|Selected news articles which highlight important policy issues.||
News: Weekly Archives
News for the week of 09-28-2005
Report reignites debate over Medicare drug plan
The Veteran’s Health Administration imposes price controls on prescription drugs, both branded and generics, that are listed on the VA formulary. These prices are some of the lowest in the developed world. Any manufacturer that refuses to comply with VA pricing will find its product excluded from the formulary. In short, the VA gets lower prices than any HMO or pharmacy benefits manager (PBM) could bargain from industry. This aspect of the VA program has largely gone unremarked. Until now, that is: Families USA, a consumer health-care group, has released a report touting the price difference between the VA formulary and the Medicare drug discount card (which will be phased out in a few months).
The Families USA report observes that 49 of 50 widely prescribed drugs are cheaper for patients in the VA system than for patients using the Medicare card.
Families USA, a Washington healthcare advocacy group that has repeatedly sparred with the government on issues related to the new drug benefit, said it found that 49 of 50 common prescription drugs could be obtained at lower prices from the VA department than through the discount card. For example, it said the VA provides the cholesterol drug Lipitor for $498.84 a year, compared to $730.56 under the Medicare discount. …
The report, however, is deceptive because it ignores the fact that imposing the lowest possible prices inevitably leads to shortages and discourages innovation. One economist quoted in the Globe article hit on this exact point:
David Kreling, a professor of pharmacy marketing and economics at the University of Wisconsin-Madison, said Families USA's comparison with the VA's drug-purchasing strategy might not be valid.
"I'm not sure it's an appropriate comparison," said Kreling. "The VA gets some very, very special pricing because they're a special class of customers. They are very much below market rates. If such prices were extended to a large group of patients, that's not a sustainable proposition."
Comparing VA prices to the Medicare discount-card is an invalid exercise because it ignores the principles that make markets successful. Imposing price controls on the Medicare drug benefit for 43 million seniors would, indeed, slash pharmaceutical prices in the Medicare program to new lows. It would also slow biopharmaceutical innovation in the United States. And that is a cost none of us can afford to pay.
Vermont testing cap on Medicaid
When former Vermont Governor Howard Dean ran for President last year, he was quick to claim that he had solved Vermont’s health care problems through dramatic expansion of the state’s Medicaid program. In hindsight, he “solved” the problem by creating a fiscally-unsustainable program that now threatens to bring the state to its knees.
A growing inability to pay ever-increasing Medicaid costs has forced Vermont into an innovative deal with the federal government that critics fear could jeopardize a safety net dating back to the Great Society.
Gov. Jim Douglas says he is confident his Global Commitment to Health, in which the state has agreed to cap federal Medicaid funding over the next five years, will give state officials unprecedented flexibility to manage the health insurance program for the poor and begin to control costs. The program went into effect Saturday, with the start of the fiscal year.
There is irony in Vermont's pursuing a federal funding cap. Vermont, a solidly Democratic state, has transformed Medicaid into a program in which even middle-class families can get the insurance, especially for children. Now, roughly one in every four Vermonters is covered. But soaring medical inflation, particularly among the traditional Medicaid users, has forced the state to try fresh thinking, and other states are keeping watch.
In an attempt to get its own house in order, Vermont has traded additional federal Medicaid funding for broad flexibility to reform the program. Like other governors in Florida and South Carolina, Gov. Douglas recognizes that Medicaid’s safety-net won’t survive unless it become more a more market-friendly, fiscally responsible program.
US FDA to search insurer data for drug safety info
The inherent complexity of human biology means that when physicians prescribe medicines (both old and new) to patients' they are often conducting de facto mini-clinical trials. Not surprisingly, this means some of the most serious adverse events will only be discovered after, not before, FDA approval.
But the FDA can turn a liability into an asset by analyzing the tremendous amount of safety-related information than can be gleaned from insurance data routinely amassed from doctors’ offices and hospitals. By mining databases for rare drug side-effects, and tracking how often such events occur, the FDA and industry can disseminate safety warnings faster and more efficiently than the current drug safety system, which relies largely on voluntary reporting from over-worked physicians.
