Saturday, July 21, 2018
Blog Page 1017

PBMs: More litigation attacks on PBM behavior, leads to longer term doubts.

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I’ve reported before on the suits against Caremark and Medco for all kinds of alleged shenanigans in drug pricing, rebates and other activities kept away from their clients’ eyes.  There’s a bumper crop of news this week about the same topics.  The latest version of Government Health News reports that the attorney general of Ohio has jumped in with his own suit accusing Medco of slanting drug purchases towards its (former) corporate parent, Merck. Meanwhile 2 unions in New York State are accusing Express Scripts of keeping rebates that it didn’t tell them about. Finally another study in the Journal of the American Pharmacists Association reports that PBMs have been overcharging on the spread between wholesale and customer prices for generic drugs.

It’s been fairly common knowledge around the drug industry for many years that not only are PBMs getting rebates to influence which drugs end up on their formulary, but that much if not most of the rebate money doesn’t go all the way back to the clients, and in fact is a fairly substantial chunk of the PBMs’ bottom lines. As I’ve opined before, whether or not it’s a legitimate business practice as the PBMs claim, when Medicare becomes the client that type of behavior is not going to survive the scrutiny of any even half-hearted Congressional investigation.  At that point I find it hard to see how PBMs become little more than claims processors, and I’d expect their PE ratios to fall to match.  The question is whether they can increase their revenues enough by adding the volume from Medicare clients to allow their stock prices at least to tread water.  I doubt it, but it’ll be an interesting subtext in the implementation of NAIM.

POLICY: Notes from my wonderings on Medicare

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In New York last week I had a great visit with my old colleagues at Harris. Humphrey Taylor had some new data showing that flu vaccinations don’t seem to work. Meanwhile Bob Leitman broadly agreed with me that we can’t expect anything much out of the next Congress no matter who wins the Presidency as, there may be as many as 5 Senate seats in the south that go over to the Republicans, and so the Congress itself will be to the right of this one. However, by 2008 things may be different. By then the TROOP and the donut hole will be familiar to the NASCAR dads (the southern males who vote Republican but economically should be Democrats).  Also, by then the first tranche of the baby-boomers will be retired (if they can afford it) and two years away from Medicare.  And they will be finding the individual insurance market increasingly difficult to deal with.  Meanwhile Medicare will be entering its most costly phase–the run up to 2020 when the peak of the baby boom hits 65. At that point wider appetite for reform financially from the fiscal hawks and from the baby busters who’ll be paying for this may meet the interests of the soon to be Medicare recipients who don’t like the benefits the way they are.  Some where in there is the subject of the real debate and therefore the seeds of a real compromise for a workable solution.  Maybe.

