Category Archives: Policy and politics

How Martin Shkreli is driving down drug prices

Thanks Mr. Evil for helping build consensus

Thanks Mr. Evil for helping build consensus

Breaking news: Martin Shkreli has been arrested for securities fraud. Not surprising, but actually I was hoping this wouldn’t occur for a while –at least until some of his drug pricing schemes had played all the way out. I hope he gets out on bail and keeps going with his business plan.

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Turing Pharmaceuticals CEO Martin Shkreli made waves this year by boosting the price of generic drug daraprim from $13.50 to $750 per tablet. Now he’s angling for an FDA voucher worth hundreds of millions of dollars by abusing an incentive program intended to encourage development of new drugs for neglected diseases. He’ll be ratcheting up the price of another drug to boot. And finally his interview with HipHopDx reveals him to be a very nasty and unsavory character. (Jump straight to the last question if you don’t believe me.)

Yet ironically his well publicized price-jacking of a few specific products seems reasonably likely to lead to a slowdown in price increases for the pharma industry as a whole, if not outright price controls. You see, what Shkreli has done differs only in degree from standard industry practices.

The industry spends a lot of money and energy to explain that its pricing is directly related to the high cost of drug development. We know that’s not true, but even if it were true it would not explain why prices for medications rise so quickly, even for products that have been on the market a long time.

The Shkreli affair, along with shenanigans from Valeant, have awakened serious journalists, who have started to look into drug pricing more broadly. This Wall Street Journal article (How Pfizer set the cost of its new drug at $9,850 a month) is a good example.  Pfizer doesn’t set its price based on R&D costs, but it doesn’t charge the maximum it can get away with either. Pfizer is in this game for the long term and likes the status quo. It doesn’t want to generate a backlash. But Shkreli is generating a backlash, not just against him but against the whole industry. Politicians are seizing on him as an example, and rightly so.

Free markets unfettered by government interference are great, but as I have written (Why drug price regulation should not be ruled out) we have to remember that the government plays a very big role in enabling high and rising product prices: it grants monopolies and market exclusivity that keep out competitors. And, through Medicare, Medicaid and other programs the government is the biggest payer for many products. Shkreli’s actions present legislators and the president with an opportunity to re-examine drug pricing policies and consider changes that are in the country’s interest. The longer he keeps up his act, the higher the chance for significant reform.

Image courtesy of Sira Anamwong at FreeDigitalPhotos.net

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

 

United pulls out of ACA exchanges: Should we care?

Walking wounded?

Walking wounded?

Insurance exchanges are a key feature of the Affordable Care Act, aka Obamacare. They enable individuals to compare insurance plans from a variety of carriers and choose the policy they like. Exchanges got off to a rough start with website glitches but overall they’ve been quite successful: enrolling millions of newly insured people, many of whom receive premium subsidies and some of whom receive additional assistance on out-of-pocket costs.

Recently we’ve heard what could be interpreted as bad news about the viability of exchanges: UnitedHealth is considering withdrawing from the program. In the highly politicized world of health reform, that information has Obamacare foes sounding the death knell.

I see things differently.

The biggest premium increases reported in the press were generally from the largest, most well known health insurers –like United. They may be losing money on the policies they offer on the exchanges and are jacking up prices as a result. But the whole purpose of an exchange is to give people the opportunity to shop around and to change plans if they want. Even in the face of big headline price increases, consumers who shop around can still typically keep their premium increases modest or even reduce what they’re paying.

The big name insurers that have a large share of the corporate market are not necessarily the winners on the exchanges. Rather, the leaders in the new price-sensitive era are lesser known plans, many of which cut their teeth in the Medicaid managed care market where tight cost control is key. They have what it takes to play in this brave new world.

There are some similarities to the airline business. Remember the days when you had to buy a ticket 30 days in advance and stay over a Saturday night to get a reasonable deal? Then carriers like Southwest came into the market and changed all that. Carriers like USAirways used to withdraw from markets that Southwest entered –they just couldn’t compete. That doesn’t mean air travelers suffered.

Don’t get me wrong. I’d like to see some changes to make the exchanges more vibrant –like increasing the allowed ratio of premiums based on age, which would make the plans more affordable for younger people. And it would be nice to have more flexibility in benefit designs. Still, United’s departure is likely to be more of a problem for the legacy carriers than it is for the exchanges or consumer choice.

