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POLICY: Medicare bill passes

So it’s done. The Medicare bill passed the Senate this morning 54-44 with the votes of enough conservative Democrats to ensure an easy passage. My suspicion is that there’s a lot less here than meets the eye. However, Tom Daschle (who’s continued tenure as Minority leader in the Senate is already in doubt) was the first to notice that 

    "This is not the final vote. This is the beginning of the end; it is not the end. We will see many many more votes. I predict that we will be back within the next 12 months. Seniors will demand that we respond to the many deficiencies of this bill, and they will not rest until we address them.”

I don’t think it’s necessarily 12 months, but there’ll certainly be many more attempts to amend Medicare in the next 1-6 years. We won’t see the program left alone as we have for the last 6 years. However as several of the cooler heads in the health care blogsphere have been commenting, the drug benefit is relatively limited, the competition and premium support aspects are minor tinkering (for the moment!), and the boost to the program in terms of budget will eventually need cuts elsewhere or new funding sources. The important questions are:

    1. While this is an immediate win for the Republicans, as the news filters out about what’s actually in the program, who wins politically out of this in the next 12 months? My suspicion is that this bill is net bad for enough seniors that the Democrats do. Of course given Iraq et al it may not matter.
    2. How much does the pharma and PBM industry benefit? Again this depends on the details of the implementation. Particularly how over time who aggressive will the government force the PBMs to be with the pharmas on price? Volume will clearly go up.  Will prices come down to match or not much?
    3. Will employers maintain their drug benefits for their retirees? That’s the question that both matters most politically and also determines to some extent how popular and therefore how expensive the drug benefit will be.

    TECHNOLOGY: eHealth update

    I posted a while back on Manhattan Research’s new Cybercitizen health findings. In the past week I’ve received Forrester Research’s Healthcare First Look email and also seen a new article from Caroline Broder at iHealthBeat on Manhattan research’s eHealth findings. Forrester focuses on Rx sites and on physician sites.  The results are predictable.  There is good information on Rx sites, but consumers don’t trust drug companies as a source.  They’d rather see it from their own doctor or from a medical specialty society.  But the doctors don’t have a web site or if they do, only 6% of consumers have been to see it.

    Manhattan concentrates on consumer use of the eHealth space generally and their intersections with health plan sites in particular.  And like in Forrester’s previous research on the topic, health plan sites are little used and not very functional. Around 20% use their health plan’s site, and are in general dissapointed with what they can do there.  Manhattan though believes that health plan sites are getting better and starting to incorporate more useful functionality. As regular readers know, I was trying to sell software to health plans to help them do this from 2000-2002 and we were well ahead of the market.  Nice to hear that they’re slowly moving in the right direction.

    QUALITY QUICKIE: Ratings getting off ground, but humbled by technology

    While it’s really baby steps, it looks like the slowly emerging consumer-directed health plan movement is finding some information out there to show its members.  Even stock site CBS Marketwatch has noticed in this article called hospital, doctor quality ratings getting off ground. But while Healthgrades and Leapfrog rate hospitals, the Californians who are a little ahead of the game here and actually paying for "quality" are increasing the amount of incentive they are giving medical groups for having EMRs or other technology that improves and measures healthcare delivery and quality. The Pay for Performance initiative from IHA is now going to weight 20% of its bonus based on the level of investment the provider group makes in IT.

    That of course begs the cynical question; if the IT is not up to scratch to capture the information about the care being delivered, how do they (or Healthgrades or Leapfrog for that matter) know what care they are really rewarding with the program?  OK, so that’s a little cynical of me, but the demand from the IOM for a national information reporting system is essentially pointing out the same thing.

    The quality buffs always say that you can’t manage what you can’t measure and it appears that we can’t really measure what we’re doing.  So the measurement that is going on is indeed improving in only baby steps.

    POLICY: Medicare drug bill on its way to passage.

    Well, the bill is going to make it.  The dissidents in the Senate led by Kennedy could only muster 29 votes in favor of a filibuster (they need 40).  So the bill will pass tonight. Drug stocks and PBM stocks rallied yet further on the news–here’s Caremark’s performance–note the bump in price and volume around 2pm EST.

    So I was wrong about this one.  I thought that it would get past the House easily and die in the Senate.  But in fact it was (almost) the other way around.

