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Selected news articles which highlight important policy issues.

News: Weekly Archives

News for the week of 01-11-2007

CBO Faults Medicare Drug Plan
Associated Press, 1-11-07

Editor's Notes:

The U.S. House of Representatives will vote today (January 12th) on a bill that requires the Secretary of the U.S. Department of Health and Human Services to negotiate drug prices for seniors in the Medicare drug benefit.

However, the bill, as it currently stands, does not authorize the Secretary to create a formulary of approved drugs that can be sold in the program. At the request of the bill's author, Rep. John Dingell, the CBO has analyzed the spending effects of the proposed legislation, and the CBO's analysis was made public on January 10th.

"The secretary would be unable to negotiate prices across the broad range of covered Part D drugs that are more favorable than those obtained by (the plans)under current law," Donald B. Marron, the CBO's acting director, told Dingell, D-Mich., in a letter made public Wednesday.

The measure requiring the secretary of the Health and Human Services Department to negotiate drug prices is a priority of new House Speaker Nancy Pelosi and is set to be taken up Friday by the House.

Current law prohibits the government from negotiating drug prices in Medicare Part D. Rather, insurers have that role. The insurers get a federal subsidy for administering a plan. Beneficiaries also pay for the benefit.

House Democrats say the government can use its leverage to strike a better deal than the insurers get. Dingell was not dissuaded by the letter, which quickly made its way around Capitol Hill.

Whether the bill will actually save money is, at this point, almost academic, given the political capital the Democrats have at stake in passing a bill mandating government price negotiations.

But what makes this particular struggle important is that this is merely an opening salvo in a long struggle over the future of American health care. On the one hand we have central government control, rationing and price controls; on the other, consumer driven health care and more decentralized decision making. The jury is still out on which vision will emerge triumphant in the next few years, but expect the struggle to intensify in short order.

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Experts Fault House Bill on Medicare Drug Prices; Comparison Called Invalid
Washington Post, 1-11-07

Editor's Notes:

One of the most frequent criticisms of the Medicare drug benefit is that it doesn't produce prices as low as that obtained by the Veteran's Administration through its drug formulary. This article explains why comparing the two programs is mixing "apples and oranges".

Democrats are fond of citing the Department of Veterans Affairs as evidence that Medicare officials could squeeze lower prices out of drugmakers if the government merely used its negotiating clout. But that comparison ignores important differences between the two systems, experts say.

Unlike Medicare, VA by law receives an automatic 24 percent discount from the average price that wholesalers pay. Its prices are also low because VA, which prescribes medications for 4.4 million veterans annually, has a relatively narrow formulary, or list of approved drugs. The agency secures big discounts from the manufacturers of a few drugs in each class by promising not to offer competing drugs. The Centers for Medicare and Medicaid Services (CMS) is prohibited by law from adopting such a list for the year-old Medicare drug benefit, in part because seniors enrolled in what is known as Part D want to have a wide range of drug choices.

Critics of the VA comparison note that some of VA's costs are buried in overhead. The department employs the doctors and nurses who write the prescriptions, and it operates the mostly mail-order pharmacies through which 76 percent of veterans' prescriptions are distributed. Medicare does not have that kind of infrastructure, and seniors have demonstrated a preference for retail pharmacies, CMS officials say.

CMS officials also note that about a quarter of the 3.8 million Medicare beneficiaries who get VA health-care benefits are also enrolled in Part D, in which the choice of drugs is broader.

"It's apples to oranges," former CMS administrator Mark B. McClellan said of the comparison. "The VA is a closed health-care system relying on mail order and a tighter formulary than Medicare beneficiaries have shown they prefer."

In the long run, if the government did institute a VA-style formulary for Medicare drugs, it would not only reduce choice for seniors, but it would significantly reduce competition and innovation in the prescription drug industry. In other words, it would hurt seniors today, and their children and grandchildren in future years.

