Daily Archives: February 2, 2015

02.02.15
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Pharma, healthcare’s 8-ton gorilla, comes under increasing scrutiny

 

For all the heavy weights in the healthcare industry, that industry that now gobbles about one fifth of the U.S. economy, none has more weight to throw around than the pharmaceutical giants.

Big drug companies make the most profit, mark up their prices the most, have the most clout in Congress and other elected officials, and generally get whatever they want.

But public pressure on the price gouging on drugs is now ratcheting up.

This past week after Gildead Sciences, a U.S. biopharmaceutical company, agreed to discount its $1,000 a pill hepatitis C drug Sovaldi in Germany, a number of mainstream U.S. healthcare journalists raised again the question of why should U.S. drug companies give discounts in other countries that are not available in the U.S.

FiercePharma, an industry website, noted that drug price deals in Germany and the United Kingdom are “closely watched in other countries” that expect similar price breaks. And further that Gildead continues to face heavy “pressure” from developing nations “to provide its vaunted treatments to poor patients at accessible prices.” [Source: FiercePharma.com]

Developing nations, and HIV/AIDS activists in particular, have been protesting price gouging by the drug kings for years.

Doctors Without Borders also took aim at two of the biggest drug giants GlaxoSmithKline and Pfizer in a report in mid-January calling on the two firms to reduce the price of a new vaccine against pneumococcal disease needed by children in the developing world. “Because of the astronomical cost of new vaccines, many governments are facing tough choices about which deadly diseases they can afford to protect their children against,” said the group in its report. [Source: TheGuardian.com]

The heat from that report prompted the world’s richest man Bill Gates, who counts on a philanthropic reputation in developing nations to soften his corporate image, felt compelled to speak out in defense of big pharma. “Criticism by health campaigners of the high prices of some vaccines only serves to deter pharmaceutical companies from working on life-saving products for poor countries,” was how London’s Guardian newspaper summed up Gates’ views. [Source: TheGuardian.com]

It’s hard to shed too many tears for the drug companies. In 2013 alone, the 25 wealthiest giants racked up more than $100 billion.  Johnson and Johnson set the pace with more than 13.8 billion in profit, according to data from Thomson ONE Banker.

That buys a lot of clout. Especially in the U.S. where the drug lobbyists have for years killed off proposals to allow Medicare, for example, to negotiate discount drug prices the way countries with national health systems do.

In his new book on the Affordable Care Act, “America’s Bitter Pill,” journalist Steven Brill, cites research showing that overall prescription drug prices are 50 percent higher for comparable products than in other developed countries.

By 2012, more than $280 billion was being spent annually on prescription drugs in the U.S. “If Americans paid what other countries did for the same products, they would save about $94 billion a year,” Brill wrote.

Brill also describes his personal experience with Celebrex, a drug used for arthritis and other muscle and joint pains. Brill found that his insurer paid Pfizer, which makes Celebrex, $50 for each pill. In 2013, he continues, Pfizer “actual incremental cost of producing and shipping its products, before counting expenses for marketing, overhead or research and development, was 18.6 percent, yielding a gross profit margin of 81.4 percent.” In his case, that meant Pfizer was making a profit of $38.40 on each of his $50 pills.

Drug companies typically seek to justify their high charges by, in particular, claiming that they need exorbitant profits to cover their costs for risky research and development of new, more effective drugs.

But an internal National Institutes of Health (NIH) document, the advocacy group Public Citizen reported in 2001, “exposed that taxpayer-funded scientists conducted 55 percent of the research projects that led to the discovery and development of the top five selling drugs in 1995.” [Source: Citizen.org]

As legendary consumer advocate Ralph Nader puts it, “Americans built the drug industry, and the gratitude of the drug companies is to charge them more than in any other countries.” Americans pay the price twice, first in subsidizing the publicly funded research and development and then in paying the highest prices.

And, as Brill noted, when it came to drafting the Affordable Care Act, this 800-pound gorilla looked every bit like an 8-ton gorilla – and got almost everything on its agenda.

Among the big players in the healthcare industry who were in the deal making from the outset, PhRMA, the lobbying arm for the drug giants, was “first to the table,” Brill wrote.

PhRMA was successful in achieving essentially all of its demands, including protecting the 2003 Medicare prescription drug deal which required the government to pay 106 percent of what the drugmakers reported was their ‘average wholesale price,’ which Brill aptly termed “a straitjacket that cost taxpayers $40 billion a year.

