Net prices of brand-name drugs have increased significantly over the last decade. But savings from generics have driven average prescription prices down in Medicare and Medicaid, Axios’ Caitlin Owens writes about a new analysis by the Congressional Budget Office.
Why it matters: The analysis reiterates that the generic market is largely working as it’s intended to.
By the numbers: The average net price of a prescription fell from $57 in 2009 to $50 in 2018 in Medicare Part D, and from $63 to $48 in Medicaid.
The drop is largely attributable to the growing use of generics, which jumped from 75% to 90% of all prescriptions nationally during that time frame. The average price for a generic prescription also fell in both programs.
But the average net brand-name prescription price more than doubled in Part D and increased by 50% in Medicaid, per the analysis. These increases were driven by higher launch prices for new drugs and price increases for drugs already on the market.
The second year of the pandemic did not dampen UnitedHealth Group’s finances, and the company actually surpassed its initial 2021 revenue and profit projections, Bob writes.
The big picture: UnitedHealth’s revenue has tripled from 2010 to 2021, and profit has almost quadrupled. The company continues to make more of its money from owning doctor groups and controlling pharmacy benefits instead of relying on health insurance.
Workers in New Jersey healthcare facilities and high-risk congregate settings like hospitals and nursing homes will be required to be up to date with their COVID-19 vaccinations, including a booster, Gov. Phil Murphy announced Jan. 19.
Mr. Murphy said there would no longer be an option to opt out of vaccination through testing, except for the purposes of providing an accommodation for people exempt from vaccination.
New Jersey healthcare facilities’ covered workers subject to the CMS vaccination mandate for healthcare settings were already required to ensure covered employees received at least one vaccine by Jan. 27 and completed their primary vaccine series by Feb. 28. Mr. Murphy said the state is now requiring proof that these workers are up to date with their vaccination by Feb. 28, which also includes any booster shots for which they are eligible. Noncompliant workers risk losing their jobs.
Workers at covered healthcare settings not subject to the CMS mandate and covered high-risk congregate settings like prisons and jails have until Feb. 16 to receive their first dose of the primary vaccine series and must submit proof that they are up to date with their vaccination by March 30. Mr. Murphy said workers who become newly eligible for a booster after the two deadlines must submit proof of their booster shot within three weeks of becoming eligible.
“With the highly transmissible omicron variant spreading across the country and New Jersey, it is essential that we do everything we can to protect our most vulnerable populations,” Mr. Murphy said in a news release. “With immunity waning approximately five months after a primary COVID-19 vaccination, receiving a booster dose is necessary to protect yourself and those around you. It is critically important that we slow the spread throughout our healthcare and congregate settings in order to protect our vulnerable populations and the staff that care for them.”
The rule in New Jersey, which was issued through an executive order, comes after New York and California also announced booster requirements for healthcare staff.
Omicron and staffing constraints pushed hospitals and health systems to once again suspend nonurgent, elective procedures — a move that hurts patients and their care teams.
Physicians told The Washington Post that notifying patients of their surgeries being postponed is one of the most difficult things they do during the pandemic, and the idea of prolonging patients’ suffering is anguishing. In interviews, a patient rated the pain he felt from a ruptured cervical disk — for which his surgery has been indefinitely postponed at Mercy Health-St. Rita’s Medical Center in Lima, Ohio — as a 12 out of 10.
In addition to extended pain, pushed back surgeries leave more time for disease advancement. Certain cancers can advance to later stages in four to eight weeks, for instance. Even procedures considered low acuity, such as joint replacements or bariatric cases, will have material implications from delays through reduced activity, mobility and quality of life for patients. Delays in surgery have also been shown to result in higher rates of surgical site infections.
“I’d say it’s a bona fide mess right now,” Kenneth Kaufman, chair and founding partner of Kaufman Hall, told The Washington Post. “We seem to be back to square one. Omicron has significantly compounded staffing shortages in a very profound way.”