    This is immediate very good news for a smallish subset of poor sick seniors, rural hospitals, pharma companies and (probably) PBMs.  It’s good-ish news for doctors who got a 1.5% hike as opposed to a 4% cut in Medicare payments for their support, and employers who will now start to get subsidized for something they were doing anyway. It’s not such  good news for Medicare recipients who already have drug coverage and now will probably be pushed by employers into the Medicare system. And, as for the taxpayer, as the conservative Republicans who voted against it claimed, we’re witnessing the birth of another, potentially out-of-control, Federal spending program.

    The longer term implications for Medicare depend on the details of the bills that will amend this bill in years to come–and there will be several.  The shorter term implications are about how this will play out for seniors in next year’s elections. Is it "Drug coverage" or "The end of Medicare"?

    INDUSTRY: Tenet watch

    Sometimes the old favorites don’t disappoint! Tenet is in the news again with some more subpoenas about possible fraudulent referrals, this time in Louisiana, and a spat with Blue Cross in California which said that half its cardiac procedures at Doctors Medical Center of Modesto were unnecessary. In fact things got so nasty last week that the CEO of the hospital was going to sue Blue Cross for defamation! It looks like Blue Cross is keeping the hospital in its network for now.  Tenet however believes that the root of this dispute was a fight over $50m in reimbursements, and of course we don’t yet know how that got settled.

    Meanwhile, remember the little company that Tenet was using for reporting (having fired Perot systems)? Well apparently that company took over another that held a big repository of (patient-identified) medical errors.  During the first monthly conference call a rustling was heard on the other side of the phone and then no one answered.  Apparently the repo man had come a knockin’. It seems that the lease hadn’t been paid and that they were kicked out of the office–immediately. I’m sure none of the hospitals using that service would be worried about the security of their error data, would they?

    POLICY: Medicare bill making it?

    As I go to bed late, late Sunday night it looks like the Medicare bill is going to avoid a filibuster and get through the Senate.  Go see Don Johnson at The Business Word for the latest news. Meanwhile here’s a chart showing how much impact the bill will have on seniors’ drug costs.  As I remark in some comments over at the Bloviator, it really only helps those poor seniors who are currently paying $2-4,000 a year and are literally deciding between food or drugs–and those with drug costs over $5,000 for whom it is a good catastrophic drug insurance policy.  For the larger majority  of seniors paying less for drugs or those with higher incomes, this bill doesn’t do too much.  It also looks like it’ll reduce employers’ support for Medigap policies. I suspect that the politically unpopularity of that feature of the Bill will come to bite the Republicans in the 2004 election. In any event watch for more vicious politicization of Medicare’s future in its representation to seniors in the coming days and weeks.

    PHARMA: Statin drugs may go OTC in UK next year and Crestor update

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    As you probably know by now, the UK has a national health service (NHS) which pays for prescription drugs. Most Brits pay a small (or if they are over 60 no) co-payment when they get their drugs and the real cost of the drugs are absorbed by the government. The government does indeed bargain down the price of the drugs, but there is still a real cost involved. Just like health plans in the  US, where Wellpoint led the battle to get Claritin forcibly moved to the OTC market, the UK is interested in moving drugs OTC–where of course the cost is absorbed directly by the consumer. 

    Now, one of the most significant categories is moving in that direction. Currently the NHS is spending roughly $625 per year for each of the 1.5 million Brits on statins–more proof as if you needed it that we Brits eat too much greasy food!  At over $900m a year, that’s a tempting morsel to get off the government’s budget, and consequently the health minister is looking to move statins to OTC in the UK within 6 months.

    Merck is thrilled about this as its main statin Zocor lost its patent in the UK earlier this year–it has patent protection in the US until 2006.  Pfizer has less to worry about in the US as Lipitor is patented until 2010. However, in the UK presumably if Lipitor comes out of the NHS’ (and in some cases out of fundholding GPs’ budgets), and Zocor is availble OTC, this is bad news for Lipitor as physicians there will stop prescribing it, and instead tell patients to get Zocor at the local chemist. Of course, Merck and its OTC competitors will meet stiff price resistance there. At Drugstore.com Liptor is about $1100 a year in the US, but less than half that in Canada, and obviously will cost much less OTC in the UK. So this might be a fore-runner of what happens in the US when Zocor goes off patent in 2 years. And of course if Zocor is operating successfully OTC in the UK by then, why wouldn’t US health plans want to move it and Lipitor OTC here too–just as they did with Claritin?

