‘Outrageous giveaway to Big Pharma’: A political ‘bomb’ over drug prices may threaten NAFTA 2.0

https://www.japantimes.co.jp/news/2019/02/13/business/outrageous-giveaway-big-pharma-political-bomb-drug-prices-may-threaten-nafta-2-0/#.XGR6YlVKi1s

Image result for big pharma

The clash over free trade in North America has long been fought over familiar issues: low-paid Mexican workers. U.S. factories that move jobs south of the border. Canada’s high taxes on imported milk and cheese.

But as Democrats in Congress consider whether to back a revamped regional trade pact being pushed by President Donald Trump, they’re zeroing in on a new point of conflict: drug prices. They contend that the new pact would force Americans to pay more for prescription drugs, and their argument has dimmed the outlook for one of Trump’s signature causes.

The president’s proposed replacement for the 25-year-old North American Free Trade Agreement is meant to win over Democrats by incentivizing factories to hire and expand in the United States. Yet the pact would also give pharmaceutical companies 10 years’ protection from cheaper competition in a category of ultra-expensive drugs called biologics, which are made from living cells.

Shielded from competition, critics warn, the drug companies could charge exorbitant prices for biologics.

“This is an outrageous giveaway to Big Pharma,” Rep. Rosa DeLauro, a Connecticut Democrat, said in an interview. “The government guarantees at least 10 years of market exclusivity for biologic medicine. It’s a monopoly. It’s bad policy.”

The objections of DeLauro and other Democrats suddenly carry greater potency. The need to curb high drug prices has become a rallying cry for voters of all political stripes. Trump himself has joined the outcry. The revamped North America trade deal must be approved by both chambers of Congress, and Democrats have just regained control of the House.

Rep. Earl Blumenauer of Oregon, the new chairman of the House Ways and Means subcommittee on trade, told The Associated Press that “I don’t think candidly that it passes out of my trade subcommittee” with the biologics provision intact.

“The biologics are some of the most expensive drugs on the planet,” Blumenauer said.

Still, the politics of NAFTA 2.0 are tricky for Democrats and not necessarily a sure-fire winner for them.

The original NAFTA, which took effect in 1994, tore down most trade barriers separating the United States, Canada and Mexico. Like Trump, many Democrats blamed NAFTA for encouraging American factories to abandon the United States to capitalize on lower-wage Mexican labor and then to ship goods back into the U.S., duty-free.

Having long vilified NAFTA, Trump demanded a new deal — one far more favorable to the United States and its workers. For more than a year, his top negotiator, Robert Lighthizer, held talks with Canada and Mexico. Lighthizer managed to insert into the new pact provisions designed to appeal to Democrats and their allies in organized labor. For example, 40 percent of cars would eventually have to be made in countries that pay autoworkers at least $16 an hour — that is, in the United States and Canada and not in Mexico — to qualify for duty-free treatment.

The new deal also requires Mexico to encourage independent unions that will bargain for higher wages and better working conditions.

Late last year, the three countries signed their revamped deal, the U.S.-Mexico-Canada Agreement. But it wouldn’t take effect until their three legislatures all approved it. In the meantime, the old NAFTA remains in place.

The question now is: Are Democrats prepared to support a deal that addresses some of their key objections to NAFTA and thereby hand Trump a political victory? Some Democrats have praised the new provisions that address auto wages, though many say they must be strengthened before they’d vote for the USMCA.

Protection for drug companies is another matter. Many Democrats had protested even when the Obama administration negotiated eight years of protection for biologics— from cheap-copycat competitors called “biosimilars” — in a 12-country Pacific Rim trade pact called the Trans-Pacific Partnership, or TPP.

Trump abandoned the TPP in his first week in office. But the pharmaceutical industry is a potent lobby in Washington, and Trump’s negotiators pressed for protection for U.S. biologics in the new North American free trade deal. They ended up granting the drug companies two additional years of protection in the pact.

Top biologics include the anti-inflammatory drug Humira, the cancer fighter Rituxan and Enbrel, which is used to treat rheumatoid arthritis.

The administration and drug companies argue that makers of biologics need time to profit from their creations before biosimilars sweep in, unburdened by the cost of researching and developing the drugs. Otherwise, they contend, the brand-name drug companies would have little incentive to invest in developing new medicines.

