The state is paying for the marketing campaign as part of a deal to give AbbVie the exclusive right to treat its citizens who have the potentially deadly liver disease. Armed with its medication, Mavyret, AbbVie beat out rivals Merck and Gilead Sciences in a blind bidding process.

It’s the second time this year that a state has struck a novel deal with a pharmaceutical company to obtain drugs that can cure hepatitis C ― with discounts from a price that came to market at $84,000 for a course of treatment.

The drugmakers are in a race to treat the . with the viral infection. Left untreated, its most chronic form can cause liver damage, including cirrhosis, as well as liver cancer and death. States are weighing the price of curing those infected with hep C using the new drugs against the medical and economic costs of long-term care for those with untreated infections. The state bears the medical expenses of the Medicaid and prison populations as well as public employees and retirees.

The money paid to AbbVie buys a package of services that includes outreach and testing to identify patients as well as the drugs to treat them. But the price and other details of the deal are secret under the Washington state Public Records Act, even though they involve massive commitment of taxpayer dollars.

Washington officials said they’re prohibited from releasing details by that hide drug pricing to protect what companies consider trade secrets. Lawyers for the three pharmaceutical firms that submitted bids vowed to go to court to halt the release of bid documents requested by Kaiser Health News under state public records laws.

Without transparency about the details, however, it is impossible to evaluate whether the spending amounts to smart public policy or a boondoggle that primarily benefits manufacturers hoping to lock down payments of perhaps $10,000 per patient for drugs from Medicaid. The same drugs from the same manufacturers can cost in other parts of the world.

The secrecy troubles Dr. John Scott, medical director of the University of Washington’s Hepatitis and Liver Clinic at Harborview Medical Center in Seattle, which treats most of the 65,000 hepatitis C patients in the state ― even as he welcomes the curative drugs and wider access to treatment.

“I absolutely support greater transparency,” Scott said. “I think the public needs to know how much these things cost.”

Many people don’t realize that such obscurity is “baked into the system,” said Pam Curtis, director of the Center for Evidence-Based Policy at Oregon Health & Science University.

“That definitely hamstrings our ability to weigh the facts in front of us,” she said. “You want policy to be driven by the highest-quality evidence.”

Other states are eyeing the experiments “with a healthy skepticism but a high level of interest,” said Jennifer Reck, project director for the National Academy for State Health Policy.

In Washington, officials would describe the terms of the AbbVie contract only in the broadest terms. After federal rebates, the state spent about $80.4 million in 2018 on the drugs, known as direct-acting antivirals, to treat more than 3,300 patients, figures show.

Under the new contract, officials expect to spend about the same amount of money per year, while treating twice as many patients, said Dr. Judy Zerzan, chief medical officer for the Washington State Health Care Authority.

That works out to more than $321 million to treat about 30,000 patients over four years, with options for two-year extensions.

But that would be an improvement over the nearly $387 million state officials have to treat just 10,377 people, according to state records. That works out to an average cost of $37,259 apiece, though actual fees vary by program.

Washington’s request for proposals included a provision that other states could join its program in the future ― also a potential benefit to AbbVie.

“There’s probably an alignment of interests all the way around here,” said Alan Carr, a senior analyst focusing on biotechnology with the Wall Street firm Needham & Co.

Another reason it’s a race for the drugmakers: The overall market for hepatitis C drugs has been “falling fast,” as more patients are treated and cured, Carr said.

“The companies are trying to find a way to ensure the remaining patients use their drug,” Carr said. “[They] have a lot less leverage than they once had, and that’s why they’re willing to do these deals.”

Many patients with hepatitis C have no symptoms and are silent carriers. Only a fraction of people with the virus will develop the serious consequence of the disease, liver failure or cancer. Still, most public health experts urge screening ― and treatment.

The new contracts ― sometimes because they ― call for capped costs or flat-rate subscriptions for cheap access to the drugs.

But the plan is much broader than creating a drug discount for the state, said Michael Staff, AbbVie’s vice president of U.S. market access.