Hospitals hit pause on surgeries over the last several weeks as growing COVID-19 inpatient volumes were compounded by omicron sidelining healthcare professionals infected with the virus. Vaccinated healthcare professionals experienced mild breakthrough cases that temporarily took them out of the workforce.
Cleveland Clinic has extended its postponement of elective surgeries four times over the past month as thousands of employees were sidelined from COVID-19 infection. Hospitals in New York, Chicago, St. Louis, Washington and Virginia are among those that have either moved back surgeries or complied with government officials’ requests to do so in January.
Healthcare professionals have taken issue with the industry term “elective,” which does not describe the acuity of the medical condition or necessity of the procedure. Rather, the use of “elective” distinguishes these surgeries that are scheduled in advance from emergency surgeries, such as trauma cases.
University of Utah Hospital in Salt Lake Citypostponed about 20 percent of its surgeries when at least 500 clinical and nonclinical employees were out sick or isolating from COVID-19 at the start of the month.
“Around Christmastime and the week after Christmas, we didn’t have to reschedule any operations for a period of three weeks, until January 1. Then the wheels came off,” Robert E. Glasgow, MD, interim chair of the hospital’s surgery department, told The Washington Post.
On Jan. 14, the physicians at the hospital learned they could accommodate six additional surgery cases Jan. 18, leaving them in a mad dash to identify priority patients and determine who could present for surgery with less than four days’ notice.
“How can we find six cases that are most in need and are most able to come?” said Dr. Glasgow said.
Beaufort (S.C.) Memorial Hospital has created a homebuyer assistance program to help staff purchase a home or refinance mortgages, with up to $10,000 in assistance.
To be eligible for the program, employees must be full time, have worked at the hospital for at least six months, attend a homebuyer education workshop and meet household income requirements, among other criteria, according to a Jan. 10 news release from the hospital.
Additionally, properties must be within a 15-mile radius of a designated Beaufort Memorial campus, be the buyer’s primary residence and have monthly mortgage payments of no more than 33 percent of monthly income.
Recipients can use the funds for down payments and closing costs, the release said.
The hospital is partnering with development financial institution CommunityWorks for the program.
“We know that homeownership provides stability, security and a means to building financial health and wealth for future generations,” Beaufort Memorial President and CEO Russell Baxley said. “We also recognize that a major obstacle can be coming up with the money needed for a down payment or closing costs. This assistance program will help our employees bridge that financial gap.”
The latest Omicron developments continue to be encouraging. New Covid-19 cases are plummeting in a growing list of places. The percentage of cases causing severe illness is much lower than it was with the Delta variant. And vaccines — particularly after a booster shot — remain extremely effective in preventing hospitalization and death.
I also think it’s time to begin considering what life after the Omicron wave might look like.
1. Plunging cases
Since early last week, new cases in Connecticut, Maryland, New Jersey and New York have fallen by more than 30 percent. They’re down by more than 10 percent in Colorado, Florida, Georgia, Massachusetts and Pennsylvania. In California, cases may have peaked.
“Let’s be clear on this — we are winning,” Mayor Eric Adams of New York said yesterday. Kathy Hochul, the governor of New York State, said during a budget speech, “We hope to close the books on this winter surge soon.”
If anything, the official Covid numbers probably understate the actual declines, because test results are often a few days behind reality.
The following data comes from Kinsa, a San Francisco company that tracks 2.5 million internet-connected thermometers across the country. It uses that data to estimate the percentage of Americans who have a fever every day. The declines over the past week have been sharp, which is a sign of Omicron’s retreat:
Many hospitals are still coping with a crushing number of patients, because Covid hospitalization trends often trail case trends by about a week. But even the hospital data shows glimmers of good news: The number of people hospitalized with Covid has begun declining over the past few days in places where Omicron arrived first:
The U.S. seems to be following a similar Omicron pattern as South Africa, Britain and several other countries: A rapid, enormous surge for about a month, followed by a rapid decline — first in cases, then hospitalizations and finally deaths.
