AARP, United Healthcare and CVS keep prescription drug prices higher for seniors

https://www.washingtontimes.com/news/2020/feb/11/aarp-united-healthcare-and-cvs-keep-prescription-d/

Illustration on overpriced prescription drugs for seniors by Alexander Hunter/The Washington Times

Most folks think of the AARP as a membership organization that gives older Americans discounts on magazine subscriptions and cellphone plans. In fact, those business lines are secondary to AARP’s real source of income, a lucrative partnership with United Healthcare.

AARP partners with United Healthcare to offer health insurance plans to its membership. On its face, there’s nothing inappropriate about this type of affinity branding; the problem is that United Healthcare (and, frankly, other insurance companies) have made some decisions at the expense of seniors and the Medicare program, which should run counter to what a seniors-focused advocacy organization endorses. Recent actions by United Healthcare to limit seniors’ access to less expensive versions of Medicare drugs calls into question whether the AARP is looking out for older Americans or its own bottom line.

During the past three years, President Trump has maintained a laser focus on drug prices, causing pharmaceutical companies to respond in a variety of ways, including reducing or, in some instances, halting altogether annual price increases, pledging responsible pricing for new medications and reducing the price of medicines in certain instances.

For example, last year Eli Lilly launched a half-price version of its insulin drug, Humalog, to address affordability barriers for diabetic patients. Gilead created a subsidiary company in order to offer its two revolutionary hepatitis C products, Harvoni and Epclusa, as “authorized generics” at prices more than 70 percent lower than the identical brand version. In 2018, two companies competing in the cardiovascular space, Sanofi and Amgen, each introduced less costly versions of their cholesterol medications for patients who are unresponsive to statins — at 60 percent below the original price. These are all big wins for Mr. Trump’s jawboning campaign.

But the system is not working: These less expensive versions of innovative drugs are not available to many seniors because of how insurance companies and their negotiators (known as “pharmacy benefit managers” or PBMs) design drug coverage via formularies, particularly in Medicare. A perfect case study is cardiovascular disease, the No. 1 cause of death in the United States: For the past 14 months, in many instances, United Healthcare formulary design kept patients on the more expensive versions of the Sanofi and Amgen cholesterol medicines which came coupled with a high out-of-pocket co-insurance for the patient. Further, CVS (which is merging with insurance company Aetna) admitted to creating barriers for patients by requiring doctors to provide a “documented clinical reason” for prescribing the identical, cheaper version of the same medicine. Today in Medicare, CVS continues to block affordable access to the lower cost versions by not covering these medicines anywhere on their national formulary, effectively dissuading a patient at high risk for a heart attack or stroke from purchasing the medicine prescribed by his/her cardiologist.

Why would insurance companies and PBMs want to keep paying for the more expensive version of an identical drug? The answer lies in the backward way drugs are priced in America. Drug manufacturers set the “list price” of a drug the same way a car dealership lists the price of cars or colleges list the price of tuition. What’s actually paid by an insurer in the final transaction is usually steeply discounted from the starting price by the drug company “rebating” a portion — 40 percent on average, oftentimes more — to the PBM/insurance company (which then pocket it). That negotiation should result in reduced out-of-pocket drug costs for seniors. The problem is that this model results in perverse incentives.

Medicines have high “list prices” because the drug company knows that it will need to provide significant discounts/rebates in order to be listed on a health plan’s formulary. Positive formulary placement = patient access to a medicine. Insurance companies and PBMs like the higher list prices because they profit from both the steep, negotiated rebates and the higher co-insurance the patient pays to the plan. In Medicare, once a patient barrels through the initial drug coverage phase, the federal government picks up 80 percent of a senior’s drug costs, reducing the insurer’s liability. In the end, it’s patients who suffer at the pharmacy counter and in the long run.  

 

 

 

 

For 2020, California Goes Big On Health Care

For 2020, California Goes Big On Health Care

https://www.comstocksmag.com/kaiser-health-news/2020-california-goes-big-health-care

California is known for progressive everything, including its health care policies, and, just a few weeks into 2020, state leaders aren’t disappointing.

The politicians’ health care bills and budget initiatives are heavy on ideas and dollars — and on opposition from powerful industries. They put California, once again, at the forefront.

The proposals would lower prescription drug costs, increase access to health coverage, and restrict and tax vaping. But most lawmakers agree that homelessness will dominate the agenda, including proposals to get people into housing while treating some accompanying physical and mental health problems.

