VA to outsource care for 180,000 vets with hepatitis C

The Department of Veterans Affairs is moving to outsource care nationwide for up to 180,000 veterans who have hepatitis C, a serious blood and liver condition treated with expensive new drugs that are costing the government billions of dollars.

The VA has spent weeks developing a dramatic and controversial transition as patient loads have surged and funding has run out. Those efforts were not disclosed until records were released this week to The Arizona Republic.

Instructions on how to carry out the program show that the sickest veterans generally will get top priority for treatment. However, patients who have less than a year to live or who suffer "severe irreversible cognitive impairment" will not be eligible for treatment.

That provision, and the mass shifting of patients, drew immediate criticism from veterans advocates.

Tom Berger, executive director of a health council established by Vietnam Veterans of America, ripped the VA for launching a "faulty plan" and blasted the idea of medical teams deciding which patients will be denied antiviral remedies.

"They've set up what I would call, in Sarah Palin's words, 'death panels.' ... Maybe rationalization panels is a better term," Berger said.

The maneuver also caused a furor among experts inside the Veterans Health Administration, some of whom disassociated themselves from the plan and warned about ethical compromises. According to e-mails obtained by The Republic, about 200 specialists sent a letter in April to Secretary Robert McDonald expressing their "dismay at this unacceptable development."

"... To halt hepatitis C treatment at VHA facilities now would be unconscionable," they wrote. "We can and must end the epidemic. Once we have treated every veteran with hepatitis C, the costs will go away. ... Give us the ammunition, and we will win this war."

HCV funding runs out

The transition plan for so-called HCV patients was developed in a working group chaired by Kenneth Berkowitz, acting executive director of VHA's National Center for Ethics in Health Care. In an April e-mail, he told colleagues they needed to develop an "ethical framework" in anticipation of a complete depletion of funds for drugs. "A fair and transparent plan that can be consistently applied is better than having no plan," he wrote.

The shift to private providers through the VA's Choice Plan enables the VHA to pay for HCV with bailout money from the Veterans Access, Choice and Accountability Act, a $16.3 billion funding and reform measure passed last year. About $10 billion of that money was earmarked for private care, but the Choice Plan has been so lightly used that it remains untapped. The money was intended to ease the backlog of veteran appointments for health care.

RELATED:VA loosens eligibility rule for private medical care

E-mails show Dr. David Ross, the VA's director of HIV, HCV and public-health pathogens programs, resigned from the working group. "I cannot in good conscience continue to work on a plan for rationing care to veterans," he wrote.

In a separate e-mail to top VA officials, Ross wrote, "There is no doubt in my mind that exclusively relying on Choice, rather than seeking supplemental funding, will be a disaster for patients, providers and VA."

VHA administrators concede they implemented the plan without a cost-benefit analysis or studies on provider availability and patient impacts. Records indicate only eight HCV veterans received antiviral therapy through the Choice Program from August 2014 through May 31, while more than 16,000 were getting treatment in VA medical centers.

The VA had set aside nearly $700 million this year for HCV antiviral drugs. In documents and a written statement, department officials confirmed soaring patient loads and medication expenses have nearly wiped out that budget with several months to go in the federal fiscal year that ends Sept. 30. That's an estimated $400 million shortfall with more dramatic costs expected, beginning in October.

RELATED:The Republic's investigation of the VA crisis

A VA clinician who asked not to be named for fear of retaliation stressed that department leaders "haven't told anybody how it works. They've sent out a solution with no way to implement it."

The clinician added that VA leaders were warned months ago that pharmaceutical funds were being wiped out, but they did nothing until the decision to move patients into a community-care program that has been underutilized and heavily criticized.

"It's not working now, and you're expanding it? ... I'm like nauseous over this."

In an official statement on the hepatitis dilemma, VHA officials said they remain "committed to ensuring America's veterans have access to the health care and benefits they have earned and deserve." They stressed that "no patients on current therapy will be stopped," but declined to clarify how many patients are being moved to private providers or how many will not be eligible for cure.

Demand for treatment soars

Hepatitis C is a blood-borne virus that attacks the liver. According to the Centers for Disease Control and Prevention, about 3 million Americans are infected, though many have not been diagnosed. The virus is most commonly transmitted through hypodermic needles shared by narcotic-drug users, and before blood-screening improved in 1992, it spread dramatically via transfusions. It also may be transmitted by sexual contact.

The disease is considered epidemic among Vietnam-era veterans due to transfusions and blood contact in combat or training. More than 60 percent test positive, while 1 in 10 veterans overall has the infection — a rate five times higher than the general population. Last year, about 3,000 veterans died in VA care as a result of HCV infection, according to internal records.

Roughly 400 veterans are treated for hepatitis C in the Phoenix VA Health Care System, a spokeswoman said.