PHYSICIANS/INDUSTRY: Notes from my wanderings on EBM and malpractice

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Apologies for the lack of posting. When you read the first paragraph you’ll figure out why. I’ve been touring around the East Coast talking to various people in the health care business and then on Thursday went to the UK. Or more accurately got on a plane, which sat on the runway at JFK overnight before deciding that it didn’t want to go and dumping all its grumpy passengers on the next plane. I have a few observations about the state of play with physicians, and Medicare.
I spoke with a group of physicians and a separate group of managers and clinical managers in a rural health system in Pennsylvania, and with various industry watchers and participants on New York and Philadelphia. The doctors are (not surprisingly) concerned about malpractice….given the current deal in Pennsylvania where the governor has decided to pay their malpractice insurance for the current year by raising the cigarette tax. If this goes through it’s a temporary win for the Pennsylvania Medical Society, which has billboards up across the state reading “when the last doctor leaves the state the malpractice crisis will be over”. While this may solve some of their problems immediately, it doesn’t resolve the longer-term issues. In my Q&A with the doctors three major points emerged.
1) There was broad if grudging acceptance that though malpractice reform was needed (from the doctors point of view) simply saying that we need a cap on awards for pain and suffering of $250,000 is not good enough, and that some more valid solution needs to be proposed. On physician told me that 20 years ago both sides of the malpractice equation were taken care of– Anyone hurt badly by the system was looked after institutionally (e.g. a child with brain damage from a “bad birth”) Now the parents only option is to see a lawyer and go after the poor OBGYN who just happened to be there at the time. On the other side, the physician I spoke with is so scared of lawyers that he will not give any kind of a reference about a doctor or nurse, especially a bad one, for fear of being sued by that clinician. That’s one reason why it took so long for the New Jersey “Angel of Death” to be discovered). So lawyers are the problem but also for many patients the only solution. I believe that this view romanticizes the “good old days” especially as way back then doctors’ incomes were lower in real terms and the communal support for victims of poor care wasn’t that great. However, we did agree that lawyering may remain the only solution unless physicians do something constructive about it.
So what might that something be? Well, physicians, nurses and pharmacists have a huge amount of public trust. Amazingly enough, politicians, lawyers and HMO managers do not. As a profession, doctors need to spend some of that “trust capital” by developing education for the public about what evidence based medicine is, and also amongst themselves by showing that they are working to implement it. I appreciate that following evidence-based medicine is very tricky, but the profession needs to level with the public about the fact that not every doctor is practicing state of the art medicine, and that although agreeing on what constitutes EBM is complicated, physicians as a whole are dedicated to working towards that end–rather than simply telling the public that “we have the best health care in the world” and ignoring Don Berwick, the IOM and Michael Millenson.
The real issue is how to do that and to some extent whether they already are doing that. I was accused, perhaps accurately, of identifying organized medicine as only being the AMA. But of course the IOM and the IHI is composed of doctors too, and their work is beginning to have an effect. Many dedicated physicians are working hard to promote the understanding and application of evidence based medicine both among the public and among physicians. The question is how will the public understand this issue and how will that interact with the malpractice issue. If doctors are perceived as simply covering their own rears, and not seen as promoting the best science in the interest of their patients, that “trust capital” may not be there to be spent in ten years time.
2) There were several comments about how much is “too much”. The specter of the Oregon Medicaid insurance experiment (organized rationing for the poor) was invoked. I’d introduced the QALY notion in my talk and one comment I heard was that “we have to get away from the concept that any procedure, test or pill that shows a statistically significant improvement should automatically become standard practice now matter what the cost.” Cost efficiency as a rationale for new Rx introduction has been introduced in the UK, which recently said no to various new drugs for MS and osteoporosis. The concept of introducing that type of assessment to the US is still light years away–we love technology too much for that. But a couple of factors suggest that a compromise might be developing here. First is the slow growth of shared-decision making. Frequently that ends up with a less aggressive course of treatment, because the patient tends to be less interested in a heroic procedure than the physician. The other is the long range state of Medicare, which is eventually going to have too may people at too high a cost to be able to say yes to absolutely everything.

NOTE: Lite today

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I’m travelling today and tomorrow.  There may be something wonderful written on the plane, there may be not.  So please check on Friday but don’t hold it against me if you don’t see anything till Monday. Thanks. Matthew

TECHNOLOGY: Jane Sarasohn Kahn’s top ehealth predictions for 2004

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Jane Sarasohn Kahn has her top ten predictions for eHealth 2004 out at iHealthbeat.  Considering that I’ll be her house guest tonight I’ve been remiss in not referring you to it!  So go read.

POLICY: 1991 redux? NY Times discovers health care crisis, Democrats response to it

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Apparently there’s a health care crisis going on. 43 odd million uninsured, (that’s at any one time–25 million basically permanently 80 million for some substantial time in any 4 year period), costs going through the roof (premiums up 8% over inflation in 2002 and more last year), and Medicaid coming under the knife. Oh, and seniors hate the NAIM (new and improved Medicare). The NY Times reports that the Democrats all have their health care plans and are taking them seriously. However, there are two minor differences between 2004-6 and 1991-4:

a) With the exception of the three outsiders’ single payer plan, none of the "main" Demo candidates proposals gets to universal coverage.  Don’t forget these are proposals.  And as you know any Presidential proposal will get watered down over the course of the negotiations in the Congress–especially in a Republican Congress.  So if, to pick on one suspect, Dr. Dean’s proposal will take us from 86% insured to 92% insured, the actual result may be to go from 86% insured to 91% insured–and that he’d regard as a victory.  It’s impact on the hard core uninsured and the providers who have to deal with them would be close to unnoticeable.

b) It’s not 1991.  We haven’t just won the cold war and can now concentrate on the peace time economy.  We’re involved in a never-ending "war" that whatever your view on it will be the main event in elections form now to 2006 and beyond.  Health care will be a poor second till the mass of NASCAR dads (the ones in the South who economically should be Democrats but culturally are conservatives and decide Presidential elections) get closer to retirement age and notice that they might need Medicare and Social Security.

In the meantime Bush is pushing his $89Bn tax break for the uninsured to buy their own insurance really hard.  I think he’s mentioned it twice in three years!

PHARMA/POLICY: New word for the day

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Just a quick post as I’m traveling all day today. Yesterday I heard a new Medicare term to do with NAIM ("New and Improved Medicare"). The word is TROOP, which stands for "True Out of Pocket"costs. Those are the costs that will actually be recorded against your deductible and the donut hole for your yet-to-come Medicare drug coverage, and as you might suspect, it may not included everything you might think!