“Simply stating you want to eradicate hepatitis C without a very detailed plan is probably not going to be effective,” he said. AbbVie’s contract includes payments for services that include outreach, such as the bus, to identify infected patients.

In Washington, would treat about half of those in the state infected with hepatitis C, but the average per-patient cost would be about 40% less than before the deal, Zerzan said.

In Louisiana, the first state to announce a flat-rate hepatitis C drug , Asegua, a subsidiary of Gilead, will provide an unlimited amount of its drug, Epclusa, for a set price — roughly $58 million a year for five years, or up to $290 million. Louisiana plans to treat about 31,000 of 39,000 Medicaid patients and prisoners believed to have the disease. Costs could drop to less than $10,000 per patient, according to the contract, which the state health agency made available after a public records request.

The was put forward by Dr. Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes, and his colleagues. Australia implemented a in its national health plan. England’s National Health Service has one as well.

In Egypt, which has the highest hepatitis C rate in the world, negotiations and generic pricing have reduced costs to

U.S. drugmakers likely wouldn’t have considered such a plan when they first introduced their medications. Gilead’s Sovaldi, the first antiviral for hepatitis C, launched at $84,000 for a course of treatment; the second, Harvoni, started at $94,500. Three years later, AbbVie introduced Mavyret at $26,400.

Now, Bach said, drugmakers are staring down a sharp decline of their once-hot market.

“They were losing market share and price per share,” Bach said. “If payers [like state Medicaid programs] can give them the same revenue with much more certainty, they’ll prefer that to uncertainty over what’s happening now.”

Hepatitis C poses dilemmas for public health officials and drugmakers alike.

Louisiana has been from the American Civil Liberties Union regarding prisoners who said they were denied effective hepatitis C treatment. And Washington state’s Department of Corrections faces from a prisoner who said he was denied timely care for his disease.

In Washington, Gov. Jay Inslee last year to negotiate the best deal to eliminate hepatitis C in the state by 2030, which mirrors goals of global health agencies.

The federal Centers for Disease Control and Prevention warned last month that new hepatitis C infections are on the rise ― , the seventh consecutive annual increase. New cases of hepatitis C have spiked among adults in their 20s and 30s, largely because of the opioid epidemic, according to the CDC.

Between 15% and 25% of people with acute hepatitis C will clear the infection on their own; the rest become chronically infected with the virus.

Hundreds of thousands of people have been treated ― and cured ― since the drugs were introduced early this decade. Deaths from hepatitis C fell from almost 20,000 in 2014 to a little more than 17,000 in 2017, which could be an effect of the new drugs.

“It’s just been transformational,” said Scott, of the University of Washington’s Hepatitis and Liver Clinic. Previous treatments for hepatitis C had to be taken for a year, had toxic side effects and helped only 40% of patients, he added.

The Center for Evidence-Based Policy has advised Washington state in the effort to eradicate hep C, Curtis said. She noted that the arrangements Washington and Louisiana struck share an overall goal of reining in runaway drug prices, especially in state-run Medicaid programs, which can’t shift costs like the commercial market and would be forced instead to cut services.

“States are already struggling,” Curtis said. “A larger and larger part of their budget is being eaten up by these new high-cost drugs.”

“This is not a solution,” she said, “but it’s a step in the right direction.”

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of those early state filings, which noted some states appear poised to have lower premiums next year, found that Washington had a lower rate increase than almost half the other states.

Insurance premiums for Washington’s individual market are rising less than 1% on average next year, and the state’s insurance commissioner, Mike Kreidler, credits much of that moderation to homegrown insurance companies.

“We’ve had locally grown insurers that dominated the health insurance market for individuals,” Kreidler said. These insurers are tied to the local community and must succeed in Washington or in the Pacific Northwest region to stay in business. That motivates them to try harder to meet the needs of their customers, he said.

“Insurers that are local and tied to the community — not from out of state, coming in and out — they were ones that need to stay or they weren’t going to be in business,” Kreidler said.

Nearly 250,000 people who do not get coverage through their employers or the government buy health insurance in Washington’s individual market, most of them shopping on the state’s ACA exchange, the Washington Healthplanfinder.

