Trump Threatens Health Subsidies to Force Democrats to Bargain
by Robert Pear - NYT - April 13, 217
WASHINGTON — In the weeks since President Trump’s attempts to replace the Affordable Care Act collapsed, the administration has debated what to do: Try again? Shore up the insurance marketplaces? Or let the whole system collapse?
Mr. Trump has failed to get enough support from his own party, but he hopes to get the Democrats’ help by forcing them to the negotiating table with hints about the chaos he could cause.
His bargaining chip is the government subsidies paid to insurance companies so they can reduce deductibles and other out-of-pocket costs for low-income consumers — seven million people this year.
In an interview with The Wall Street Journal this week, Mr. Trump threatened to withhold the subsidy payments as a way to induce the Democrats to bargain with him.
For now, Democrats are resisting and using his maneuver against him to energize their own party. And they warn that Mr. Trump will be blamed if the insurance markets collapse and people lose coverage next year.
“Republicans are in control of government,” Senator Claire McCaskill, Democrat of Missouri, said Thursday after a town-hall-style meeting in her home state. “If they blow up what access to health care there is right now, they’re going to own it.”
The president’s tone differs from that of Republicans in Congress, who have repeatedly promised a smooth transition away from the law they call Obamacare. “We don’t want to pull the rug out from under people,” the House speaker, Paul D. Ryan, has said.
If the subsidies are interrupted, insurers say, some health plans will increase premiums and others will withdraw from the individual insurance market. That will, in turn, affect millions of other people who do not receive the subsidies.
The issue could come to a head within weeks. When the House reconvenes on April 25, the first order of business will be a spending bill to replace the current stopgap law, which expires three days later. Democrats are determined to put money for the health insurance subsidies into that bill, and some Republicans on the House and Senate Appropriations Committees are open to the idea. But ultimately, the decision will be made by Republican leaders in the two chambers.
If the spending is allowed to continue, the Congressional Budget Office estimates that the federal government will pay $135 billion in cost-sharing subsidies to insurers from 2018 to 2027.
The cloud of uncertainty swirling around the subsidies stems from a court ruling in a lawsuit that House Republicans filed against the Obama administration in 2014. Judge Rosemary M. Collyer of the Federal District Court in Washington ruled last year that spending on the subsidies “violates the Constitution” because Congress never appropriated money for them. She ordered a halt to the payments, but suspended her order to allow the government to appeal.
The Trump administration has not made clear whether it will press the appeal filed by the Obama administration. In a letter to Mr. Trump this week, the U.S. Chamber of Commerce joined the American Medical Association, the American Hospital Association and insurers in seeking “quick action” to guarantee continuation of the subsidies. Without the subsidies, they said, more people will be uninsured and unable to pay medical bills.
Democrats say they will not negotiate with Mr. Trump until he stops his drive to repeal the Affordable Care Act. “President Trump is threatening to hold hostage health care for millions of Americans, many of whom voted for him, to achieve a political goal of repeal that would take health care away from millions more,” said the Senate Democratic leader, Chuck Schumer of New York.
Having no immediate prospect of a deal with Democrats, the White House is still focusing on Republicans. It is seeking consensus on a repeal bill that can overcome rifts among House Republicans, whose disagreements sank an earlier version of the legislation on March 24.
Even though lawmakers are out of town for a two-week spring break, Mr. Trump and Vice President Mike Pence are continuing efforts to revive the bill in talks with Representative Mark Meadows, the North Carolina Republican who is the chairman of the conservative House Freedom Caucus.
Many conservatives opposed the earlier version of the bill, saying it did not do enough to repeal federal rules that drive up the cost of insurance. Democrats say those rules, including a definition of minimum benefits, provide essential protections for consumers.
Asked about the outlook for a deal, Sean Spicer, the White House press secretary, said Tuesday, “I think we’re getting closer and closer every day.” But potential gains among conservatives risk alienating moderate Republicans.
Representative Justin Amash, Republican of Michigan and a member of the Freedom Caucus, said at a town hall-style meeting this week that 50 to 80 Republicans would have voted against the bill that was pulled from the House floor last month.
Mr. Amash had a suggestion for the administration and House leaders. “Let’s start over in a bipartisan way,” he said. “We should have worked with Democrats from the very beginning. At the end of the day, you cannot pass legislation, whether it’s the A.C.A. or a new health care proposal, that affects so many people and not have it be bipartisan.”
The Trump administration announced rule changes on Thursday that it said would help stabilize insurance markets and reduce premiums. The new rules would cut the annual open enrollment period in half, so it would run from Nov. 1 through Dec. 15 this year. If consumers wanted to sign up at other times, they would have to submit documents to prove they were eligible for a “special enrollment period.”
Marilyn B. Tavenner, the chief executive of America’s Health Insurance Plans, a lobby for insurers, welcomed the changes but said they were not enough.
“Most urgently,” she said, “health plans and the consumers they serve need to know that funding for cost-sharing reduction subsidies will continue uninterrupted. Without funding, millions of Americans who buy their own plan will be harmed. Many plans will likely drop out of the market. Premiums will go up sharply — nearly 20 percent — across the market.”
Can Trump Take Health Care Hostage?
by Paul Krugman - NYT - April 13, 2017
Three weeks have passed since the Trumpcare debacle. After eight years spent denouncing the Affordable Care Act, the G.O.P. finally found itself in a position to do what it had promised, and deliver something better. But it couldn’t.
And Republicans, President Trump very much included, had nobody but themselves to blame. Basically, the party has been lying all this time, and the lies finally caught up with the liars. Mr. Trump promised health care that would be “far less expensive and far better”; in the event, all he and his allies had to offer were surging premiums, higher out-of-pocket expenses and mass loss of coverage.
But Mr. Trump, as you may have noticed, isn’t big on accepting responsibility for his failures. Instead, he has decided to blame Democrats for not cooperating in the destruction of their proudest achievement in decades. And on Wednesday, in an interview with The Wall Street Journal, he openly threatened to sabotage health care for millions if the opposition party doesn’t give him what he wants.
In that interview, the president of the United States sounded just like a mobster trying to extort protection payments from a shopkeeper.
“Obamacare is dead next month if it doesn’t get that money,” he declared, referring to cost-sharing subsidies that reduce out-of-pocket expenses for low-income families, and are crucial even to higher-income families, because they help keep insurance companies in the system. “I don’t want people to get hurt.” (Nice shop you’ve got here, shame if something were to happen to it.) “What I think should happen and will happen is the Democrats will start calling me and negotiating.” (I’m making them an offer they can’t refuse.)
It’s a nasty political tactic. It’s also remarkably stupid.
The nastiness should be obvious, but let’s spell it out. Mr. Trump is trying to bully Democrats by threatening to hurt millions of innocent bystanders — ordinary American families who have gained coverage thanks to health reform. True, Democrats care about these families — but Republicans at least pretend to care about them, too.
Why does Mr. Trump even imagine that this threat might work? Implicitly, he’s saying that hurting innocent people doesn’t bother him as much as it bothers his opponents. Actually, this is probably true — remember, we’re talking about a man who once cut off health benefits to his nephew’s seriously ill 18-month-old son to gain the upper hand in a family dispute. But it’s not the kind of thing one expects to hear from the occupant of the White House.
What makes Mr. Trump’s tactic stupid as well as nasty is the reality that Democrats have no incentive whatsoever to give in.
For one thing, what is he offering by way of a deal? Obamacare increased coverage two ways, via Medicaid expansion and subsidized private insurance. Mr. Trump might be able to undermine the private markets, but Medicaid wouldn’t be affected. Why would Democrats ever agree to Republican plans, which would basically kill both?
Then there’s the political reality that by sabotaging Obamacare, the Trump administration would be handing Democrats a huge electoral gift. Bear in mind that the places that are already poorly served by private insurers, and would therefore be most hurt, are relatively poor, rural areas — places that overwhelmingly voted Trump last year.