The U.S. Food and Drug Administration has contracted with UnitedHealth Group Inc. (UNH.N: Quote, Profile, Research) and three other organizations to access their prescription drug data so scientists can pinpoint possible side effects from marketed drugs sooner, the agency said on Monday.
UnitedHealth's unit Ingenix Inc., the Kaiser Foundation Research Institute, Vanderbilt University and privately held Harvard Pilgrim Health Care Inc. won contracts worth about $1.35 million each to provide the data, the FDA said.
Under the agreements, FDA scientists will be able to search each organization's database of medical claims and prescription drug use to try to spot potential side effects more quickly. The databases include information from patients enrolled in private insurance plans and state Medicaid programs for the poor.
"These kinds of methods, I think, provide a lot of opportunities. It's something we will probably be doing a lot more of," Scott Gottlieb, deputy FDA commissioner for medical and scientific affairs, said at a discussion hosted by the Food and Drug Law Institute.
More information on how information technology initiatives can improve patient safety can be found in a Spotlight article authored by Dr. Gottlieb in February 2005, FDA Drug Officers: Working in the Dark.
Medicare Drug Plan Stumps Seniors
Will the Medicare drug benefit be too complicated for seniors to navigate? Only time will tell, as insurers have just begun advertising their programs. But there is some early polling data available. According to a recently released USA Today/CNN/Gallup poll,
…37% [of seniors] say they understand [the Medicare drug benefit] at least somewhat well, but 61% don't. Those figures haven't changed much from polls in July and August. About one in four seniors, 24%, say they plan to join the program, compared with 54% who say they don't. Twenty-two percent have no opinion. The poll of 275 adults age 65 and older has a margin of error of +/- 7 percentage points. …
"The (poll) numbers suggest an abysmal program," says Robert Hayes of the Medicare Rights Center, an advocacy group. "This benefit was designed to make it impossible for consumers to understand it."
Administration officials call the numbers encouraging. Only this week did insurers start marketing specific drug plans, they note. "This is positive movement," says Kathleen Harrington of the Centers for Medicare and Medicaid Services. "We know that we have more work to do, but we have plans in place to do it."
It is not too much to say that the future of Medicare may hinge on how this experiment plays out. If private management of the Medicare drug benefit wins public praise and wide acceptance, reformers will be emboldened to push for additional—and much needed—market-based reforms. If it fails, or is perceived to have failed, critics will almost certainly call for transforming Medicare drug coverage into a VA-style entitlement, complete with price controls and restrictive formularies. At that point, a national Canadian-style health care system would be almost inevitable. And everyone knows it.
Program Offers Health Care for Some Part-Time Workers
Purchasing health insurance on the open market is often prohibitively expensive for part-time or free-lance employees who aren’t covered by employer-provided plans. To help at least some part-time workers find affordable health insurance, six large companies are enrolling their part-time employees in a national program with limited, but affordable health care coverage:
Dozens of part-time workers at six large companies have begun to sign up for low-cost, limited health benefits in a new national program for uninsured employees. The HR Policy Association, a nonprofit organization of senior personnel executives, said enrollment was under way at units of General Electric, I.B.M., Sears, Avon Products, the computer-storage company EMC and the auto supplier Federal-Mogul.
Six more large employers plan to start enrolling uninsured workers in the next few weeks, and five additional companies will join early next year, said Jeff McGuiness, the president of the association, whose members are personnel executives at 250 of the nation's largest employers.
Those eligible include independent contractors like Avon sales representatives, as well as temporary and seasonal employees, and their spouses and dependents.
Of course, this is just a small stop-gap measure that won’t help the millions of Americans that are uninsured, or underinsured, for significant periods of time. What Congress can do, however, is to help lower the cost of purchasing health insurance by creating tax-parity for insurance purchased by individuals for themselves and their families, as well as creating a national insurance market where consumers could shop for the best values.
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