JustCare

Tag: Cost

  • Drugs with high prices are often no better than lower-cost drugs

    Drugs with high prices are often no better than lower-cost drugs

    The US famously pays far more for medications than other countries, putting stress on the health care system and individual patients who often bear this cost. The pharmaceutical industry often justifies these high prices by claiming that they create the opportunity for more innovation in the drug space, and that lowering prices would diminish the ability of drugmakers to create new and better drugs.

    Given this argument that higher prices leads to better drugs, one would expect that the price of a drug should be correlated with its clinical benefit. It’s common sense–if we are paying more for a certain drug, it should be because it works better.

    Unfortunately that does not appear to be the case, according to two recent studies on drug prices. In The Lancet Oncology, researchers at the University of Zurich analyzed the prices and clinical benefit of 65 cancer drugs approved by both the US Food and Drug Administration and the European Medicines Agency over the past ten years.

    The median monthly treatment costs for these new drugs in the US was $13,200, more than twice as high as in England, Switzerland, Germany, and France. However, they also found that cost of the drugs were not correlated with clinical benefit, according to value frameworks from the American Society of Clinical Oncology and the European Society of Medical Oncology.

    “We have so many drugs on the market and we found that some don’t have the value you’d expect,” said study author Kerstin Vokinger, in STAT News. “The prices of cancer drugs should be better aligned with their clinical importance in order to improve access.”

    It’s not only cancer drugs that are being priced regardless of effectiveness. In a recent piece in Health Affairs blog, Harvard Medical School professors Richard G. Frank, Jerry Avorn, and Aaron S. Kesselheim asked the question, “Are the drugs we approve in the US considered effective according to other countries’ assessments?” They looked at 46 new drugs approved by the FDA in 2017 and compared evaluations of the drugs’ effectiveness using assessments from independent boards in Canada, Germany, and France.

    Of the 27 drugs that were evaluated in these other countries, 17 of these drugs were found to offer little or no added clinical benefit by all of the boards that evaluated them. For 6 drugs, there was not consistent agreement between the different boards about the effectiveness of the drugs. Only 4 drugs were determined to have at least minor added benefit by all of the boards that evaluated them. These drugs were Fasenra for asthma, Dupixent for excema, Imfinzi for urothelial carcinoma, and Rydapt for leukemia.

    The authors noted that many of the drugs found to be not effective when evaluated by international boards are very expensive. Eli Lilly’s breast cancer drug Verzenio was found to have no added benefit in both Germany’s and France’s reviews; the list price of the drug is more than $12,000 a month. Gilead’s Vosevi, a combination drug to treat Hepatitis C, was found to have only minor clinical benefit by one of the international boards–the drug costs $26,000 for 28 pills.

    Figuring out whether a drug is priced “fairly” is tricky, but at the least we should agree that paying thousands more for drugs than other countries without a corresponding clinical benefit is a bad deal.

    This piece was originally published on May 8 on the Lown Institute blog.

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  • Medicare for All lowers taxes for most Americans

    Medicare for All lowers taxes for most Americans

    Emanuel Saez and Gabriel Zucman, economics professors at UC Berkeley, report in The Guardian that Medicare for All–a public health insurance program, which Senators Bernie Sanders and Elizabeth Warren both support–would lower taxes for most Americans and lead to a big pay raise for many Americans as well. (Note: Warren’s financing plan imposes no taxes on middle class Americans; it puts their share of insurance premiums back in their pockets.)

    Saez and Zucman explain that no matter how you do the financing around Medicare for All, because it saves so much money, it does not raise taxes. They argue that in order to talk about health care in America, you need to start with its huge cost, 20 percent of GDP. With Medicare for All, the cost of health care for the vast majority of Americans comes down.

    Health insurance premiums are equivalent to taxes, only they are paid to corporate health insurers instead of the federal government. People or their employers must pay these premiums. Unlike choice of restaurants or clothing, where you can pick lower cost options or forgo it, you cannot (or should not) do so with health care or health insurance. Health care is like education. Everyone needs it, and for that reason other countries pay for it through taxation.