Maybe Mr. Trump believes that he could somehow shift the blame for the devastation he has threatened to wreak onto Democrats. “See, there’s the death spiral I predicted!” But that probably wouldn’t work even if he hadn’t effectively proclaimed his own guilt in advance. Voters tend to blame whoever holds the White House for bad things, and in this case they’d be right: If there is a death spiral, it will have Mr. Trump’s name on it, and deservedly so.
Put it this way: There’s a reason an open letter to Mr. Trump urging that the cost-sharing subsidies be maintained was signed by a wide array of lobbying organizations, including very conservative groups like the U.S. Chamber of Commerce. What they understand is that sabotaging Obamacare would be a disaster for their interests.
So the Trump health care threat is, as I said, stupid as well as nasty. And it’s hard to believe that it will be carried out.
But here’s the thing: Even if Mr. Trump wimps out, as he is doing on so many other issues, he may already have done much of the threatened damage. Insurers are deciding right now whether to participate in the 2018 Obamacare exchanges. Mr. Trump’s tough talk is creating a lot of uncertainty, which in itself may undermine coverage for many Americans.
There is, of course, a good chance that Mr. Trump doesn’t understand any of this. Unfortunately, when you’re in the White House, what you don’t know can hurt a lot of people.
Explaining the Health Payments That Trump Is Threatening to End
by Reed Abelson and Margot Sanger-Katz - NYT - April 14, 2017
Cost-sharing reductions seem like an arcane aspect of the Affordable Care Act, but they could now make or break the Obamacare insurance marketplaces. Even President Trump is talking about them, as a possible bargaining chip for a new health bill.
Mr. Trump this week repeatedly threatened to cut off the federal funding that makes the cost-sharing reductions work for insurers and patients. The idea, he told The Wall Street Journal, is that Democrats would be forced to negotiate with him over a replacement for the Affordable Care Act if they did not want the individual insurance market to collapse. The administration has been anything but clear about whether it wants that market to thrive or fail.
What exactly are the cost-sharing reductions?
The Affordable Care Act helps make health insurance affordable for low-income people in two ways. The government provides a subsidy to help buy a policy, but about seven million people also get help with their out-of-pocket costs when they go to the doctor or fill a prescription. The government pays the insurance companies extra — $7 billion last year — to offer plans with discounts on the usual deductibles and co-payments that might make medical care unaffordable for relatively poor consumers.
Why are they at risk?
There is no language in the bill explicitly linking the subsidies to a permanent funding source, but the Obama administration argued that Congress intended for the money to be paid alongside other subsidies, and the subsidies have been paid over the last three years.
House Republicans said what the Obama administration was doing was unconstitutional, and they brought a lawsuit to stop the payments. The House won, but the decision has not taken effect while the case is being appealed. The next court date is May 22. Now the Trump administration is in the awkward position of deciding whether to keep fighting the Obama administration’s fight.
If Trump decides to stop paying them, what will happen?
Killing the cost-sharing subsidies would be a huge and immediate hit to insurance companies offering Obamacare plans. The companies are still required by law to offer their customers discounts, but they could lose the money to help fund them. Without the government payment, they would need to find another way to make up the difference.
Insurers could raise the price of insurance for everyone, a change that would affect even people who don’t get the subsidies. The Kaiser Family Foundation has estimated premiums for a plan would go up by an average of 19 percent without the funding. (This paradoxically could end up costing the government a lot of money, since it is still required by law to help many customers pay their premiums.)
A decision to do away with the subsidies would also send a key signal to the insurance companies that the Trump administration and Congress have decided not to stabilize the market, which has been particularly shaky in some areas. Without the subsidies, insurance could get very expensive in some places in the country. In other areas, no insurance options might be available.
If Trump wanted to fix them, what could he do?
It’s complicated.
The easiest way would be to encourage Republicans in Congress to pass an appropriations bill that explicitly funds the subsidies. They will have an opportunity soon: Congress is expected to vote on a short-term appropriations bill in the next few weeks.
The Trump administration could also keep fighting the House lawsuit in court. Many legal experts think that the administration has a good chance of winning if the case continues, since courts rarely recognize the right of Congress to sue the White House. It’s not clear if the parties could settle the case in a way that preserves the subsidies, even if they wanted to.
Who wants the funding to continue?
A broad coalition of insurance companies, hospitals, doctors and patient groups want the subsidies to be paid. Democrats in Congress are also strong supporters of the cost-sharing reductions. A letter to the White House this week urging a resolution of the issue was signed by insurers, hospitals, doctors and even the solidly Republican Chamber of Commerce.
Who wants the funding to end?
The House leadership that brought the suit argued that the payments were worrisome because they represented illegal spending. But that does not mean that all Republicans in Congress want to see Obamacare markets in their home state fail. In fact, several key Republicans in Congress, including Greg Walden of Oregon, the chairman of the House Energy and Commerce Committee, have said that they would prefer Congress to pass legislation explicitly funding the subsidies.
But some people in the Trump White House believe that preserving the risk of market failures could create political pressure for a deal on a larger Obamacare replacement bill. On Wednesday, President Trump told The Journal, “I don’t want people to get hurt,” then added, “What I think should happen — and will happen — is the Democrats will start calling me and negotiating.”
Republicans may not want Trump to end Obamacare payments
by Page Winfield Cunningham - Washington Post - April 14, 2017
Some influential Republicans in Congress don’t want a fight President Trump is threatening to pick over extra Obamacare payments to insurers.
Trump suggested this week that as Congress seeks to fund the government beyond April, Republicans should refuse to pay for cost-sharing subsidies provided through the Affordable Care Act to low-income Americans. There’s widespread agreement that without the subsidies, insurers would be forced to hike premiums next year, worsening conditions in the Obamacare insurance marketplaces.
The president told the Wall Street Journal on Wednesday that not only would such a move cause Obamacare to “die,” it could also be used to force Democrats to negotiate on repealing the health-care law altogether. “Without the payments, Obamacare is gone, just gone,” Trump said.
Many Republicans are well aware that the public is likely to blame them for premium increases, now that they control both Congress and the White House and have so far failed to agree on a health-care replacement plan. And Democrats are keenly aware of the shifting dynamics, seizing every opportunity they can to insist Republicans now own the health-care law.
The Democratic leadership in Congress says it will hold up the government funding bill that expires on April 28 in order to secure the payments if Trump decides to withhold them. But Republicans are unlikely to want to shut down the government — or for Trump to withhold the payments in the first place.
“I don’t think Democrats will let this happen, but I frankly don’t think the Republicans want it to happen either,” said Timothy Jost, a health-law professor at Washington and Lee University.
Rep. Greg Walden (R-Ore.), who, as chairman of the House Energy and Commerce Committee, helped craft the GOP health-care plan, told constituents this week that the subsidies need to be funded, period.
“It was a commitment made by the government to the insurers and the people,” Walden said Wednesday at a town hall in his district. “That needs to happen.”
Rep. Tom Cole (R-Okla.), who chairs the powerful Appropriations subcommittee with jurisdiction over health care, has also said it’s important to fund the payments for insurers, although he stressed it’s a decision that the House leadership would have to make.
“It’s probably the right thing to do, I think,” Cole told The Washington Post last month. “Otherwise you’re going to have insurance companies exiting the market.”
Other top Republicans are remaining quiet about how to handle the subsidies, letting the White House lead the way. Ways and Means Chairman Kevin Brady (R-Tex.) isn’t taking a position. A Brady spokeswoman said Friday that the congressman “believes the administration is taking important steps to stabilize Obamacare’s collapsing marketplace.”
President Trump says he thinks he can bring Democrats and Republicans together to pass a bipartisan health care bill. Is that realistic? (Video: Peter Stevenson/Photo: Jabin Botsford/The Washington Post)
The Trump administration must decide whether it will continue pursuing a GOP lawsuit to block the subsidies. The House sued the Obama administration for awarding the subsidies without a clear congressional appropriation and won in federal court last year. The Obama administration appealed the decision.