    Crestor Update.  The newest statin Crestor from Astra-Zeneca has had a somewhat rocky start.  In this post I noted that the  research group Friedman, Billings, Ramsey & Co had suggested Crestor wasn’t selling too well and that there were some adverse events being reported in the UK.  Now that same group has reported that according to:

      The Canadian Adverse Drug Reaction Monitoring Program, a database maintained by the Therapeutic Products Directorate of Health Canada (the drug regulatory agency in Canada), between February 1st and September 30th, 30 adverse drug reactions have been reported with Crestor, 24 of which were considered serious. In addition to 10 reports of muscle-related side effects (eight at the 10mg strength and two at 20mg, with eight patients below the age of 60) and one death (myocardial infarction in a 22-year-old patient), we find it notable that kidney-related adverse events have been associated with the drug at lower dosages. Events associated with kidney issues were observed in five patients in Canada and are as follows:

      ? one report of acute renal failure at the 40mg strength;
      ? one report of nephropathy at the 10mg strength;
      ? two reports of proteinuria at 10mg;
      ? three reports of hematuria, one at 10mg and two at the 20mg strength;
      ? two reports of increased blood creatinine, one at 10mg and one at the 40mg strength.

    Of course it’s still very early days for Crestor, but between these reports and the suggestions of rushing the research in The Lancet last month, it may be that the FDA starts to consider some action.

    TECHNOLOGY: eHealth update

    I posted a while back on Manhattan Research’s new Cybercitizen health findings. In the past week I’ve received Forrester Research’s Healthcare First Look email and also seen a new article from Caroline Broder at iHealthBeat on Manhattan research’s eHealth findings. Forrester focuses on Rx sites and on physician sites.  The results are predictable.  There is good information on Rx sites, but consumers don’t trust drug companies as a source.  They’d rather see it from their own doctor or from a medical specialty society.  But the doctors don’t have a web site or if they do, only 6% of consumers have been to see it.

    Manhattan concentrates on consumer use of the eHealth space generally and their intersections with health plan sites in particular.  And like in Forrester’s previous research on the topic, health plan sites are little used and not very functional. Around 20% use their health plan’s site, and are in general dissapointed with what they can do there.  Manhattan though believes that health plan sites are getting better and starting to incorporate more useful functionality. As regular readers know, I was trying to sell software to health plans to help them do this from 2000-2002 and we were well ahead of the market.  Nice to hear that they’re slowly moving in the right direction.

    POLICY: Medicare Bill just gets past the house

    And in a rare Saturday posting . . .

    After some real hard core arm-twisting, (plus leaving the voting open for 3 hours), at 6am this morning the House passed the Medicare Bill 220-215. It looked like it was going down 218-216 for over 2 hours when finally the Republican leadership got 2 of their holdouts to cave (and then a couple more committed).  I suspect what they say about watching sausage and watching legislation being made applies here!

    We should know about the Senate by Monday. My suspicion is that it has the straight up and down votes to win, so it’s a question of the filibuster being used.  Just as it was in the Energy Bill.

    PHARMA: PhRMA members learn to play the game

    So I can’t quite stay away from the Bill….

    In a reminder of how hardball politics is played in the USA these days, there’s a report out today (hat tip to California Healthline) that shows that in the first 6 months of 2003 the healthcare industry spent over $139m on lobbying in the run-up to Medicare bill. $37.7m came from the pharma industry. This number probably includes standard costs associated with keeping Washington offices, etc. so it’s not all "new" money. But obviously much more has been spent in the last four months, and there’s no doubt that, as in its successful attempt to defeat certain House Democrats who were in favor of price controls in the run-up to the 2000 elections, targeted contributions and lobbying have had a definitive pay-off for the pharma industry in this Bill.

    This is no secret in health care.  The AHA, for-profit hospital groups and the AMA have been doing this forever in order to influence the Medicare and Medicaid reimbursement schedules.  The drug companies have too, of course, but as they were previously opposed to drug coverage, their contributions weren’t quite so targeted.  Now that the industry has decided to buy the best bill it can, you can see the results in the text of the bill–especially the import ban from Canada.  The ongoing federalization of the health care system continues.  It’s starting to look more and more like the Defense department and the military industrial complex–you can expect the lobbying/business techniques in that industry to become more common in health care.

    This post is not meant as criticism of PhRMA.  Their fiduciary interest is to their shareholders, and once they saw that politically drug coverage was unavoidable, that interest means to get as much money as possible out of the government. And the way to do that in the USA is by using money to buy influence. In the light of the even more pork-laden energy bill coming out the same week–and you know that there was equal lobbying weight on that one too–more disinterested observers may believe that campaign finance reform needs a little strengthening. But that’s in a parallel universe and we and PhRMA live in this one.

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