They note that a 2015 law authorizing presidents to negotiate trade deals requires American officials to push other countries toward U.S.-level protections for intellectual property such as biologic drugs. (The same law, somewhat contradictorily, directs U.S. negotiators to “promote access to medicines.”)

Supporters also note that existing U.S. law gives makers of biologics 12 years’ protection. So the new pact wouldn’t change the status quo in the United States, though it would force Mexico to expand biologics’ monopoly from five years and Canada from eight years. In fact, supporters of the biologics monopoly argue that the pact might cut prices in the United States because drug companies would no longer face pressure to charge Americans more to compensate for lower prices in Canada and Mexico.

But critics say that expanding biologics’ monopoly in a trade treaty would prevent the United States from ever scaling back the duration to, say, the seven years the Obama administration once proposed.

“By including 10 years in a treaty, we are locking ourselves in to a higher level of monopoly protection for drugs that are already taking in billions of dollars a year,” said Jeffrey Francer, general counsel for the Association for Accessible Medicines, which represents generic drug companies. “The only way for Congress to change it is to back out of the treaty. … Does the United States want to be in violation of its own treaty?”

For Democrats, higher drug prices are shaping up as a powerful political argument against approving the president’s new North American trade deal. In December, Stanley Greenberg, a leading Democratic pollster and strategist, conducted focus groups in Michigan and Wisconsin with Trump voters who weren’t affiliated with the Republican Party. Some had previously voted for Barack Obama. Others called themselves political independents. They’re the kinds of voters Democrats hope to attract in 2020.

Greenberg said he was “shocked” by the intensity of their hostility to drug companies — and to the idea that a trade pact would shield those companies from competition.

“It was like throwing a bomb into the focus group,” said Greenberg, who is married to DeLauro. He said the voters’ consensus view was essentially: “The president was supposed to go and renegotiate (NAFTA) so that it worked for American workers. But it must be that these lobbyists are working behind the scenes” to sneak in special-interest provisions.

That perception gives Democrats reason to reject the new pact as the 2020 election approaches.

“Democrats have no incentive to do this,” said Philip Levy, a senior fellow at the Chicago Council on Global Affairs and a White House economist under President George W. Bush. “Before you know it, the presidential election season is going to be upon us.”

U.S. trade rules are designed to force Congress to give trade agreements an up-or-down vote — no nitpicking allowed. Still, there are ways to bypass those restrictions. Congressional Democrats could, for example, push the administration to negotiate so-called side letters with Canada and Mexico to address their concerns. President Bill Clinton did this with the original NAFTA.

“Lighthizer and his team are very creative,” said Blumenauer, chair of the House trade subcommittee. “This is something that can be handled.”

 

 

 

More Than One-Quarter of High-Cost Medicare Patients Have Persistent High Costs Over Three Years

https://www.commonwealthfund.org/publications/journal-article/2019/jan/high-cost-medicare-patients-persistent-three-years

Medicare high costs of outpatient care and medications

The Issue

It has been well documented that a small portion of Medicare patients — just 10 percent — account for more than half the program’s spending in any given year. But how many of these patients continue to incur high costs over time? Using three years of Medicare claims data (2012–2014), Commonwealth Fund–supported researchers sought to determine the share of patients with persistently high costs, as well as the key traits that differentiate them from those who incur high costs in only one or two years — or never.

What the Study Found

  • More than one-quarter (28%) of patients who had high costs in 2012 remained persistently high-cost over the subsequent two years, while 72 percent were transiently high-cost — for one or two years.
  • Persistently high-cost patients were younger (66.4 years) than either the transiently high-cost (73.3 years) or never high-cost (70.5 years) patients. They were also more likely to be members of racial and ethnic minorities, eligible for Medicaid in addition to Medicare, and qualify for Medicare because of end-stage renal disease.
  • On average, in the first year, persistently high-cost patients spent $64,434, compared with $45,560 for the transiently high-cost and $4,538 for the never high-cost.
  • Persistently high-cost patients spent more in all categories of spending. Notably, they spent more than four times as much as transiently high-cost patients did in outpatient settings ($16,148 v. $4,020) and on drugs ($15,467 v. $3,841).

