Category Archives: Policy and politics

The Medical Marijuana Mess

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The thin veneer of “medical” marijuana has been stripped away in Colorado, where stores originally providing remedies for patients have been quick to plaster themselves with new signs touting recreational use for all adults. (The signs above are among those I spotted this month in just one small town.) And while federal regulations and public pressure have largely kept alcohol and nicotine out of candy and other child-friendly, sugary products, the marijuana industry is moving in the opposite direction by offering an ever-widening array of pot-infused “edibles,” complete with approving coverage from mainstream media.

There’s room for debate on just how harmful marijuana is, but it definitely is harmful, especially to the developing brains of adolescents. Here’s my bottom line: marijuana should be decriminalized so that those who consume it for whatever purpose are not subject to arrest and imprisonment, with all the personal and societal costs that brings, but the widespread use of marijuana should not be encouraged. And that’s roughly where Massachusetts was before voters decided to legalize medical marijuana.

I think we’re fooling ourselves in Massachusetts by going down the route of approving medical marijuana dispensaries. Early experience has already demonstrated that some unsavory characters and losers are drawn into the business. And with public opinion running toward legalization, we should expect these dispensaries to become outlets for recreational marijuana within a few years, maybe sooner.

Let’s be honest with ourselves and act accordingly:

  • If marijuana is a medicine it should be tested like any other drug and approved by FDA. If that’s the case, physicians could prescribe it and pharmacists could dispense it. In fact, such drugs are on the market and in development
  • If marijuana is so safe and effective that it doesn’t need a prescription, it should be sold wherever –like Tylenol
  • If marijuana is a recreational drug like alcohol, with known harms but where we’ve opted against prohibition, we should let liquor stores sell it. They already deal with age verification and physical security of the product

Sad to say but I think we’re going to see widespread legalization of recreational marijuana over the next few years and that we’ll look back in a decade or so and realize it’s been a serious mistake of the same magnitude as the addiction and abuse epidemic that’s resulted from the expansion of legal prescribing of drugs like OxyContin for pain.

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By healthcare business consultant David E. Williams of the Health Business Group

Consumer Reports lets us down with attack on Zohydro ER

Guess who's got acetaminophen

Guess who’s got acetaminophen?

Readers like me trust Consumer Reports to provide objective, unbiased recommendations on products and services. That’s why I’m so disappointed in the September cover story, The dangers of painkillers. The story rails against two products –Zohyrdo ER and acetaminophen– yet fails to mention that what differentiates Zohydro ER is that it is the only extended release version of hydrocodone that doesn’t contain acetaminophen.

The article urges readers to contact the FDA to ask that Zohydro ER be banned and acetaminophen be more tightly regulated. But Consumer Reports fails to inform us that Zohydro ER represents a partial solution to the problem of acetaminophen proliferation that Consumer Reports is so worried about. If I were at the FDA and someone called me to complain about Zohydro ER and acetaminophen on the same call I’d find it ironic, to say the least. Callers might be embarrassed when they realize they’ve been misinformed.

Here’s what the article says about acetaminophen:

Opioids aren’t the only painkillers that pose serious risks. Almost as dangerous is a medication renowned for its safety: acetaminophen (Tylenol and generic). Almost 80,000 people per year are treated in emergency rooms because they have taken too much of it, and the drug is now the most common cause of liver failure in this country.

And with acetaminophen, accidentally taking too much is all too easy. That’s because it’s the most common drug in the U.S., found as an ingredient in more than 600 OTC and prescription medications, including allergy aids, cough and cold remedies, fever reducers, pain relievers, and sleep aids.

Zohyrdo ER’s direct competitors such as Vicodin contain hydrocodone and acetaminophen. Until Zohydro ER came along, hydrocodone users ended up taking acetaminophen whether they wanted it or not. Incredibly, according to a 2010 study cited by Zohydro ER’s manufacturer, “63 percent of unintentional acetaminophen overdoses [are] attributed to the use of hydrocodone-acetaminophen combination products.” How can Consumer Reports have overlooked this?

There are legitimate complaints about Zohydro ER. The biggest is that it’s not tamper resistant, and is thus prone to abuse. Fair enough. But there are other narcotic painkillers on the market –like generic Opana ER– that are also not tamper resistant. And without getting into the details, it’s not all that hard to tamper with tamper resistant products.