Now the GOP has the White House on its side — and a new concern that Republicans will bear the public blame for problems with Obamacare. Trump’s victory created a tricky new situation that House Republicans surely didn’t envision when they filed the lawsuit, said Bill Pierce, a health policy expert at APCO Worldwide.
“It is a situation entirely of their own doing,” Pierce said.
Republicans have said they were fighting the awarding of insurer payments without permission from Congress — not the subsidies themselves. House Speaker Paul D. Ryan (R-Wis.) hasn’t said whether he wants to fund the subsidies in a spending bill later this month, and his office didn’t respond Friday to a query about the issue.
“We believe in Congress retaining its lawmaking power, but this lawsuit hasn’t run its course,” Ryan said late last month. “While the lawsuit is running its course, the administration is exercising their discretion with respect to the [cost-sharing reductions].”
The health-care law requires marketplace insurers to discount extra insurance costs beyond the monthly premium — such as deductibles and co-payments — for people earning less than 250 percent of the poverty level. Without federal payments to cover those discounts, it’s estimated that insurers would hike premiums by an average of 19 percent.
That reality is leading lawmakers such as Walden and Cole to back the subsidies, even if they want to get rid of the underlying law. The cost-sharing reductions would cost an estimated $7 billion or $8 billion in the next year, but with that cost already built in, Congress wouldn’t have to come up with extra money to fund them.
If Trump pushes for withholding the payments, it could fuel a clash between these lawmakers and conservatives who want to damage Obamacare in any way they can.
“I’m not alone in my party in [wanting to fund the cost-sharing reductions], but there are a lot in my party that don’t think that,” Walden said.
Insurers are watching the situation with trepidation, with rapidly approaching deadlines for announcing whether they will continue selling plans on the insurance marketplaces next year. Kristine Grow, a spokeswoman for the trade association America’s Health Insurance Plans, said more plans will likely exit without the cost-sharing reductions.
“A lot of plans are very likely to drop out of the market because of continued instability,” Grow said.
Defiant, Generic Drug Maker Continues to Raise Prices
by Gretchen Morgenson - NYT - April 14, 2017
Congressional hearings. Federal investigations. Consumer outrage.
In the wake of developments like these, many drug company executives are laying low. Their favored business models, based on raising drug prices indiscriminately, are now seen as a liability; many pharmaceutical companies are curbing increases on their products and accepting that this once-lucrative jig may be up.
Not Arthur P. Bedrosian, chief executive of Lannett Company. A generic drug maker with roughly $600 million in net sales in fiscal 2016, Lannett continues to push prices skyward on some of its offerings. And those moves are noteworthy on two accounts: First, its drugs are all off patent, meaning they are no longer proprietary formulations and should sell at deep discounts. The other: Lannett is raising prices even as it faces an antitrust inquiry from the Justice Department and a drug-pricing investigation by Connecticut’s attorney general.
Lannett, based in Philadelphia, sells drugs for thyroid conditions, gastrointestinal diseases and congestive heart failure, among other ailments. Its most recent price rise on dicyclomine, a treatment for irritable bowel syndrome, is scheduled to go into effect on May 2. A bottle of 100 10-milligram capsules will cost $19.95, up from $5.90, its price since 2001.
But that is a relatively tiny bump compared with recent price increases on its other drugs. Last year, Lannett more than tripled the price of terbutaline, a treatment for asthma and emphysema, propelling it to $435 for 100 tablets of 2.5 milligrams each, up from $136 for the bottle.
Also last year, Lannett raised the price of fluphenazine, an anti-psychotic drug, to $870 for 100 10-milligram capsules, from $43.50, its price since 2012. Fluphenazine, which treats schizophrenia, was approved in 1959 and has been off patent for years. It is on the World Health Organization’s list of essential medicines.
Many elderly patients take fluphenazine. Data from QuintilesIMS shows that in January, Medicare and Medicaid together covered 65 percent of prescriptions for Lannett’s version of the drug. This puts taxpayers squarely on the hook for Lannett’s price increases.
While Lannett’s customers and American taxpayers may be hurt by the company’s pricing practices, Wall Street loves them. Among the six analysts who cover the company, five rate it a “buy” and one a “perform,” or hold. Lannett’s stock was up 7.6 percent over the past week and 15 percent this year to date.
Elliot Wilbur, an analyst for Raymond James, is among the bulls. He recently wrote a research report commending Lannett’s management for being able to “squeeze dollars” from its base; he called the company the “last of the pricing Mohicans.”
Lannett is not new to the aggressive pricing game. In 2014, The New York Timescited the soaring price of digoxin, the company’s congestive heart failure drug. Many patients on digoxin are older, as is the case with fluphenazine.
Both investigations into Lannett, by the Justice Department and the Connecticut attorney general, remain ongoing. The company says it complies with all regulations and is cooperating.
Mr. Bedrosian, through a spokesman, declined to talk to me about his company’s pricing practices. But he has spoken about it with others.
Three people who attended an investor conference in Laguna Niguel, Calif., on March 14, 2017, said Mr. Bedrosian boasted in meetings about his ability to keep pushing up prices on products. The investors spoke on condition of anonymity, fearful of retaliation if they were identified.
According to the investors, Mr. Bedrosian was asked if the price-hike business model in the drug industry was over. He chuckled and said no, adding that he had tripled the price of one of Lannett’s drugs that very morning. He did not identify which one, the investors said.
When I asked Robert Jaffe, a spokesman for Lannett, to explain the rationale for these steep price increases, he said the company does not discuss its strategy. Instead, he suggested I speak with analysts, singling out Mr. Wilbur of Raymond James. In his recent report, Mr. Wilbur wrote that Lannett’s shares are attractive because the company can “find obscure, infrequently trafficked products where market dynamics facilitate or require substantial price movement.”
I asked Mr. Wilbur whether he was concerned that Lannett might face heightened scrutiny because of this practice. In a series of emails, he questioned why I would write about the company’s price increases, since they affected only a small number of people. “Convince me there is a real story here, and I can be helpful,” he said.
It’s true that some of Lannett’s price increases have been on niche drugs not used by millions of patients. Still, Dr. Aaron Kesselheim, associate professor of medicine at Brigham and Women’s Hospital in Boston and at Harvard Medical School, said, “The people who do use them maybe haven’t responded to other medications, so the rise in price for those patients would be problematic.”
The market dynamics that allow a generic drug manufacturer to hike up prices have to do mostly with competition. The problem, pharmaceutical experts say, definitely needs fixing. Generics come to market after the branded manufacturers’ exclusivity periods on their drugs expire. Prices of these drugs are a fraction of what the offerings were when they were branded.
And yet, prices on many generic products have risen significantly in recent years. A 2016 study by the United States Government Accountability Office found that from early 2010 to mid-2015, more than 20 percent of generic drugs had undergone price increases of over 100 percent.
These jumps are a concern to Dr. Scott Gottlieb, President Trump’s nominee to head the Food and Drug Administration. In testimony earlier this month before the Senate committee on Health, Education, Labor and Pensions, Dr. Gottlieb said he intended to solve the problem of rapid escalations in generic drug prices.
Price surges among generics are especially worrisome because these drugs account for 90 percent of all prescriptions and are crucial to reducing health care costs.
Dr. Kesselheim said that generic drug increases often come about when there is a lack of intense competition in the marketplace. He pointed to studies showing that when three or fewer manufacturers sell a generic drug, prices are far higher than when four or five makers compete.
A recent study done by Dr. Kesselheim and four other academics found that one third of generic drugs had three or fewer manufacturers. The drugs that Lannett has recently re-priced fall into that category.
“People expect a generic to be inexpensive, but the reason it is inexpensive is that there is reasonable competition,” Dr. Kesselheim said. “When you take that away, there is nothing to stop generic companies from trying to extract the maximum they can.”