“This budget doubles down on the war on unaffordability — from taking on health care costs and having the state produce our own generic drugs to expanding the use of state properties to build housing quickly,” Gov. Gavin Newsom said in a letter to the legislature, which accompanied the $222.2 billion budget proposal he unveiled last Friday. About a third of that money would be allocated to health and human services programs.

But even with a Democratic supermajority in the legislature, these proposals aren’t a slam-dunk. “There are other factors that come into play, like interest groups with strong presence in the Capitol,” including Big Pharma and hospitals, said Shannon McConville, a senior researcher at the nonpartisan Public Policy Institute of California.

Drug Pricing

Newsom’s plan to create a state generic drug label is perhaps his boldest health care proposal in this year’s budget, as it would make California the first state to enter the drug-manufacturing business. It may also be his least concrete.

Newsom wants the state to contract with one or more generics manufacturers to make drugs that would be available to Californians at lower prices. Newsom’s office provided little detail about how this would work or which drugs would be produced. The plan’s cost and potential savings are also unspecified. (Sen. Elizabeth Warren of Massachusetts, who is seeking the Democratic presidential nomination, proposed a similar plan at the federal level.)

Because the generics market is already competitive and generic drugs make up a small portion of overall drug spending, a state generic-drug offering would likely result in only modest savings, said Geoffrey Joyce, director of health policy at USC’s Leonard D. Schaeffer Center for Health Policy & Economics.

However, it could make a difference for specific drugs such as insulin, he said, which nearly doubled in price from 2012 to 2016. “It would reduce that type of price gouging,” he said.

Representatives of Big Pharma said they’re more concerned about a Newsom proposal to establish a single market for drug pricing in the state. Under this system, drug manufacturers would have to bid to sell their medications in California, and would have to offer prices at or below prices offered to any other state or country.

Californians could lose access to existing treatments and groundbreaking drugs, warned Priscilla VanderVeer, vice president for the Pharmaceutical Research and Manufacturers of America, the industry’s lobbying arm.

This proposal could “let the government decide what drugs patients are going to get,” she said. “When the governor sets an artificially low price for drugs, that means there will be less money to invest in innovation.”

Newsom’s drug pricing proposals build on his executive order from last year directing the state to negotiate drug prices for the roughly 13 million enrollees of Medi-Cal, the state’s Medicaid program for low-income residents. He also ordered a study of how state agencies could band together — and, eventually, with private purchasers such as health plans — to buy prescription drugs in bulk.

 

Homelessness

California has the largest homeless population in the nation, estimated at more than 151,000 people in 2019, according to the U.S. Department of Housing and Urban Development. About 72% of the state’s homeless slept outside or in cars rather than in shelters or temporary housing.

Newsom has asked for $1.4 billion in the 2020-21 state budget for homelessness, most of which would go to housing and health care. For instance, $695 million would boost health care and social services for homeless people via Medi-Cal. The money would fund programs such as recuperative care for homeless people who need a place to stay after they’ve been discharged from the hospital, and rental assistance if a person’s homelessness is tied to high medical costs.

A separate infusion of $24.6 million would go to the Department of State Hospitals for a pilot program to keep some people with mental health needs out of state hospitals and in community programs and housing.

 

Surprise Bills

California has some of the strongest protections against surprise medical bills in the nation, but millions of residents remain vulnerable to exorbitant charges because the laws don’t cover all insurance plans.

Surprise billing occurs when a patient receives care from a hospital or provider outside of their insurance network, and then the doctor or hospital bills the patient for the amount insurance didn’t cover.

Last year, state Assembly member David Chiu (D-San Francisco) introduced legislation that would have limited how much hospitals could charge privately insured patients for out-of-network emergency services. The bill would have required hospitals to work directly with health plans on billing, leaving the patients responsible only for their in-network copayments, coinsurance and deductibles.

But he pulled the measure because of strong opposition from hospitals, which criticized it as a form of rate setting.

Chiu said he plans to resume the fight this year, likely with amendments that have not been finalized. But hospitals remain opposed to the provision that would cap charges, a provision that Chiu says is essential.

“We continue to fully support banning surprise medical bills, but we believe it can be done without resorting to rate setting,” said Jan Emerson-Shea, a spokesperson for the California Hospital Association.

 

Medi-Cal For Unauthorized Immigrants

California is the first state to offer full Medicaid benefits to income-eligible residents up to age 26, regardless of their immigration status.

