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June 2012
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RATIONED Illinois drug restrictions show single-payer pitfall

Those who think it would be great to have a government-run, single-payer health care system might want to consider the implications of Illinois' recent action involving the hepatitis C drug Sovaldi.

The Centers for Disease Control and Prevention estimates that 3.2 million Americans have the chronic form of Hepatitis C. Most have no symptoms until the disease causes serious damage, such as cirrhosis (scarring of the liver) or liver cancer.

Sovaldi is a novel drug that can wipe out the Hepatitis C virus in patients. But the cure is expensive. The cost of the standard 12-week regimen is $84,000. Illinois' Medicaid program has spent $16 million on the drug since its approval last December, accounting for 70 percent of all of the program's cost of treating hepatitis C patients. In fact, Illinois spent only $6.7 million total treating hepatitis C patients in 2013, before Sovaldi came along.

The soaring cost is a function of Sovaldi's effectiveness. And in a classic case of rationing to try to lower costs, Illinois reacted. The state announced last week that it is putting tight restrictions in place that require patients to meet 25 criteria and get prior approval before Illinois Medicaid will pay for the drug.

The restrictions require that the drug only be given to sicker patients, and bar its use for anyone who has a history of drug or alcohol abuse within the previous year. It imposes a "once in a lifetime" rule as well, giving Medicaid recipients only one shot at receiving the drug. (Hepatitis C is often transmitted by intravenous drug use. Apparently if a person cured by the regimen is later reinfected, that person is out of luck.)

The restrictions also prevent doctors from using Sovaldi in ways that appear promising but haven't yet been approved by the Food and Drug Administration. The Associated Press quotes Dr. Steven Flamm of Northwestern University's Feinberg School of Medicine as saying the new restrictions will eliminate all but 30 percent of the patients he would like to prescribe Sovaldi to.

Another physician, Dr. Nikunj Shah of Rush University Medical Center was also critical of the restrictions. He told the AP the restrictions prevent him from treating patients in earlier stages of the disease, before severe liver damage occurs. He says earlier treatment could prevent the need in some patients for costly liver transplants and, "I think this would be a much better investment of the money for the state."

We think the researchers' criticisms are valid. What we find more disturbing in the case of Sovaldi is that it is not a case where the state is refusing to fund, say, a novel cancer treatment that might extend a patient's life by two or three months. Rather, it is refusing to fund (except in limited circumstances) a cure for a progressive and potentially fatal disease. Only when damage is severe and life is threatened does one qualify for the treatment. And if one happens to be an alcoholic or drug addict who has relapsed in the last year, the state's content to let the disease run its course.

It's these sorts of cost-driven, arbitrary decisions by government bureaucrats that ought to give people pause about the government-sponsored, single-payer health system favored by many Democrats. At least in a market where there are private insurance alternatives (admittedly with their own restrictions) people have a choice and an opportunity to find coverage for the treatment. Unfortunately people limited to Medicaid don't have that choice. In Illinois, they are stuck with the government's life or death decisions. Long live the free market.

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