The Big Picture

The 28 percent of Medicare beneficiaries with persistently high costs represent slightly less than 3 percent of the overall Medicare population but account for nearly 20 percent of Medicare spending for the three years studied. Only 5 percent of their total spending was related to potentially preventable hospitalizations, suggesting that it may be of little benefit to focus efforts on reducing such incidents.

The Bottom Line

Medicare patients who incur high costs over several years spend more on outpatient care and medications than those with lower costs. Targeting interventions on those two areas could help reduce overall spending.

 

 

Insurers blame specialty drug costs for rising premiums. This report from California shows why

https://www.fiercehealthcare.com/payer/report-prescription-drug-costs-driving-up-insurance-premiums?mkt_tok=eyJpIjoiWWpZNU4yTTROREExWlRsaSIsInQiOiJjZHh5VGpsWnhSN3RLQjNHbDNsWUROQkg0Y2EzOFZ3OFY2Z0Z1a1dFNVhwNkRXNTE3dTNMK0U2TloxUnFKT1RDU29cL3NEZ0gwMTdJbUptaTFxamFTbFg1cG1PbFRHbTQ2TmQzRHhYZERqcUZXQ1B0YVF1aW1QODBDb2g3aHA1cEwifQ%3D%3D&mrkid=959610&utm_medium=nl&utm_source=internal

Drugs and money sign

Specialty drugs made up about 3% of prescriptions in California in 2017 but accounted for more than half of the prescription drug spending that year, according to new report that compiled drug spending from nine insurers in that state.

According to the first Prescription Drug Cost Transparency Report released by the California Department of Insurance, there were about 270,000 specialty prescriptions compared to about 1.4 million brand-name prescriptions and about 8.9 million generic prescriptions in 2017.

Insurers—including Aetna, Anthem, Cigna, Kaiser Permanente and UnitedHealthcare—reported spending upwards of $606 million on specialty drugs, $271.3 million on brand-name drugs and $172.6 million on generics in 2017.

Among other findings, the report said:

  • In all, insurers reported that per member per month drug spending reached about $81 last year, or about 16.5% of premiums in 2017, comparable to per member per month spending of about $76 or 16.3% in 2016. Total health insurance premiums per member per month were about $491 in 2017, compared to about $470 in 2016.
  • Specialty prescriptions on average cost about $2,361 per prescription compared to about $236 for brand-name prescriptions and $29 for generics. Members typically pay about $113 per specialty prescription while insurers said they pay about $2,248 per specialty drug. They report members pay about $45 per brand-name drug, while insurers pick up $192 of the tab for brand names. And they report members typically pay about $10 for generics on average while insurers pay about $19.
  • The top 25 most frequently prescribed drugs in California represent about 40% of insurers’ overall spending. Specialty drugs make up about 1.3% of the 25 most frequently prescribed drugs and about 20% of insurers’ spending (resulting in a 3.7% impact on health insurance premiums.) In comparison, brand-name drugs make up about 6.8% of the most frequently prescribed drugs and about 11% of insurer spending (and a 1.2% impact on health insurance premiums). Generics represent about 32% of the most frequently prescribed drugs and 4% of the cost to insurers (and about .3% impact on premiums.)

The most frequently prescribed specialty drugs included HIV drug Truvada, immunosuppressant Humira, insulin therapeutic Humalog, diabetes drug Victoza and hormonal agent Androgel.

The most costly specialty drugs by total annual prescription drug spending included Humira, arthritis drug Enbrel, Truvada, psoriasis and psoriatic arthritis drug Stelara and multiple sclerosis drug Copaxone.

 

 

 

Health Care Is on Agenda for New Congress

https://www.scripps.org/blogs/front-line-leader/posts/6546-ceo-blog-health-care-is-on-agenda-for-new-congress

After months of polls, mailbox fliers, debates and seemingly endless commercials, the mid-term elections are over and the results are in. As predicted by many, the Democrats have won back the majority in the U.S. House of Representatives, while the Republicans have expanded their majority in the Senate.