The benefits to companies can be significant. Mr. Wilbur of Raymond James estimated that Lannett’s increase on dicylomine could propel that drug’s sales at the company from under $100,000 a year to as much as $15 million. And according to Lannett’s quarterly results in December, the almost 2,000 percent price increase it levied on its anti-psychosis drugs resulted in a $14.6 million increase in sales — or 54 percent — from the same period a year earlier.
In a world of billion-dollar drugmakers, this may not sound like much. But the price increase in the anti-psychosis category alone accounted for 8.5 percent of Lannett’s total net sales in the December quarter. Overall net sales were up 35 percent.
“Generics are essential in the care of certain patients,” Dr. Kesselheim said. “We need to make sure that the marketplace is functioning efficiently to be able to continue to get these essential benefits from generic drugs.”
Wouldn’t it be nice if drug companies thought better of leaving their patients in the lurch, so that they can laugh all the way to the bank?
Keeping People Healthy: Visits to the Doc Not Enough
By IRWIN GRATZ - Maine Public • APR 14, 2017
PORTLAND, Maine - How do we get - and keep - people healthy? Some would say a visit to the doctor is a must. But Ron Deprez, president of the Public Health Research Institute in Deer Isle, tells Irwin Gratz that’s only part of the answer. The rest is detailed in a recent Maine Policy Review article Deprez wrote entitled “Population Health Improvement.” Here's an excerpt of their conversation.
For Malpractice Reform, Focus on Medicine First (Not Law)
by Aaron Carroll - NYT - Congressional Republicans have recently revived efforts to overhaul malpractice laws, including capping certain kinds of suits at $250,000. A perennial argument of supporters of such measures is that many claims are frivolous, clogging the court system and driving up health care costs for everyone. But does the evidence support this?
You don’t have to look too hard to find backing for the notion that some malpractice claims lack merit. A 2006 New England Journal of Medicine study reviewed a random sample of 1,452 claims from five malpractice insurers. Its authors found that 37 percent of these cases involved no errors, and 3 percent involved no verifiable injuries.
It’s also undeniable that defending against malpractice suits gets costly. Other research shows that providers and hospitals spent $81,000 to $107,000 (in 2008 dollars) to defend cases that went to verdict, on average. Even defending claims that were dropped, withdrawn or dismissed cost $15,000 per claim.
But it is not so clear that the best way to solve malpractice lawsuits is through changes focused on the legal system rather than the medical one.
The same 2006 N.E.J.M. study also found that, in many ways, the malpractice system works reasonably well. Most claims without errors or injuries didn’t result in payments, and most claims with errors did.
A study published last month in the American Journal of Health Economics explored the link between malpractice suits and metrics known as Patient Safety Indicators(P.S.I.). These indicators, developed and released by the Agency for Healthcare Research and Quality in 2003, are intended to quantify harmful events in the health care system. These events are thought to be preventable by changes at the level of the physician, the hospital or the system itself.
The study’s researchers combined a number of data sets from Florida and Texas to see how the rates of 17 indicators were related to malpractice claims for hospitals. Their hypothesis was straightforward: Patient Safety Indicators are a reasonable measure of safety; poor safety makes medical errors more likely; and medical errors lead to malpractice claims.
It turns out that hospitals differed quite broadly in P.S.I. rates. In Florida, among the larger hospitals, adverse events ranged from 55 to 390 per 10,000 discharges. The researchers also found a strong correlation between P.S.I. rates and the rates of malpractice claims.
Bernard Black, one of the authors of the study and a professor at Northwestern’s school of law, said that even small changes in patient safety helped a lot: “Moving a hospital from roughly the 33rd percentile (worse than two-thirds of other hospitals) to the 67th percentile (better than two-thirds of other hospitals) reduces the rate of lawsuits by 16 percent. This level of improvement should be achievable.”
This research is not the last word on this subject, of course. Patient Safety Indicators, while widely accepted as measures of safety and quality, are imperfect. This study includes only two states, with hospital-level data available only in Florida. The study wasn’t a randomized controlled trial, and causality isn’t assured.
Causation is likely, though, because reverse causality doesn’t make much sense — it’s hard to see how higher malpractice rates would lead hospitals to pay less attention to safety.
The study points to a significant link between measures of quality and safety and malpractice claims, suggesting that taking steps to improve patient safety should reduce the risk of lawsuits. Such measures would also probably improve outcomes for patients — a good in itself.
Too often, efforts to fight undeniable problems in the malpractice system start from the assumption that there are too many cases, that they’re not “real,” and that we need to come up with solutions to limit them. But what the data suggest is that improving medical practices may be a more effective approach than passing new laws.
Grasping For The Middle Ground On Obamacare
by Emily Bazar - Kaiser Health News - April 17, 2017
Joel Hay, a professor at the University of Southern California, describes his political views as “conservative, free market.” But in a counterintuitive twist, his proposal to fix the Affordable Care Act would expand the largest source of public health coverage in the country: Medicaid.
Hay, who specializes in health policy and economics, envisions an Obamacare replacement plan that would scrap health insurance exchanges such as Covered California, which sell subsidized private market plans.
Instead, he would allow people under the age of 65 to buy into Medicaid, called Medi-Cal in California. Their premiums would be based on family income and a surcharge would be assessed on those who are uninsured at the time they apply. That would be intended as an incentive to keep them from buying insurance only when they’re sick. People could acquire coverage regardless of preexisting conditions.
Under Obamacare, 31 states and the District of Columbia expanded Medicaid, the federal-state health care program for people with low incomes. In doing so, they added more than 11 million people to the rolls, including about 3.7 million in California.
Hay believes the Medicaid expansion was the most successful part of the ACA and contends that the health insurance exchanges have struggled to provide affordable plans with adequate networks in many states.
He said expanding Medicaid further could achieve two important goals: slowing the growing costs of health care, which he said is better achieved by Medicaid than private market plans, and giving all Americans access to at least basic health coverage.
Scrapping the exchanges may not be an easy sell in the Golden State, where Covered California has been lauded as a national model.
Laurel Lucia, director of the health care program at the UC Berkeley Center for Labor Research and Education, agrees with Hay that the Medicaid expansion has been a success, but she wonders whether middle class consumers will enroll in Medicaid as readily as private market plans.
California Healthline recently interviewed Hay about his proposal, and Lucia for a contrasting point of view. Their comments, below, have been edited for clarity and length.
Under ACA, Medicaid Thrived But Exchanges Faltered
Joel Hay, University of Southern California, professor of health policy and economics
Q: Can you provide an overview of your Obamacare replacement plan?
It would build on the successful part of the Affordable Care Act, namely the Medicaid expansion that is responsible for the majority of the increased coverage.
This is how it would work: Below some family income threshold that would be yet to be determined, the cost of getting Medicaid would be zero. Above that, there would be premiums based on family income up to some maximum threshold, where the cost would be something like 10 percent of family income.
People would always have an option of opting out into a private plan if one is available to them. But this is a backup for anybody that doesn’t have other options.
This plan focuses on the two biggest problems in American health care. No. 1: Not everyone has health insurance. No. 2: We have the highest health care costs in the world.
Medicaid is a no-frills health plan available in all states. It’s not perfect, but it works. There are certainly access problems, but it seems to do a much better job, even in some of these rural areas where we’re seeing problems with the health insurance exchanges.
Q: In some states, such as California, the exchanges seem to be working reasonably well. Why lump all exchanges in one basket?
There’s a philosophical issue here. Is competition across health plans the best way to get affordable, basic care to everyone?
Among the majority of people that are reasonably well-educated, middle class or better, have good jobs and in fact maybe get their insurance through their jobs, the competition between insurance plans works reasonably well. But when you go further down the income scale, that’s where the competition doesn’t seem to work.
The Obamacare experience thus far backs that up. A lot of people just don’t seem to be able to get a good plan either because the premiums are skyrocketing or because the narrowing of the coverage options they have is prohibitive.
