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Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 09-25-2006

Millions of Seniors Facing Medicare 'Doughnut Hole'
Washington Post, 9-25-06

Editor's Notes:

While talk about the gap in Medicare Part D coverage, the infamous "doughnut hole" where seniors pay 100% of their drug costs out of pocket up to $3600, has kicked into high gear, it seems not to have become the political firestorm that critics expected.

Even with the doughnut hole, most beneficiaries are better off financially than they were before the drug benefit was created, when many seniors had to fend for themselves all year long.

[CMS Administrator Mark] McClellan said seniors in the coverage gap should continue to use their Medicare drug cards to get the prices negotiated by their plans. They also can apply for prescription-assistance programs run by many states and pharmaceutical companies, he said. And they can call Medicare at 800–633–4227 for information and help.

"There are lots of places to go to get lower–priced drugs, to get additional help with your drug costs," he said.

Mark Merritt, president of the Pharmaceutical Care Management Association, stressed that the majority of seniors will not reach the gap. Many who will could delay it by more than two months by switching to generic drugs and using mail–order pharmacies, he said.

"There's been a lot of hand–wringing about it and very little information about what people can do to stay out of it," said Merritt, whose organization represents companies that administer drug benefit programs for employers and health insurance carriers.

Another thing seniors can do is choose their drug plans more carefully for 2007 when the open enrollment period begins Nov. 15. Susan Knight, director of the Senior Health Insurance Program in Anne Arundel County, said she and other workers will begin visiting centers and programs for seniors next month, the start of what is likely to be another major marketing season for companies offering prescription coverage.

When the 2007 enrollment period for Part D begins in November, seniors who faced significant out of pocket costs this year can shop for plans that cover drugs with no lapse in coverage in return for somewhat higher premiums or co–pays. 2006 has been a trial period for the drug benefit, and everyone—seniors, Medicare administrators, and insurers, should be in a much better position to navigate the program next year.

Ideally, however, the next Congress should take up the issue of far reaching Medicare reform—by, for instance, offering seniors means—tested and risk–adjusted vouchers for the purchase of private health insurance. Sicker, poorer seniors could pick plans that covered prescription drugs and disease–management programs. Healthier and wealthier seniors could invest in HSAs or other consumer directed plans. Closing the doughnut hole for seniors is one thing—closing the doughnut hole in the federal government's entitlement programs will require much more bold thinking on Medicare than we have seen to date.

[permanent link]

Coalition Launches Campaign to Increase the FDA's Budget
The Boston Globe, 9-26-06

Editor's Notes:

One thing that almost all FDA watchers can agree on is that the FDA's responsibilities far outstrip its budget, and there is a growing call for additional agency funding.

A group called the Coalition for a Stronger FDA yesterday launched a campaign to boost the Food and Drug Administration's budget.

The group's lobbying effort includes biotechnology manufacturers, food producers, patient advocates, former FDA leaders, and three former secretaries of Health and Human Services. The FDA, with a fiscal year 2007 budget of $1.8 billion, regulates food, drugs, cosmetics, medical devices, veterinary, and other goods that represent about 25 cents of every dollar consumers spend in the United States.

But in a press conference yesterday, coalition members said the $1.5 billion in funding that Congress appropriated for the FDA lags far behind the $5.8 billion allocated to its sister health agency, the Centers for Disease Control and Prevention. Another agency, the National Institutes of Health, will receive $28.5 billion in fiscal year 2007.

The Coalition for a Stronger FDA's plans to lobby for more FDA funding were announced days after a scathing report by independent scientists said that chronic underfunding contributes to the agency's lax oversight of drug safety.

James Greenwood, a former US representative who is now chief executive of the Biotechnology Industry Organization, outlined the lobbying effort during a recent visit to Boston. As part of the campaign, Tommy G. Thompson, immediate past Health and Human Services secretary, and a biotechnology lobbyist soon will meet with the director of the federal Office of Management and Budget to discuss funding for the FDA's fiscal year 2008 budget. If the group can't obtain more money from the White House, its next step is to lobby Congress.

Whether the funding pitch is to made to members of Congress or directly to the White House, both "are going to be difficult, because dollars are in short supply," Thompson said.

Even if the FDA's budget was doubled, the investment would pay for itself if it sped life–saving drugs to market just one year earlier or averted a public health crisis, like the recent illnesses and at least one death linked to fresh spinach, said William Hubbard, a former FDA associate commissioner.