    In the US, working people are charged a fixed rate for their health care–based on a variety of factors including age and geography–which Saez and Emanuel call a poll tax. Health insurance costs are not based on ability to pay as they are in other wealthy nations.  Rather, they are regressive. In fact, once you add in the cost of health care, the US tax system overall is “highly regressive.” It’s about 30 percent for the lower-income earners, 40 percent for the middle-income earners and 23 percent for billionaires. CEOs pay the same amount for their health insurance as their secretaries.

    The health care system in the US is unsustainable. Medicare for All would end the poll tax and establish a progressive tax. Consequently, workers would benefit substantially through increased income. For example, if you earned $50,000 a year and had employer coverage, the $15,000 or so your employer pays for your health insurance would increase your income to $65,000. Your health insurance tax, based on ability to pay, would be $4,000, leaving you with $61,000 in come, ahead by $11,000 a year.

    You can visit TaxJusticeNow.org, a web site with a tax calculator that Saez and Zucman developed, to see how you would fare financially with Medicare for All. You could see how different Democratic presidential candidates’ tax plans would affect low-, middle- and high-income people’s tax rates. With Sanders’ Medicare for All plan, only the bottom 90-plus percent of income earners would benefit financially.

    If you support Medicare for all, please let Congress know. Please sign this petition.

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  • Overpriced health care too often means bankruptcy

    Overpriced health care too often means bankruptcy

    When Americans get sick these days, many hesitate to take an ambulance to the ER. Even with insurance, the costs can be several thousand dollars. Overpriced health care too often means bankruptcy, when it doesn’t mean large numbers of people forgoing care.

    The Atlantic reports on an uninsured woman who suffered a mini-stroke and went to the ER overnight. She received a battery of tests and was discharged.  The bill was $26,203.62 total for “observation.” On top of that. she was charged $1,301 for consultations with two doctors. She was charged $1,316 for X-rays and other diagnostic tests. And, the ambulance company charged her $1,807, which she was able to knock down to 1,084.

    Unlike citizens of other wealthy countries, Americans find themselves relatively often in medical debt. The American Journal of Public Health reports that almost six in ten Americans who file for bankruptcy do so in some part because of medical debt. Medical debt is more often given as a reason for bankruptcy than student loans or bank foreclosures.

    One in three cancer survivors go into medical debt. Of those, one in 11 file for bankruptcy. Collection agencies see more unpaid medical bills than any other type of bill. About one in five Americans have credit reports that reflect medical claims.

    Medical debt most often results from ER visits and elective surgeries. People may go into debt just paying the thousand dollar plus deductibles that are increasingly common. Or, they go into debt because their in network hospitals assign them out of network doctors, who surprise them with bills their insurers often won’t pay.

    Three in 10 Americans delay care to avoid these bills, according to a December 2018 Gallup poll. People without insurance are most likely to deny care–54 percent. But, high deductibles and coinsurance lead 30 percent of people with insurance to delay care as well. People with Medicare and Medicaid are least likely to delay care—22 percent.

    What can you do to protect yourself from big medical bills when you seek care? If you have a large bill after your Medicare Advantage or other health insurer pays, you should ask the hospital or doctor for a discount. Sometimes they will provide one.

    As important, make sure your representatives in Congress and presidential candidates support Medicare for All. Presidential candidate Beto O’Rourke and others who support what they call Medicare for America are doing little if anything to address overpriced health care or to keep people from medical debt. Only Medicare for All reins in costs, lets you see any doctor and use any hospital in the US, and eliminates deductibles, premiums and coinsurance.

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  • Let’s have a prescription drug public option

    Let’s have a prescription drug public option

    also, by Stephanie Taylor, originally published in The American Prospect.