Q: Would your plan require everyone to have health insurance?
There is no mandatory requirement for having health insurance, but there are penalties if you go without coverage. If you don’t sign up during open enrollment, the only option you can get outside of that window would be this Medicaid option. The longer you delayed getting into it, the higher your monthly premiums would be.
Q: Would subsidized health plans still be offered through exchanges?
No. The subsidies to help people buy into Medicaid should be targeted to making sure everybody has access to essential care. The subsidies would be focused on helping low-income people get into a no-frills Medicaid health plan. The subsidies will phase out at some upper income level.
If you’re earning $96,000 for a family of four, hopefully the private market will generate options for you. But if you have no other option, this would be available to your family at a premium of 10 percent of your family income. That’s going to work out to be something like $10,000. That’s a lot of money, but that’s the problem we have.
Q: What do you mean when you say “that’s the problem we have”?
We’ve reached the point in this country where the average cost of health care per capita is over $10,000, whereas the median family income is only $54,000. A median family of 2.6 people is going to see over half of their income going to health care.
We have to consider other options. Medicaid is cheaper. It gets the lowest price for drugs by law and negotiates vigorously to get extremely low prices for medical services, hospitalizations, doctors. If you can get your health care through Medicaid, the cost per every unit of service is lower.
Q: Can the already-stressed Medi-Cal program handle millions more enrollees?
It’s better than what has been demonstrated in the private health insurance exchanges under Obamacare. In Medicaid, people may have to travel long distances for specialty care, although some of those things can be overcome with telemedicine and other mechanisms. But we’ve seen pretty much a collapse of the private markets to handle people in rural, hard-to-reach places. Yet Medicaid has provided care to people in every state, including in every one of these remote access areas. It’s not perfect. Rural health care access is never going to be perfect.
Q: You have mentioned block grant funding of Medicaid as part of your proposal. That is what Congressional Republicans have been pushing to reduce federal spending on the program. How can you do that and significantly expand Medicaid at the same time?
I certainly wouldn’t want to hang the whole program on whether or not it’s block-granted. The argument in favor of block granting is if you give a certain amount of money per-capita to the states, it’s up to them to allocate the resources efficiently and effectively to provide the highest quality of care. If you continue with the current funding approach for Medicaid, the states have 50 percent or less of the responsibility for how the dollars are spent and so they’re not going to work as effectively to control costs and quality.
Some people on the far right want to actually destroy Medicaid. They think by block granting Medicaid, they can eventually make it go away. That’s not my goal here. My goal is to provide sufficient federal funds to make this thing work.
Q: Have you discussed this idea with any lawmakers?
I’m just beginning. What I see so far is that everybody is so polarized, that there really isn’t any movement in the middle. I’ve presented this to left-wing academics, and they say what they want to do is push through single payer, even if it’s only in California. They’re just not interested in compromise. I’m sure the same would be true of Tea Party Republicans.
Q: What do you think of Professor Hay’s idea?
I agree with the conclusion that the Medicaid expansion has been working really well, especially in California. It’s true that Medicaid costs are lower than the costs to cover an equivalent population with private insurance and that Medicaid costs have been growing more slowly than costs in private insurance.
But I disagree with the premise that the individual market components of the ACA are failing. In California, the individual market reforms and subsidies have been working very well, and nationally I’d say they’re mostly working.
In California, we’ve had very high enrollment and we still have significant competition in the individual market. The vast majority of Californians have a choice of at least three insurers through Covered California.
Nationally, millions of people have been newly insured as a result of the individual market subsidies under the ACA. And affordability has improved significantly for low- and middle-income people who don’t have job-based coverage and need to rely on the individual market.
Both nationally and in California, I would not say that the individual market is in a death spiral.
Q: Aren’t there places where premiums have skyrocketed and choices have decreased?
There are places in the United States where much more plan choice is needed. We need to build on the Affordable Care Act reforms in the individual market to ensure greater choices and greater competition, rather than starting from scratch.
Q: It doesn’t seem like the current Congressional leadership wants to build on the ACA.
If there’s bipartisan will to make the ACA work better in terms of the individual market, it’s very possible to do with some policy changes. And in some places, like California, it is already working well.
Q: So why not end subsidized private plans and allow people to buy into Medicaid instead?
It’s an interesting idea to expand upon Medicaid. There is a question of whether middle-class consumers would enroll at the same rate in a Medicaid-type plan as they do in private insurance.
The provider networks in Medicaid are often quite different than those in plans offered through Covered California. Some consumers may be less likely to enroll in Medi-Cal if they have a strong attachment to their provider and that provider is not in the Medi-Cal network or isn’t accepting new Medi-Cal patients.
Q: Would middle-class consumers be less likely to sign up for Medicaid because of a perception or stigma that it’s just for poor people?
I just don’t know how Californians or Americans at higher income levels would perceive a new program like this that builds upon Medicaid.
If you were going to expand Medicaid to a broader population, you would want to make sure that it is adequately funded. One part of Professor Hay’s proposal would fund Medicaid through block grants, which would actually do just the opposite.
Most research has indicated that block-grant funding for Medicaid would result in substantial cuts to federal Medicaid spending over time without resulting in better cost efficiency. The loss of federal funding would force states to make difficult decisions like cutting eligibility, cutting benefits or implementing enrollment caps.
Block-grant funding would not only threaten Medicaid coverage for existing enrollees, but it would also be especially harmful if you were considering expanding the Medicaid population at the same time.
Q: What can be done to moderate health care cost growth, if not through Medicaid?
Cost containment is an important next step in federal health policy and state policy as well. Costs are growing too rapidly, not just in the individual market but also in job-based coverage, but those are trends that started well before the ACA.
They’re not due to the ACA. In fact, since the ACA, private insurance premiums have grown at a slower rate.
But we do need more focus on slowing the rate of cost growth. I think a lot of the barrier there is political. There have been a lot of solutions proposed to reduce costs, for example allowing Medicare to negotiate with drug companies on drug prices. And often Congress doesn’t want to take on the drug industry or the hospital industry or other aspects of the health care industry to reduce costs.
The Cost of Not Taking Your Medicine
by Jane E. Brody - NYT - April 17, 2017
There is an out-of-control epidemic in the United States that costs more and affects more people than any disease Americans currently worry about. It’s called nonadherence to prescribed medications, and it is — potentially, at least — 100 percent preventable by the very individuals it afflicts.
The numbers are staggering. “Studies have consistently shown that 20 percent to 30 percent of medication prescriptions are never filled, and that approximately 50 percent of medications for chronic disease are not taken as prescribed,” according to a review in Annals of Internal Medicine. People who do take prescription medications — whether it’s for a simple infection or a life-threatening condition — typically take only about half the prescribed doses.
This lack of adherence, the Annals authors wrote, is estimated to cause approximately 125,000 deaths and at least 10 percent of hospitalizations, and to cost the American health care system between $100 billion and $289 billion a year.
Former Surgeon General C. Everett Koop put it bluntly: “Drugs don’t work in patients who don’t take them.” This partly explains why new drugs that perform spectacularly well in studies, when patients are monitored to be sure they follow doctors’ orders, fail to measure up once the drug hits the commercial market.
More important, it explains why so many patients don’t get better, suffer surprising relapses or even die when they are given drug prescriptions that should keep their disorders under control.
Studies have shown that a third of kidney transplant patients don’t take their anti-rejection medications, 41 percent of heart attack patients don’t take their blood pressure medications, and half of children with asthma either don’t use their inhalers at all or use them inconsistently.
“When people don’t take the medications prescribed for them, emergency department visits and hospitalizations increase and more people die,” said Bruce Bender, co-director of the Center for Health Promotion at National Jewish Health in Denver. “Nonadherence is a huge problem, and there’s no one solution because there are many different reasons why it happens.”
For example, he said parents often stop their children’s asthma treatment “because they just don’t like the idea of keeping kids on medication indefinitely.” Although a child with asthma may have no apparent symptoms, there is underlying inflammation in the lungs and without treatment, “if the child gets a cold, it can result in six weeks of illness,” Dr. Bender explained.
