House expected to vote to pass healthcare and climate reform bill, sending it to President Biden for signature

https://mailchi.mp/11f2d4aad100/the-weekly-gist-august-12-2022?e=d1e747d2d8

The $740B Inflation Reduction Act (IRA) includes significant reforms for Medicare’s drug benefits, including capping seniors’ out-of-pocket drug spending at $2,000 per year, and insulin at $35 per month. Medicare plans to fund these provisions by requiring rebates from manufacturers who increase drug prices faster than inflation, and through negotiating prices for a limited number of costly drugs. Drug prices are consistently a top issue for voters, but seniors won’t see most of these benefits until 2025 or beyond, well after this year’s midterms and the 2024 general election. 

The Gist: While this package allows Democrats to deliver on their campaign promise to allow Medicare to negotiate drug prices, the scope is more limited than previous proposals. Over the next decade, Medicare will only be able to negotiate prices for 20 drugs that lack competitors and have been on the market for several years.

Still, because much Medicare drug spending is concentrated on a few high-cost drugs, the Congressional Budget Office projects the bill will reduce Medicare spending by $100B over ten years. However, these negotiated rates and price caps don’t apply to the broader commercial market, and some experts are concerned this will lead manufacturers to raise prices on those consumers—creating yet another element of the cost-shifting which has been the hallmark of our nation’s healthcare system. 

The pharmaceutical industry also claims that this “government price setting” will hamper drug development (although there is limited to no evidence to support this proposition), signaling that they will likely spend the next several years trying to influence the rulemaking process as the new law is implemented.

Critics say Mark Cuban’s pharmacy isn’t tackling the big issue: brand-name drugs

Mark Cuban’s pharmacy, Cost Plus Drug Co., has hundreds of drugs marked at discounted prices, but some pharmacy experts say there’s a larger problem that needs fixing, CNBC reported July 28. 

The online pharmacy launched in January with about 100 drugs, and by its one-year anniversary, plans to have more than 1,500 medications, according to the company’s website. The business model, which allocates for a $3 pharmacy dispensing fee, $5 shipping fee and a 15 percent profit margin with each order, aims to uproot the pharmaceutical industry, which has faced criticism for years about its opaque business practices

Gabriel Levitt, the president of PharmacyChecker, a company that monitors the cheapest drug prices, told CNBC there’s more to be done.

“As much as I support the venture, what they’re doing does not address the big elephant in the room,” Mr. Levitt said. “It’s really brand-name drugs that are increasing in price every year and forcing millions of Americans to cut back on medications or not take them at all.”

Brand-name drugs are 80 percent to 85 percent more expensive than generics since brand-name drugs have to repeat clinical tests to prove efficacy, according to the FDA. Cost Plus Drug Co. only offers generics. Mr. Cuban told CNBC he hopes to sell brand-name medications “within six months,” but added that it’s a tentative timeline.

Value-based care isn’t yielding much “value.”

https://mailchi.mp/ff342c47fa9e/the-weekly-gist-july-22-13699925?e=d1e747d2d8

Despite the hype, accountable care organizations (ACOs) and other Medicare-driven payment reform programs intended to improve quality and lower healthcare spending haven’t bent the cost curve to the extent many had hoped.

A recent and provocative opinion piece in STAT News, from health policy researcher Kip Sullivan and two single-payer healthcare advocates, calls for pressing pause on value-based payment experimentation. The authors argue that current attempts to pay for value have ill-defined goals and hard-to-measure quality metrics that incentivize reducing care and upcoding, rather than improving outcomes. 

The Gist: We agree with the authors that current value-based care experiments have been disappointing.

The intention is good, but the execution has been bogged down by entrenched industry dynamics and slow-to-move incumbents. One fair criticism: ACOs and other “total cost management” reforms largely focus on the wrong problem. They address utilization, rather than excessive price. 

