In some cases, these explosive drug prices are the result of drugmakers’ patent schemes that financially distress consumers and limit their treatment options. That is why a recent proposal to exempt pharmaceutical companies from a key consumer protection would leave families across the country even more hostage to egregious pharmaceutical prices.
Pharmaceutical companies are pushing lawmakers to include a special interest exemption from the Inter Partes Review (IPR) process. The IPR is a quicker, more efficient, and less expensive way to challenge and weed out weak patents. Those weak patents lead to instances of “product hopping” or “evergreening,” which allow pharmaceutical companies to artificially prolong drug patents to avoid competition from more affordable generics.
Virtually all companies engage in these tactics, which involve taking existing drugs and making slight tweaks in dosage form, strength, or formulation, and marketing them as “new drugs” such as “extended release” or “once daily” pills. As drug companies continue to invest in these so called “life cycle management” strategies, exempting pharma from the IPR process would come at a huge cost to consumers.
Here’s why: Instead of the IPR process, pharma patent challenges would get tied up in costly litigation battles between brand-name and generic drug manufacturers that can easily span years. This would mean drugmakers would put their investment dollars toward patent litigation and patent extensions rather than R&D to bring new medical innovations to patients.
The impact of patent abuses is felt by consumers and employers first hand: higher costs for needed drugs, and fewer treatment choices due to the blocking of generic and biosimilar competition from coming to market. AHIP Interim CEO Dan Durham highlighted these harmful effects in a recent letter to leaders of the Senate and House Judiciary Committees, and he stressed that “the IPR holds great promise” for reducing anticompetitive pricing schemes. As the letter noted, we need to protect the IPR process to make sure consumers aren’t forced to bear excessively high drug prices because of weak patents that wouldn’t survive review under IPR.
Exorbitant prescription drug prices are already unsustainable and unaffordable. Allowing pharmaceutical manufacturers to avoid examination of weak patents under IPR will keep those soaring drug prices high – restricting patient access to the medications they need and making them even more difficult to afford.]]>
Repealing the HIT is an important step policymakers should take to alleviate a financial burden that impacts individuals, families, small businesses, and seniors with Medicare Advantage coverage. The $145 billion tax on health insurance will be largely passed on as higher premiums, according to the Congressional Budget Office. That means $170 in higher premiums for individuals purchasing coverage this year and an extra $530 paid by small businesses for each family covered.
Over the next 10 years, the HIT will have a big impact on premiums across all 50 states. In New York, premiums will soar by $9,942 for family coverage in the individual market, according to an Oliver Wyman study cited in a recent AHIP issue brief. Families in West Virginia will pay $9,221 in higher premiums for small-group market coverage, and premiums will rise by $4,182 for each senior enrolled in a Medicare Advantage plan in New Jersey.
Small employers will face a greater cost burden next year. Starting Jan.1, mid-size companies (those with 51 to 100 employers) could face significant premium increases and coverage disruptions for millions of workers and their families. A majority of small businesses could see premium increase of as much as 18 percent once the new regulatory requirements kick in next year, according to another recent AHIP issue brief. Letting states maintain their existing definitions of the small-group market is an important way to protect employers and workers from rising costs.
The time is now for Congress to take action to preserve access to affordable coverage by passing common-sense bipartisan solutions:
Enacting these bills would help protect the small business community and millions of consumers from unnecessary added health care costs.]]>
S. 1695, Roy Blunt, to provide appropriations for the Departments of Labor, Health and Human Services, and Education, and related agencies for the fiscal year ending September 30, 2016, and for other purposes
S. 1697, Charles Grassley-Heidi Heitkamp, to provide an exception from certain group health plan requirements to allow small businesses to use pre-tax dollars to assist employees in the purchase of policies in the individual health insurance market, and for other purposes
H.R. 2891, John Moolenaar, to amend the Internal Revenue Code of 1986 to inflation adjust the $5,000 limitation with respect to dependent care assistance programs and flexible spending arrangements
H.R. 2895, Mike Pompeo, to amend title XVIII of the Social Security Act to establish payment parity under the Medicare program for ambulatory cancer care services furnished in the hospital outpatient department and the physician office setting
H.R. 2897, Hank Johnson, to require the submission of a report to the Congress on parasitic disease among poor Americans
H.R. 2905, Brian Babin, to amend title I of the Patient Protection and Affordable Care Act to provide that only health plans made available by the Federal Government to Supreme Court Justices and staff are Exchange health plans
H.R. 2911, Charles Boustany-Mike Thompson, to provide an exception from certain group health plan requirements to allow small businesses to use pre-tax dollars to assist employees in the purchase of policies in the individual health insurance market, and for other purposes
H.R. 2921, Randy Forbes, to intensify stem cell research showing evidence of substantial clinical benefit to patients, and for other purposes
H.R. 2932, Ron Kind, to provide for the Secretary of Health and Human Services to establish grant programs to improve the health and positive youth development impacts of youth sports participation, and for other purposes
H.R. 2935, Sean Patrick Maloney, to provide for a five-year extension of the authority of the Secretary of Veterans Affairs to provide for the conduct of medical disability examinations by contract physicians
There are significant positive correlations between premiums and the level of hospital concentration in Missouri, Georgia, and Ohio. In the most heavily provider-consolidated areas of Georgia, premiums were 35 percent to 52 percent higher than in markets with less provider consolidation. That means consumers paid an extra $952 to $1,495 a year for insurance coverage just because they lived in areas of the state with little-to-no hospital competition.