The individual insurance market here features companies that do business only in the Pacific Northwest, such as Asuris Northwest Health and Premera Blue Cross. Both nonprofits have been selling health insurance in the region for many years. Premera and its subsidiary LifeWise Health Plan have taken about 13% of the total health insurance market in Washington, selling to companies and individuals, both inside and outside of the Obamacare marketplace.

“Local plans can really make a difference in stabilizing their state-based marketplace,” said Emily Curran, a research fellow at the Center on Health Insurance Reforms at the Georgetown University Health Policy Institute in Washington, D.C. They help fill in geographical market gaps and build better partnerships with local doctors and hospitals, and are more effective at reaching underserved populations.

One key to their success, she said, is their commitment to a local market. They can succeed only if they make the business work locally.

“They have an incentive to make sure the market is stable,” she said.

Premera, based in Mountlake Terrace, a Seattle suburb, has been selling insurance in Washington for more than 80 years and is now an independent licensee of the Blue Cross Blue Shield Association. It sells plans in 38 of the state’s 39 counties and also operates in Alaska.

Asuris has been in the Washington market since 1933 and became part of Portland, Ore.-based Cambia in 1994. Asuris, which is too small to make the top 10 list of insurers in the state, sells health insurance outside the ACA marketplace. Its products are available in eastern Washington and Oregon as well as northern Idaho.

But the two largest companies in Washington’s health insurance market are based elsewhere: Kaiser Foundation Health Plan has seized 19% of the market and UnitedHealth Group controls 14%. Washington’s Healthplanfinder has shrunk slightly since 2014, from eight companies to six in 2019, but two new outside companies plan to join the market in 2020. (Kaiser Health News has no ties to Kaiser Permanente or the Kaiser Foundation Health Plan.)

Homegrown insurance companies aren’t as prominent in other states, where national companies dominate most markets. But Curran said New York is another example of a state with a base of local insurers.

Companies with a bigger footprint can afford more customer churn in their business. The smaller guys need to hang on to its customers, so they offer a wide variety of insurance options, in gold, silver and bronze tiers, both inside and outside of the state marketplace.

But buying from a local plan sometimes has disadvantages. Some companies’ plans limit consumers’ ability to get full health coverage in other parts of the nation. While local companies are more likely to have agents and brokers who know their customers and their plan offerings, they also have smaller teams than the big national companies and may not be available on weekends and at night, so they cannot respond as quickly to customers’ requests.

While Asuris has considered expanding — to the Seattle market, for example — Brady Cass, its president, said that just doesn’t make business sense. “Health insurance is personal and it’s very local,” he said, adding that companies that find their niche, as Asuris has, can more easily weather marketplace storms.

Asuris also markets itself to local companies. Cass, who is a Washington native and has worked for Asuris for 14 years, mentioned examples such as a concierge program Asuris started for both employers and individuals that is designed to help immigrants from Latin America. His company also sent crisis counselors to a workplace where an employee had died on the job.

Barry Baker, CEO of Baker Construction & Development in Spokane, Wash., said Asuris helped his company find economical options for both the company and its employees.

Baker also likes that Cass is involved in his community; they have served on several nonprofit boards together. “He’s super community-minded,” Baker said. They share business values, making a profit but also putting their profit back to work right where it was earned, he said.

Said Cass: “We’ve kept our feet squarely in the market that we have built.”

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Washington state’s ambitious plan, signed into law in May, will employ a new 0.58% payroll tax (or “premium,” as policymakers prefer to call it) to fund a $36,500 benefit for individuals to pay for home health care, as well as other services — from installing grab bars in the shower to respite care for family caregivers.

Hawaii’s Kupuna Caregivers Program, which was , is also publicly funded, but state budget allocations limit enrollment and benefits. It provides up to for services when family caregivers work outside the home at least 30 hours a week.

Other state policymakers are closely watching both experiments because, as seniors account for a greater proportion of the American population, the need for long-term care will increase. Josephine Kalipeni, director of policy and partnerships for Caring Across Generations, a national group that advocates for long-term care policy improvements, said, “What’s most exciting for us and for the country is to have a working model we can learn from.”