    Kara Eastman, the Democratic nominee in Nebraska’s Second Congressional District, tells a story while campaigning about visiting her mother while she was dying from cancer. Her mother’s medicals bills were stacked so high on the kitchen table, Eastman says, that when she visited, they couldn’t see each other through the piles. Just one of her mother’s pills cost $2,500 a month.

    Eastman decided to run for Congress to offer alternatives to the skyrocketing cost of health care. She campaigns calling for Medicare for All and further solutions to the crisis of unaffordable prescription drugs. Her message is resonating. She beat a well-known opponent in her primary by a few hundred votes.

    Spending on prescription drugs is growing faster than any other sector of our health-care system. Drug companies, meanwhile, are raking in record profits, far higher than those in other industries—and they are spending considerably more of it on buybacks and dividends than on research and development. Most importantly for their bottom line, they are breaking records with their spending to influence Congress to protect their monopolies.

    Drug company revenues soared from $534 billion in 2006 to $775 billion in 2015. That’s billion with a “b.”

    According to a study by researcher Adam Gaffney, Americans spend more on outpatient drugs than the residents of any other industrialized nation—$1,026 per capita annually. The average in advanced industrial nations is $515; in Denmark, it’s just $240. The problem isn’t that Americans use four times the drugs that Danes do; it’s that drug prices are much higher in the United States than anyplace else. In 2014, a daily 50-unit dose of insulin glargine cost $186 a month, after applicable discounts, in the United States—but only $63 in the United Kingdom and $46 in France.

    In fact, U.S. taxpayers are paying twice. First, their taxes fund the research and development of new drugs: Federally funded studies contributed to the science behind every single one of the 210 drugs approved between 2010 and 2016. Taxpayers, for example, funded the development of Crestor, a popular medication to lower cholesterol. Now Crestor is sold by the private pharmaceutical giant AstraZeneca, which made over $16 billion in profits on Crestor alone during a three-year period.

    It’s clear that simply strengthening regulations on pharmaceutical corporations is not enough. Such corporations will prioritize lining their pockets over saving the lives of everyone who needs their medications, when the laws permit that—as they do in the United States. And when they do invest, they will always invest where there is the greatest potential for profit, not where there is the greater potential benefit to the public health.

    One way to address that dilemma is to create a taxpayer-owned drug company to produce and distribute medications at affordable prices—especially drugs that have been developed with U.S. taxpayer dollars. Unlike private corporations, this public drug company would focus on developing drugs based on public need rather than perceived profitability. The company could use private contractors to develop and manufacture the drugs, but it would own the patents and therefore ensure that everybody has access to them. Economist Dean Baker has pointed out that this type of model is how the Department of Defense operates to create many weapons of war.

    The United States would not be the first country to create a national drug company. Brazil, Cuba, South Africa, and Sweden all have publicly owned drug companies. While there would be a cost to setting up a public drug company, Baker and others have shown that the savings on drug prices in the United States could fully offset the added costs of a such a company. Depending on the scope of that company, Baker has shown savings of hundreds of billions of dollars per year.

    This is not just good policy. It’s good politics, too.

    The Progressive Change Campaign Committee (co-founded by one of the authors) recently polled a cross-section of Republicans, independents, and Democrats in swing and Republican-leaning congressional districts on support for the idea of creating “a publicly-owned not-for-profit pharmaceutical company to compete against private drug companies, to create more competition in the marketplace and stop big drug companies from jacking up prices for our seniors.”

    In the Third Congressional District in Kansas, currently represented by Republican Kevin Yoder, 61 percent said they support the idea, 23 percent are opposed, and 16 percent are not sure.

    In the First Congressional District in Wisconsin, currently represented by Republican Speaker Paul Ryan, 69 percent support the idea, 20 percent oppose it, and 11 percent are not sure.

    In the Third Congressional District of New Jersey, currently represented by Republican Tom McArthur (who introduced the bill that gutted much of the Affordable Care Act), 66 percent support the idea, 19 percent oppose it, and 14 percent are not sure.

