Economics

High Cost of Hepatitis C Drug Hits California Budget

Published

11 years ago

February 5, 2015

By David Siders, Sacramento Bee

Last year, after the Food and Drug Administration approved a breakthrough new drug for hepatitis C, health officials around the country warned of dire consequences for state budgets.

The drug is expensive – about $1,000 a pill, or $84,000 for a regular course of treatment – and many people it could help receive publicly funded care.

In California last week, Gov. Jerry Brown’s administration quantified the impact: Tucked inside Brown’s annual spending plan was $300 million for the cost of new hepatitis C drugs, including Sovaldi, the drug approved in December 2013.

The single budget item – $100 million this fiscal year and $200 million in 2015-16 – eclipses proposed general fund spending.

“It’s huge,” Michael Cohen, Brown’s director of finance, said. “It was clearly something that caught folks by surprise.”

The state estimated that in 2000, about 600,000 people in California were chronically infected with hepatitis C, the blood-borne illness that can ravage the liver. An estimated 5,000 people in the state are estimated to be infected each year.

While older treatments were less effective and brought debilitating, flu-like side effects, Sovaldi offered a high cure rate in a less toxic pill.

But the cost of the treatment and the large number of people lining up for it has forced states to confront an enduring question of health care in America – one exacerbated by the federal health care overhaul’s expansion of Medicaid coverage in the states: How much should the public pay for effective but costly cures?

“The treatment is exceptional,” said state Sen. Ed Hernandez, an optometrist and Los Angeles-area Democrat. “I mean, it’s probably one of the best things to ever happen.”

On the other hand, he said, the cost is alarming: “There’s good, and there’s bad.” The treatment’s emergence comes amid a dramatic expansion of Medi-Cal, the state’s version of Medicaid, with California projecting caseloads growing to almost 12.2 million next year.

“This is a huge exposure to the state,” said Charles Bacchi, president and chief executive officer of the California Association of Health Plans.

The state Department of Health Care Services estimated this week that, as of October, roughly 1,695 Medi-Cal recipients had received Sovaldi or Johnson & Johnson’s hepatitis C drug Olysio, or a combination of the two.

For those treatments, Medi-Cal has paid about $108 million, the state said.

In addition, California Correctional Health Care Services said it has treated 315 inmates with Sovaldi since July, at an estimated cost of about $26 million to $30 million. The illness is often associated with a history of injection drug use and, in older patients, blood transfusions, and is more prevalent in prisons than in the general population.

Prison officials said they anticipate budget savings in future years as cases of cirrhosis and liver cancer decrease due to the cure. Competition may also drive down future costs.

Demand, however, appears to remain high. Julia Logan, quality officer at the California Department of Health Care Services, said shortcomings of old hepatitis C treatments resulted in a “backlog of patients” waiting for Sovaldi and other new drugs. Similarly, in the state prison system, officials said some patients who previously deferred treatment are now being considered for it.

John Martin, chairman and chief executive officer of Gilead Sciences.

In future years, Logan said, “I think that there will continue to be many thousands more people getting treated for hepatitis C.”

Shortly after Sovaldi was approved, the drug’s maker, Gilead Sciences Inc., came under intense criticism from lawmakers, insurers and health care advocates for the price. The drug maker reported $8.6 billion in sales of Sovaldi in the first nine months of 2014.

Gilead Sciences did not respond to requests for comment. In an earnings conference call in October, John Martin, the company’s chairman and chief executive officer, said Sovaldi and drugs like it “provide savings to payers, providers, patients and our entire health care system over the long-term.”

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Women & Wealth: Tips for Navigating Your Lifelong Financial Journey

Published

3 weeks ago

March 15, 2026

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Sponsored by J.P. Morgan Wealth Management

We are in the midst of a seismic shift in wealth. This phenomenon, often referred to as the “Great Wealth Transfer,” describes the unprecedented movement of assets from the Baby Boomer generation to their heirs – an estimated $105 trillion by 2048. And women are poised to inherit most of this.

J.P. Morgan Wealth Management’s 2025 Investor Study found that women are not only set to receive significant wealth – they’re actively working to build it on their own. Ninety-three percent of women surveyed who are expecting an inheritance aren’t relying on it to reach their goals.

Here are a few tips for women to consider in their wealth-building journey:

Create a financial roadmap

A detailed, well thought out plan is important. J.P. Morgan’s study found that 90% of those surveyed with a plan feel confident about reaching their financial goals, compared to 49% without one.

Your plan should reflect your unique goals, priorities and circumstances. Consider your investment horizon and risk tolerance, and remember to revisit your plan regularly as life evolves.

Are you saving up for goals like buying a house, sending your kids off to college or retiring early? Where do you want to be in the next five, ten or twenty years? Everyone’s financial situation is unique, so it’s important to think about these questions and build a plan that is unique to your life.

Women tend to live longer than men on average. Many take career breaks or care for family members, which can influence long-term planning. It’s important to adjust your strategy with these factors in mind.

Where to start with investing

Don’t let misconceptions hold you back. Starting to invest doesn’t require a large sum, and beginning early can be beneficial. The earlier you start, the more time your money has to potentially grow over the years. Understand your overall financial situation, set clear goals and develop a long-term plan.

It’s important to also make sure you’re covered for unexpected expenses that come up before you start to invest. Build up a cash emergency fund, typically enough to cover three to six months of expenses, and pay down any high-interest debt.

Taking charge of your finances

The good news is that women are taking charge of their finances. J.P. Morgan’s research found that 75% of women respondents make financial decisions with their partner or take the lead themselves. For those who have a spouse or partner, it’s important for each person in the relationship to play an active role in the process.

Building wealth can be empowering for many women. The same survey found that 73% of women respondents said money gives them “security,” while 64% of Gen Z and Millennial women associated it with “freedom.”

The power of having a team

Some people find it helpful to work with a financial advisor, so you don’t have to tackle things alone. An advisor can help you craft a plan tailored to your needs and keep you on track throughout your lifelong financial journey. If you expect to receive an inheritance, you should also consult with estate planning and tax professionals.

No matter where you are on your wealth-building path, education is key. It’s so important to be an informed investor, and there are plenty of resources out there to help. You can find a library of free educational resources at chase.com/theknow.

As the landscape of wealth continues to evolve, women have a unique opportunity to shape their financial futures and those of generations to come. By staying informed and planning ahead, women have the tools to help them confidently navigate the Great Wealth Transfer and set themselves up for financial freedom.

The views, opinions, estimates and strategies expressed herein constitutes the author’s judgment based on current market conditions and are subject to change without notice, and may differ from those expressed by other areas of J.P. Morgan. This information in no way constitutes J.P. Morgan Research and should not be treated as such. You should carefully consider your needs and objectives before making any decisions. For additional guidance on how this information should be applied to your situation, you should consult your advisor.  

JPMorgan Chase & Co., its affiliates, and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transaction.  