"We realize it's going to take a nice, sizeable increase," Thompson said, but added that the group hasn't settled on a figure.

While we are on the topic of the FDA's budget, Congress should also take a look at the agency’s portfolio of responsibilities and think seriously of moving several them to other federal agencies with relevant expertise. For instance, the Federal Trade Commission could take responsibility for direct–to–consumer advertising, freeing up more FDA resources for drug approval and postmarket surveillance, a classic case of addition by subtraction.

For more discussion of direct to consumer advertising and the FDA/FTC relationship see Public Policy Issues in Direct–to–Consumer Advertising of Prescription Drugs, by John E. Calfee, a senior fellow at the American Enterprise Institute.

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Health Care Costs Rise Twice as Much as Inflation
The New York Times, 9-27-06

Editor's Notes:

The average income of American workers—with a brief exception in the mid-1990s—has been largely stagnant for decades. One—perhaps the—reason is that health care costs have risen during that time much faster than the general inflation rate, and since most employees receive health insurance through their employers, increases in employee compensation have been funneled into health insurance subsidies rather than take–home income.

A widely followed national survey reported yesterday that the cost of employee health care coverage rose 7.7 percent this year, more than double the overall inflation rate and well ahead of the increase in the incomes of workers.

The 7.7 percent increase was the lowest since 1999. But the average cost to employees continued an upward trend, reaching $2,973 annually for family coverage out of a total cost of $11,481.

Since 2000, the cost of family coverage has risen 87 percent while consumer prices are up 18 percent and the pay of workers has increased 20 percent, the survey noted. That is without counting the cost of deductibles and other out–of–pocket payments, which have also been rising.

"The cost trend is moderating but nobody is celebrating," said Drew Altman, president of the Kaiser Family Foundation, which sponsored the survey with the Health Research and Educational Trust. "Businesses and workers are still being slammed year after year by rising health costs."

Employer–sponsored health insurance is a drag on wages–there is no doubt about it. Congress should help fix this problem by equalizing the tax treatment of individually–purchased health insurance, allowing individuals to buy insurance for themselves and their families with pre–tax earnings. Companies could then stop paying for health insurance, and funnel the savings back into wages or other business investments. Health care inflation and stagnant wages, are the by–products of third–party payment of heath care costs.

[permanent link]

New Sense of Caution at F.D.A.
The New York Times, 9-28-06

Editor's Notes:

A former FDA official once observed that the agency is a "slow moving target that bleeds profusely when hit," largely because Congressional oversight of the agency focuses relentlessly on why supposedly "bad" drugs like Vioxx get approved in the first place. Consequently, the agency's political incentives largely tilt towards slowing down new drug approvals. Disease categories such as AIDS and cancer are the notable exception because there are particularly well–organized and vocal patients' groups that can provide political cover for its regulatory decisions.

The F.D.A.'s own statistics, too, show signs of a more cautious stance—at least for new drugs that the agency does not consider major advances over ones already available.

So far, only 1 of 14 such drugs submitted to the agency in the 2005 fiscal year—the Sucampo Pharmaceuticals drug Amitiza for constipation—has won approval on the first try. That is the lowest approval rate in at least a decade.

The main category in which the F.D.A. does not show signs of a slowdown is in approval rates for new drugs that merit a priority review, like the cancer drugs Sutent from Pfizer and Sprycel from Bristol–Myers Squibb. Both were approved within a six-month review.

A reason for the seeming discrepancy between the perceptions of the agency's critics and the experience of the drug industry may be that, to some extent, they are looking at different things. The Institute of Medicine report, as well as bills in Congress aimed at reforming the F.D.A., focus mainly on lapses in monitoring drugs already on the market, not on the initial approval process.

Indeed, the Institute of Medicine report said the F.D.A. devoted too much of its resources to reviewing new drug applications and not enough to tracking post–approval safety. But the report also criticized the approval process for emphasizing speed at the expense of safety.

The problem with trying to sustain a meaningful distinction between drugs that constitute "major" versus "minor" improvement over existing treatments is that many valuable uses for a drug may not be discovered until it is on the market for several years. And, of course, seemingly small improvements in a drug's dosage or formulation can have a major affect on how well patients tolerate, and therefore continue to use, effective drug therapies.

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