Monthly Archives: July 2015

Footing the Bill

By Marcus J. Hopkins, Blogger

As a society we need a way of determining what is a reasonable price at the time of introduction of a new drug,” said Stephen Schondelmeyer, a University of Minnesota professor who specializes in pharmaceutical economics. “We have expanded coverage, but we haven’t done anything to control costs on the pricing side.” (Alonso-Zaldivar, 2015)

Truer words are rarely spoken in the world of healthcare coverage. In a time of unprecedented increases in “covered” Americans, the promised “savings” haven’t really materialized, either for payers or for consumers. Rather, the spending on specialty medications has increased so exponentially that both private and public payers are finding themselves faced with difficult choices, when it comes to what coverage can be offered for the amount that consumers pay.

For private insurers, the answers are simple: increase premiums, expand and strengthen prior authorization criteria to restrict access, and place the drugs in the highest available tiers with the highest drug co-pays. For public insurance programs, such as Medicaid, Medicare, and the AIDS Drug Assistance Program (ADAP), the solution is not so clear cut.

For Medicare, specifically, Federal law currently prohibits the program from negotiating with drug manufacturers for lower prices. As recently as February 2015, the Obama Administration requested authority to negotiate prices for Medicare, in large part because of the price of high-cost specialty drugs, such as Sovaldi (Gilead), Olysio (Janssen), Harvoni (Gilead), and Viekira Pak (AbbVie) (Morgan, 2015).

LOGO: Centers for Medicare & Medicaid Services

Photo Credit: Medicare Learning Network

Both Medicaid and Ryan White programs can negotiate for drug prices, but even still, those negotiations are largely kept secret, and the true cost is rarely shared with the public. For that reason, we rely on two measures to express the cost of drugs on the American market: the Wholesale Acquisition Cost (WAC) and the Average Wholesale Price (AWP). Even with those standards in place, nobody actually pays those costs, due to various rebates, negotiations, and other pricing schemes, all of which is available only if you all but threaten them with the comfort of a nice set of thumbscrews.

In fact, getting actual pricing information based on what payers actually pay, often involves Freedom of Information Act (FOIA) requests from government agencies, and threats of lawsuits to get the same information from private insurers. Much of the problem is that no one really wants to show their hand, especially when it comes to the prices that they pay for specialty drugs, because doing so might disrupt some balance of the space-time continuum, creating a paradox, and the entire healthcare system would collapse.

…or maybe, something not quite so dramatic.

It’s likely because openly stating how much everyone is paying for drugs would result in one of two outcomes:

  • Each payer would be able to compare and contrast what they were paying for various drugs, and would thereby be able start a “race to the bottom,” creating a low-bidding war. In addition, the public would be able to see how well payers were bargaining in their own best interests, rather than consumers. In this case, both insurers and drug companies would be on the losing end of the battle, and it behooves them to keep information about payment schemes private.
  • It would be revealed to both the public and the payers exactly how much of the cost drug companies are willing to eat (through rebates and other scenes) just to get their drugs on the market, thus revealing that the whole pricing model companies use to determine drug prices is a farce. In this case, drug companies would be on the losing end, primarily, because they would finally have to publicly justify in quantifiable terms the costs of their medications.

In truth, either scenario could be nothing but a net “win” for consumers. So long as the American healthcare system continues to subsist in an insurance-based market, the only real weapon consumers have against being price gouged is open, honest, and accurate pricing information – a clear explanation of how drug prices are decided, a clear explanation of what each payer is actually paying, and how much drug companies are willing to forego in order to sell more of their drugs.

Without this information being made public, how can there really be a “free market?” How can consumers make a truly informed choice if this information is kept secret? That really is the crux to dismantling the insurance scam – making everyone reveal what they’re actually paying for drugs and services.

What Dr. Schondelmeyer asserted in the opening quote of this piece is absolutely correct: the Affordable Care Act has done a great job of forcing getting people into the health insurance market, but has done very little to deliver the “savings” it promised. We’re still paying more than virtually every other economic superpower for our healthcare, and still achieving subpar results.

Now, private insurers are arguing that the cost of covering these people has become so burdensome [to their profits and bottom lines] that they need to increase premiums by up to 40%. We have effectively handed over clients to private entities without ensuring that people will be able to pay their prices, leaving the “Affordable” part of the law’s title hanging in the wind.

For how much longer can our insurance-based healthcare system continue to operate without imploding upon itself? For how much longer will consumers continue to allow drug and service pricing scams to continue, before determining that there is a better way? Sadly, I don’t think there’s enough interest on the part of Americans to do anything about it…until they’re forced to foot the bill, themselves.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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“State” Means Something for the ACA, Nothing for ADAP

By: Marcus J. Hopkins, Blogger

June 25th, 2015, became yet another milestone for the landmark Obama Administration legislation, the Affordable Care Act (ACA), when the Supreme Court ruled 6-3 in favor of maintaining federal tax credits for citizens in all states, regardless of whether or not the state, itself, had established its own exchange (King v. Burwell).

To put that decision into perspective, to date, there have been only 16 states (and the District of Columbia) that have set up their own health insurance marketplaces (de Vogue & Diamond, 2015). It is significant because residents in 34 states whose marketplaces are run by the federal government risked losing key tax subsidies that would allow for lower- and middle-income families to afford health insurance – a key measure whose overturning threatened to derail, entirely, the ACA, leaving millions of Americans stuck with the bill for their healthcare, entirely out of pocket.