I’m not saying Consumer Reports is necessarily wrong to want painkillers restricted. But I just can’t understand why an article that hits acetaminophen so hard wouldn’t mention that it’s the absence of acetaminophen that makes Zohydro ER different.

photo credit: Mike Licht, NotionsCapital.com via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

Whining about the thousand-dollar pill

Medicine is too expensive!

Medicine is too expensive!

When I saw Paying for the Thousand-Dollar Pill, an anti-Sovaldi op-ed in the Wall Street Journal by the health plans’ head lobbyist, it brought back memories from my childhood when I toured the FBI headquarters in Washington, DC. The tour guide started off by showing us a wall with pictures of the 10 most wanted fugitives in the country and asked for our help in tracking them down.

“If that’s their plan for catching these guys,” my dad whispered to me, “we’re in more trouble than I thought.”

The author, Karen Ignagni, complains that the prices charged for new drugs like Sovaldi don’t “reflect the cost of investment.” She worries that the government is giving drugs a monopoly through the patent system. And she fears that her cries for “transparency in the relationship between the price of a drug and the cost of its development” will lead to allegations of “price controls” –which the insurance industry doesn’t want. Boo hoo!

Rather than whining and complaining in the press, the insurance industry should do its job of containing costs and ensuring quality. The problem with Sovaldi, a novel drug that claims a high cure rate for Hepatitis C, is not that the per pill cost is $1000 or about $84,000 for a course of treatment. There are several drugs that cost a lot more than that and aren’t as effective against the diseases they target. The problem is that Hepatitis C is a common condition, and many, many cases that have accumulated over the years that can now be treated. That makes the total bill very high at least for the next couple years even though the total cost to the healthcare system as a whole may drop because there will be fewer transplants and fewer Hep C cases over time.

One way to deal with the problem Ignagni cites would be to move to a single payer system and global budgeting. Then the government could just dictate the price and be done with it. You don’t see the national health insurance systems in other countries quaking in their boots about Sovaldi. Instead, they’re negotiating prices and limiting the treatment to those with severe disease. Once competitors enter the market, access is likely to be expanded.

Clearly the US health insurance industry doesn’t want to put itself out of business so I don’t expect Ignagni to cheerlead for single payer. But I would expect closer scrutiny of the clinical claims being made for Sovaldi, which are not as airtight as they are typically presented. Plans could take a harder line on price negotiations, encourage some patients to wait for treatment, and more publicly critique the evidence beyond Sovaldi.

Meanwhile, I think it’s great that companies that come out with novel, useful drugs can make a ton of money.

The health insurance industry shouldn’t come crying to me or the rest of the American public if they can’t figure things out.
photo credit: ★ spunkinator via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

 

Health insurance premium increases in Massachusetts: More ways it can happen

Last week (ACA rollout hits some Massachusetts businesses harder than expected) I described how the implementation of Obamacare caused one small businesses’s Blue Cross Blue Shield of Massachusetts premium to jump by 29 percent for the upcoming renewal. The main issue was family size –previously only the first two kids were counted when calculating premiums, now it’s the first three kids. This group, with lots of kids, is paying the price.

After that I heard from two other BCBS MA customers who were experiencing big premium hikes. One is a two-family partnership where one family has two kids and the other has none. Their premium is up 17%. The second is a non-profit organization where the number of kids also shouldn’t be a deciding factor. Their premium increase is 26%.

Here’s what BCBS MA told me about these two:

The first group was a new customer entering its first renewal year. Initially, BCBS rated the company based on the expected –rather than actual– number of dependents. The rate was based on ~1.5 kids for one family and 0 for the other. (Something tells me they probably knew 1.5 was either too high or too low and not right on!) In any case, in a small group that is enough to make a significant difference in rates. With the ACA, health plans have to gather the dependent info even for new customers.

For the non-profit organization, the number of members covered declined from 12 to 7, which pushed them into a more expensive rate per member. (Even though rating based on group size is being phased out, it’s still a significant factor.) In addition, the group’s prior year increase had been tempered under a state law that limited the rates of increase for renewals. The ACA overrides the state’s rule and BCBS tells me they are unable to cap this year’s rate increase.

For what it’s worth, BCBS tells me that the median rate increase in the merged (individual + small group market) this year is 5-6%, which means these three examples are outliers. They also tell me that rate increases a year from now should be in the low single digits for all three of these customers and others like them.