When Dr. Lisa Rosenbaum, a cardiologist at Brigham and Women’s Hospital in Boston, asked patients who had suffered a heart attack why they were not taking their medications, she got responses like “I’m old-fashioned — I don’t take medicine for nothing” from a man with failing kidneys, peripheral vascular disease, diabetes and a large clot in the pumping chamber of his heart. Another common response: “I’m not a pill person.”
When Dr. Rosenbaum told her hairdresser that she was studying why some people with heart disease don’t take their medications, he replied, “Medications remind people that they’re sick. Who wants to be sick?” He said his grandmother refuses to take drugs prescribed for her heart condition, but “she’ll take vitamins because she knows that’s what keeps her healthy,” so he tells her that the pills he gives her each night are vitamins.
Other patients resist medications because they view them as “chemicals” or “unnatural.” One man told Dr. Rosenbaum that before his heart attack, he’d switched from the statin his doctor prescribed to fish oil, which unlike statins has not been proved to lower cholesterol and stabilize arterial plaque.
“There’s a societal push to do things naturally,” she said in an interview. “The emphasis on diet and exercise convinces some people that they don’t have to take medications.”
Dr. Bender said, “People often do a test, stopping their medications for a few weeks, and if they don’t feel any different, they stay off them. This is especially common for medications that treat ‘silent’ conditions like heart disease and high blood pressure. Although the consequences of ignoring medication may not show up right away, it can result in serious long-term harm.”
Some patients do a cost-benefit analysis, he said. “Statins are cheap and there’s big data showing a huge payoff, but if people don’t see their arteries as a serious problem, they don’t think it’s worth taking a drug and they won’t stay on it. Or if they hear others talking about side effects, it drives down the decision to take it.”
Cost is another major deterrent. “When the co-pay for a drug hits $50 or more, adherence really drops,” Dr. Bender said. Or when a drug is very expensive, like the biologics used to treat rheumatoid arthritis that cost $4,000 a month, patients are less likely to take them or they take less than the prescribed dosage, which renders them less effective.
Dr. William Shrank, chief medical officer at the University of Pittsburgh Health Plan, said that when Aetna offered free medications to patients who survived a heart attack, adherence improved by 6 percent and there were 11 percent fewer heart attacks and strokes, compared with patients who paid for their medications and had an adherence rate of slightly better than 50 percent.
“There are so many reasons patients don’t adhere — the prescription may be too complicated, they get confused, they don’t have symptoms, they don’t like the side effects, they can’t pay for the drug, or they believe it’s a sign of weakness to need medication,” Dr. Shrank said. “This is why it’s so hard to fix the problem — any measure we try only addresses one factor.”
Still, there is hope for improvement, he said. Multiple drugs for a condition could be combined into one pill or packaged together, or dosing can be simplified. Doctors and pharmacists can use digital technology to interact with patients and periodically reinforce the importance of staying on their medication.
With fear of side effects a common deterrent to adherence, doctors should inform patients about likely side effects when issuing a prescription. Failing that, patients should ask: “What, if any, side effects am I most likely to encounter?”
Forgetting to take a prescribed drug is a common problem, especially for those ambivalent about taking medication. Patients can use various devices, including smartphones, to remind them to take the next dose, or use a buddy system to make adherence a team sport. Dr. Shrank suggested making pill-taking a habit, perhaps by putting their medication right next to their toothbrush.
How Many Pills Are Too Many?
by Austen Frakt - NYT - April 10, 2017
The point of prescription drugs is to help us get or feel well. Yet so many Americans take multiple medications that doctors are being encouraged to pause before prescribing and think about “deprescribing” as well.
The idea of dropping unnecessary medications started cropping up in the medical literature a decade ago. In recent years, evidence has mounted about the dangers of taking multiple, perhaps unnecessary, medications.
Deprescribing will work only if patients also get involved in the process. Only they can report adverse effects that they sense but that are not apparent to clinicians. And they need to be comfortable weaning from or dropping drugs that they are accustomed to and believe to be helpful.
Yet an increasing number of Americans — typically older ones with multiple chronic conditions — are taking drugs and supplements they don’t need, or so many of them that those substances are interacting with one another in harmful ways. Studies show that some patients can improve their health with fewer drugs.
Though many prescription drugs are highly valuable, taking them can also be dangerous, particularly taking a lot of them at once. The vast majority of higher-quality studies summarized in a systematic review on polypharmacy — the taking of multiple medications — found an association with a bad health event, like a fall, hospitalization or death.
About one-third of adverse events in hospitalizations include a drug-related harm, leading to longer hospital stays and greater expense. The Institute of Medicineestimated that there are 400,000 preventable adverse drug events in hospitals each year, costing $3.5 billion. One-fifth of patients discharged from the hospital have a drug-related complication after returning home, many of which are preventable.
Not every adverse drug event means a patient has been prescribed an unnecessary and harmful drug. But older patients are at greater risk because they tend to have more chronic conditions and take a multiplicity of medications for them. Two-thirdsof Medicare beneficiaries have two or more chronic conditions, and almost half take five or more medications. Over a year, almost 20 percent take 10 or more drugs or supplements.
Some are unnecessary. At least one in five older patients are on an inappropriate medication — one that they can do without or that can be switched to a different, safer drug. One study found that 44 percent of frail, older patients were prescribed at least one drug unnecessarily. A study of over 200,000 older veterans with diabetesfound that over half were candidates for dropping a blood pressure or blood sugar control medication. Some studies cite even higher numbers — 60 percent of older Americans may be on a drug they don’t need.
Though studies have found a correlation between the number of drugs a patient takes and the risk of an adverse event, the problem may not be the number of drugs, but the wrong ones. Some medications have been identified as more likely to contribute to adverse events, particularly for older patients.
For example, if you’re taking psychotropic agents, such as benzodiazepines or sleep-aid drugs, you may be at increased risk of falling and cognitive impairment. Diuretics and antihypertensives have also been identified as potentially problematic. (The Agency for Healthcare Research and Quality has published a longer list of drugs that are potentially inappropriate for older patients. Note that, even if they are problematic for some patients, they are appropriate for many.)
Relative to the mountain of evidence on the effects of taking prescription drugs, there are very few clinical trials on the effects of not taking them.
Among them is one randomized trial that found that careful evaluation and weekly management of medications taken by older patients reduced unnecessary or inappropriate drug use. Adverse drug reactions fell by 35 percent. Medication use was reduced, along with the risk of falls among a group of older, community-dwelling patients through a program that included a review of medications.
Several other studies also found that withdrawal of psychotropic medications reduced falls. A comprehensive review of deprescribing studies found that some approaches to it can reduce the risk of death. Another recent randomized trial found that frail and older people could drop an average of two drugs from a 10-drug regimen with no adverse effects.
So why isn’t deprescribing more widely considered? According to a systematic reviewof research on the question, some physicians are not aware that they’re prescribing inappropriately. Other doctors may have difficulty identifying which drugs are inappropriate, in part because of lack of evidence. In other cases, doctors believe that adverse effects of drug interactions are outweighed by benefits.
Physicians also report that some patients resist changing medications, fearing that alternatives — including lifestyle changes — will not be as effective. Other studies found that many doctors are concerned about liability if something should go wrong or worry they’ll fail to meet performance benchmarks — like the proportion of diabetic patients with adequate blood sugar control.
To reduce the chances of problems with medications, experts advocate that physicians more routinely review the medication regimens of their patients, particularly those with many prescriptions. At hospital discharge — when patients leave the hospital, often on more medications than when they entered it — is a particularly important time for such a review. Including nurses and pharmacists in the process can reduce the burden on physicians and the risks to patients.