Image courtesy of stockimages at FreeDigitalPhotos.net

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

 

Health Wonk Review is up at Wright on Health

Wright on Health hosts the Counting Our Blessings Edition of the Health Wonk Review blog carnival. He’s worked in posts on understanding the rising death rates among whites, managerial overreach, workers comp, diabetes (my post), health IT and more.

Enjoy it!

Marty, Bernie, Hillary –Ready to talk health policy?

Last year I interviewed all nine candidates for governor of Massachusetts about healthcare policy. I asked each of them the same questions and they all gave thoughtful replies. I received encouraging feedback from readers and from mainstream media, such as WBUR.

The presidential race is a whole different ballgame, with a lot more bluster and superficiality than the race for governor. And although it’s pretty popular for a niche publication, the Health Business Blog is not going to have the reach of more general outlets.

Nonetheless I decided to reach out to the three Democrats who remain in the race to see if they’ll be willing to speak. I would really like to see a competitive race and am still a little puzzled as to why Martin O’Malley hasn’t gotten more attention. He’s a credible player, if not as colorful as Bernie Sanders or as famous and controversial as Hillary Clinton.

The O’Malley site contains reasonably detailed policy prescriptions, but the only one on healthcare is about addiction treatment. That’s an important topic, but doesn’t make for a healthcare policy.

Sanders has a lot to say about prescription drug pricing. He frames it in the context of universal coverage, but again he doesn’t share a comprehensive policy.

Clinton’s site includes the most comprehensive views including one on healthcare broadly, another on addiction and another on Social Security and Medicare.

I do hope the candidates will take me up on my interview offer.

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

 

Why Republicans will stumble on drug pricing policy

Get 'em while they're cheap!

Get ’em while they’re cheap!

Prescription drug pricing has quickly risen toward the top of the list of voter concerns. Democrats running for President have been talking about it for a long while, but now Republicans feel they need to have something to say. (See GOP hopefuls, long quiet on drug prices, begin to make some noise.)

I predict the GOP candidates will mainly fail to come up with compelling approaches. Why?

The article includes certain wise things Republicans are saying on healthcare policy. But I want to point out that these won’t do anything to control drug prices:

  • Expand public/private partnerships for drug development. (They would do well to look to the Forum for Collaborative HIV Research as an incredibly effective and efficient model that started in HIV but has since expanded to liver disease)
  • Provide more funding for the NIH. We really need this if we are to stay ahead in the global competition for highly-educated talent. Yes, this policy would be even more effective if coupled with immigration reforms to enable graduates of US universities to stay after obtaining their degrees

Image courtesy of digitalart at FreeDigitalPhotos.net

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

 

Health Wonk Review: Open season on open enrollment edition

You'll feel better after reading this

You’ll feel better after reading this

Health Wonks are nothing if not opinionated. Their views burn bright in the submissions I received for this edition, which coincides with the start of the Affordable Care Act’s third annual open enrollment period. Enjoy!

Skyfall?

GOP presidential candidates including Marco Rubio keep insisting that Medicare is on a path to bankruptcy. But as Medicare Resources explains, the insolvency date has been pushed back 13 years under Obama’s watch. On the other hand, the GOP has actually worsened Medicare’s finances through implementation of Part C (Medicare Advantage) and Part D (drug benefit).

Health Affairs Blog chronicles two warring political narratives about health spending growth. Conservatives blame the patient, while Progressives blame physicians. Author Jeff Goldsmith dissects the narratives, finds fault with both, and suggests a more complex and balanced approach. Now there’s a wonkish mindset for you!

Mattering mabobs of managerialism

Leave it to Health Care Renewal to scour the globe for medical managerial malfeasance. In The Scourge of Managerialism we learn of an Australian source that sums up the sins of mission-hostile management and its adverse impact on patients and academics.

Psych out

Workers’ comp claims adjusters want nothing to do with psychologists, fearing they’ll turn any referral into a lifetime annuity. Workers’ Comp Insider has the scoop, as expected.

Where B all the hospitalists?

There’s no specific billing code or board certification for hospitalists, so how do you track them down? The Hospital Leader has two suggestions: ask everyone “are you a hospitalist?” or dig deep into the Medicare Part B claims database to identify hospitalists based on what they bill. The analysis lays the groundwork for important conversations about care delivery, but also makes it clear that hospitalists need a unique billing code.

