Archive for category drug costs
Bernie Sanders popularized the idea of US national healthcare during his 2016 campaign. He described the idea as “Medicare For All”. That was a genius idea since most Americans have a family member with that program for seniors. In fact, with its 44 million participants it represents a very large, although incomplete, national healthcare program. It is very popular among seniors since it reduces insurance premiums dramatically.
There are two major versions of Medicare: Standard and Advantage.
- It sets the allowed price for hospital and medical provider services
- It pays 80% of the “allowed” price leaving 20% for the individual or a “medical supplement”.
- Limits participants to one insurance company or organization
- Has lower premiums
- Wraps Medicare and a supplement together
What about Medicare For All
- What about premiums or supplements or services? (the specifics need to be chosen, not guessed at.) It’s like a dream house, but without a drawing or a list of deliverables.
This is really the nuts and bolts of a national plan no matter what you call it. And, if the current providers sense they will make less money, the self-serving complaints will be very loud. Who will complain if patients don’t get a better deal — not very many people. That’s because not very many people understand healthcare. So, what do you as a consumer want?
☐ Same old insurance, high drug prices and poor quality
☐ Premiums paid via payroll deduction
☐ Premiums paid via annual income tax
☐ Allow supplemental insurance for non-covered items (like plastic surgery or special drugs)
☐ Profits for drug companies limited to 5%
☐ All covered medications available for $10/month
☐ All approved hospital days available for $400/day
☐ Out of pocket annual expenses limited to $5000/year
☐ Approved child medical care is free
☐ 0.5% of premiums for research
☐ Regional claim processing (by current insurance carriers, limited to 5% profit)
☐ Limited list of available medications, generics are required where available, brand name drugs are selected by the plan
☐ 30% of provider payments linked to quality and quantity measurements
☐ Medical school tuition paid in exchange for 5 years of service in designated (poorly served) areas
☐ Mental health service included same as other health care (includes PhD psychologists)
☐ Maternity care, including midwife care at home when safe
☐ Primary care provider available for all persons
☐ Physicians and surgeons are salaried (not paid by number of services)
☐ Same day service for urgent problems
☐ Clinics open nights and weekends
☐ Massive increase in numbers of physician assistants and nurse practitioners with tuition paid in exchange for service
☐ Video visits with providers via Internet if desired
☐ Hospitals paid according to diagnosis (DRGs)
☐ Regional specialty hospitals (5% for growth and development)
☐ Local general hospitals (5% for growth and development)
☐ Providers all use the same secure medical record
☐ Annual adjustment of payment levels based on a budget
☐ Ongoing and up-to-date quality measurements on all services
☐ No need for malpractice suits — immediate compensation for injuries instead
☐ Strong quality system capable of sanctioning administrators and providers (important!! may need lawyers here)
Ralph Waldo Emerson is not usually associated with healthcare. However, his famous quote about consistency may apply. The US healthcare system seems to be quite consistent, in a bad way.
The Perspective section of the September 7, 2017 edition of the New England Journal of Medicine featured an opinion article by Eric Schneider and David Squires. The essence of the article is to point out the US healthcare system has a lot of potential, receives lots of money, discovers great treatments and has some institutions that really deliver good care. The authors suggest with a change in focus US healthcare could be number one in the world. Yet, it is not. And, it maintains a poor rating CONSISTENTLY.
The authors state key strategies for improving healthcare:
- Timely access to care (preventive, acute and chronic)
- Delivery of evidence-based and appropriate care services.
They note several things that stand in the way of delivering care of any type:
- Cost of care (US is number one)
- Administrative burden (US is number one)
- Disparities in the delivery of care (US rates very high)
In any large US city the profusion of stand-alone emergency rooms is testament to the failed notion of high-cost rescue treatment rather than low-cost prevention or ongoing monitoring and early intervention. The US tends to invest in high-cost drugs, treatments and surgeries and under-invests in primary care and social services. The failure to adjust the focus of healthcare efforts has become a financial train wreck.