The need is great. The number of Americans 65 and older will double to 98 million by 2050, and studies show few have the financial resources to pay for care in old age. More than half of adults 65 and up will require long-term assistance at some point with everyday activities, for an average duration of about two years, according to a by the Department of Health and Human Services. Finding a way to help people stay in their homes — and not move to nursing homes — can keep them happier and save them and the state money. Medicaid programs help cover the costs of 62% of nursing home residents.

Sixteen percent of Americans have private long-term care insurance, according to the American Association for Long-Term Care Insurance. But that is an expensive option, with premiums averaging as much as $3,000 a year in 2019.

Affordability and sustainability are the two main challenges to public long-term care insurance programs. The federal ACA originally included the long-term care provision — sponsored by Sen. Ted Kennedy (D-Mass.), who did not live to see it enacted — called the . The voluntary program would have provided benefits of up to $50 a day for home assistance or to help with nursing home care for people who paid into the system. But critics said the program was unlikely to draw healthy people to help pay premiums, and the Obama administration in 2011 said it could not find a way to make it solvent. Congress later repealed the provision.

Initially, Washington state officials considered an alternative plan — shoring up the private long-term care insurance market — but determined that option was neither affordable nor likely to succeed.

Instead, they created a benefit system with a broad definition of covered services, from paying someone to build a wheelchair ramp to helping a caregiver learn how to deal with aggressive or violent patients. They could have shrunk this list to make the program less expensive, but Washington policymakers believed offering a wide menu of services would help keep people out of nursing homes.

The state will begin collecting the payroll tax in 2022, and starting in 2025 residents can collect benefits if they have paid into the system for at least three of the previous six years or five consecutive years within a decade. The details will be set over the next few years, but to qualify for a benefit of up to $100 a day, which will be adjusted for inflation, a person must show they need help with at least three activities of daily living.

The Long-Term Care Trust Act is expected to save $3.9 billion in state Medicaid costs by 2052.

Setting up a new state-run tax and benefit system is complicated. And figuring out how to determine who qualifies and how the money can be spent could take Washington state officials the next five years.

“The challenge is just the enormity of the insurance product itself,” said Bea Rector, director of the home and community services division of the Washington Department of Social and Health Services, one of four agencies involved in implementing the new program. State feasibility studies estimate the Long-Term Care Trust Act provisions will eclipse long-term care benefits paid through the state Medicaid program, which helps about 66,000 people at any time. The number expected to seek the new benefit is estimated at 15,000 in the first year of operation in 2025, growing to 97,000 by 2050.

Jason McGill, Gov. Jay Inslee’s senior health policy adviser, is not concerned about implementation. “We’ve been working on this for five years now,” he said, adding that the Trust Act is a modest benefit that will cover what most people need without breaking the state budget. “It’s not like we just cooked this up. This has been thoroughly thought through.”

Rector said the new state program for paid family leave, which also involves a payroll tax, has laid the groundwork for administering the new long-term care fee.

“We’ve got a long way to go before we start paying benefits,” said McGill, who believes the biggest challenge will be communicating with the public why they’re paying this new tax. Self-employed people can voluntarily join the new program and workers with private long-term care insurance can opt out; otherwise, all public and private employees will be assessed the new tax.

Other states are also grappling with long-term care.

Minnesota is considering allowing people to convert life insurance plans to long-term care insurance.

Last November, Maine voters rejected a ballot proposal to provide free long-term care to residents, funded by a 3.8% income tax on residents making more than $128,400 a year. Instead, the state government is educating people about the need to buy long-term care insurance, including an awareness campaign in high schools.

The California Aging and Disability Alliance, an advocacy group, is considering a for a state program to provide long-term services and support, but it is still researching how to pay for and run this program. Michigan and Illinois are also studying proposals.

New York lawmakers have debated a graduated income tax to pay for comprehensive long-term care for its citizens. The Assembly has passed such a bill repeatedly, but the state’s Senate has refused to approve it.

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