• Healthcare Triage: Making Drugs Cheaper Without Stifling Innovation — Euro Style

    When anyone proposes reducing prescription drug prices — as Hillary Rodham Clinton and Bernie Sanders recently have — the most commonly heard criticism is that it would squelch innovation. But not all pharmaceutical innovation is valuable. Though some drugs are breakthroughs, some offer only marginal benefits at exorbitant cost.

    There is a way to keep prices low while encouraging drug companies to innovate: Look to Europe and elsewhere, where drug prices are a fraction of those in the United States. That’s the topic of this week’s Healthcare Triage.

    This episode was adapted from a piece Austin wrote for the Upshot. Links to references and further reading can be found there.


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  • Worried about the exchanges yet?

    The exchanges are hurting. Uwe Reinhardt, among others, thinks the individual mandate isn’t stiff enough and that we’re too wimpy about its enforcement. Adrianna, among others, thinks the premium subsidies may be big enough to keep healthy people in the market.

    I don’t know who’s right, but if we’re pinning our hopes on the premium subsidies, there’s trouble ahead. Through 2018, there’s a cap on the percentage of your income that you have to devote to premiums. As premiums go up, so too do the subsidies.

    Starting in 2019, however, the percentage that you’ll be asked to pay will rise if premium growth outpaces inflation. (Check out §36B(b)(3)(A) of the Internal Revenue Code.) Over time, you’ll be asked to contribute an ever-greater fraction of your income to health care. No longer will the government bear the costs of skyrocketing premiums. You will.

    As John McDonough has said, the lifting of the cap on premium payments is “the ACA’s political equivalent of the Medicare Part D ‘doughnut hole,’ something a future Congress will have to address if coverage is to remain affordable.”

    Anyone want to take bets on what a future Congress might do?

    UPDATE: The inimitable and all-knowing Loren Adler has pointed out to me that CBO has recently slashed projections of the number of enrollees in exchange plans. As a result, CBO doesn’t anticipate that overall spending on premium subsidies and cost-sharing subsidies will exceed 0.504% of GDP through 2025. That matters because, under the ACA, the cap on the percentage of income that families have to devote to health care is lifted only if spending exceeds 0.504% of GDP.

    The ACA’s caps on income-contributions are therefore likely to remain in place in 2019 and beyond. Or maybe not: these projections are necessarily uncertain, and CBO projected that the 0.504% trigger would be hit as recently as last year. Time will tell.


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  • Response to reviewer

    Via Academia Obscura (click to enlarge … a little):

    peer review


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  • #6things That Happened in Health Policy This Week

    6 Things That Happened in Health Policy This Week is produced by a mix of research assistants from the Healthcare Quality & Outcomes (HQO) Initiative at the Harvard T.H. Chan School of Public Health. In each edition we feature a variety of news articles, reports, and studies focused on U.S. health policy and health services research. This week’s edition includes contributions from Stephanie Caty (stephaniecaty), Yevgeniy Feyman (@YFeyman), Anthony Moccia (@Anthony_Moccia), and Kim Reimold (@KimReimold).

    KHN: Report For State Insurance Commissioners Offers Options To Improve Drug Access

    • A forthcoming study from the National Association of Insurance Commissioners (NAIC) proposes state-level reforms that can make prescription drugs more affordable and accessible to patients.
    • Proposed reforms include:
      • Limiting cost-sharing tiers for prescription drugs. Typically, when insurers offer drug coverage, they do so along multiple levels requiring different levels of cost-sharing for different drugs. Some states, like New York and Vermont have restricted the number of tiers.
      • Requiring copay-only plans. Cost-sharing can come either as a flat copay (some dollar amount per prescription) or as a coinsurance (a percentage of the drug’s cost). Coinsurance can lead to high prices for consumers.
      • Prohibiting mid-year formulary changes. The formulary is a list of covered drugs for the insurance plan. Changing this formulary mid-year can affect drug coverage for patients who might be caught unaware.
    • The goal of these proposals is to help inform NAIC’s model law, the Health Carrier Prescription Drug Benefit Management Model Act, which was last updated in 2003.

    Modern Healthcare: State Medicaid agencies could spend up to $5 million to cover mosquito repellent

    • Controversially, at least 6 state Medicaid agencies are planning on spending millions on mosquito repellent.
      • Officials from Texas projected that they could spend up to $12.6 million to support such efforts.
    • These projections surfaced after:
      • CMS agreed earlier this summer that states could cover repellents if prescribed by an authorized health professional.
      • A year of increasing repellent prices (Off Deep Woods spray is up 33 cents) and increasing repellent consumption (spent 12% more than last year).