Now Democrats are proposing another first: California could become the first to open Medicaid to adults ages 65 and up who are in the country illegally.

Even though Medicaid is a joint state-federal program, California must fund full coverage of unauthorized immigrants on its own.

Newsom set aside $80.5 million in his 2020-21 proposed budget to cover about 27,000 older adults in the first year. His office estimated ongoing costs would be about $350 million a year.

Republicans vocally oppose such proposals. “Expanding such benefits would make it more difficult to provide health care services for current Medi-Cal enrollees,” state Sen. Patricia Bates (R-Laguna Niguel) said in a prepared statement.

 

Vaping

Dozens of California cities and counties have restricted the sale of flavored tobacco products in an effort to curb youth vaping.

But last year, state legislators punted on a statewide ban on flavored tobacco sales after facing pressure from the tobacco industry.

Now, state Sen. Jerry Hill (D-San Mateo) is back with his proposed statewide flavor ban, which may have more momentum this year. Since last summer, a mysterious vaping illness has sickened more than 2,600 people nationwide, leading to 60 deaths, according to the Centers for Disease Control and Prevention. In California, at least 199 people have fallen ill and four have died.

Hill’s bill would ban retail sales of flavored products related to electronic cigarettes, e-hookahs and e-pipes, including menthol flavor. It also would prohibit the sale of all flavored smokable and nonsmokable tobacco products, such as cigars, cigarillos, pipe tobacco, chewing tobacco, snuff and tobacco edibles.

Newsom has also called for a new tax on e-cigarette products — $2 for each 40 milligrams of nicotine, on top of already existing tobacco taxes on e-cigarettes. The tax would have to be approved by the legislature as part of the budget process and could face heavy industry opposition.

Tobacco-related bills are usually heard in the Assembly Governmental Organization Committee, “and that is where a lot of tobacco legislation, quite frankly, dies,” said Assembly member Jim Wood (D-Healdsburg), who supports vaping restrictions.

 

 

 

 

The fight over the future of our most expensive drugs

https://www.axios.com/the-fight-over-the-future-of-our-most-expensive-drugs-034b6e4d-b596-4f48-9b53-6e2c267e01e3.html

An illustration of a hammer and a concrete pill.

The market designed to create competition for biologics — typically our most expensive drugs — has been slow to take off, but some experts say that even its best-case scenario doesn’t do enough to lower drug prices.

Why it matters: While wonks debate the future of biosimilars in policy journals and on editorial pages, the argument is reflected in the political divide over whether enhanced drug competition or price regulation is the best way to address drug prices.

The big picture: Congress created the pathway for biosimilars to come to market knowing that they’d look different than small-molecule generics, and even their most ardent supporters say biosimilars will never achieve the steep discounts that generics do.

  • That’s because biosimilars are much harder to make than normal generics, meaning that drug companies have to charge enough to make their endeavor worthwhile.
  • Nevertheless, the Biosimilars Council says on its website that biosimilars could lead to more than $54 billion in savings over the next decade. A recent analysis by the Pacific Research Institute found that biosimilars could save $7.2 billion a year under the most optimistic modeled scenario.

Yes, but: Some experts are arguing that that’s not enough, and that biosimilars aren’t the best way to control biologic prices.

  • Last week, Memorial Sloan Kettering Cancer Center’s Peter Bach and MIT’s Mark Trusheim published an editorial in the Wall Street Journal arguing that biosimilars don’t produce enough savings and that the resources spent developing them would be better used to bring new, innovative drugs to market.
  • Bach and Trusheim proposed that the government instead regulate the price of older biologics after they’ve been on the market for a certain period of time, which they wrote could save around $50 billion a year.

The other side: Former FDA Commissioner Scott Gottlieb wrote an editorial in the WSJ yesterday in response, arguing that Congress should speed up the use and development of biosimilars instead of regulating prices.

  • “Among other dangers, [price regulation] could trigger shortages of the drugs. It would also discourage investment in manufacturing, as few drugmakers would want to produce complex drugs in perpetuity for little profit,” Gottlieb writes.

The bottom line: This argument isn’t just for the academics. The leading Democratic presidential candidates are also arguing for drug price regulation, a major shift left for the party.

  • “Price regulation may be a tough sell in some quarters, but it’s the best way to keep the promise of America’s extraordinary pharmaceutical industry alive,” Bach and Trusheim write.