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Limited Menu: Japan’s ‘Cancer Refugees’ Demand More Options – Patients Decry System That’s Frugal, Universal but Restricts Choices
Wall Street Journal, 1-11-07

Editor's Notes:

This Journal article offers a look at how centralized health care systems abroad treat cancer patients. Unsurprisingly, the options available to these patients are highly limited compared to the U.S.

Many countries are grappling with how to improve care while containing costs. In Japan, debate about the system has focused on cancer, by far the nation's leading killer. The Internet has helped break down patients' isolation from information about their disease and supplied data on foreign treatments. Cancer activists believe inadequate treatment on occasion cuts short the lives of Japanese. Some focus their ire on the very notion that mortality numbers can measure the value a health-care system delivers.

Hidesuke Hashimoto, who has been treated for lung cancer and leads a patients' group, says Japanese bureaucrats, unlike Americans, fail to recognize the value of pursuing all possible avenues of treatment when a person is seriously ill. "Our rights as individuals aren't being recognized," says Mr. Hashimoto, a 68-year-old retired math teacher. "We have the right to live." More government spending on health care, he suggests, would be a small price to pay for promoting democracy and the rights enshrined in Japan's U.S.-written constitution. Article 25 says all people are entitled to a minimum standard of "wholesome and cultured living."

Cancer accounted for 326,000 deaths among Japanese in 2005, or 30% of the total—more than heart attacks and strokes combined. The rate of cancer deaths per 100,000 population continues to rise slightly, in contrast to a slight decline in the U.S. Whether poor care has something to do with that is a matter of debate. Demographics and lifestyles also may play a role: Japan is a rapidly aging nation where nearly half of men smoke, while obesity and heart disease are relatively uncommon. Those factors tend to increase the proportion of deaths caused by cancer.

While it is true that Japan (like Europe) may have a higher life expectancy and lower infant mortality rate than the U.S., we also have to adjust rates for cultural and genetic variables (diet, accident rates, etc.) that may affect those rates, regardless of the effectiveness of the health care system. Plus, we should also note that the U.S.’s higher per-capita income also explains some measure of U.S. health care spending without, again, reflecting negatively on the quality of U.S. health care.

But if you want to measure how a system treats its most vulnerable patients—in this case, cancer victims—the U.S. is the best in the world.

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States Bridling at Insulin's Cost, Push for Generics
The New York Times, 1-11-07

Editor's Notes:

The Times reports that some states, concerned about rising treatment costs for diabetic Medicaid patients, are pushing the FDA to create a generic approval process for biologically produced medicines like insulin, which they hope will lower drug costs.

The drug cost state Medicaid programs $500 million in 2005. And in the face of an epidemic of diabetes, the governors are asking why there is no cheaper generic version of a drug that, in one form or another, has been used since the 1920s.

Rose McDaniels is wondering, too. She is a bakery worker in Mississippi, the state with the highest incidence of the disease. The $115 a month she spends on insulin consumes more than 10 percent of her income.

She sometimes cuts back her dosage to make it from payday to payday, though she knows the risks. "I’m trying to make it until the next available dollar I can spare," she said.

The issue involves questions of politics and profits, as well as science.

Insulin is caught in a commercial tug of war between brand-name drug companies that want to protect their franchises and generic drug makers that want to produce their own insulin products. Recently, each side has stepped up efforts to advance its side of the argument, and there are signs that Congress is ready to make life easier for generic drug companies.

People with diabetes in this country, as well as government and private insurers, spend a combined $3.3 billion a year on insulin. Analysts say the price of insulin might drop by 25 percent if generic versions became available.

Patent protection for insulin has long since passed, and the drug is so commonly used that safety questions would seem to be well established. For newer, more complex drugs, science and safety concerns should drive the debate, rather than cost concerns. The FDA has promised guidance on a potential "biogeneric" approval process, and the political push from governors and Congress will undoubtedly accelerate the issue over the course of the coming months.