The authors of the above article present four prescriptions for US healthcare:
- Improve access to care
- Increase investment in primary care
- Reduce the administrative burden
- Make healthcare more equitable, so all people can receive good healthcare
However, those lofty goals require something else. The US must stop the foolish consistency of accepting poor health care, of paying too much for healthcare and believing great inventions automatically lead to great healthcare.
Perhaps the Emerson quote is too painful. An Albert Einstein quote may be better:
“The world we have created is a product of our thinking; it cannot be changed without changing our thinking.”
Many patients take too many medications which leads to unnecessary side effects, drug interactions and high cost. Yet physicians sometimes fight just to get patients to take necessary medications. Two examples:
- Provider: How many medications are you taking?
Patient: Including vitamins I think fifteen.
Provider: What? I only have two medications on my list.
Patient: I restarted all the medications I was taking before you hospitalized me plus all the new prescriptions from when I left the hospital and I added some vitamins.
- Patient: I stopped that medication because I thought it was causing my hair to fall out.
Provider: Your heart medication does not cause hair to fall out. And, even if it did you could die without it.
The medications you take should be reviewed at each visit so you and the provider consider which are truly needed and why. The provider who gives the patient a prescription is responsible to make sure there is no interaction or duplication with ongoing treatment. Yes, that means cardiologists and dentists also. A proactive patient should simply ask, “Is that new medication compatible with all of my existing medications and does it replace one of the existing medications?”
The highest risk situation for evaluation of medications happens when alternate providers become involved. Like a hospital doctor, an ER doctor or a specialist. They tend to add medications without fully considering the existing medications, often thinking the primary provider will resolve any drug issues — too bad when a fill-in primary provider steps into the mix.
An article in the Washington Post January 28, 2017 by Dr. Ranit Mishori advises the following questions for providers and patients to consider together about medications:
● What is this medication, and why am I taking it?
● Are there non-pharmacologic options to treat this condition?
● How long do I need to be on it?
● What are the benefits of continuing to take it?
● What are the possible harms of using that medication?
● Do any of my medications interact with any another?
● Can I lower the doses of any of these medications?
● Which of my medications are more likely to be nonbeneficial considering my age, my other medical conditions and my life expectancy?
● Are there any medications I can get off completely?
What an opportunity! A design for American Health Care that is badly needed, a blank slate, an open door, a blank check. So what blogger could resist the obvious invitation. First is the logo — I hope you like it. No more Medicare, Medicaid, Indian Health Service, Veterans Administration, Blue Cross or United Health.
Who gets AHC? Well, every US citizen.
How much does it cost? The annual out of pocket cost is limited to just $1000.
Is there any paper work? NO. No paperwork, no bills, no EOB, and no insurance claims.
What do you need for healthcare? Just your AHC card.
What is the price list?
- Office visits: $25
- ER visits $50
- Thirty day prescription $10
- Surgery $100
- Hospitalization $200
- Medical equipment $75
- Medical devices $75
- Ambulance $100
What is the national healthcare budget? It’s set by congress. Initially budget neutral at three trillion dollars (or whatever budget neutral at this time).
Where does the money come from? Taxes. Instead of insurance premiums it’s included in your taxes.
Do insurance companies go out of business? No. They process claims from healthcare providers, pharmacies, hospitals etc. The person getting healthcare does not need to be involved with all the paperwork.
What government agency runs the program? Medicare, under the AHC name. Providers bill the claims processor and AHC pays the processor.
Is great American health research affected? No. This is a health care system. Research is not health care and is outside the system.
Can people obtain health services, like for cosmetic surgery? Sure. Any services you want to purchase yourself outside AHC is fine. But, you still pay the same taxes. AHC does not pay for private care.
Are the States excluded? No. The States are responsible for managing AHC in their States. The Federal Government sets the standards for the country. The States make it happen.
Why would national costs be lower? Because America as a country negotiates prices and because cost would be capped by the congressional budget for care. The cost would be the same the first year. Waste is a major problem — with better management of a system waste can be addressed. Since about one half of US healthcare cost is consumed by waste there is lots of room for improvement.