 

 

 

There Is No Single, Best Policy for Drug Prices

There Is No Single, Best Policy for Drug Prices

Image result for There Is No Single, Best Policy for Drug Prices

A majority of Americans prefer greater regulation of prescription drug prices, meaning government intervention to lower them.

But don’t count on a single policy to address a nuanced problem.

“All low-priced drugs are alike; all high-priced drugs are high priced in their own way,” Craig Garthwaite, a health economist from Northwestern University’s Kellogg School of Management, wrote with a colleague.

Outside of a few government programs — like Medicaid and the Veterans Health Administration — low-priced drugs are alike in that competition is the sole source of downward pressure on prices. When many generic versions of a brand-name drug enter the market, competition can push their prices 80 percent below the brand price, or sometimes even more.

In contrast, high-priced drugs lack competition for various reasons, “not all of which imply our goal should be to reduce prices,” Mr. Garthwaite said.

 

 

 

Medical costs projected to increase 6% by 2020, says PwC

https://www.healthcarefinancenews.com/news/medical-costs-projected-increase-6-percent-2020-says-pwc?mkt_tok=eyJpIjoiWldZeVlXTm1aVEF6TVdKbSIsInQiOiJjbWFzeVA2TGlWZkNkXC9odGxcLzdLczFZSDYxd1hoYW04b0wxY0ljQ25zblpYN1VWc2FMWFFCQWpmc2tCYmE4d1Z3eVdMd2htY3JiSjZ3N2Urek43SHFJbWFsckdRbUNycFJoQjhzZm5VcGpJUUhKUDlBMWF2eGJzRUhmZGFlUUx0In0%3D

Utilization is still being dampened by high deductibles and other cost sharing, but at the expense of employee satisfaction.

Medical costs are rising, and by this time next year costs will likely show a modest increase of about 6% over the past two years, according to a new report from PwC, PricewaterhouseCoopers.

After figuring in health plan changes such as increased employee cost sharing and network and benefit changes, PwC’s Health Research Institute, which conducted the study, projects a net growth rate of 5 percent. Even with employers’ actions, market forces likely will still overrun the efforts to quell them.

Prices, not utilization, are continuing to fuel healthcare spending. Utilization is still being dampened by high deductibles and other cost sharing, but at the expense of employee satisfaction with their health plan. In response, employers are inserting themselves more forcefully into the healthcare delivery equation.

WHAT’S THE IMPACT

Beyond market forces, HRI identified three “inflators” that will, influence the medical cost trend.

One is that drug spending will grow faster. Between 2020 and 2027, retail drug spending under private health insurance is projected to increase at a rate of 3 percent to 6 percent a year as the impact of generics on spending plateaus, biosimilars continue to see slow uptake, and costly new therapies enter the market.

Chronic diseases will also be a major issue. Obesity and Type 2 diabetes continue to produce high rates of hypertension and cardiovascular disease. Sixty percent of adults have a chronic disease, with 40 percent managing two or more. For employers, per capita health spending on someone with a complex chronic illness is eight times that of a healthy person.

Lastly, employers are beginning to recognize the importance of helping their employees manage their mental health and wellbeing. Nearly 75 percent of employers offer mental health disease management programs, the report found. Anytime access is expanded, costs will go up in the short term, though it may have the opposite effect long-term.

And speaking of the opposite effect, there are a few “deflators” HRI recognized that will likely slow down the medical cost trend.

HRI predicts that in 2020, more companies will take action to make sure healthcare is accessible to their employees, opening and expanding clinics as a strategy to control the cost trend. Thirty-eight percent of large employers offered a worksite clinic in 2019, up from 27 percent in 2014.

Also, payers are designing plans to encourage members to choose free-standing facilities and in-home care rather than more expensive sites. How those benefits are designed, and how employees perceive the costs, will shape the effectiveness of site of care strategies. Payers and employers are aiming to grow the role of telemedicine as employees grow more comfortable with it, especially if out-of-pocket costs are lower and the quality doesn’t suffer.

WHAT ELSE YOU SHOULD KNOW

The trend has implications for employers, payers, providers and even pharmaceutical and life science companies.

For payers, it becomes important to  benchmark the prices paid commercially against a common reference point such as Medicare. With this information it’s possible to pursue value-based arrangements with high-performing and lower-cost providers, in addition to negotiating better contracted rates on existing fee-for-service arrangements.

For providers, a value line strategy is necessary as employers and consumers look for high quality care for a low cost. Providers armed with a value line strategy are more likely to be included in health plans’ high-performance networks, and are better positioned to directly contract with employers.

