXtract Data

MAX files were obtained under a Data Use Agreement from CMS with institutional review board (IRB) approval and oversight (Advarra IRB; Columbia, MD). Created primarily to support research and policy analysis, MAX data include pharmacy and medical claims and encounter records, as well as eligibility information, on all individuals enrolled in Medicaid.34,35 MAX files for the year 2012 from 16 states—Alabama, California, Connecticut, Florida, Illinois, Indiana, Louisiana, Michigan, New Hampshire, New Mexico, New York, Ohio, Oregon, Pennsylvania, Virginia, and Washington—were utilized for this study. Participants were aged between 18 and 64 years as of December 31, 2012, with unrestricted Medicaid benefits and without an annual gap in coverage of more than 30 days. After these criteria were imposed, 5,210,249 adult Medicaid recipients remained. Participants were then segmented according to their Medicaid basis of eligibility: either adults who were blind/disabled (hereafter “disabled”) or adults who were other nonblind/disabled (hereafter “nondisabled”). They were further stratified by plan type: either fee-for-service (FFS) or managed care (see Appendix Figure).

Medicaid State Drug Utilization Data

The SDUD files contain precise information on the counts and reimbursement amounts for all prescriptions dispensed in Medicaid nationwide.36 Specifically, data were obtained on all interferon-free DAA (hereafter just “DAA”) fills from the fourth quarter of 2013 through the second quarter of 2018. Package inserts for each DAA product, which specify recommended dosage amounts and treatment durations by cirrhosis status and treatment naïvety, were used to determine the average number of prescriptions filled per treated patient with HCV infection and were applied to the SDUD to calculate the annual number of patients treated with DAAs. Subsequently, expected DAA-specific SVR rates were used to determine the estimated annual number of patients cured of the virus, accounting for treatment nonadherence. See Appendix for details.

HCV Burden-of-Illness Analysis

MAX claims and encounter data were analyzed to estimate Medicaid costs attributable to an HCV diagnosis in 2012. Patients with chronic HCV were identified using an algorithm employed by Gordon et al.14 Individuals were required to have at least 1 medical claim with a diagnosis of chronic HCV; at least 2 medical claims on different dates for unspecified HCV or HCV carrier; or 2 or more medical claims at least 6 months apart for unspecified HCV, HCV carrier, or acute HCV. Records for HCV testing were excluded from this case-finding definition to avoid basing HCV status on rule-out procedures. Using these criteria, a total of 72,109 individuals were classified as having chronic HCV during the study period. Patients were then assigned to 1 of 3 liver disease severity cohorts: noncirrhotic, cirrhosis, or end-stage liver disease (ESLD), based on the work of Gordon et al.14 See the Appendix for details.

Patients with chronic HCV were exact-matched 1:1 to control individuals (those without evidence of HCV) on the following demographic and plan characteristics: basis of eligibility, age, gender, race, ethnicity, state of residence, plan type, any months enrolled in primary care case management, and any months receiving cash maintenance assistance. Individuals were also exact-matched on the presence of diagnoses for asymptomatic HIV or symptomatic HIV/AIDS because these often cooccur with, but are not caused by, HCV infection. Because patients with HCV were exactly matched to patients without HCV, no statistically significant differences in mean values of any of the matching variables were present. Additional details are provided in the Appendix.

Five count measures of annual health services utilization (HSU) were constructed from the claims data: inpatient hospitalizations, hospital days, emergency department (ED) visits, physician’s office/clinic visits, and prescription drug fills (adjusted to 30-day equivalents). For individuals enrolled in FFS plans, healthcare cost variables were generated using the amounts paid by Medicaid. Cost measures were not created for managed care plan enrollees because their health services are routinely covered on a capitated basis. In the process of building the MAX files, CMS classifies Medicaid expenditures into 33 specific types of service. For the present analysis, a subset of 14 of these were retained; the remaining 19, which contained little to no spending, were summed to form an “other” category. Costs were aggregated into drug and nondrug subtotals, as well as total healthcare costs. Because HCV prescription drug costs were expected to be a significant part of the burden of illness in 2012, spending on peginterferon and ribavirin—and the proportion of chronic HCV patients treated with this regimen—was measured and reported separately. The costs associated with the first 2 DAAs on the market (boceprevir and telaprevir), which were used concomitantly with peginterferon and ribavirin in 2012, were itemized.

Differences in mean values for the HSU and cost variables were tested between the chronic HCV and control groups, as well as across liver disease severity cohorts using the nonparametric Kruskal-Wallis equality of populations test.37 All analyses were conducted using Stata/MP version 15.1 (StataCorp LP; College Station, TX).

Impact of DAA Use on Healthcare Costs Simulation

The impact of DAA utilization on overall healthcare costs in Medicaid from 2013 through 2022 was projected by combining the results from the burden-of-illness analysis with DAA costs and utilization data from the SDUD files.

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