But we’re having a price problem in the US, not a utilization problem. Europeans, for example, have more physician visits each year than Americans, yet spend less per-person on healthcare. It’s our high prices—for everything from physician visits to hospital stays to prescription drugs—that drive high healthcare spending. 

The root cause: our third-party payer structure actively discourages real efforts to lower price—every player in the value chain, including providers, brokers, and insurers, does better economically as prices increase. That’s why price control measures like reference pricing or price caps have been nonstarters among industry participants. 

Recent reforms that increase price transparency, while not the entire solution, at least shine a light on the real challenges our healthcare system faces.

Democrats reach deal on healthcare and climate bill

https://mailchi.mp/ff342c47fa9e/the-weekly-gist-july-22-13699925?e=d1e747d2d8

Senate Majority Leader Chuck Schumer (D-NY) and Senator Joe Manchin (D-WV) surprised everyone Wednesday night by announcing they reached a deal on a legislation package called the Inflation Reduction Act of 2022. The deal is a revival of portions of President Biden’s “Build Back Better” plan, more narrowly scoped to meet the demands of Sen. Manchin.

On the healthcare front, the bill would allow Medicare to negotiate prices for certain prescription drugs starting in 2026, and limit seniors’ annual out-of-pocket spending on Part D prescriptions to $2,000. It also includes $64B to extend the enhanced tax credits for Affordable Care Act exchange plans through 2025, avoiding health plan rate increases for millions of Americans. 

The Gist: While several Senate Democrats have announced support for the legislation, the party can’t afford any holdouts given its razor-thin majority. If all Democrats get on board, this legislation will fulfill the party’s longtime promise to lower prescription drug prices. But it stops well short of other major healthcare measures being discussed last year, including expanding Medicare coverage to include dental, vision, and hearing coverage, and closing the so-called Medicaid coverage gap. 

Finances of older Americans being dinged by high health costs, survey finds

https://www.healthcaredive.com/news/finances-older-americans-being-dinged-high-health-costs-survey-finds/625545/

Dive Brief:

  • Healthcare costs are becoming an increasing source of stress for older Americans, leading to some paring back on treatment, medicines or other spending on food and utilities — or skipping them altogether — to cover medical costs, according to new research conducted by Gallup in partnership with West Health.
  • The survey of U.S. adults released Wednesday found that almost half of adults aged 50 to 64 and more than a third of adults 65 and older are concerned they won’t be able to pay for needed healthcare services in the next year. That’s nearly 50 million older Americans.
  • About 80 million adults above age 50 see healthcare costs as a financial burden. Becoming eligible for Medicare seems to assuage those worries slightly, however: 24% of adults aged 50 to 64, who are not yet eligible for the federal health insurance, said health costs were a major burden. That percentage fell to 15% for those aged 65 and above.

Dive Insight:

The West Health-Gallup survey, conducted in September and October of 2021, is the latest vignette of how exorbitant healthcare costs in the U.S. are increasingly impacting the financial stability of Americans, especially those of retirement age who are more likely to have expensive medical needs.

Out-of-pocket healthcare expenses for adults aged 65 and older increased 41% from 2009 to 2019, according to HHS data. That population spends on average almost double their total expenditures on healthcare costs compared with the general population, despite Medicare coverage.

That cost problem is only likely to worsen amid surging inflation raising the cost of groceries, gas and other needed items. Additionally, U.S. demographics shifts are an added stressor. By 2030, the percentage of Americans 65 years and older will outweigh those under the age of 18, a first in the country’s history, according to Census Bureau projections.

The resulting stress on the Medicare program could impact benefits and cost for beneficiaries.

As sizable numbers of Americans 65 and older face tangible tradeoffs to pay for healthcare, many more Americans in the next decade will incur health and financial consequences because of high costs,” researchers wrote in the report.

The West Health-Gallup poll found about one in four adults aged 65 and above cut back on food, utilities, clothing or medication to cover healthcare costs. That’s compared to three in 10 for adults aged 50 to 64.