    While Georges Benjamin, executive director of the American Public Health Association, likened repellents to a medication (especially among low-income populations), UNC infectious diseases fellow Dr. Matt Collins thinks that widespread prevention will be costly and ineffective.

    Vox: Big insurers have quit Obamacare. That means more shoppers only get one choice.

    • A new analysis from Vox estimates that there will be 687 counties with only one insurer in their Healthcare.gov marketplace in 2017, which is almost four times as many counties (182) as in 2016
    • Aetna and UnitedHealth have both left substantial parts, if not all of the market, and while there is some hope that smaller insurers will enter to replace them, this has not yet happened
    • While 1,152 out of the 2,601 counties using Healthcare.gov still have 3 or more insurers offering plans, this number had decreased substantially from 2016, when almost 70% of counties using Healthcare.gov had 3 or more insurer options
    • The analysis finds that competition in the markets varies significantly between states and within states; urban areas such as Detroit, Dallas and San Antonio, tend to have much greater competition while rural counties, including many in Arizona and Alabama, are more likely to have one or no insurers offering plans
    • Although there is the possibility for some fluctuation in the marketplaces in the next month before the insurers have to finalize coverage options, this is likely to be the least competitive year the marketplaces have seen

    Washington Post: How emergency rooms treat poorer kids differently

    • Based on a study released by the National Bureau of Economic Research using hospital billings in New Jersey from 2006-2010, children with public insurance (Medicaid or the Children’s Health Insurance Program) are less likely to be admitted to the hospital from the emergency department than their privately insured counterparts
    • For children presenting to the ED with flu like symptoms, a publicly insured child is 10% less likely to be admitted to the hospital; for other conditions such as asthma or appendicitis, publicly insured children are 5% less likely to be admitted
    • During peak flu season, when hospital beds are in high demand, publicly insured children are 20% less likely to be admitted, suggesting that hospitals may be selecting patients based on potential profitability
    • When publicly insured children are admitted to the hospital, they incur more expenses than privately insured children, likely due to the fact that they must be sicker to be admitted
    • However , outcomes for publicly- and privately-insured children do not differ, which suggests that children may be hospitalized unnecessarily

    The Hill: State officials under pressure to OK ObamaCare premium hikes

    • State insurance officials are feeling pressure to approve ObamaCare premium increases to ensure that insurers do not drop out of the market
      • In Tennessee three insurers in the state marketplace received approval for premium increases of 62%, 46% and 44%
      • Tennessee insurance commissioner, Julie Mix McPeak, acknowledged that her reasoning for approving premium increases was partly out of fear that insurers would leave the state marketplace
    • ObamaCare analyst Charles Gaba predicts that average approved premiums could increase to 27.6% over the next year
    • Most consumers will not feel the effect of increased premiums because of the ObamaCare subsidies that cap percent of income a person has to pay for premiums, but still about 15% of enrollees will have to pay full price
    • Senator John McCain, one of the most vocal senators on the topic, claims that Arizona residents will be left with “more expensive and less accessible health care”

    NYT: Mylan to Offer Some Patients Aid on Cost of EpiPens

    • EpiPen prices rise to $600 for a pack of 2 from around $100 in 2007, this price increase comes during a time with no therapeutically equivalent competitor available
    • In response to the controversy, Mylan said it would lower out-of-pocket costs to some consumers
      • Offering financial assistance with co-payments for patients with commercial insurance and expand the number of uninsured patients eligible for free EpiPens
    • Breakdown of costs based on insurance coverage:
      • Commercially Insured
        • Largest group of EpiPen Users
        • Responsible for co-payments
        • Mylan is offering a coupon up to 300$ that can be obtained from prescribing physician or the EpiPen website
        • Depending upon a patients co-pay the most they will pay is half price
      • Uninsured Families
        • Accounting for only about 5 % of EpiPen users
        • Pay full price
        • Mylan will give uninsured patients with income below 400% the federal poverty level for free
        • Patients must apply for this every year and provide financial information and documents
      • Medicare or Medicaid families
        • These patients will most likely see no difference
        • Drug companies cannot provide assistance to this population because it is considered a kickback
        • Only foreseen issue is patients who enter the doughnut hole
        • Spokeswoman for Mylan claims said the “90% of Medicare and Medicaid patients have coverage for EpiPen”
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  • This is why research is important, teen pregnancy edition

    Most people, in general, would like to reduce the incidence of teen pregnancy. Yes, it’s at an all-time low here in the US, but that doesn’t mean there isn’t room for improvement, here and abroad.