Bundle it up

Archway Health Advisors describes a real-time patient tracking app to improve patient care during a bundled payment episode. This timely feedback is a must if providers are to manage care episodes across the continuum.

Where and what are MACRA and MIPS?

With the notable exception of health wonks — and I do mean notable– no one paid much attention to the provisions of the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) beyond the so-called ‘permanent doc fix.’ But fortunately Healthcare Economist lays it out for everyone else, explaining how MIPS and Alternative Payment Models will make significant impacts on physician payment.

Open season on open enrollment

The National Center for Policy Analysis has seen Obamacare Open Enrollment before, and is none too thrilled to see it come around again. The Nothing to Celebrate post makes important points about rising premiums, especially for those who don’t qualify for subsidies. We’ve seen premiums jump with our own business in Massachusetts. Still, it probably would have been worth noting that premiums for those with subsidies aren’t really changing.

ACASignups has been looking at the data to try to figure out which way ACA exchange enrollments are heading. From this –perhaps the wonkiest post of the whole bunch– it appears that while overall exchange enrollment is up, the big plans are losing market share. From where I sit that’s no bad thing. As premiums rise (see post above) patients who are willing to switch plans are often able to keep their own premiums well below the advertised levels of increase, typically by choosing plans from smaller, more nimble carriers.

InsureBlog has been around for more than a decade, and I’m still waiting for the first pro-Obama post. (Actually I never really got my hopes up.) In any case Musings on ACA Open Enrollment Day tells the story of a patient skipping care because of a super-high deductible.

Finally, Managed Care Matters comes to tell us that the whole idea of high deductible plans is “stupid.” They just lead to cost shifting and don’t encourage lower spending by high-cost members.

That’s it folks! Meanwhile if you’re in the mood for more, you can always check the Health Wonk Review site for past posts and upcoming hosts.

Image courtesy of imagerymajestic at FreeDigitalPhotos.net

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

Healthcare at the GOP debate

Look at my healthcare policy!

Look at my healthcare policy!

I didn’t watch the Republican presidential debate on CNBC so I’m glad MedPage Today provided a synopsis of the healthcare discussion, which occurred at the very end. At least based on the article, some of the candidates are reasonably well grounded while others are just not.

On the plus side

  • Ohio’s John Kasich cited his track record in slowing cost growth in Medicaid without cutting benefits of beneficiaries
  • New York’s George Pataki brought a dose of reality in when he said, “it’s ridiculous that in the 21st century we’re questioning whether or not vaccines are the appropriate way to go. Of course they are.”

Neutral

  • Rand Paul is correct that Medicare’s problem is that people pay much less into Medicare while working than they cost as enrollees. He blames small families for reducing the ratio of workers to retirees and suggests raising the eligibility age. There is something to that approach but the problem could also be addressed by increasing immigration and boosting labor market participation.
  • Rick Santorum complained about the consolidation of health plans that is being caused by Obamacare. That’s a reasonable and lamentable point, especially if you extend that observation to provider system consolidation, which is also occurring. Santorum is on slightly shakier ground when he says Obamacare is making it impossible for startup health plans to thrive. He’s probably talking about the CO-OP plans, which were a weak compromise to avoid the creation of a ‘public option’ health plan that would have forced private plans to demonstrate that they add value. Having said that, he’s right that the minimum medical loss ratio rules are hard on plans that are trying to get started

Negative

  • Mike Huckabee has a nice idea: eliminate Alzheimer’s, diabetes, heart disease and cancer. “Eradicate those and you fix America and its economy, and you make people’s lives a heck of a lot better.” Amen brother, but how?
  • Ben Carson wants to let people opt out of traditional Medicare and rely on the private sector, because “there are a lot of private sector things you could do with $12,500 [per person], which would get you a lot more than you get from this government program.” Actually, Medicare already relies on private sector providers and Medicare Advantage managed care plans are already offered.
  • Jeb Bush touted basically the same approach as Ben Carson. That should tell you something.
  • Marco Rubio wants to avoid changing anything for current retirees. Although that’s a nice way to avoid pissing people off, it’s unreasonable to wait for the older generation to die off before doing anything to address our nation’s problems

Image courtesy of Jeroen van Oostrom at FreeDigitalPhotos.net

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