People living in highly consolidated markets in Missouri paid premiums that were 31 percent to 46 percent higher than what people paid in regions with more hospital competitors. Meanwhile, Ohioans paid about 10 percent more for their health insurance coverage when living in a less competitive hospital market.
This data brief builds on an analysis of premiums in California, published in January in the Antitrust Health Care Chronicle. Author Scott Thompson, Ph.D., concluded that consumers living in regions with many hospital competitors paid premiums that were 8 percent lower than those Californians who lived in highly consolidated hospital markets.
The findings from Georgia, Missouri, Ohio, and California all reinforce that hospital consolidation that increases market power makes health care more expensive for consumers and employers. These analyses also highlight the important role payment and delivery reforms play in driving more efficient care delivery and better value for patients. The fact of the matter is lower-cost, high-quality health care can – and does – happen without resorting to provider consolidation.
In addition to exploring the impacts of provider consolidation, over the coming weeks we’ll be rolling out a series of publications that address other important issues and their effect on health care choice, quality, and innovation. So, stay tuned and check back for updates.]]>
AHIP Interim CEO Dan Durham was joined on the panel by David Cusano of Georgetown Health Policy Institute, Oliver Wyman’s Chris Carlson, and Cori Uccello of the American Academy of Actuaries. As Durham noted during the briefing, proposed premium increases have been largely modest for 2016. He cited a new Avalere analysis showing premiums for silver plans increased by an average of 5.8 percent in the eight states that were examined.
The panelists all emphasized the fact that proposed premiums vary greatly; and therefore, it’s crucial to consider the full picture when looking at changes in premiums. “Averages don’t tell the whole story,” Durham said. The full premium picture includes the various components that impact how much consumers pay for coverage, including who’s covered, taxes and regulations, and uncertainty in the market.
Any look at premiums also must take into account underlying health care costs, which the panelists all spotlighted as a major cost driver. They pointed to increased medical spending, soaring specialty drug prices, and the effects of provider consolidation as factors putting upward pressure on premiums.
Given subsidy stability following today’s King v. Burwell decision, the panelists agreed that the focus going forward must be on the underlying cost of care. They called for solutions to keep those costs in check, such as enhancing price transparency, repealing the health insurance tax, and moving to a value-based system.
In light of the complex set of factors known to drive up premiums – the covered population, the hospital consolidation trend, and soaring drug prices – health plans will continue working hard to implement programs and tools like high-value provider networks that put downward pressure on these rates and deliver affordability and value to consumers.]]>
S. 1661, Johnny Isakson-Christopher Coons, to amend title XXVII of the Public Health Service Act to preserve consumer and employer access to licensed independent insurance producers
S. 1667, Maria Cantwell, to amend the Internal Revenue Code of 1986 to clarify the special rules for accident and health plans of certain governmental entities, and for other purposes
H.R. 2868, Sam Johnson, to amend title I of the Employee Retirement Income Security Act of 1974 to improve access and choice for entrepreneurs with small businesses with respect to medical care for their employees
H.R. 2869, Kenny Marchant, to amend title XXVII of the Public Health Service Act to permit cooperative governing of public entity health benefits through local governments in secondary States
H.R. 2878, Lynn Jenkins, to provide for the extension of the enforcement instruction on supervision requirements for outpatient therapeutic services in critical access and small rural hospitals through 2015
H.R. 2881, Luke Messer, to amend the Internal Revenue Code of 1986 to modify the definition of applicable large employer for purposes of the employer mandate in the Patient Protection and Affordable Care Act]]>
S. 1648, Charles Grassley, to amend title XVIII of the Social Security Act to create a sustainable future for rural health care
S. 1650, Robert Menendez-Pat Roberts, to amend title XVIII of the Social Security Act to make changes to the Medicare home health face-to-face encounter requirements
S. 1653, Bill Cassidy, to amend the Patient Protection and Affordable Care Act to enhance access for independent agents and brokers to information regarding marketplace enrollment
S. 1654, Jack Reed, to prevent deaths occurring from drug overdoses
H.R. 2846, Lois Capps, to amend title XVIII of the Social Security Act to provide for coverage of cancer care planning and coordination under the Medicare program
H.R. 2850, Donna Edwards, to prevent deaths occurring from drug overdoses
H.R. 2866, Bonnie Watson Coleman, to amend title XXVII of the Public Health Service Act to provide for a special enrollment period for pregnant women, and for other purposes]]>
Although the FDA doesn’t consider cost when approving drugs, the former head of the agency said in a recent Q&A that the affordability of $300,000-a-year specialty drugs needs to be addressed.