Patients can play an important role as well. Walid Gellad, a physician in the Veterans Health Administration and at the University of Pittsburgh School of Medicine, advises that at every visit with a doctor, “patients should ask, ‘Are there any medications that I am on that I don’t need anymore, or that I could try going without?’ ”
Patients, of course, should not try weaning themselves off medication without consulting their doctors — but deprescribing is an idea for all parties to keep in mind.
Nonprofit Working To Block Drug Imports Has Ties To Pharma Lobby
by Emily Kopp - April 18, 2017
A nonprofit organization that has orchestrated a wide-reaching campaign against foreign drug imports has deep ties to the Pharmaceutical Research and Manufacturers of America, or PhRMA, the powerful lobbying group that includes Eli Lilly, Pfizer and Bayer.
The nonprofit, called the Partnership for Safe Medicines, has recently emerged as a leading voice against Senate bills that would allow drugs to be imported from Canada.
Both the lobbying group and the nonprofit partnership have gone to great lengths to show that drugmakers are not driving what they describe as a grass-roots effort to fight imports, including an expensive advertising blitz and an event last week that featured high-profile former FBI officials and a former Food and Drug Administration commissioner.
However, a Kaiser Health News analysis of groups involved in the partnership shows more than one-third have received PhRMA funding or are local chapters of groups that have received PhRMA funding, according to PhRMA tax disclosures from 2013 to 2015.
Forty-seven of the organizations listed in the ads appear to be advocacy organizations that received no money from PhRMA in those years.
A PhRMA senior vice president, Scott LaGanga, previously led the Partnership for Safe Medicines for 10 years. At PhRMA, LaGanga was responsible for the lobbying group's alliances with patient advocacy groups, and he was simultaneously listed as the executive director of the Partnership for Safe Medicines on each of that group's annual tax filings since 2007, the earliest year for which they are available from ProPublica's Nonprofit Explorer.
LaGanga wrote a 2011 article about the partnership's origins. Published in the Journal of Commercial Biotechnology, it described "public-private partnerships in addressing counterfeit medicines." His PhRMA job was not disclosed in the article.
From 2010 to 2014, the organization hosted a conference called the Partnership for Safe Medicines Interchange. In a video from a 2013 event, LaGanga thanks pharmaceutical companies, most of them PhRMA members, for sponsoring the event.
In February, LaGanga moved to a senior role at PhRMA and stepped down as executive director of the Partnership for Safe Medicines, just as the group's campaign to stop import legislation was revving up.
The partnership's new executive director, Shabbir Safdar, said LaGanga resigned from the group to avoid the appearance of a conflict of interest.
"That's why Scott's not executive director anymore," he said. PhRMA declined to make LaGanga available for an interview.
Considering Legislation
The Senate push to allow Americans to buy pharmaceuticals from Canada comes as more patients balk at filling prescriptions because of soaring drug prices. Prescription medicines purchased in the U.S. can run three times what they cost in Canada, data from the company PharmacyChecker.com show.
In 2016, about 19 million Americans purchased pharmaceuticals illegally from foreign sources through online pharmacies or while traveling, according to a Kaiser Family Foundation poll. Many survey respondents cited pricing disparities as the reason.
A bill cosponsored by Sen. Bernie Sanders (I-Vt.) would provide a mechanism for Canadian drug manufacturers to sell to U.S. consumers and pharmacies. Sanders introduced the bill in February. In January, Sens. John McCain (R-Ariz.) and Amy Klobuchar (D-Minn.) also introduced a bill to allow drug imports from Canada.
In the House, Rep. Elijah Cummings (D-Md.) introduced a similar bill to Sanders', along with 23 other Democrats.
The U.S. drug industry has strongly opposed efforts to open the borders to drug imports, but the PhRMA lobbying group is not mentioned in the nonprofit partnership's recent advertising blitz against the proposed legislation. The nonprofit says its grass-roots effort is supported by 170 members, including professional organizations and trade groups.
The nonprofit describes PhRMA as a dues-paying member with no larger role in shaping the group's activities. Partnership spokeswoman Clare Krusing would not say how much each member contributes. PhRMA spokeswoman Allyson Funk declined to say whether PhRMA funds the partnership.
"PhRMA engages with stakeholders across the health care system to hear their perspectives and priorities," Funk said. "We work with many organizations with which we have both agreements and disagreements on public policy issues, and believe engagement and dialogue are critical."
Campaigning Against Drug Imports
The partnership recently launched its ad campaign, warning against the alleged dangers of legalizing Canadian drug imports. It includes television commercials, promoted search results on Google and a full-page print ad in The Washington Postand The Hill. The group's YouTube page shows recent commercials targeted to viewers in 13 states.
"We don't disclose specific ad figures, but the campaign is in the high six figures," Safdar said.
The commercials ask voters to urge their senators to "oppose dangerous drug importation legislation."
The newspaper ad reads, "Keep the nation's prescription drug supply safe. Urge the Senate to reject drug importation measures." Its headline declares that "170 healthcare advocacy groups oppose drug importation," noting a letter to Congress signed by its members. The ad lists 160 members who signed the letter, and PhRMA's name is not included.
"Having a big membership allows the coalition to present what looks like a unified show of grass-roots support ... but it does raise questions about which members of the coalition are really driving and funding the group's policy-making," said Matthew McCoy, a postdoctoral fellow at the University of Pennsylvania who studies patient advocacy groups.
The list of groups includes at least 64 trade organizations representing the biomedical industry, professional associations representing pharmacists, a private research company and two insurance companies.
One group that signed the letter, the "Citrus Council, National Kidney Foundation of Florida Inc.," represents a single volunteer, according to an email from the group. A spokesman for the National Kidney Foundation of Florida said the volunteer's views contradict the position of the umbrella group, and said the foundation supports "any sort of drug importation that allows our patients to have access to drugs at the best price."
Two of the hepatitis patients' advocacy groups that were listed, the National Association of Hepatitis Task Forces and the California Hepatitis C Task Force, are run by the same person, Bill Remak. Remak said the groups receive small amounts of PhRMA funding.
"I don't enjoy having to take this extreme position of saying we shouldn't import at all, but until we have some oversight regime, some way of protecting consumers, it's a really tough call," he said.
"Current drug importation proposals do not appear to have equal safety and chain-of-custody accountability laid out adequately for patient safety concerns," said William Arnold, president of the Community Access National Network, which is also listed in the ad and is an advocacy and support group for people living with HIV/AIDS or hepatitis in Washington, D.C. His group did not accept money from PhRMA between 2013 to 2015, the Kaiser Health News analysis found.
Concerns About Safety And Price
Last week, the partnership hosted a panel at the National Press Club featuring former FBI director Louis Freeh and former FDA commissioner Dr. Andrew von Eschenbach. The discussion focused on the alleged health and legal dangers of online pharmacies.
"You can talk about lowering prices, but if a drug comes with a high probability of toxicity and death, that comes at a high cost to the patient," von Eschenbach said. "That's what's at issue with drug importation."
Each speaker argued that the bill co-sponsored by Sanders would be harmful to patients. Around the same time that bill was introduced, the partnership also sent emails to member organizations seeking help to stop such a measure.
Speakers at the partnership event claimed importation would lead to a flood of counterfeit medicines laced with arsenic, fentanyl and lead paint.
"These drugs are manufactured in jungles, in tin drums, in basements. ... Those are the sort of sanitary conditions we're talking about here," said George Karavetsos, a former director of the FDA's Office of Criminal Investigations.
Both von Eschenbach and Karavetsos have ties to the pharmaceutical industry. Von Eschenbach left the FDA in 2009 to join Greenleaf Health, which counsels pharmaceutical clients, before starting his own consulting company, and Karavetsos counsels pharmaceutical clients at DLA Piper, a Washington, D.C., law firm.
In an interview, Josh Miller-Lewis, Sanders' deputy director of communications, refuted Karavetsos' arguments. He said Canadian drugmakers can apply for licenses, and all drugs would have to come from FDA-inspected plants.