Photo of the U.S. Supreme Court with the words,
Photo credit: Planned Parenthood

The sticking point in question was a four-word phrase: “…established by the State.”

The plaintiffs’ lawyers unsuccessfully argued that the phrase clearly barred the federal government from “…doling out subsidies” in the 34 states who had not established their own healthcare marketplaces. Their argument suggested that Congress specifically wrote the phrase into the law in an effort to encourage individual states to establish their own exchanges – in effect penalizing citizens living in states whose legislatures failed to act on establishing a marketplace – and that the IRS attempted to “fix” the law when that effort failed on a large scale.

What bothers me about this line of thinking is that the term “State” has consistently, throughout history, been used to reference national governments as a whole. By those wishing to convey disdain, the establishment and enforcement of federal regulations (upon any industry) are consistently blamed for creating a “Nanny State;” government leaders are referred to as “Head(s) of State.” As a noun, a state is “a nation or territory considered as an organized political community under one government” (State, n.d.).

In terms of state vs. federal law, with very rare exception, federal laws trump state laws; attempts to buck federal authority are rarely upheld in court. We are a united nation; “…one nation, indivisible, with Liberty and Justice, for all,” and not just “…those in states who created their own marketplaces.” Simply because we have, since our nation’s inception, accepted that states maintain some level of autonomy does not mean that we are not one single “State.”

And yet, without fail, certain political leaders who hoped for a different verdict from the court would like to divide us, rather than to unite. They awaited with glee a ruling that would create two classes of citizens – those whose states function for their best interests, and those whose states function for the best interests of the few; of the ideologues.

What frustrates me about this victory, though, is how its lesson is not applied to the AIDS Drug Assistance Programs (ADAPs). Ryan White, Part B, is a singular piece of legislation that was established to help those who could not afford HIV treatments across the country. Yet, we effectively have 59 completely different ADAP programs, with different funding, different qualifications, different regulations, different formularies…it’s a landscape that has not, for much of its existence, proven cost effective, equitable to its clients, or the quality or quantity of care that is provided.

I suspect that I’m largely in the minority on this issue as, in the effort of full disclosure, I have and always will be in favor of a Universal Healthcare model. If researching HCV coverage has taught me nothing else, at least I have a clearer picture of how ADAP programs, in addition to creating an opportunity for people to receive treatment they might not otherwise be able to afford, create barriers to mobility.

Mobility barriers are pernicious things, as they may manifest in many forms, but the primary concern I have is the inability to relocate to a place that may hold better economic, social, or career prospects, because relocating is hampered by having to meet much a much different set of criteria in order to qualify for your new state’s ADAP program. One of the benefits of doing away with the 59-ADAPs model in favor of a national ADAP program would be the elimination of relocation-oriented application and qualification standards – the only thing that would need updated is your physical address and source/amount of income.

Literally every ADAP qualification criteria is based upon a single measurement of income – the Federal Poverty Limit (FPL) – a measure that is assessed nationwide, regardless of an applicant’s [lower case “s-“] state of residence. And yet, despite this being a national measurement, each state’s income requirements are different: 400% of the FPL; 250% of the FPL; 150% of the FPL – each ADAP program has its own special set of requirements that applicants must meet in order to receive assistance.

What we have is a [capital “S-“] State legislated and designed program that should be equitably meted out to HIV-positive American citizens, but because it is implemented at the [lower-case “s-“] state level, citizens with virtually identical levels of income in two different states are afforded different treatment. A person in one state may qualify, where the other may not in the next state over.

Beyond basic qualification issues exists another inequitable access issue – while an ADAP client in Massachusetts has access to Sovaldi (Gilead), Harvoni (Gilead), Olysio (Janssen), and Viekira Pak (AbbVie), were that same client to relocate, for whatever reason, to West Virginia, they would lose coverage for those medications, and instead be reverted to less easily tolerated and less effective interferon-based treatments; should that client relocate to Tennessee, they would have no access to any HCV treatment, whatsoever.

It far past the point where we need to admit that our patchwork approach to Ryan White, Part B, is failing the very people it was created to assist. We do ourselves no favors by insisting that this 59-ADAP model is serving everyone who needs the program with any level of equity; indeed, we do harm by insisting that this model be not only maintain, but that it become entrenched. If we want to truly ensure that all Americans who need treatment for HIV (and any HCV co-infection), we should consider looking at the creation of a universal ADAP model, that would serve everyone equally.

While ADAP and HIV advocates are spending June 25th, 2015, exhaling a collective sigh of relief that the tax subsidies have been preserved in this 6-3 ruling, having successfully argued their point that ALL Americans should have equal access to healthcare services, they’re largely ignoring the very same people whom they are tasked (or have tasked themselves) to represent.

References:

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Disclaimer: HEAL Blogs do not necessarily reflect the views of the Community Access National Network (CANN), but rather they provide a neutral platform whereby the author serves to promote open, honest discussion about Hepatitis-related issues and updates. Please note that the content of some of the HEAL Blogs might be graphic due to the nature of the issues being addressed in it.

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