Behind the spike in Idaho Medicaid costs: Pricey new drugs for hard-to-treat disorders

Lawmakers in charge of state budgets this year grilled officials from the Idaho Department of Health and Welfare on why Medicaid spending had ballooned to $4.7 billion a year.

The culprit wasn’t a surge in emergency room visits. It wasn’t a slew of back surgeries or hip replacements. It wasn’t even just because Idaho voters decided in 2018 to open up Medicaid to low-income adults who previously did not qualify for the government health insurance program.

One of the main drivers, state officials explained, was the cost of prescription drugs. That made up the largest and fastest growing bucket of Medicaid spending, Health and Welfare Director Dave Jeppesen told the Idaho Legislature in the 2023 session.

“You may recall that, just a couple of years ago, a cure for hepatitis C was developed. The amazing thing is it’s a cure — hepatitis C could go away permanently,” Jeppesen said in a Medicaid budget hearing. “That was $300,000 a person for that drug. And so, you get these kinds of specialty drugs that are miracle drugs that are just really, really high priced.”

Jeppesen explained that Idaho isn’t an outlier in how much it’s spending for medications.

“We’ve had conversations with our fellow Medicaid programs across the country. They’re all facing the same issue,” he told legislators.

In response to a data request, the Idaho Department of Health and Welfare  provided the Idaho Capital Sun with a detailed breakdown of prescription drug spending for Idaho Medicaid over the past decade.

The data — Idaho Medicaid’s 25 highest drug expenditures — illustrated how a few medications have affected the cost of health care.

Humira, Latuda, Ozempic and more: Drugs to treat challenging diseases

For most of the past decade, the state’s annual spending for the 25 biggest prescription-drug cost drivers was in the $80 million to $90 million range. But in 2020, it began a steep climb: $132 million in 2020, $197 million in 2021 and $252 million in 2022.

The major contributors to that increase:

• an injectable monoclonal antibody used to treat autoimmune disorders like rheumatoid arthritis,
• medications to treat schizophrenia and bipolar disorder; and
• new to the Top 25 list in 2020, the diabetes drug Ozempic, which went from costing Idaho Medicaid about $1.03 million in the fall of 2021, to costing the program about $6.25 million in the fall of 2022.

The cost of insulin was reflected in Idaho Medicaid spending, too — with two insulin drugs racking up a tab of more than $5 million a year since 2014.

One factor that couldn’t be teased out from the data: How much of these prescription drugs were for Idahoans who had guaranteed Medicaid coverage between March 2020 and now?

More than 150,000 people who were on Idaho Medicaid during that three-year period had pandemic-related legal protections that kept them from losing Medicaid coverage.

About 67,000 of those had joined Idaho Medicaid as part of the expansion, according to a January presentation by Idaho Medicaid Division Administrator Juliet Charron to the Legislature. They were using health care less than other Idaho adults who were on Medicaid, Charron said.

Now, the state has begun to resume disenrolling people from Medicaid, unless they respond to notices and prove they are eligible to keep the health coverage.

Tens of thousands of Idaho Medicaid recipients are now losing coverage because they did not respond to notifications, the Sun previously reported.

That means when they go to pick up their next prescription refill, it won’t be paid for by Medicaid.