PhRMA also succeeded in getting Obama administration support to kill proposed amendments to the ACA that would have allowed consumers to buy drugs from Canada that could produce savings of 30 to 50 percent on medications, Brill noted. Other concessions to the drug kings would follow.

One symptom of the legacy, the aforementioned Sovaldi. A Washington Post blogger, Brill reminds us, speculated that California might have to spend more buying Sovaldi for its Medicaid beneficiaries than it currently does on all K-12 and higher education.”

If some heat on big pharma is beginning to boil now, it is long overdue.

02.02.15
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California Ranks Last In Spending On Diabetes Prevention, Audit Finds

California spends less per person than any state on diabetes prevention programs, even as one in 12 California adults is estimated to suffer from the chronic disease, according to a new report from the California State Auditor.

Using only federal grants, California spent just 3 cents per person on diabetes prevention in the 2012-2013 fiscal year, compared to New York’s 42 cents per person in state and federal money that year, the report noted.

No state funding is available for diabetes prevention in California, although the Department of Public Health has solicited the federal grants for programs in some counties, according to the report. The audit takes the agency to task for not doing more.

A California Department of Public Health spokesman said no one was available for comment on Friday.

Because of declines in federal funding, California in 2012 shuttered nine regional centers devoted to reducing gestational diabetes. Now it has just website with information on the condition, which can affect nearly 10 percent of pregnancies.

But the state is not alone in underfunding prevention efforts, according to advocates.

“I know we’re on the bottom of the pile on this, but what money is out there for diabetes is just a pittance across the country, when you look at the size of the problem of diabetes,” said Michael Chae, executive director of the American Diabetes Association’s regional office in Oakland, Calif. “I’d say you could take this report for most large states and it would read similarly.”

Diabetes is a chronic disease that occurs when the body either cannot make enough insulin to control blood sugar (type 1) or cannot process insulin normally (type 2). Although diabetes can be controlled with medications and lifestyle changes including diet and exercise, the yearly health care and related costs of the disease have been estimated at $27.5 billion in California alone, according to the American Diabetes Association.

The state auditor’s report acknowledged that the state public health agency appropriately spends its federal dollars. It also recently received new federal grants for diabetes prevention efforts in four counties. But the report faulted the agency for not doing more to identify additional funding and for not expanding programs to other counties with high diabetes rates. Auditors were able to identify two additional federal grants totaling $1 million that the state could have applied for but did not.

The auditor described the public health agency’s stated goal of preventing diabetes in 380,000 people by 2022 as “lofty.” It concluded, however,  that the agency “will need to do more than it has been able to in the past with its limited funding.”

Nationwide, nearly 30 million Americans live with diabetes and about 1.7 million people are newly diagnosed each year, according to the U.S. Centers for Disease Control and Prevention. More than 2.3 million California adults report they have been diagnosed with diabetes and many others are considered to have the disease but do not know it. Still others are considered to be at high risk, or “prediabetic,” based on their blood sugar levels.

Chae and other diabetes advocates said they have tried repeatedly over the years to persuade  lawmakers to devote state money to diabetes prevention, to little avail.

It’s challenging to convince lawmakers and the public to devote more money to diabetes prevention, Chae said, because the disease is often unfairly characterized as a lifestyle problem caused by poor choices such as unhealthful eating and inadequate exercise. In addition, it progresses slowly, and symptoms are often invisible for years.

However, years of state reliance on federal grants alone has resulted in uncoordinated programs and staffers who come and go as the grants do, said Joan Werblun, a retired nurse and longtime advocate who helped found the Diabetes Coalition of California.

“When you get these grants, you’re so tied into the specifics of the grants, and most of the time, it’s about data collection on how the grant is going,” Werblun said. “That’s where the money’s going. The state’s very happy to point at their projects, but they’re very small and there’s no continuation when the money’s gone. What we need are more people in the communities doing the work.”

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.

02.02.15
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Florida Leads Nation in Obamacare Enrollment Despite GOP Opposition

When Florida workers promoting President Barack Obama’s health law marketplace want instant feedback, they go to an online “heat map.” The map turns darker green where they’ve seen the most people and shows bright red dots for areas where enrollment is high.

“The map shows us where the holes are” and what communities need to be targeted next, said Lynn Thorp, regional director of the Health Planning Council of Southwest Florida. She hands out information about the health law’s marketplace at rodeos, farmers markets, hockey games —almost any place where people gather.