Some of the clearest research on Covid’s risks comes from a team of British researchers led by Dr. Julia Hippisley-Cox of the University of Oxford. The team has created an online calculator that allows you to enter a person’s age, vaccination status, height and weight, as well as major Covid risk factors. (It’s based on an analysis of British patients, but its conclusions are relevant elsewhere.)
A typical 65-year-old American woman — to take one example — is five foot three inches tall and weighs 166 pounds. If she had been vaccinated and did not have a major Covid risk factor, like an organ transplant, her chance of dying after contracting Covid would be 1 in 872, according to the calculator. For a typical 65-year-old man, the risk would be 1 in 434.
Among 75-year-olds, the risk would be 1 in 264 for a typical woman and 1 in 133 for a typical man.
Those are meaningful risks. But they are not larger than many other risks older people face. In the 2019-20 flu season, about 1 out of every 138 Americans 65 and older who had flu symptoms died from them, according to the C.D.C.
And Omicron probably presents less risk than the British calculator suggests, because it uses data through the first half of 2021, when the dominant version of Covid was more severe than Omicron appears to be. One sign of Omicron’s relative mildness: Among vaccinated people in Utah (a state that publishes detailed data), the percentage of cases leading to hospitalization has been only about half as high in recent weeks as it was last summer.
For now, the available evidence suggests that Omicron is less threatening to a vaccinated person than a normal flu. Obviously, the Omicron wave has still been damaging, because the variant is so contagious that it has infected tens of millions of Americans in a matter of weeks. Small individual risks have added up to large societal damage.
3. Effective boosters
The final major piece of encouraging news involves booster shots: They are highly effective at preventing severe illness from Omicron. The protection is “remarkably high,” as Dr. Eric Topol of Scripps Research wrote.
Switzerland has begun reporting Covid deaths among three different groups of people: the unvaccinated; the vaccinated who have not received a booster shot; and the vaccinated who have been boosted (typically with a third shot). The first two shots still provide a lot of protection, but the booster makes a meaningful difference, as Edouard Mathieu and Max Roser of Our World in Data have noted:
The next stage
The Covid situation in the U.S. remains fairly grim, with overwhelmed hospitals and nearly 2,000 deaths a day. It’s likely to remain grim into early February. Caseloads are still high in many communities, and death trends typically lag case trends by three weeks.
But the full picture is less grim than the current moment.
Omicron appears to be in retreat, even if the official national data doesn’t yet reflect that reality. Omicron also appears to be mild in a vast majority of cases, especially for the vaccinated. This combination means that the U.S. may be only a few weeks away from the most encouraging Covid situation since early last summer, before the Delta variant emerged.
If that happens — and there is no guarantee it will, as Katherine Wu of The Atlantic explains — it will be time to ask how society can move back toward normalcy and reduce the harsh toll that pandemic isolation has inflicted, particularly on children and disproportionately on low-income children.
When should schools resume all activities? When should offices reopen? When should masks come off? When should asymptomatic people stop interrupting their lives because of a Covid exposure? Above all, when does Covid prevention do more harm — to physical and mental health — than good?
These are tricky questions, and they could often sound inappropriate during the Omicron surge. Now, though, the surge is receding.
More than 13.8 million consumers have signed up for 2022 healthcare coverage through the Affordable Care Act health insurance marketplaces, on HealthCare.gov and state-based marketplaces. Coverage began on January 1.
This year’s open enrollment period, which started on November 1, 2021 and ends on January 15, continues to outpace previous years’ enrollment, including a 21% increase in plan selections through December 15, 2021, compared to the last year’s open enrollment in the 33 states using the HealthCare.gov platform.
In all, 4.6 million new enrollees gained coverage in 2021 through the ACA health insurance marketplaces.
WHAT’S THE IMPACT?
The latest national snapshot shows that the more than 13.8 million sign-ups include over 9.7 millionpeople enrolled in, or being automatically re-enrolled, through December 15, 2021, in marketplace coverage in the 33 states using HealthCare.gov.