What about poor people? The deductible would be lower than $1000 — but because the deductible is low to begin with not many would need this help.
Now would be a good time for the applause. Your humble blogger thanks you.
New drugs need to be compared to something. And, at a very minimum that something is the placebo, a sugar pill. When you see an advertisement claiming some product is 80% better, a reasonable person would ask, “better than what?”
A comparison group is hugely important in all of science. One of the biggest flaws in all research is not picking an appropriate control or comparison which makes the research worthless.
Erik Vance of the Washington Post reported on 12/2/16: “People susceptible to the placebo effect may be keeping us from getting new drugs.” The idea is many drugs can’t be proven to be better than a placebo. The FDA prevents those poor drug companies from marketing those drugs and making tons of money.
So here is the anti-scientific conclusion Mr. Vance reported: only use people that are unaffected by placebos in the control group. Sadly, that would exclude most conscious human beings. The control group would be strange people that could feel the tiny effects of the drug and ignore any psychological impact of taking a pill. And, voilà drug approved. A drug that most people would find no better than eating a sugar cube could be marketed at $800 per pill. And, advertisements could fool most practicing physicians into prescribing it.
This idea is totally nuts. The FDA would be within its authority to only allow the drug to be prescribed to that small group of strange people, not the whole world. Assuming the FDA was reasonably competent the idea and the huge profits should go down the drain.
Do you want to take a medicine that fails to work as well as a sugar pill? Probably not. Expect good science. Demand honest comparison with placebos.
Mylan is the company that makes EpiPen(R). It was one of those “inversion” companies that started in the US but is incorporated in the Netherlands to avoid taxes. Yet, the administrative offices are in Pennsylvanian in the US. It sells EpiPen(R) all over the world. In Australia a subsidiary called AlphaPharm sells the product. It’s a handy plastic syringe device that allows a person with a severe allergic reaction to grab the device and give an injection quickly.
It’s so handy that the company can sell the $1 device containing 3 cents of epinephrine for $697. That’s the price quoted by Costco. The same drug can be purchased online through Canadadrugs.com for $112.71 and through Kiwidrug.com for $122.51.
It’s not clear why other companies that package injectable drugs don’t supply prefilled syringes for this purpose — probably a very aggressive legal department or the acquisition of competing suppliers. The device is not something novel — it’s just a syringe — so it should never have received a patent.
Emergency Rooms and doctor’s offices don’t fool around with the EpiPen(R). They just purchase cheap vials of epinephrine and cheap syringes to give the dose for a few dollars. A patient could do this with a little training — it would save a lot of money. The cost of an EpiPen(R) so high the people who need the medication don’t buy it — so the few seconds a patient might take to draw up the medication in a syringe is better than no medication at all.
The Mylan company is a good example of why drug companies should be more regulated and have profits limited.
Mylan purchased the decades old EpiPen(R) rights from Merck in 2007. The consumer price in 2007 was about $60. With a major marketing effort (basically convincing patients, schools and healthcare facilities to always have the product available) the price is now about $700 accounting for about 50% of company profits. Teva Pharmaceuticals is working on a generic epinephrine injector but it probably will not be available until 2018. A startup company Windgap Medical has invented a device using powdered epinephrine but it may be many years, if ever, before the device arrives on the market — but, the device promises to extend the shelf life from 18 months (for the EpiPen) to several years.
Here are some good references about EpiPen(R) and Mylan
There is a perfectly acceptable (FDA approved) alternative to EpiPen in the form a competing product called Adrenaclick which costs only about $140 (according to GoodRx) for a two pack. This product does little advertising — certainly not as much as EpiPen. But, advertising does not equate to product superiority. To get the less expensive product:
- If the prescriber wrote a prescription in a generic format (Epinephrine auto-injector 0.3 mg (or 0.15 mg) for injection in case of allergic emergency) then a patient should simply call the pharmacy to obtain the lower cost alternative.