    A number of people, and programs, have decided that one way to combat teen pregnancy is to teach teens how hard it is to raise a baby. They sometimes force kids to “couple up” in school and pretend they have a child. Sometimes, they even give them a doll – one that cries, wakes up at night, etc. – to bring home the point.

    I’ve often rolled my eyes at such things, but never said anything. Until now. From the Lancet, “Efficacy of infant simulator programmes to prevent teenage pregnancy: a school-based cluster randomised controlled trial in Western Australia“:

    Background: Infant simulator-based programmes, which aim to prevent teenage pregnancy, are used in high-income as well as low-income and middle-income countries but, despite growing popularity, no published evidence exists of their long-term effect. The aim of this trial was to investigate the effect of such a programme, the Virtual Infant Parenting (VIP) programme, on pregnancy outcomes of birth and induced abortion in Australia.

    Methods: In this school-based pragmatic cluster randomised controlled trial, eligible schools in Perth, Western Australia, were enrolled and randomised 1:1 to the intervention and control groups. Randomisation using a table of random numbers without blocking, stratification, or matching was done by a researcher who was masked to the identity of the schools. Between 2003 and 2006, the VIP programme was administered to girls aged 13–15 years in the intervention schools, while girls of the same age in the control schools received the standard health education curriculum. Participants were followed until they reached 20 years of age via data linkage to hospital medical and abortion clinic records. The primary endpoint was the occurrence of pregnancy during the teenage years. Binomial and Cox proportional hazards regression was used to test for differences in pregnancy rates between study groups.

    This was a school-based randomized controlled trial of an infant simulator-based program to prevent teen pregnancy in girls age 13-15 years from 2003 through 2006. Fifty-seven schools participated, and more than 2800 girls were followed until they were 20. The outcome of interest was pregnancy during the teenage years.

    And… more girls in the intervention group got pregnant. In the intervention group, 8% of the girls had at least one birth, compared to 4% of those in the control group. Even after adjusting for potential confounders, the intervention group had a more-than one-third higher relative risk of pregnancy in the teenage years.

    So not only are those baby-doll-simulators likely a waste of time and money, they may be leading to an increase in teenage pregnancy.

    This is why research is important. So is what we do with it. I know if they try this kind of program with one of my kids, I’m going to open my mouth.


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  • The EpiPen, a Case Study in Health System Dysfunction

    The following originally appeared on The Upshot (copyright 2016, The New York Times Company).

    Three times in the last two weeks, people — a patient, a colleague and my wife — told me stories about how out of control the price of EpiPens were. Monday, my New York Times colleagues recounted in detail how expensive the devices have become in recent years. All tell the tale of how much even basic health care can cost in the United States.

    But by digging a bit further, the story of EpiPens can also explain so much of what’s wrong with our health care system.

    When people think of allergies to drugs, food or a bee sting, they often think of a rash. And in fact that’s how many allergic reactions develop and proceed. Most can be treated with diphenhydramine (Benadryl) and careful observation. But some are more serious. Between 1 and 2 percent of peoplecan develop what’s known as anaphylaxis, when the airways you need to breathe swell and close.

    Luckily, there’s a simple treatment for such reactions. Epinephrine — or adrenaline — is a hormone naturally produced by the adrenal glands. It’s part of your “fight or flight” response, and it causes your heart to beat faster, your blood vessels to constrict, your pupils to dilate and — most important here — your airways to open.

    Epinephrine is very, very cheap. Even in the developing world, it costs less than a dollar per milliliter, and there’s less than a third of that in an EpiPen.

    But to save a life, epinephrine must be delivered quickly, and in the proper amounts. People suffering severe allergic reactions often can’t do it themselves. Drawing the drug into a syringe and then administering it to someone else requires training and precision that most people lack.

    For that, there is the EpiPen.

    What makes this auto-injection device so special is not the drug, but the ease with which it automatically administers the correct dose without delay. The instructions are right on the side, and even if you don’t read them, it’s pretty easy to figure out. Pull off the safety cap, put the tip against the thigh, and push. Boom. Epinephrine delivered.

    The EpiPen isn’t new; it has been in use since 1977. Research and development costs were recouped long ago. Nine years ago, it was bought by the pharmaceutical company Mylan, which then began to sell the device. When Mylan bought it, EpiPens cost about $57 each.

