Archive for July, 2021

Drug Prices Are One Focus of Biden’s Push to Boost Competition

WASHINGTON—President Biden’s executive order to promote business competition lays out a series of steps to lower prices for prescription drugs, including taking legal action against companies that cooperate to keep generic medicines off the market and allowing states and Indian tribes to import drugs from Canada.

The administration also is calling for measures to increase the use of generic drugs and other medicines known as biosimilars, which are essentially generic versions of expensive biological drugs already on the market.

Most of the ideas have been urged in the past, primarily by Democrats but also by the Trump administration. Growing bipartisan support for lowering drug prices could give the current push a greater likelihood of success.

What isn’t in the executive order, however, is any mention of giving the federal Medicare agency the power to directly negotiate prices with drug companies. That approach, favored by many Democratic lawmakers, would potentially be more far-reaching than any of the measures in the presidential order.

“Negotiation of prices is the biggest and best solution” to lowering drug prices, said Diana Zuckerman, president of the National Center for Health Research, a nonprofit organization in Washington. The federal Medicare agency is generally barred by law from such direct negotiation for many prescription medicines, a ban many Democrats in Congress have urged be lifted.

While Republicans generally have been less supportive of such a step, “there is pressure from all sides” for legislative change as the public increasingly seeks solutions to high drug prices, Dr. Zuckerman said.

The recent federal approval of the Alzheimer’s drug Aduhelm from Biogen Inc. put a spotlight on concerns about rising drug costs. The company said the medication would have a U.S. list price of about $56,000 a year for the average patient. Amid concerns about the drug’s effectiveness and cost, the Food and Drug Administration this week narrowed the potential pool of patients in new prescribing instructions.

The drug-industry trade association PhRMA didn’t respond to requests for comment on the administration’s executive order.

In his order on Friday, Mr. Biden noted that the FDA hasn’t issued the necessary rules for high-priced hearing aids to be sold over-the-counter in drugstores. He called on the FDA’s parent agency, the Department of Health and Human Services, to issue proposed rules within 120 days to allow such sales. The administration said the four largest makers of hearing aids control 84% of the market, with the devices costing an average of $5,000 and up for a pair. As a consequence, the administration said, only about 14% of the 48 million Americans who have lost hearing are using the devices.

Mr. Biden also urged the government to curtail what are called “pay for delay” deals between brand-name drugmakers and generic companies. These are contractual arrangements in which generic companies receive compensation for keeping their lower-cost drugs off the market.

“The big picture is that the number of such pay-for-delay settlements has gone down,” said Michael Carrier, a Rutgers University law professor and leading authority on these deals. “In the few cases that make it all the way to the courts, for the most part courts are seeing the delay” and taking action, he added.

A 2013 U.S. Supreme Court decision has cut into such arrangements, Mr. Carrier said. And a Fifth Circuit U.S. Court of Appeals decision this year largely supported a Federal Trade Commission action against such an alleged arrangement. “But my sense is that it’s still going on,” Mr. Carrier said.

The administration’s order also pushes for allowing the importation of less expensive drugs from Canada, a measure that has had considerable support, including from the Trump administration.

“This is a very reasonable thing to do,” Dr. Zuckerman said. “I don’t think Canada likes it, because they’re afraid they may run out of drugs.” She points out that the Canadian market is far smaller than that in the U.S., making the likelihood slim that such a step would have a major impact on U.S. prices.

When the Trump administration proposed such a step in December 2019, a spokesman for the Canadian health ministry, Thierry Belair, predicted any such measure would have only minimal effect on the U.S. market.


Effort to Decipher Hospital Prices Yields Key Finding: Don’t Try It at Home

Most of the 20 common medical procedures I attempted to compare were among those 70. But a few, from lists of top outpatient procedures provided by the Health Care Cost Institute, were not. I decided to use the more comprehensive, less friendly spreadsheets for my comparisons, since they contained all 20 of the procedures I’d chosen.

Each carried a five-digit medical code known as a CPT, a term trademarked by the American Medical Association that stands for “current procedural terminology.” The transparency rule requires hospitals to include billing codes, because they supposedly provide a basis for price comparison, or in the rule’s jargony language, “an adequate cross-walk between hospitals for their items and services.”

Much to my chagrin, I soon discovered they don’t provide an adequate crosswalk even within one hospital.

My first inkling of the insuperable complexity came when I noticed that Sutter’s Alta Bates Summit Medical Center in Oakland listed the same outpatient procedure with the same CPT code three times, thousands of rows apart, with entirely different prices. CPT 64483 is the designated code for injection of anesthetics or steroids into a spinal nerve root with the use of imaging, which relieves pain in the lower back, legs and feet caused by sciatica or herniated discs. The spreadsheet showed a maximum negotiated price of $1,912 in row 12,718, $3,650.85 in row 19,014 and $5,475.80 in row 19,559 (let your eyes glaze over for just a few seconds, so you know what it feels like). The reason for the triple listing is tied to Medicare billing guidelines, Sutter later told me. I’ll spare you the details.

My head really began to hurt when I decided to double-check some of the prices I had pulled from the big spreadsheets against the same items on the shorter shoppables sheets. Kaiser’s prices were generally consistent across the two, but for Alta Bates, there were large discrepancies.

The highest negotiated price for removing a breast lesion, for example, was $6,156 on the big sheet and $23,069 on the shorter one. The difference seems largely attributable to the estimated cost of additional services, some rather nonspecific, that Sutter lists on the smaller sheet as accompaniments to the procedure: anesthesia, EKG/ECG, imaging, laboratory, perioperative, pharmacy and supplies.

But why not include them in both spreadsheets? And what do the two dramatically divergent prices actually encompass?

“How many bills they really represent and what they mean is difficult to interpret,” said Dr. Merrit Quarum, CEO of Portland, Oregon-based WellRithms, which helps employers negotiate fair prices with hospitals. “It depends on the timing, it depends on the context, which you don’t know.”

In some cases, Sutter said, its shoppables spreadsheets show charges not only for ancillary services typically rendered on the day of the procedure, but also for related procedures that may precede or follow it by days or weeks.

The listings for Kaiser’s ancillary services do not always match Sutter’s, which further clouds the comparison. The problematic fact of the matter is that hospitals performing the same procedures bundle their bills differently, use different medications, estimate varying amounts of time in the operating room, and utilize more or less advanced technology. And physician charges are not even included in the posted prices, at least in California.

All of which makes it almost impossible for mere mortals to anticipate the total cost of their medical procedures, let alone compare prices among hospitals. Even if they could, it might be of limited value, since independent imaging centers and surgery centers, which are increasingly common — and generally less expensive — aren’t required to report their prices.

The bottom line, I’m afraid, is that despite my efforts I don’t have anything particularly insightful to reveal about how Kaiser’s prices compare with Sutter’s. The prices I examined were as transparent to me as hieroglyphics, and I’m pretty sure that hospital executives — who unsuccessfully sued to stop implementation of the price transparency rule — are not losing any sleep over that fact.

This story was produced by KHN, which publishes California Healthline, an editorially independent service of the California Health Care Foundation.

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