The 18 state-based marketplaces that use their own platforms reported to CMS that through December 25, 2021, more than 4 million people selected plans or were automatically re-enrolled in a plan for 2022 health coverage, which is an increase of 240,000 consumers since the last published report.
The U.S. Department of Health and Human Services credits the Biden Administration’s outreach efforts, including additional funding and the quadrupling of the number of Navigators who are available to assist consumers.
As the January deadline approaches, there are 59 Navigator grantee organizations, with more than 1,500 certified Navigators ready to help consumers enroll. Navigators have held outreach and education events, focusing on meeting consumers in their communities at places such as local libraries, vaccination clinics, food drives, county fairs and job fairs.
THE LARGER TREND
Upon extending the open enrollment deadline in September, the Centers for Medicare and Medicaid Services also expanded services provided by federally-facilitated marketplace navigators – experts who help consumers, especially those in underserved communities, understand their benefits and rights, review options and enroll in marketplace coverage.
The agency also announced it’s relaunching its “Champions for Coverage” program. The program currently includes more than 1,000 local organizations that are active in providing outreach and education about the health insurance marketplace and how consumers can enroll in coverage through HealthCare.gov, Medicaid or the Children’s Health Insurance Program (CHIP).
According to CMS data, about 8.3 million people selected individual market plans through the marketplaces using the federal platform during the 2021 open enrollment period.
This total enrollment is nearly the same as enrollments during the 2020 open enrollment period, despite the fact that New Jersey and Pennsylvania transitioned to state-based exchange platforms starting with the 2021 open enrollment period.
After removing these states from the total plan selection totals in the 2020 open enrollment period and comparing year-over-year trends, the results show plan selections this year increased by 7% from 2020, despite a decline in new consumers. Also, for the fourth straight year, the consumer satisfaction rate at the call center remained high – averaging over 90% – throughout the entire stretch.
Companies that fail to adjust to labor shortages and satisfy the growing demands of workers will likely falter as they lose the battle for talent, BlackRock CEO Larry Fink said in a letter to CEOs.
“No relationship has been changed more by the pandemic than the one between employers and employees,” Fink said, noting that “employees across the globe are looking for more from their employer — including more flexibility and more meaningful work.” Fink, while leading the world’s largest asset manager, has sought for a decade to influence corporate behavior through an annual CEO letter.
“As companies rebuild themselves coming out of the pandemic, CEOs face a profoundly different paradigm than we used to,” Fink said. Companies can no longer overlook employee mental health, insist that staff work in the office five days per week and provide modest wage increases for low- and middle-income workers.
Dive Insight:
CFOs considering an increase in prices and employee wages need to balance the imperative to sustain profits with pressures from the worst inflation and labor shortages in decades.
The persistence of COVID-19 has slowed the labor market’s post-lockdown recovery and churned up company payrolls. Fink noted that in November the quits rate, or the number of workers who left their jobs as a percent of total employment, rose to 3%, a record high first breached in September.
CFOs aiming to attract and retain employees with wage increases must take into account a 7% jump in the consumer price index (CPI) during the 12 months through December — the biggest surge since 1982.
“Workers demanding more from their employers is an essential feature of effective capitalism,” Fink said. Describing “a new world of work,” he said, “companies not adjusting to this new reality and responding to workers do so at their own peril.
“Turnover drives up expenses, drives down productivity and erodes culture and corporate memory,” Fink said. BlackRock manages more than $10 trillion in assets for institutional and retail investors.
In order to satisfy workers, CEOs must look beyond pay and workplace flexibility, Fink said. The coronavirus “shone a light on issues like racial equality, childcare and mental health — and revealed the gap between generational expectations at work.”
Fink also reiterated his support for “stakeholder capitalism,” saying that “a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders.”
“Stakeholder capitalism is not about politics. It is not a social or ideological agenda. It is not ‘woke,’” he said. “It is capitalism driven by mutually beneficial relationships between you and the employees, customers, suppliers and communities your company relies on to prosper.”