Hepatitis C patients today are treated with a breakthrough medication, sofosbuvir, approved in late 2013 under the brand names Sovaldi and later as Harvoni. In combination with other drugs, sofosbuvir cures the HCV infection in about nine of 10 patients while reducing risks of cirrhosis and liver cancer.

However, the pills reportedly cost about $1,000 each retail, or $600 per dose to the VA at a discount. A typical treatment regimen of 12 to 24 weeks costs $50,000 to $100,000. The price tag to serve VA patients could exceed $10 billion.

Despite the cost and controversy, sofosbuvir is widely regarded as a modern medical victory: Records show the VA has cured nearly as many HCV patients in the past 15 months as during the previous 15 years. Healed patients not only mean fewer deaths but reduced medical costs over the long haul.

In the short term, however, success has spawned a six-fold increase in demand for treatment by veterans, creating a huge funding gap.

The drug is so critical to care, and the expense so high, that U.S. Sen. Bernie Sanders, I-Vt., former chair of the Senate Committee on Veterans Affairs and a Democratic presidential candidate, during a recent hearing urged the VA secretary to break the patent due to the manufacturer's "excessive profits."

Sovaldi and Harvoni are manufactured by Gilead Sciences Inc., which made $22.8 billion on antiviral sales during 2014, according to the California company's annual earnings report.

In a written statement, Gilead said high prices reflect the "innovation of the medicines" and are comparable to other antiviral drugs. The statement emphasized that Gilead offers discount rates for government health programs and assistance for patients in financial need.

VA turns to Choice Program

During a hearing last month of the Senate Committee on Veterans' Affairs, Deputy VA Secretary Sloan Gibson pleaded with lawmakers for "additional flexibility" to use Choice Program funds to pay for the hepatitis remedy.

There was no official action by Congress. But, a week later, on May 21, Undersecretary for Health James Tuchschmidt issued national orders to begin shifting HCV patients out of VA care "effective immediately."

Instructions accompanying that internal directive stressed the process should be "ongoing and transparent," but it was not publicized outside the agency.

Patients already receiving the antiviral therapy in veterans' facilities will continue. The remainder will be contacted by their VA doctors, told of the Choice Program and evaluated to determine whether they meet eligibility for treatment.

Decisions on who will be first in line for treatment, and who will be denied the cure, are to be made by teams at Veterans Integrated Service Networks, regional offices also known as VISNs.

According to directives, those panels must follow strict protocols "to avoid decision-making that is based on real or perceived conflicts of interest, preferential treatment or nepotism." An appeals process also is being devised for veterans who are denied the medication.

The VA has set up a detailed priority system to determine which patients get the HCV cure first, and which are not eligible. Veterans already receiving antiviral drugs are the No. 1 priority, followed by those with severe conditions such as cirrhosis of the liver, compromised immune systems or B-cell lymphoma.

Patients with a prognosis of living less than 12 months will not be eligible for the drugs. Veterans in a vegetative state or with advanced dementia also are excluded, along with those who have hepatitis C strains resistant to antiviral therapy.

The instructions note that, "based on the principles of equity and human dignity," ineligible patients "should be provided all other appropriate medical care and support."

The VA clinician knowledgeable about the new program said it is not clear whether the patient transfer to the Choice Plan is legal.

The Choice Plan was developed to provide private care for veterans who could not get timely treatment in more than 1,000 VA hospitals and clinics nationwide. Program rules allow veterans to see private doctors if they live more than 40 miles from a VA facility or cannot obtain an appointment there within 30 days.

The HCV patients apparently are being enrolled in Choice based on a determination that, because there is no more money to pay for drugs, they qualify under the wait-time criteria. Department officials did not directly respond when asked if the strategy is lawful.

The Department of Veterans Affairs has enough doctors to treat hepatitis C patients in house, but not enough cash to pay for drugs. Shifting HCV veterans outside the system is a money maneuver, the clinician said, and "the exact reverse of what Choice was created for."

Berger, of the Vietnam veterans group, predicted major backlogs. He said some states have no physicians who are qualified to treat hepatitis C and enrolled with the Choice Plan. "Where the hell are they going to send these patients?" he asked.

Hepatitis C facts

What is hepatitis? It is an inflammation of the liver. Hepatitis C is a type that can result in chronic disease of the liver and cause long-term damage, including cirrhosis.

Can it be spread? Yes, most commonly when an infected person's blood is transmitted to someone who is not infected. Many veterans contracted it from blood transfusions and organ transplants before the start of routine blood screenings in 1992.

Source: CDC

How to reach the reporter:

E-mail: dennis.wagner@arizonarepublic.com

Phone: 602-444-8874

Twitter: @azrover