    Few competitors existed, and for various reasons, that has remained the case. The device actually worked and saved lives. People needed it. Mylan raised the price. It also began to raise awareness.

    Unfortunately, epinephrine is inherently unstable. Research shows that itdegrades pretty quickly over time, and it’s recommended that EpiPens be replaced every year. When my friends ask me if they can take an expired over-the-counter pain medication like acetaminophen or ibuprofen, I shrug and nod. If they don’t get a full dose, it’s usually not a big deal. But epinephrine is no joke. People in anaphylaxis need a full dose every time. They therefore need to replace all their EpiPens every year, again and again.

    Kids need them in many places. They need them at home. They need them at school. They need them at camp. They may even want to stash one at Grandma’s house. So people often need to buy quite a few.

    More revenue for Mylan. And it raised the price.

    Then in 2010, federal guidelines changed to recommend that two EpiPens be sold in a package instead of one. Studies showed that about 10 percent of children who received epinephrine from an EpiPen needed more than one dose. Better to be safe than sorry. Additionally, the Food and Drug Administration changed its recommendations to allow for the prescription of EpiPens for prevention for at-risk patients, not just for those with confirmed allergies. Mylan stopped selling individual EpiPens and began to sell only twin-packs.

    It also raised the price.

    In 2013, the government went further. It passed a law that gave funding preferences for asthma treatment grants to states that maintained an emergency supply of EpiPens. As the near sole supplier of the devices, Mylan stood to make even more money.

    That year, Mylan raised the price again.

    Of course, competition would bring the price down. But it’s very hard to bring such a device to market. In 2012, the Adrenaclick and Twinject were discontinued. In 2013, Sanofi began to sell Auvi-Q devices, which even gave audio instructions to walk people though their use. Unfortunately, they were found to give potentially improper doses, and were pulled from the shelves about a year ago.

    Teva had hoped to offer a generic version of the EpiPen, but concerns from the F.D.A. sent it back to the drawing board until at least next year.

    Adamis hoped to offer prefilled syringes, which would still be harder to use than EpiPens. But it was told by the F.D.A. that much more data would be needed before such a product could be sold.

    These setbacks, all in the last year, have once again left Mylan with a veritable run of the market. It raised the price of EpiPens again. As of this May, they cost more than $600 a pack. Since 2004, after adjusting for inflation, the price of EpiPens has risen more than 450 percent.

    An alternative still exists. The Adrenaclick, while still not cheap, is back andless expensive than the EpiPen. Some think it’s harder to use, though. It’snot on the accepted list for many health insurance plans. More important, few physicians think of it. Because of that, they write prescriptions for EpiPens. Since the Adrenaclick is not a generic version of the EpiPen,pharmacists can’t substitute one for the other. A prescription for an EpiPen must be filled with an EpiPen, regardless of what consumers might want.

    Some people argue that we could still just use syringes and epinephrine for far less money. Sure, they would expire every few months. Sure, they would be harder to use and likelier to break. Sure, they would require training, be hard for the uninitiated to use in an emergency and be more likely to be administered with an incorrect dose. Nonetheless, you could argue that they’re an alternative when the “Cadillac” EpiPens are financially out of reach.

    But those are unsatisfactory arguments. Epinephrine isn’t an elective medication. It doesn’t last, so people need to purchase the drug repeatedly. There’s little competition, but there are huge hurdles to enter the market, so a company can raise the price again and again with little pushback. The government encourages the product’s use, but makes no effort to control its cost. Insurance coverage shields some from the expense, allowing higher prices, but leaves those most at-risk most exposed to extreme out-of-pocket outlays. The poor are the most likely to consider going without because they can’t afford it.

    EpiPens are a perfect example of a health care nightmare. They’re also just a typical example of the dysfunction of the American health care system.


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  • AcademyHealth: Experience matters when it comes to outcomes and safety

    I spend a fair amount of time talking about how social determinants of health come into play, with respect to health care outcomes. I also talk a lot about things that don’t work, and therefore constitute waste in that they don’t affect outcomes positively, and cost money. But there are some aspects of health care (many, in fact) that do matter, and when research points that out, it’s worth highlighting. In a recent BMJ paper, a number of researchers investigated how surgeon specialization was associated with operative mortality in the United States.

    Go read about that paper, and my thoughts on it, in my latest post over at the AcademyHealth blog!


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  • All high drug prices aren’t the same

    It’s been gratifying to watch the world suddenly coalesce around the idea that EpiPens are ridiculously expensive. The next step is, of course, figuring out what to do about it. Unfortunately, a rallying cry I hear too often is that “drug prices are too high”.