Older women and Black adults were more likely to forgo basic necessities to pay for healthcare than other demographics.

More than 20 million Americans aged 50 years and above said there was a time within the last three months when they or a family member was sick, but didn’t seek treatment due to cost.

More than 15 million Americans said they or a family member skipped a pill or dose of prescribed medicine in order to save money.

Researchers urged policymakers to act to improve efficiency and reduce the costs of medical care and prescription drugs in the U.S. Congress has yet to take meaningful action to lower medical costs, despite rising support for government intervention and high-profile proposals from the Biden administration.

Democrats revive legislation to lower prescription drug prices

https://mailchi.mp/9e0c56723d09/the-weekly-gist-july-8-2022?e=d1e747d2d8

Senate Democrats have reached a deal to give Medicare the power to negotiate drug prices, starting next year. The legislation includes provisions similar to those in the Build Back Better (BBB) Act, such as capping seniors’ out-of-pocket drug costs to $2,000 per year and limiting how fast drugmakers can raise prices.

This smaller package has support from moderate Senator Joe Manchin (D-WV), who blocked passage of the BBB last year. Manchin is reportedly open to using some of the estimated $1T in revenue from prescription drug negotiations to fund an extension of Affordable Care Act (ACA) insurer tax credits, which are set to expire this year. 

The Gist: With a closely divided Senate and competing priorities, Democrats have been unable to pass significant healthcare reform since taking control in 2021. 

If all 50 Senate Democrats can coalesce around this deal, it could pass under reconciliation rules without Republican support, allowing the party to deliver on its longstanding promise to lower prescription drug prices. 

It would also help Democrats avoid a problematic “October surprise”: consumers receiving notices that their health insurance and drug plan premiums will be increasing just weeks ahead of the midterm elections. 

Study finds Medicare could save billions buying generic drugs from Mark Cuban’s pharmacy

https://mailchi.mp/3390763e65bb/the-weekly-gist-june-24-2022?e=d1e747d2d8

 An analysis published in the Annals of Internal Medicine finds that if Medicare had purchased 77 common generic drugs from Mark Cuban’s Cost-Plus Pharmacy in 2020, it would have saved $3.6B dollars. That translates to more than a third of the $9.6B Medicare spent on generic drugs that year. 

In January, Dallas Mavericks owner and billionaire Cuban launched the generic drug company as a transparency play, cutting out pharmacy benefit managers (PBMs), negotiating directly with manufacturers, and selling drugs at a flat 15 percent markup.

The Gist: This isn’t the first study to find that Medicare overpays for generic drugs, as it’s unable to negotiate drug prices under current law. Another recent analysis found that Costco can offer consumers lower prices than Medicare drug plans for half of the most common generic drugs.

The fact that both Costco’s and Cuban’s pharmacies, neither of which accepts health insurance, can offer consumers cheaper generics is another indication of how PBMs’ perverse incentives and opaque pricing and rebate models lead to consumers being steered to higher priced drugs. We’re hopeful that the FTC’s new investigation into PBMs will shed light on their pricing practices, and create a path for lawmakers to finally address unsustainably high prescription drug prices.  

Out-of-pocket limits aren’t silver bullets

Part of the reason why medical debt is so high is because many Americans don’t have enough savings to pay their deductibles and other out-of-pocket costs, according to a second KFF analysis.

Driving the news: Health insurance plans’ out-of-pocket limits prevent enrollees from paying limitless sums of money for medical care. But that doesn’t mean they protect people from having to pay several thousands of dollars — which not everyone has lying around.

  • Deductibles alone, which people must pay before coverage for most services kicks in, are frequently thousands of dollars and can exceed the amount of liquid assets a household has.

By the numbers: Over 40% of multi-person households can’t cover a mid-range employer family plan deductible of $4,000, and 61% don’t have enough to cover a high-range deductible.

  • The ability to pay out-of-pocket costs varies significantly by income.