Most stakeholders expect companies to help “decarbonize” the global economy, Fink said, predicting that so-called sustainable investment will surge well beyond the $4 trillion total.
BlackRock has asked companies to set short-, medium- and long-term targets for greenhouse gas reductions which “are critical to the long-term economic interests of your shareholders,” he said.
At the same time, “divesting from entire sectors — or simply passing carbon-intensive assets from public markets to private markets — will not get the world to net zero,” Fink said, adding that “BlackRock does not pursue divestment from oil and gas companies as a policy.”
Fink’s annual letter drew fire from environmentalists.
The letter “is just another rehashing of the same vague rhetoric, without any meaningful new commitment to actually help lead the necessary transition to a climate-safe future,” Ben Cushing, the Sierra Club’s fossil-free finance campaign manager, said in a statement.
A top Medicare advisory board did not recommend any new payment hikes for acute care hospitals or doctors for 2023, stating that targeted relief funding has helped blunt the impact of the COVID-19 pandemic.
The Medicare Payment Advisory Commission (MedPAC), which makes recommendations to Congress and the federal government on Medicare issues, voted on the payment changes to Congress during its Thursday meeting. The panel decided against recommending any pay hikes.
The commission unanimously voted to update 2023 rates for acute care hospitals by the amounts determined under current law. The Centers for Medicare & Medicaid Services will publish its update to the current law payment rates this summer.
MedPAC estimated that the rates will increase 2% and that there would be 3.1% growth in hospital wages and benefits, but these “may be higher or lower by the time this is finalized,” said MedPAC staff member Alison Binkowski.
She added there will be another estimated 0.5% increase in inpatient rates.
MedPAC decided not to recommend any pay rates beyond current law after looking at the financial picture for hospitals and found the indicators of payment adequacy are generally positive.
“Hospitals maintained strong access to capital thanks to substantial federal support, including targeted federal relief funds to rural hospitals which raised their all-payer total margin to a near-record total high,” Binkowski said.
She added fewer hospitals closed, and facilities continued to have positive marginal Medicare profits.
It was also difficult to interpret changes in quality that traditionally would determine whether a payment boost would be needed.
“For example, mortality rates increased in 2020, but this reflects the tragic effects of the pandemic on the elderly rather than a change in the quality of care provided to Medicare beneficiaries or the adequacy of Medicare payments,” Binkowski said.
Even though commission members agreed with the recommendation for hospitals, they were concerned whether it was enough to help facilities meet drastic increases in labor expenses.
“With labor, it is more than just a salary increase these hospitals are seeing,” said commission member Brian DeBusk.
He noted that hospitals haven’t just seen an increase in rates for contract or temporary nurses, but in nursing education as well.
MedPAC also recommended no changes to the statutory payment update for dialysis facilities and shouldn’t give a payment update to ambulatory surgery centers (ASCs) due to confidence in payment adequacy for the facilities.
“Despite the public health emergency, the number of ASCs increased by 2% in 2020,” said MedPAC staff member Daniel Zabinski. “The growth that we saw in the number of ASCs also suggests access to capital remains adequate.”
Physician fee schedule recommendation
The commission decided to take a similar estimate with the physician fee schedule, calling for any update to be tied to current law, which is estimated to have no change in spending.
Medicare payments to clinicians declined by $9 billion in 2020 but were offset thanks to congressional relief funds. Physicians also got a 4% bump to payments through 2022 compared to prior law.
The temporary rate hike is expected to go away at the start of 2023, but physician groups are likely to lobby Congress to keep the pay bump intact.
Physician groups already blasted the recommendation from MedPAC.
Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, tweeted that the recommendation was out of touch, especially after new reports of inflation.
“Hard to conceive of a more misguided recommendation to Congress at a time when practices face massive staffing shortages and skyrocketing expenses,” he tweeted.
HENRY KOTULA 