    Some drugs likely should be expensive. Or, at least, the pharmaceutical companies that make them should be rewarded.

    When Sovaldi came out at what many considered a very high price tag, you didn’t see much rage from this blog. You didn’t see it from me, at least. A drug which cures Hepatitis C? That’s a huge deal, real innovation, and it’s arguably cheaper than the alternative. So… tens of thousands of dollars didn’t make me want to burn the house down.

    On the other hand, the whole Daraprim thing was maddening. As are EpiPens. There’s no innovation there from Turing or Mylan. They’re not doing anything new. They’re just jacking up the price because our system allows it.

    So what do we do? We’ve been arguing about this here at TIE almost from its inception. Here’s a piece from me in 2009. And 2010. Another from 2012. Austin had some thoughts at the Upshot last year. Today, Matthew Herper has one over at Forbes. Here’s the best part:

    We shouldn’t pay for advertising for EpiPen or for Martin Shkreli’s desire to start a new company. We should pay for real innovation. As with any other financial decision, America needs a real discussion of what we want from pharma, and how much we’re willing to pay for it.

    That last sentence there should be the theme of all health care reform. It’s all tradeoffs, people.


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  • Thinking straight about orphan drugs, Part 2.

    As I said in my first post in this series, the Orphan Drug Act of 1983 sure seems like it worked. Over the past few decades, and in the last five years in particular, more and more orphan drugs have come on-line. Today, they account for one in three drugs approved for sale in the United States.

    In general, the growing numbers of orphan drugs is taken to mean that “orphan drug legislation remains a critical part of the drug development process.” The assumption is natural. After all, we all know that the patent system will yield too few orphan drugs because of the restricted market for those drugs, right? That’s the premise behind the adoption of the Orphan Drug Act, and it’s one that holds sway today.

    Notice, though, the premise is flawed. What drives drug manufacturers is the total amount of money they anticipate earning on a given drug. Total revenues, in turn, are the product of the price of the drug and the number of units sold.

    For orphan drugs, manufacturers won’t be able to move that many units. But what if they can charge up the wazoo for the units they do sell? Due to a combination of market forces and legal obstacles, payers (public and private) find it nearly impossible to resist paying for efficacious drugs, however much they cost. The inelasticity of the market gives manufacturers extraordinary pricing power during periods of monopoly protection.

    That pricing power helps explain why the median price of an orphan drug is a jaw-dropping $100,000 per year. For a market of 50,000 patients—well under the 200,000 cap for orphan designation—total revenue for a median-priced drug would be $5 billion per year. Yes, you read that right: that’s billion with a b.

    Not all orphan drugs will have a market of that size. Nor will all orphan drugs command a $100,000 price tag. But lots of them will—and lots of them do. For those drugs, a brief period of market exclusivity would be more than enough to cover the costs of drug development, even under dubious and inflated estimates of those costs. Seven years of market exclusivity is just gilding the lily.

    So you can’t tell me that we’d have no orphan drugs without the Orphan Drug Act. We might not have as many as we do today: as Aaron Kesselheim concluded in a 2011 review, “[t]he most methodologically rigorous studies of the Orphan Drug Act indicate that there was a response to [its] incentives.” But we’d still have some: as Kesselheim notes, “other market forces, such as anticipated revenue, may also have affected orphan drug development.”

    To measure the effects of the Orphan Drug Act, you’d want to know how many orphan drugs would have been developed in its absence. Once you figured that out—and we aren’t close to doing that—you’d need to weigh the benefits of those new drugs against the social costs associated with their development. I’ll turn to that question in the next part in the series.


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  • How to keep up

    Here’s what I told the USC Annenberg School of Journalism, and its newsletter included it today:

    Politico Pulse is very useful for the inside-the-beltway perspective. Pulse Check, Politico’s health policy podcast is also very good. It’s my favorite podcast in this area.

    Modern Healthcare’s A.M. is a roundup of stories from that source only. I think Modern Healthcare does an excellent job in general. It’s a rare day I don’t read at least one of their pieces in full.

    RealClearHealth’s Morning Scan catches things from all sources, but just a few, so it’s a reasonable load.

    Institute for Clinical and Economic Review’s (ICER’s) Morning View has a comparative- and cost-effectiveness angle, and largely focuses on prescription drugs. It also includes a few other, high profile stories.

    The New York Times’ Morning Briefing for the rest of the news.

    I also keep up on Twitter, which is self-curated. To get started, consider Ezra Klein’s Twitter health care list.


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