Politico reported in October that PhRMA is bolstering its war chest by another $100 million per year, suggesting to many industry analysts that drugmakers are gearing up for a ferocious fight.
"I think it's safe to say pharmaceutical corporations are prepared to spend some fraction of their multibillion-dollar profits to fight drug importation and any other policy that might end the plague of overpriced medicine," said Rick Claypool, research director for Public Citizen, a watchdog group critical of the drug industry.
Democrats and Sanders push to allow importing drugs from Canada
Their proposed bill aiming to bring down prices has bipartisan support, but drug trade groups question safety issues.
by Carolyn Y. Johnson - The Washington Post - February 28, 2017
Opening a new front in the war against big pharma, Sen. Bernie Sanders, I-Vt., and a slew of Democratic colleagues introduced a bill Tuesday to allow commercial importation of drugs from Canada.
The appeal is obvious; through cheap imported drugs, the U.S. would be able to take advantage of the government levers and regulation that other countries have used to bring down pharmaceutical prices. It’s a far more politically palatable way to attack the problem of soaring drug prices than opening up an even more contentious fight over whether the U.S. government should meddle directly in pricing – and it has had wide popular and bipartisan support, including from Hillary Clinton and President Trump during the presidential campaign.
A drug importation amendment was previously advanced during the budget resolution vote in the Senate in January. It was rejected, with 13 Democrats voting against the measure. Four of those who voted against the amendment signed on as co-sponsors of the bill.
In a press conference unveiling the bill, Democratic and independent lawmakers threw down the gauntlet, calling on Trump – who has repeatedly said that he will do something to reign in rising drug prices – to support their effort.
“I want to finally say about our president, who has said a lot of talk about health care, and has recently confessed how ‘complicated’ he thinks it is. He has made promises to the American people about prescription drug prices; he has made promises to the American people, and now it’s time for him to put up or shut up,” said Sen. Cory Booker , D-N.J., who joined as a co-sponsor after earlier voting against drug importation when it was an amendment. “It’s time for him to join with us, or, in my opinion, to confess his lies to the American people.”
The bill was immediately criticized by pharmaceutical industry’s trade group, arguing that the policy could cause patient harm if bogus or unsafe drugs make it into the market.
“The bill lacks sufficient safety controls, would exacerbate threats to public health from counterfeit, adulterated or diverted medicines, and increase the burden on law enforcement to prevent unregulated medicines and other dangerous products from harming consumers,” said Nicole Longo, a spokeswoman for PhRMA, the trade group for the drug industry.
Partnership for Safe Medicines, a coalition that includes PhRMA and many public health groups, said in a letter that the proposal would “undermine nearly two decades of drug safety and policy.”
But supporters of the law argue that the specter of patient harm is a boogeyman.
The bill has safety protections embedded in it, some of which were what convinced Democrats who voted against a previous importation proposal to sign on in support.
Bare Market: What Happens if Places Have No Obamacare Insurers?
by Margot Sanger-Katz - NYT - April 18, 2017
The Obamacare marketplaces can be thought of as a government-run store. The government gives many customers subsidies, like gift cards, that they can use to buy insurance. But what happens if no companies want to sell their products in the store?
That is the problem that could face Obamacare customers if no insurance carriers show up in a given area, a risk policy makers call the bare-market problem. That risk is growing as the administration sends negative signals about the future of the market. If all the insurers start leaving some stores, consumers there will find their options dwindling, and then their subsidies will become worthless. Most would end up uninsured. The problem could affect as few as dozens of customers — or spread more broadly to affect a substantial fraction of the approximately 11 million people currently enrolled in Obamacare coverage.
The markets created by the Affordable Care Act have always relied on the voluntary participation of private companies. If the government set up the right conditions for the market, the thinking went, insurers would want to jump in. But, as Sarah Kliff at Vox.com has reported, the law contained no real backup plan if that vision didn’t work out.
So far, there are parts of Tennessee where none of this year’s insurers want to sell insurance next year. Other counties have only one carrier, and in some of them, that carrier is looking shaky.
The Trump administration has taken actions that have worried insurers, and it has done little to reassure them. It pulled back on outreach and advertisement for this year. It issued an executive order suggesting it would weaken enforcement of a requirement that most Americans obtain health insurance. The president and his Department of Health and Human Services have issued statements assailing the health law and warning of imminent collapse. (Absent the policy uncertainty, there have been growing signs that the markets have stabilized.)
The administration did take one action meant to calm the waters: It finalized a regulation last week that included several insurance industry requests to make the market more predictable.
But perhaps most critically, President Trump has made it clear that he may choose against funding a form of insurance subsidy that the companies rely on to balance their books and set premium prices. In an interview with The Wall Street Journal last week, he said that he might decline to fund these “cost-sharing reduction” payments in order to increase leverage on Democrats in Congress, whom he wants to vote for a Republican health care overhaul plan.
Seema Verma, the administrator for the Centers for Medicare and Medicaid Services, which oversees the marketplaces, is meeting with some health insurers today, though it is unclear what new messages she may have to deliver.
Amid this uncertainty, crucial deadlines are approaching for insurers, who must calculate and submit next year’s prices to state regulators in the coming weeks.
“The regulatory uncertainty is something that is very hard for these people to price in,” said Craig Garthwaite, an associate professor of strategy at the Kellogg School at Northwestern. “How do you develop a model for the thoughts of the Trump administration on what they’re going to do policywise in health care?”
In theory, the bare market problem shouldn’t be a big worry. The federal government pays a large fraction of Obamacare premiums for most customers, and a single insurer can essentially name its price. Economists like Mr. Garthwaite see the situation as a happy circumstance for an insurance company. Who wouldn’t want a monopoly market where the government pays the bills?
“Why be at zero — why not come in and charge a freaking outrageous price and be the one?” said Jonathan Gruber, a health economist at M.I.T who advised the Obama administration when it was developing the Affordable Care Act. Then he answered his own question: “Many mysteries of life can be answered with the statement: Insurers are bizarrely risk-averse.”
Kevin Counihan, who was the C.E.O. of HealthCare.gov in the Obama administration, said much of his job involved outreach and support for insurance executives. He called an insurance C.E.O. every day, he said, just to check in and hear industry concerns. He arranged meetings between companies and local officials. As he describes it, the job was part counselor, part cheerleader and part tough-love parent.
“If you show you are trying to be supportive, and you’re collaborative with them, it changes the tone,” he said.
That kind of outreach is not happening in the Trump administration so far.
The initial filing deadlines, which begin this week and run through mid-June, are not the most important ones. A next round of decisions will be made in August and September, and insurers must sign final contracts in the fall. That leaves some time, if the Trump administration is motivated, to complete regulatory decisions and engage in the wooing and arm-twisting that may be necessary to draw in worried insurers. But it’s a small window.
If insurers do all decide to exit a market, no one is exactly sure what will happen next. Some experts have brainstormed about possible workarounds, but all would entail uncharted legal territory.
Officials at Covered California, the California state marketplace, produced a white paper outlining a series of options to fix the problem of so-called bare counties. But the top bullet point for nearly every option was: “Very difficult, if not impossible, to implement for 2018.”
Katherine Hempstead, who studies health insurance markets at the Robert Wood Johnson Foundation, was more confident than former Obama administration officials that a motivated executive branch could devise new policies to help people in bare counties, such as letting them buy a Medicaid plan, or including them in the state employee benefit pool. “I do think there will be solutions,” she said.
Senator Lamar Alexander of Tennessee, the state currently at greatest risk of bare counties, has introduced a bill that would create options for customers shut out of their Obamacare market. But even if Congress passed such a law, regulators would have to work very fast to make anything happen before next year’s enrollment period, which begins in November.
And the limited time for a big change of heart may be an underappreciated risk.
“The more time that passes, the more heroically they need to behave,” said Andy Slavitt, the former administrator of the Centers for Medicare and Medicaid Services. “If they try to solve this whole thing later, they’re not going to be able to do it.”
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