This means that for the first time since 2015 we have a divided Congress, which leaves me pondering the possible consequences for Scripps Health and the broader health care sector.

Without a doubt, health care will be on the agenda for both parties over the coming months. That became apparent during pre-election campaigning as voters on both sides of the political spectrum voiced concerns about a wide range of health care-related issues.

Exit polls found that about 41 percent of voters listed health care as the top issue facing the country, easily outpacing other issues such as immigration and the economy.

That’s really no surprise. Health care affects all of us, whether we’re young or old, poor or well off, or identify as more conservative or more liberal. And despite all of the division around the country, most Americans seem to agree on at least a few things – health care costs too much, more needs to be done to rein in those costs, everyone should have access to health insurance, and pre-existing condition shouldn’t be a disqualifier for getting coverage.

When the new Congress convenes on Jan. 3, a wide range of health care issues will be on the agenda.

Here are a few of the issues that I’ll be watching as our lawmakers adjust to the reshuffled political dynamics in Washington.

  • Repealing elements of the Affordable Care Act (ACA) is likely off the table now that Democrats control the House. Previously, House Republicans had voted to change a number of ACA provisions that required health insurance policies to cover prescription drugs, mental health care and other “essential” health benefits. But even before the election, Republicans had reassessed making changes to measures that protect people with pre-existing conditions as that issue gained traction with voters.
  • Efforts to expand insurance coverage and achieve universal health care will likely increase. A number of newly elected Democrats vowed to push for a vote on the single-payer option, but other less politically polarizing options such as lowering the eligibility age for Medicare and expanding Medicaid likely will draw more support.
  • While Republicans used their majority in the House to reduce the burden of government regulations in health care and other industries, Democrats might use their new-found power to initiate investigations on a wide range of matters such as prescription drug costs.

We could see some significant changes take place at a more local level as well. On Tuesday, voters in three states approved the expansion of Medicaid, the government program that provides health care coverage for the poor.

And here in California, we will be watching newly elected Governor Gavin Newsom to see what plans he will put forward for expanding health care coverage in this state.

At Scripps, we believe everyone should have access to the health care services that they need, and we have worked hard in recent years to do all that we can to bring down the costs of delivering that care to our patients.

In this new world of divided government, gridlock likely will prevail and President Trump’s initiatives will struggle in the Democrat-controlled House. Everyone will be focused on positioning themselves and their party for the next presidential and congressional elections in two years.

Compromise and bipartisanship are clearly the best options for addressing the health care challenges we now face in ways that have the best chance to win wide public support.

If Democrats in the House fail to reach across the aisle to Republicans or try to make too many changes too quickly, they surely will face many of the same pitfalls that confronted Republicans over the last two years.

 

 

Public blames everyone for high health costs

https://www.kff.org/health-reform/poll-finding/kaiser-health-tracking-poll-late-summer-2018-the-election-pre-existing-conditions-and-surprises-on-medical-bills/

Health care costs remain a leading issue ahead of this year’s midterms, and voters have plenty of blame to go around, according to the Kaiser Family Foundation’s latest tracking poll.

  • Kaiser asked its respondents whether certain factors are a “major reason” health care costs are rising. (There could be multiple “major reasons.”)
  • Blame for the potential political culprits — the ACA and the Trump administration — was split about evenly.
  • But there’s a broader bipartisan agreement that industry is to blame: At least 70% faulted drug companies, hospitals and insurers. Doctors caught a break, at 49%.

Partisanship reigns, though, on the question of whether President Trump will help.

  • A mere 13% of Democrats are at least somewhat confident that Americans will pay less for prescription drugs under the Trump administration, compared with a whopping 83% of Republicans. Independents generally share Democrats’ skepticism.
  • Roughly a quarter of Democrats and two-thirds of Republicans, think Trump’s public criticism of drug companies will help bring down prices.

Surprise hospital bills haven’t attracted the same political uproar as prescription drug costs, but the Kaiser poll provides more reason to believe they could be the next big controversy.

  • 67% said they’re “very worried” or “somewhat worried” about being unable to pay a surprise medical bill, while 53% fear they won’t be able to pay their deductible and 45% are afraid of the tab for their prescription drugs.
  • 39% experienced a surprise bill in the past year.