That mapping strategy is one reason why a Republican-controlled state like Florida, whose leaders have criticized the health law at every turn, is leading the nation in signing people up for private Obamacare health plans. With two weeks to go until the deadline for 2015 enrollment, Florida’s tally exceeds that of even Democratic-led California, which has embraced the law building its own online marketplace and has twice the population and uses three times as much federal funding for outreach.

“It’s surprising Florida has done as well compared to other states, and they will be looked at by folks who want to learn lessons to promote enrollment,” said Joel Ario, managing director for Manatt Health Solutions, a consulting firm, who worked for the administration setting up the exchanges soon after the law was passed.

As of mid-January, 1.27 million Floridians had enrolled in exchange plans, according to federal data, compared to 1.2 million Californians. Texas, which has 6 million more people than Florida, enrolled about 919,000 people in private plans. Both Florida and Texas have a 22 percent uninsured rate. California’s rate is 17 percent, according to latest Census data.

“It is truly ironic that Florida leads the nation in enrollment … with leadership that has actively opposed the law,” said Leah Barber-Heinz, executive director of Florida CHAIN, an advocacy group involved in outreach efforts. “It shows true commitment on the part of many and it portrays an extremely high need for affordable coverage.

There are other reasons cited for Florida’s robust enrollment —including intense competition among insurers in several big counties and the high degree of coordination among the nonprofits and community groups which received federal grants to sign people up.

Another key factor is the state’s decision not to expand Medicaid under the law. That’s left consumers with incomes above the federal poverty level of $11,600 per year with no coverage option other than to buy a private plan — with help from sliding-scale government subsidies.  About 800,000 Floridians who make less than the federal poverty level are shut out altogether because they make too little to qualify for subsidies for private plans, but too much to qualify for Medicaid. In Florida, adults with children qualify for Medicaid only if their income is below 34 percent of the poverty level. Childless adults are ineligible. Florida is one of 22 states that chose not to expand Medicaid after the U.S. Supreme Court made that provision optional for states.

In contrast, California expanded Medicaid to those making up to 138 percent of the poverty level, or $16,100 for an individual. The program has grown by 2.3 million people since fall of 2013, boosted partly by publicity for the online marketplace.

Covered California spokesman James Scullary said the exchange is not allowed to enroll people in private plans if their incomes fall between 100 and 138 percent of the federal poverty line, because they qualify for Medicaid.

Jon Urbanek, senior vice president of Florida Blue, the state’s dominant insurer, credits Florida’s strong enrollment in private plans, in part, to the state’s decision not to expand Medicaid.  He also points to the intense outreach by thousands of the carrier’s insurance agents. Florida Blue has conducted about 3,000 “town-hall” style meetings at its 18 retail centers. “We knew going in that this was going to be a face-to-face, get in the community type of action to build trust with people,” he said.

Florida has also gained from having an older population which is more likely to buy coverage than younger people, Ario said.  That population is centered in a handful of urban areas such as Miami, Orlando and Tampa, making them easier to target, he said.

In contrast, many uninsured Texans live outside the big markets of Dallas, Houston and San Antonio. Texas also has a higher proportion of Hispanics who have been more challenging to enroll because of language barriers.

Then there’s the unusual effort to coordinate outreach. John Gilbert, national field director for Enroll America, a nonprofit doing outreach in 10 states, said Florida has benefitted from having several large nonprofits with experience signing up children for Medicaid.  They have worked together closely  – helped in part by the heat map.

Thorp of the Southwest Florida Health Planning Council describes how every time she hands out Obamacare flyers at a fair, or counsels at a local library, the action get entered into a computer log, which immediately changes the heat map. That way, other outreach workers see where contacts have been made.

Data from actual enrollment in the Obamacare health plans is added using dots, although that information lags because it is controlled by the U.S. Department of Health and Human Services.

The darker the dots on the map, the more saturated the enrollments in that zip code. When users hover over a dot, it pulls up a box showing how many residents in that zip code received outreach, including how many got one-on-one help filling out an application.

“We can then make sure we are appropriately allocating resources,” said Melanie Hill, executive director of the Tampa-based Family Health Care Foundation, which devised the mapping tool. Her group is working with the University of South Florida, which received a $5.4 million federal grant to help people anywhere in the state enroll. In all, Florida nonprofits received $6.8 million in federal “navigator” grants.

Perhaps another, harder-to-measure factor is how advocates have been fired up by the opposition of many of the state’s political leaders, said Barber-Heinz of Florida CHAIN.

“Stakeholders that didn’t work together in the past are working together on this,” she said. “It drives us to work even harder.”

Barbara Feder Ostrov contributed to this story.

Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.