- If the prescriber wrote the prescription for the easy-to-remember brand name a patient should simply call the prescriber’s office and ask that a replacement prescription be sent to the pharmacy for the Adrenoclick in the same dose as for the EpiPen.
- The two devices are not exactly the same but the technique is very similar. The patient should read the directions very carefully to understand the small differences — read this when the medication arrives, not when an emergency is present. The pharmacist is required to provide personal instructions and answer questions about products they sell.
Although the Adrenoclick is less expensive it is still much too expensive. The manufacturing price is probably less than $10 each. Also, keep in mind the shelf life — liquid epinephrine only has a shelf life of 18 months — so even if the medication is not used there is a recurring cost for replacement.
Profits for insurance companies and drug companies are skyrocketing. Data from CMS (2013 and 2014) are tabulated below. The big finding is the cost of healthcare is going up much faster than inflation. And, the lack of regulation is allowing insurance companies and drug companies to gouge consumers in the US.
Between 2013 and 2014 prescription drugs increased by 9.8% and net insurance cost (i.e. profit) increased by 12.1%. If life expectancy was going up at the same rate it would be a good deal — but, that’s not happening.
Despite the complexity there are rather simple solutions.
- Limit insurance company profits (these are not healthcare providers — these are paper shufflers!).
- Inform prescribers which drugs are cost effective. That means expanding FDA oversight or starting a new agency less influenced by industry lobbying.
- Limit drug company profits to 7% like most other developed countries.
The table below lists the expenditures for various categories of health care. The figures are in millions of dollars. The total expenditures for US healthcare in 2014 were over 3 trillion dollars.
Spreadsheet: US Healthcare Costs 2014
The two most important questions cancer patients have when thinking about cancer drugs are 1) how much life do I gain? (survival) and 2) will I feel OK while I survive? (quality of life). The problem for drug makers is it is expensive and time consuming to answer those questions (to use endpoints of survival and quality of life).
Drug surrogates are measurements that show some effect of a cancer drug but are not absolutely related to those 2 primary questions. An example of a surrogate endpoint is “event-free survival”. This is a measure of time, like the time from when chemotherapy is given before something bad happens. Clearly important, but not the same as survival or quality of life.
The Federal Drug Administration (FDA) has a list of surrogate endpoints it will accept in order to approve cancer drugs. Drug companies have progressively moved research to those surrogate endpoints. The graph below is based on the data of Martel.
Many times this shortcut is helpful for patients but it is always helpful for drug makers. It has decreased the costs associated with marketing a drug. But, the cost of drugs has gone up at a faster rate than the prolongation of life the drugs impart. And, that survival may not be a benefit in quality of life. Now, virtually all new anticancer drugs exceed the $50,000 per quality life year many social researchers say is the amount our economy can afford. It means insurance can’t include those drugs otherwise premiums would be so high the average citizen could not afford the insurance. Here is a very disturbing graph from an article by Howard.
The vertical axis is that cost being paid for one year of life provided by a cancer drug. The horizontal axis is the year in which that drug was approved. Meaning it’s not a very good deal — the cost of one year of life gained by chemotherapy is rising and you likely can’t afford such drugs. The economics are really depressing and the situation is absolutely not sustainable. Rather than hoping a treatment will be invented we will be hoping the cost of that treatment is within reach.
There are signs the cancer drugs are overpriced, inflated by speculation and simple price gouging. To the extent such unethical practices exist they need to be rooted out and stopped. Given the past history of big pharma there is likely a lot that needs to be fixed.
The people in the United States pay more for drugs than any other country. And, they pay more to universities to do drug research than other countries. In a nutshell, it is due to a lack of regulation in the U.S.
Drug companies constantly complain regulations are hurting profits. Now it appears without enough regulation drug companies are hurting sick patients. As big pharma points out, it’s all legal. Basically, big pharma points a finger at the US Congress for not imposing restrictions common in the rest of the world. Sounds like a circular argument!
Between the two articles linked above and this author’s experience here are the reasons:
- Abuse of patent laws
- Driving small drug companies and generic companies out of business with frivolous but highly expensive suits.