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FDA Proposes New Measures to Strengthen Drug Safety Under PDUFA Reauthorized User Fee Program
FDA News, 1-11-07

Editor's Notes:

Late last week, the FDA announced the broad outlines of its recommendations to Congress for the reauthorization of the Prescription Drug User Fee Act (PDUFA). As expected, the FDA is requesting significant new resources to enhance postmarket drug surveillance and the ability to levy new fees from companies that ask the agency to review their DTC television spots. Additional details, including an overview of the PDUFA legislation since 1992, is available on the federal register.

The Food and Drug Administration (FDA) today proposed recommendations to Congress for the next reauthorization of the Prescription Drug User Fee program which, if adopted, would significantly broaden and upgrade the agency's drug safety program, increase resources for review of television drug advertising, and facilitate more efficient development of safe and effective new medications for the American public. To achieve these public health benefits, the agency proposes to recommend, as part of the reauthorization of the program, that annual user fee collections be increased to $392.8 million, an $87.4 million increase over the current base line.

The user fee program, which was first authorized by the Prescription Drug Use Fee Act (PDUFA) in November 1992, adds industry's funds to the agency's appropriations to help FDA's human drug review program achieve demanding performance goals. Over the years, the PDUFA programs, which have to be reauthorized by Congress every five years, have enabled the agency to dramatically reduce its review times for drugs and biological medications while increasing scientific consultations, clarifying issues involving drug development, and increasing oversight of postmarket safety.

"The proposed recommendations would support significant improvements in FDA's ability to monitor and respond to emerging drug safety issues, as well as continuing FDA's commitment to scientific improvements and streamlining the drug approval process," said HHS Secretary Mike Leavitt...

"In the last 14 years, three consecutive user fee programs—PDUFA I, II and III—have brought enormous public health gains to our and, indeed, the world's consumers, by helping FDA make increasingly complex medications available to patients faster than was ever possible before without sacrificing quality," said Andrew C. von Eschenbach, M.D., Commissioner of Food and Drugs. "Our proposed recommendations for PDUFA IV aim to top these accomplishments by achieving, above all, an impressive expansion and modernization of our drug safety system, and adding resources to enhance information technology initiatives."

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HHS Awards $133M in Flu Vaccine Pacts
Houston Chronicle, 1-17-07

Editor's Notes:

No one knows when—or even if—the H5N1 strain of bird flu will ever mutate sufficiently to become readily transmissible between humans, the precondition for a global pandemic. In the meantime, however, the U.S. government is prudently working with vaccine manufacturers to advance development of potential bird flu vaccines.

Health and Human Services Secretary Mike Leavitt on Wednesday said the department awarded contracts totaling $132.5 million to three vaccine makers for the advanced development of H5N1 bird flu vaccines.

HHS awarded five–year contracts to British drugmaker GlaxoSmithKline PLC for $63.3 million and to Novartis Vaccines and Diagnostics Inc. for $54.8 million.

The department also awarded $14.4 million to Iomai Corp. for 15 months to complete Phase 1 clinical trials of their vaccine, and the company may receive an additional $114 million if those are successful. Iomai is developing a skin patch that, when used in conjunction with an injectable vaccine, is designed to stimulate an immune response, according to the Gaithersburg, Md.–based company.

All the selected vaccines use an immune system booster called an adjuvant, which is a substance that can increase the body's response to the vaccine's active ingredient, according to HHS.

"In the event of an influenza pandemic, a vaccine that uses adjuvant could provide a way to extend a limited vaccine supply to more people," Leavitt said in a release.

Under the contracts, each company will build its capacity to produce within six months after the beginning of an avian flu pandemic either 150 million doses of an adjuvant–based vaccine or enough adjuvant for 150 million doses of a vaccine. The pacts also require each company to provide its adjuvant for U.S. government–sponsored, independent evaluation with influenza vaccines from other manufacturers.

For more information on the government's strategy in the event of a pandemic flu, go here.

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