I’d be interested in hearing from other Massachusetts customers of Blue Cross and other plans. Have your rates jumped? Are they steady? Did they fall? Do the explanations above seem to account for what’s happened to you?

Leave a note in the comments or mention on Twitter @HealthBizBlog.

By healthcare business consultant David E. Williams of the Health Business Group

Narrow networks: Get used to it

Narrow but workable

Narrow but workable

Many health plans unveiled “narrow network” plans recently as part of the Affordable Care Act. These plans cover a limited number of doctors, hospitals and other providers and often pay nothing for out-of-network coverage. Predictably, some members are upset as documented today by Kaiser Health News (Limitations of New Health Plans Rankle Some Enrollees.)  Some consumers are upset that they can’t see specific doctors who they may have seen in the past and that the list of available providers isn’t terribly long.

Insurance commissioners and lawmakers are hearing complaints and some are considering taking action. And while it definitely makes sense for regulators to take an interest in network adequacy and to prevent abuses, in my view narrow networks have become a crucial part of healthcare affordability and need to be maintained.

Here’s why they’ve become prevalent: The Affordable Care Act prevents health plans from using many of their traditional tools for limiting costs. They can’t reject sick or high-risk patients, can’t charge them more, can’t cap annual or lifetime benefits, and have to provide a set of proscribed services. At the same time, the plans are subjected to apples-to-apples comparisons on health insurance exchanges by price-sensitive buyers. The result is that plans take the main remaining step they can to be control costs: limiting their networks to providers willing to accept lower reimbursement rates.

Most shoppers care mainly about price so this is a very sensible approach for the health plans. And for many customers it’s a way to afford insurance that provides a wide array of benefits. In some markets (including Massachusetts) narrow network products that exclude the highest priced, largest healthcare systems provide very substantial discounts while still delivering high quality providers.

Narrow networks are becoming increasingly important. In 2010, before the Affordable Care Act, I wrote Narrow networks. Nice idea but no panacea. I listed six reasons why such networks were having a limited impact. Some of these factors are still present, but others are less prominent. For example, the development of integrated delivery networks mean that health plans can contract with these larger entities and get essentially all the providers they need, the emergence of risk-sharing through ACOs and similar arrangements aligns incentives, and in general there is more price sensitivity. At least a few provider organizations are now positioning themselves as value players, ready to address an emerging market segment.

 

photo credit: coolmonfrere via photopin cc

By healthcare business consultant David E. Williams of the Health Business Group

ACA rollout hits some Massachusetts businesses harder than expected

Like many, I’ve been surprised that the rollout of the Affordable Care Act has had such an impact on Massachusetts. After all we already had near universal coverage, an exchange/marketplace, lots of mandates, guaranteed issue and community rating. Obamacare is based on Romneycare. But somehow Massachusetts screwed up the rollout of the Obamacare exchange, which is costing $100 million to fix, and at least some Massachusetts small businesses are getting hit with big rate hikes as they renew.

One small business I know got hit with a 29 percent premium jump, almost all due to the ACA. Here’s how a Blue Cross actuary explained it:

  • Blue Cross has alway developed its rates for the merged individual/small group market by rating each member based on age and location. Industry and company size have also factored in
  • However, prior to 2014 Blue Cross only counted the first 2 kids plus adults when doing the rating
  • The ACA mandates a similar approach, but now Blue Cross has to count the first 3 kids in the family. In addition, if a son or daughter aged 21-26 remains on the plan, that individual is counted as an adult along with up to 3 kids
  • For this particular business with the 29 percent jump, the shift in the counting of number of kids boosted the premium by about 25 percent
  • The other 4 percent was mostly related to aging of the members plus the inclusion of pediatric dental benefits in the medical benefit, again as required under the ACA
  • The ACA requires Blue Cross to phase out its reliance on company size and industry rating factors over time. That effect was basically neutral for this customer, whose premium rose about 3 percent based on the phase out of the industry factor and went down 2.5 percent based on phasing out of the company size factor

The silver lining, if any? There shouldn’t be any serious changes in premium for next year’s renewal.

I’d heard about similar premium increases for other small businesses and non-profit organizations, including those that I don’t think are facing the family size issue. But maybe I’ve just heard from those who’ve been hit hard and others are not seeing increases.

Is your Massachussetts small business healthcare premium skyrocketing next year? Is it staying flat? I’d love to hear from you in the comments or via Twitter @HealthBizBlog.

By healthcare business consultant David E. Williams of the Health Business Group