    These are overwhelming bipartisan numbers that reflect the impact that big pharma’s greed is having on Americans across the country. Families everywhere are struggling to absorb the skyrocketing cost of prescription drugs—drugs that were often developed with public money in the first place.

    There is no good reason or justification for continuing with business as usual. We’re calling for a public drug company that allows us to keep life-saving technologies developed with our dollars in the public domain—and get them into the hands of everyone who needs them.

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  • Out-of-pocket costs for Part D generics way up

    Out-of-pocket costs for Part D generics way up

    Michael Hiltzik writes for the LA Times that people with Medicare are paying more for generic drugs even though generic drug prices overall have barely increased. According to Avalere, a healthcare consulting firm, older adults and people with disabilities are paying almost twice as much out-of-pocket for generic drugs through Medicare Part D today as they did seven years ago. How can this be?

    The reason for high out-of-pocket costs for generics is that CMS allows Part D plans to decide the copays (the part of the cost individuals pay) for their drugs. And, the Part D plans want them to be as high as possible. If they impose higher copays, Part D plans can keep their monthly premiums from going up as much, allowing them to attract more enrollees. By so doing, they penalize their enrollees who need these drugs, driving up their costs and jeopardizing their access to needed medicines.

    As a result of copay increases in Medicare Part D plans, people with Medicare paid $6.2 billion more in 2015 than they did four years before, a 93 percent increase. Copays increased on important cost-effective cholesterol drugs, hypertension drugs and diabetes drugs, all of which are prescribed widely. Generic drug prices increased just 1 percent in that period.

    Part D plans have moved most generic drugs out of the tier 1, lowest copay category, and into the tier 2 category. More than 70 percent of generic drugs were in the tier 1 copay category in 2011. By 2015, only 19 percent were in the tier 1 category. And almost all Part D plans changed their tier structure from four to five tiers. These copay increases are a way of rationing care based on ability to pay; they keep people who need these drugs from taking them, endangering their health.

    If you want Congress to rein in drug prices, please sign this petition.

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  • Medicare encourages doctors to use costliest cancer drugs 

    Medicare encourages doctors to use costliest cancer drugs 

    The Trump Administration has identified one problem with Medicare payment rates for drugs. StatNews reports that CMS Chief Seema Verma critiqued Medicare regulations that encourage doctors to use the costliest cancer drugs as well as incentivize pharmaceutical companies to charge a high price for cancer drugs.

    You can be sure that pharmaceutical companies give doctors a strong financial incentive to use their most costly cancer therapies. In exchange, Pharma may pay for their vacations, dinners and speaking fees. But, Medicare gives doctors a second incentive to prescribe the highest-cost cancer drugs. It pays them more to use them.

    Medicare pays doctors for the cost of chemotherapy drugs plus six percent for administering these drugs. The higher the cost of the drug, the more the doctors earn.  It should go without saying that ease of administration has nothing to do with the amount Medicare pays doctors.

    Why would Medicare pay a doctor $6,000 to administer a $100,000 drug therapy, much less $30,000 to administer a $500,000 drug therapy. Why would Medicare pay different amounts for the same drug therapy depending upon whether it is administered in a hospital or an outpatient clinic? It is all about the influence of the pharmaceutical companies and big Pharma.

    In a recent speech, CMS chief Seema Verma posed these questions and critiqued Pharmacy Benefit Managers (PBMs) for having a conflict of interest. They allegedly negotiate lower drug prices for insurers. But, they also pocket money from the drug manufacturers to promote their costly drugs. According to Verma, they may keep some of the drug discounts they achieve for themselves.