INDUSTRY: Malpractice & EBM, a modest proposal from Matt Quinn

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Over at DB’s Medical Rants and at the Bloviator there’s been a continued interesting debate on Malpractice.  I suggest that you read DB’s post here, which as a bonus gets you two long comments from Ross (who writes the Bloviator).  The crux of this issue is how do you shoehorn what we theorists know about evidence-based medicine into the ill-fitting shoe of the American court system. Presumably the AMA and organized medicine should be doing something here.  Matt Quinn, who’s been absent from this column working on an interesting new project at Intermap Systems, has some ideas:

    The medical profession needs to spend its time and energy fixing the problem (i.e. care that does harm and/or doesn’t follow institutional best practices) rather than protecting itself from the consequences of bad care.

    I think that a constructive role that the AMA and the various clinical professional associations can play is in establishing evidence-based guidelines for care.  I know – easier said than done.  But every doc in the country doesn’t need to agree on what appropriate care means.  A 2/3 solution is better than none at all and professional associations – in an activist (versus protectionist) role – can drive this.  If I (or another non-clinician) were serving on a jury in a malpractice case, having evidence-based (professional) guidelines would make understanding whether care was appropriate much easier (and perhaps quicker and cheaper) to determine.  Without good (i.e. evidence-based) reasons to deviate from  guidelines – and an adverse outcome for a patient, fault is obvious. 

    Further, clinicians can use the guidelines (perhaps built into EMR systems) to know when the care that they are providing deviates from evidence-based best practices.  If they feel the necessity to deviate, they should justify themselves.  While this might increase the prevalence of "defensive medicine" in exceptional cases, it would largely eliminate the necessity for "defensive medicine" for most cases.  It is incumbent on professional organizations and the physicians who compose them to ensure that their guidelines are updated to reflect the standards by which they will be judged.   

    There isn’t, of course, a direct correlation between proper care and malpractice liability.  Most malpractice victims neither bring suit nor are compensated.  Some people who receive proper care receive malpractice awards.  Limiting liability robs justice from those who were wrongfully harmed and successfully prove their cases – while protecting the
    perpetrators.  And does nothing to address those who received a judgment but weren’t wrongfully harmed, those who were wrongfully harmed and didn’t bring suit, or the incentive for the medical profession to hold itself to its own oath.

Of course Matt nails the real reason for the rise of malpractice in the Administration’s agenda

    I view Bush’s (Rove’s) preoccupation with Tort Reform as a way to damage the political opposition and not a way to "fix" medicine.

As I mentioned in comments over at DB’s my British heart tells me that you shouldn’t be suing someone who’s trying to help you (which I assume is the case in all malpractice cases). My American head tells me that that’s the way things are here, and the end result, as Matt points out, makes a lottery of the medical system. I have no firm opinions about how to solve the malpractice problem, but I do think that a no-fault error reporting system, or a separate medical court system, should be investigated. Unfortunately this is an arena in which none of the protagonists–organized medicine, trial lawyers, both political parties and the corporations looking for immunity from litigation who are hiding behind the medical profession for political reasons–is looking out for  anything other than their basest self-interest. The public good and patient safety are way down the list.

PHARMA: Potential blockbuster drugs to watch in ’04

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CBS marketwatch has an interesting list of new blockbuster drugs to watch for in ’04. One of the blockbusters is Caduet, an interesting combo pill from Pfizer that combines Novarsc and Lipitor for both hypertension and high cholesterol. This helps patients by making it easier for those with multiple conditions to remain compliant. But as was noted by the Industry Veteran last Friday, the development of the combo pill also gives pharma companies a chance to raise prices.  You can expect that the payers may not be so interested in improving the ease of patients, but will use three tier formularies and other tools to increasingly push the decision over spending extra for an easier to use product down to the consumer.

PHARMA: Big pharma gets aggressive over pricing

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Two of my favorite contributors both have found me interesting stories about pharma company tactics today.  Jane Sarasohn Kahn sent me an article about the ongoing US-Australia talks on drug pricing.  Recall that the Aussies joined us in invading Iraq because they were promised in a nudge-nudge wink-wink way a free trade deal which would allow their agricultural products into the US market. However, fresh from victory in the Medicare drug coverage arena, the US pharmas a going after price "discounting" by governments abroad.  (For background info look at this latest edition of the Pfizer sponsored Health Politics which basically trots out Mark Pauly’s not entirely untrue line that Canadian drugs aren’t any cheaper than US drugs overall when you factor in that fact that they don’t use so many generics and don’t allow access to the some of the newest and most expensive drugs). As part of the Australian negotiations things are getting a little heated. The Australian (which is the pretty unsuccessful result of Murdoch’s attempt to create a highbrow national paper there) wrote that

    US drug lobbyists were peddling misinformation about Australia’s medicine subsidy scheme to secure a better deal under a free trade agreement, federal Health Minister Tony Abbott warned a delegation from Washington yesterday.