- Release of a similar drug before a patent expires and manipulating doctors and patients to change to the new drug suggesting the similar drug is “MUCH” better (evergreening).
- Paying new drug makers to delay marketing their competitive drug (pay-to-delay). While at the same time asking for a fast track through the FDA approval process.
- Claiming a new drug is novel when by any reasonable standard it is not (asthma inhalers are a good example).
- Coupling devices to drugs to double the difficulty for competition (like insulin pumps).
- Failing to pay their fair share of basic drug research, funded by the US government instead.
- Happily doing “inversion” deals to move headquarters to other countries to evade US taxes — into the very countries that strongly regulate drug company profits.
- Voluntarily limiting profits in many countries due to the threat of regulation, but failing to offer the same deal to the US.
- Lobbying successfully to prevent Medicare (a larger health program than the NHS in the UK) from negotiating prices as the UK has done for many years.
- Blackmailing patients to pay for old drugs at exorbitant prices because generic companies are afraid to compete (pricing because-they-can, oral beclomethasone is one example).
- Preventing drugs from other countries to be sold across borders because of unfounded safety concerns (crocodile tears).
- Actively avoiding drug comparison research — forcing others to do that type of research after the drug is already marketed.
- Doing cancer drug research with endpoints (such as tumor size) rather than life expectancy. 85% of cancer drugs now have no connection to the most basic expectation of patients, to live longer.
- The WSJ review of 40 drugs administered in physicians offices: 39 cost less in the UK, 37 cost less in Norway and 28 cost less in Ontario Canada. The price gouging in the US certainly suggests racketeering.
- Drug company profits are 17% in the US and 7% elsewhere.
- Actively avoid cost-effectiveness research — prescribers don’t know whether a new drug is better or worse than old drugs except by what is told to them by marketing. (Unlike the UK drug system which is strongly linked to cost-effectiveness)
- Drug companies hide special deals with large customers so other customers have no idea of the low end of the price spectrum. The companies are so large that a lone US State can not leverage deals needed to lower prices like countries can.
Perhaps I have missed some other corrupt practice or unethical behavior, there are just so many. This mess needs to be cleaned up! At very least the US Congress needs to institute controls similar to other countries. Feel free to send this blog to your congressional representative — with a copy of your drug bills!
The Affordable Care Act (ACA) does have some teeth to reduce drug prices. The ACA formed a 15 member group intended to restrain the growth in cost of Medicare without reducing benefits. The Independent Payment Advisory Board (IPAB) has powers to improve efficiency and prevent Medicare from being victimized by business interests.
Mergers of large pharmaceutical companies have created near monopolies for setting prices — the new specialty drugs are a case in point. Also, by repeatedly suing smaller companies and generic manufacturers the competition is under siege if not defeated. The huge rise in drug prices have become a national disaster because individuals and Medicare just can’t afford the price gouging.
The IPAB has some power to help the problem — hopefully they will act to implement reference pricing of new drugs. It forces drugs with a similar effect to charge the same amount — old drugs and new. So if a new wonderful drug “Neximabob” is no better for arthritis than ibuprofen then the prices must be the same.
The Federal Drug Administration can not require drug-comparison research. This has been a wonderful marketing loophole for big pharma. It’s time consuming to do comparison research. By the time “Neximabob” is found to be a sham, billions of prescriptions have been filled,billions of dollars have been paid and Medicare has lost billions. But, you will be happy to know, the FDA says “Neximabob” is safe and effective.
The IBAP can act on expert opinion rather than wait for full comparison research. One option for drug companies is to do the comparison research (which they fight) or do more lobbying (more that the hundreds of millions they already spend).
Guess where the money for drug lobbying comes from? the very tax payers and Medicare recipients who pay for the medications in the first place — it’s just not fair. Next time you hear the IBAP is so so bad you will know who is speaking — it’s not consumers!
Note: According to the Congressional Research Service the IBAP is not currently active because the rise in Medicare cost in 2015 is not enough to trigger actions by the committee. There is some thought it may become active in 2017 unless repealed by Congress.