Subscriptions to Prescriptions: Lessons from Louisiana’s Effort to Eliminate Hepatitis C

Hepatitis C is a major public health concern due to its high rates of infection and mortality. Recent breakthroughs in pharmaceuticals not only have the potential to cure hepatitis C but could also cause large positive health externalities through reduced transmission. The high cost of these drugs under traditional reimbursement schemes create large obstacles to care, but a recent first-of-its-kind two-part tariff system in Louisiana aims to circumvent these obstacles using a modified subscription model with an exclusive pharmaceutical provider. Under this model, the medication is provided at no marginal cost to the state to cover the state's Medicaid and incarcerated population. This creates an incentive for Louisiana to aggressively test and treat as many patients as possible in order to maximize the benefits of this agreement. Using a number of different data sources, we implement synthetic control and event-study specifications, and find that detection and treatment of hepatitis C increased dramatically, with meaningful reductions in hepatitis C-related mortality and liver transplants after this agreement. Finally, after calculating the Marginal Value of Public Funds of this agreement, we find that the program more than pays for itself.