Providers should also understand what risk they can take on to guarantee a health outcome, and the cost structure needed to make them profitable in doing so. Providers should understand and manage both the risk inherent in their ability to deliver care and the risk of the population they’re managing — from health status to the social determinants impacting their health — to help them design appropriate clinical interventions and non-clinical support services.

For employers, it becomes imperative to understand their role as the purchaser of healthcare for employees and join the ranks of employer activists, pursuing new solutions to lower costs, improve access and enhance quality. Pharmaceutical and life science companies, meanwhile, should go beyond the basic outcomes-based arrangements currently in place and consider exploring and expanding alternative financing arrangements, such as subscription models for unlimited access to a product for a set period of time, or a mortgage model to finance expensive specialty drugs over time.

THE LARGER TREND

The PwC study loosely mirrors the findings of an October report from the Altarum Center for Value in Health Care, which found prices and spending in healthcare growing steadily, but at a moderate pace.

The country’s healthcare spending habits are at a level nearly double that of similar countries. Spending per capita in the U.S. is more than $9,000, compared to just over $5,000 in other Western nations, and because prices are growing slowly but steadily, spending is doing the same.

 

 

The drug pricing debate is stuck in the past

https://www.axios.com/drug-pricing-debate-stuck-in-past-10ba315e-0ddf-4013-8c5a-f8ee89c2f530.html

Illustration of falling pills and coins

There’s a scientific and economic revolution happening in medicine, and the political debate over drug prices isn’t keeping up. Not only are policymakers struggling to agree on solutions, they’re mostly talking about yesterday’s problems.

Why it matters: Medical innovation is already hurtling toward a new era of highly specialized drugs — some are even tailor-made for each individual patient. They may be more effective than anything we’ve seen before, and also more expensive. But the drug-pricing debate is more focused on decades-old parts of the system.

The big picture: “We haven’t really contemplated how we’re going to absorb some of these things,” Food and Drug Administration Scott Gottlieb said. “These are good problems to have…but they are policy challenges.”

Where it stands: Congress is mainly squabbling over proposals to reduce prices by boosting competition — by making it easier to start developing generics, or by changing patent protections that help pharmaceutical companies keep their rivals at bay.

Yes, but: Those regulatory tools were designed for a world in which pharmaceutical companies develop relatively simple drugs and try to market them to a big group of people. But science is rapidly moving away from that world.

  • Gene therapy, for example, is the new wave in cancer treatment. It helps patients’ own immune systems fight off cancer — which means each dose is custom-made for each patient. It’s a highly promising approach, but treatment can come with a price tag north of $1 million once all is said and done.
  • The old dichotomy of a brand-name pill followed by a generic version of that pill doesn’t really hold up for custom-made drugs.
  • So tools that try to promote competition simply may not work as well. “I don’t think they’re solutions for gene therapies because I think you’re ultimately going to have to figure out ways to capitalize those costs,” Gottlieb said.

Even without being custom-made, many new drugs are still trying to treat smaller groups of patients — like people with the same specific genetic mutation.

  • “Generic entry might not prove to be as successful for addressing this problem as it has historically been, and I think it’s because we fundamentally have shifted into these other types of products where competition is just more challenging,” Vanderbilt’s Stacie Dusetzina said.

Most of these new drugs belong to a class known as biologics. They’re more complex than the drugs we’re used to, and therefore have the potential to be more precise in the way they interact with your body.

  • “The way drugs are produced and made now is quite different from the way they were produced and made in the early ‘80s, and that’s both because…you have a lot of these drugs being made for small populations, and for biologics the science is so much more complicated,” said Rachel Sachs, a professor at Washington University.
  • Biologics don’t have traditional generic versions; the equivalent are products known as “biosimilars.”
  • The Affordable Care Act created a pathway for the FDA to approve biosimilars, but that market has been slow to take off, and at least in the early going, biosimilars often don’t offer the same steep discounts as traditional generics.

Promoting competition isn’t the only idea in the world, but more muscular price controls are much more controversial.

  • Most of these new, complex drugs are administered at a doctor’s office, not picked up from a pharmacy. The Trump administration has proposed tying Medicare’s payments for that class of drugs to the lower prices that other countries pay, and Democrats support direct Medicare price negotiations.

The bottom line: “One version of ten years from now will have very limited competition in certain types of markets, either because the market has eroded it to be that way or because the drugs that are coming out will by definition have limited competition,” said Rena Conti, a professor at Boston University.