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  • National Academy of Sciences recommends drug price negotiation to make drugs affordable

    National Academy of Sciences recommends drug price negotiation to make drugs affordable

    A new report, Making Medicines Affordable, by the National Academies of Sciences, Engineering and Medicine recommends several immediate actions to ensure Americans have access to affordable and effective medicines. For people with Medicare, the committee supports Medicare drug price negotiation, a cap on out-of-pocket costs for prescription drugs and an end to cost-sharing for prescription drugs in some cases. The report recognizes that people are increasingly not taking their medications because of their high cost and that lack of compliance with a drug regimen can increase health care costs overall.

    The report recommends that deductibles and copays for people enrolled in all government health programs be based on the net price of the prescription drugs and not the list price, which is often significantly higher. The net price is the price that the pharmacy benefit manager (PBM) gets for a drug after all rebates are taken into account. People filling their prescriptions often do not benefit from these rebates and end up paying copays and deductibles off higher drug prices than the the prices that the PBM is getting for the drugs.

    Committee members recognize that the US does not have a competitive marketplace for prescription drugs. As a result, prices for many drugs are sky high. They recommend ensuring meaningful competition among drug makers after a drug’s patent expiration. They propose ways to limit the ability of drug makers to take drugs going off patent off the market and change them superficially so as to allow them to garner a new patent, “evergreening.”

    In addition, committee members propose more price transparency and ending profits to pharmacy benefit managers, insurers, doctors and hospitals for using high-priced drugs. They want to encourage doctors to prescribe the most effective drugs at the lowest prices and patients to use drugs that offer the greatest clinical benefits at the lowest cost. They also want pharmaceutical companies to explain how they price their drugs so that the Federal Trade Commission can take action against companies engaging in anti-competitive practices.

    Committee members would like to find ways for better understanding of the comparative value of drugs, particularly of new drugs brought to market, and to explore paying for drugs based on value.

    According to David Lazarus at the LA Times, to date President Trump and the US Department of Health and Human Services have failed to embrace any of these recommendations, much less all of them.

    If you want Congress to rein in drug prices, please sign this petition.

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  • Drug coupons drive up overall health costs

    Drug coupons drive up overall health costs

    Pharma has many tools for generating big profits. Drug coupons, which cover the copay of a high-cost drug, are one such tool. For patients, drug coupons can make extremely high-cost drugs free. But drug coupons drive up overall health costs; they also may incent people to take drugs with unknown risks when other safe drugs are available.

    Drug coupons can seem very attractive to patients. Coupons can make the out-of-pocket cost for a very high-priced drug lower than the patient’s cost for a low-cost drug. Patients need to keep in mind though that drug coupons tend to be for drugs that are new or relatively new to market. And, unless you’re in a situation where no other drug works for you, you should try to avoid taking newly approved drugs.

    Newer drugs can cause serious side effects about which the doctor is unaware, since it’s hard to evaluate a drug’s potential for harm until it has been on the market for several years. That’s why, to be safe, it’s wise to take drugs that have been used for a long time, where the risks of harm are well understood.

    Drug coupons are not only geared to get patients to take expensive drugs that have not been well-tested; they effectively undermine the value of a tiered copay system for drugs.  The tiered copay system is designed to help keep insurance premiums down. It steers people to the lowest-priced drug in a category because it comes with the lowest copay.

    When the doctor gives a patient a coupon for a drug in the highest copay tier, the tier becomes meaningless as the patient is not responsible for the copay. Pharmaceutical companies use coupons to keep patients away from competitor lower-cost drugs. Since the coupon covers the cost of the copay only, the drug companies still get paid a lot for the high-cost drug.

    Federal health care programs forbid the use of drug coupons under the “anti-kickback statute.” So, Medicare does not allow them. But, the Government Accountability Office has found that pharmaceutical companies don’t always have systems in place to prevent the use of drug coupons by people with Medicare and that six percent of people with Medicare do use them.

    Why do doctors prescribe a tier three drug when a lower-cost drug is available to treat a condition? In many cases, the doctors don’t know the price of the drug.  In other cases, a pharmaceutical company has persuaded doctors that its drug is better than other drugs.  Or, patients may ask for the drug because they’ve seen ads for it on TV.