“We need to find more efficient ways to develop new products and make them available in the marketplace, and we cannot just accept that any innovative new product automatically will carry a huge price tag,” Dr. Margaret Hamburg told the Journal of the American Medical Association.
Leading oncologists also are challenging exorbitant drug prices and making headlines this week by unveiling new tools aimed at driving value in cancer care. The American Society of Clinical Oncology Value in Cancer Care Task Force has a new formula that measures the overall value of cancer drugs based on efficacy, toxicity, and cost.
“Cancer patients are increasingly burdened by the rising costs of care,” task force chair Lowell E. Schnipper, M.D., said in a statement, The Hill reported. “Even well-insured patients are often unprepared for the high out-of-pocket cost of some cancer therapies. Too often, that leads to severe financial strain and even bankruptcy,” he said.
That is why understanding the true value of these high-priced specialty medications is key. Doctors at Memorial Sloan Kettering Cancer Center developed a new calculator that links the price of drugs to benefits and side effects. The Wall Street Journal reported that in many cases, the calculator’s price is lower than the drug’s market price. Dr. Peter Bach developed the tool and hopes it will motivate drugmakers, doctors, patients, and health plans to all discuss drug pricing, the WSJ noted.
Like these physician group initiatives, health plans are focused on delivering value to patients, especially those with serious health concerns, and enhancing transparency around the price and quality of the medical treatments they need to survive. We’re ready for drugmakers to join us in this endeavor.]]>
The recent focus on health plan consolidation has raised questions about how such activity would impact how much coverage costs. Here’s where it’s important to understand that insurance premiums track the underlying cost of medical care, like the cost of doctor’s visits, hospital stays, and prescription medications. So as the costs of medical care increase, so do premiums.
As the latest report from the Altarum Institute shows, hospital prices continue to grow year over year. One explanation for those increases in hospital prices is consolidation among hospitals and other providers.
Study after study has shown that provider consolidation leads to higher health care costs. First, there’s research by Scott Thompson, Ph.D., which found consumers living in regions of California with many hospital competitors have premiums that are 8 percent lower than those in regions with less hospital competition.
And according to research from UC Berkley, medical care costs more at hospital-owned physician groups than at physician-owned organizations. The study found the cost of care is 19.8 percent and 10.3 percent more expensive after a medical group gets acquired by a multihospital system or a local hospital, respectively. Similarly, a working paper published by the Institute for Policy Research Northwestern University, found prices increase by an average 14 percent after hospital acquisition, and that prices for cardiologists jump by 34 percent post-acquisition.
With such overwhelming evidence, it’s no surprise that experts agree provider consolidation is a driver of premiums and health care costs for consumers. For example, John Hopkins’ Dr. Marty Makary recently wrote about the dangers posed by hospital monopolies. He said the rapid spread of hospital mergers and acquisitions will lead to higher prices from decreased competition.
Martin Gaynor, director of the FTC’s Bureau of Economics, has warned that increased hospital concentration can cause price increases of 40 percent to 50 percent for individuals and families. The FTC’s chairwoman, Edith Ramirez, called increasing provider consolidation a worrisome trend.
And after diving into the mountain of evidence against provider consolidation, health economist Austin B. Frakt of Boston University’s School of Medicine and School of Public Health concluded that “hospital consolidation is neither sufficient nor necessary to lower costs and raise quality.”
As you can see, all signs point to the fact that increasing hospital and provider consolidation means increasing costs for individuals and families.]]>