    During a meeting with a powerful US congressional delegation yesterday morning, Mr Abbott also said the Australian Government would not change the "basic architecture" of the $5.8 billion-a-year Pharmaceutical Benefits Scheme to secure a trade deal. But he left open the prospect of other concessions to multinational drug companies, saying he would be happy to talk with them about demands for greater transparency. After the talks with Acting Prime Minister John Anderson and eight influential Republican congressmen in Sydney yesterday, Mr Abbott accused drug lobbyists of waging a dishonest campaign against the scheme. "Misleading information is being peddled in Washington," he said in a statement. "The PBS is not a rationing system but a subsidy system. The PBS does not deny access to US drugs but treats them exactly the same as drugs made in Australia or elsewhere."

Now despite the party name (which harks back to the old European meaning of liberal not its American derviation) the Aussies have a very right wing government in power by all but US standards. (Randomly enough I’m a friend of Tony Abbot’s sister who’s political views are somewhat pinkish and despite the fact her brother is the rising star of the Aussie Liberal party and a likely future Prime Minister, she basically thinks he’s a right wing nut!) So if the Aussies feel that they can’t sacrifice their drug pricing system despite the huge carrot of free-trade in agriculture that the US is dangling, there’s no chance of the Europeans doing so.

Meanwhile, the Industry Veteran sends me this story about Abbot’s huge price increase in Novir, its protease inhibitor which is used as a component of many anti-viral HIV regimen. Basically Abbot has increased the price of a drug five-fold that is used in combination with its competitors anti-virals, but if you take Novir in a combo form with Abbot’s new protease inhibitor Kaletra, it’s now cheaper than taking it separately with the competitors’ drugs. The Seattle Times reports

    Abbott is pricing Norvir as though it is a "full component" in the drug cocktail, complained Shalit. "But it’s not being used for its activity against the virus — it’s used as a booster for the other drugs." While Abbott vigorously denies it, Shalit and others believe the Norvir price increase was aimed at Abbott’s competition. In essence, Shalit said, increasing Norvir’s price raises the cost of taking Abbott’s competitors’ drugs used in combination therapy. That could push patients toward Abbott’s newer drug, Kaletra, a combination drug with Norvir built in. With the Norvir price increase, Kaletra’s competition has become more expensive than Kaletra, approved by the Food and Drug Administration in 2000.

    In their letter to Abbott, the local doctors also expressed worry that the increased cost of Norvir would have a chilling effect on development of other drugs designed to work with its boosting power; at least one such drug is now being tested in Germany.

The Industry Veteran comments

    Here’s an ominous trend that I see as more pervasive than just the HIV area. Big Pharma will seek to extend patent protection and up-sell patients by exorbitantly raising the price of single-compound products, thereby coercing people onto fixed-dose combinations (one pill containing two or more compounds) that contain the unconscionably priced compound. Watch for this trend in (y)our favorite category: the statins.

In any event both these stories prove that big pharma, conscious of its potential problems with future drying pipelines, is going to fight hard to maintain its profits and protect its turf.  That’s to be expected and it is also part of their fiduciary duty which, lest we forget is not to Canadians, Australians or AIDS patients, but to their shareholders.  The question is will this type of behavior cross the line and cause sufficient resentment that politicians bring a backlash against them. That may yet happen in their incredibly unpopular opposition to Canadian imports.

Then again there is the other question that Jane posed in her post here a month or two back. She wrote

    Pharmas are looking to biotech for new formulations, but they’re also looking to smaller pharmas too for licensing deals. This will be important over the next few years. Obviously, biotech will be important in the longer term, but the juries are still out on so many very expensive drugs. We will be hitting the wall on who is going to pay for those expensive bio drugs, and I anticipate that will be a big area of contention. It’s not clear really who will be willing to pay for innovation.

Jane’s follow up goes to the heart of the "how much will who pay, and be able to pay?" question.

    In today’s news, I see that the small pharma Trimeris based in NC which produces the $20K/year drug, Fuzeon, for HIV/AIDS, is now laying off and looking like it could close shop…for a few weeks, literally, a few payers last year said they’d be willing to pay for such an expensive HIV drug. However, as I recently told one of my clients who is big in HIV, that’s one disease state where that high cost just won’t get rationalized….now an expensive prostate cancer drug used by rich old white (mostly) men, sure…but even $20K a year for that wouldn’t be chronically taken virtually ‘forever.’ Some discussions are afoot about whether we have "enough" innovation for now.