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  • Drug costs eating into greater share of income

    Drug costs eating into greater share of income

    A new paper by Dean Baker at the Center for Economic and Policy Research explains that an increasing and substantial share of our national income goes to paying for prescription drugs. And, most of us likely do not realize it because insurance companies pay for a good chunk of these costs.  If we don’t address the monopoly pricing power we confer on pharmaceutical companies through patents, drug costs will eat into a still greater share of our income.

    Data from the U.S. Centers for Medicare and Medicaid Services reveals that, in the twenty years between 1960 and 1980, we spent about one percent of our salaries and wages on prescription drugs.  And, indeed our wages were increasing at a faster rate than our spending on drugs, So, by 1979, we spent 0.86 percent of our income on prescription drugs.

    After 1980 and until 2007, our spending on prescription drugs rose more quickly than wages every year. During the Great Recession in 2007 until 2010, drug spending increases were less than wage increases. But, in 2010, that changed again, with drug spending increasing four percent more than wage increases.

    We have spent about three percent of our annual income on drugs in the last 40 years, costing each household an average of about $2,400 a year, and drug spending is projected to consume a greater portion of our income in the coming years.  By 2025, spending on prescription drugs will be more than five percent of income and wages.

    Yes, we are getting older as a nation, which explains a bit about why prescription drug spending has increased so much. But, between 1960 and 2015, the percent of people over 65 has risen from 9.2 percent to 14.8 percent.

    The vast majority of the increase in drug spending stems from the drug companies’ monopoly power to set drug prices sky high, through the patents granted them for new drugs. That’s the principal reason that we are spending eight times more on drugs today than we did in 1980, adjusted for inflation.

    We need to reconsider the patent protections the U.S. government awards drug companies. Without these protections, we could be paying about 20 percent of what we currently pay for drugs.

    If you want Congress to rein in drug prices, please sign this petition.

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  • With health insurers and Pharma setting prices, no controlling health care costs

    With health insurers and Pharma setting prices, no controlling health care costs

    Why would a health insurer pay one hospital in New York City $81,000 more for outpatient infusion treatment than another hospital one mile away–$100,000 and $19,000 respectively?  And, how is it that a pharmaceutical company can get away with charging for Avonex today almost seven times its original cost  21 years ago? These are two questions Elisabeth Rosenthal’s op-ed on CNN.com leads us to ask. Rosenthal’s op-ed makes a strong case that there’s no controlling health care costs, so long as health insurers and Pharma are setting prices.

    In Japan, an echocardiogram costs less than $100, at a Harvard training hospital it costs $1,714, and at a community hospital in New Jersey it costs $5,435. The health insurers do not appear to have the leverage to rationalize the prices for different procedures and pay a standard fair price for them. For that reason alone, the federal government should be negotiating prices, as it does with Medicare, for everyone in the U.S..

    The health care market is broken, and incentives are misaligned. When insurers pay high prices, they not only drive up premiums, they increase insurer profits. And pharmaceutical companies, accountable to their shareholders first and foremost, have every reason to charge exorbitant prices for prescription drugs so long as Congress gives them the power to do so, and insurers are willing to pay those prices.

    Tremendous price variations for the same health care services, along with sharply increasing prices for older treatments and technologies over time, should be enough to demonstrate that we cannot rely on competition in the health care marketplace to bring down prices. With insurers in the mix, doctors determining treatments regardless of cost, and patients essentially unable to know whether they are getting value, the market is broken. So, even prices for competitive treatments that have been around for decades just keep going up. Economists describe this phenomenon as “sticky pricing.”

    Japan does not permit sticky pricing. Instead, doctors, economists and politicians come together to decide how the price of a piece of technology, such as an echocardiogram will drop over time. What will it take for the U.S. Congress to step in and regulate health care prices?

    If you believe it’s time for improved Medicare for all, please sign this petition to Congress.

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