The Progressive Ensign

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Category: Medicaid

States Move Ahead of Fed To Reduce New Drug Prices

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Photo: healtheconomics.com

Several states including New York, Vermont, Massachusetts and California have begun initiatives to take on drug companies for the their exorbitant prices of new drugs.  New York is taking a price versus effectiveness approach with a new drug called Orkambi for cystic fibrosis.  The New York state Medicaid department is demanding a lower price as it is not clear the drug helps patients with the disease better than existing treatments. Vertex,  the manufacturer of Orkambi made $1.3 billion in sales from the drug which is a high sales level for a drug that is marketed to only 26,000 eligible patients.  Vertex prices Orkambi at $272,000 for one year of doses. The drug costs so much that some insurers pass on the high costs to patients in some cases $3000 per month.

Dr. Steven D. Pearson, President of the Institute for Clinical and Economic Review is working with New York officials on a state board case against Vertex to bring the price down.  The state board found that Orkambi did not meet the effectiveness claims by the manufacturer so New York should receive a 77 % discount.  Dr. Pearson said his evaluation of the costs indicated that the drug could be discounted by 77 %.

Major states like New York and California are taking on the drug companies with renewed interest as their Medicaid costs soar in part from new drugs where companies like Vertex price the medication at extreme multiples of a fair cost. While the GOP Administration has promoted some ideas to bring the cost of new drugs down, nothing to date has been done.

The U.S. is alone of all major developed countries in not directly regulating drug prices.  In Europe health services officials do not accept high prices for drug with marginal value and negotiate using their purchasing power to bring the price down.  Congress has consistently bowed to the drug lobby by not speeding generic drugs to the market and not including in any drug bill the power for Health and Human Services to directly negotiate the price of all the medications it covers for U.S. patients.

Source: Bloomberg – 5/11/18

In 2014, U.S. patients paid the most of ten developed countries at $1,100 per year out of pocket and for many patients with difficult treatment diseases the costs per year are significantly more.

Next Steps:

Time is up for the drug companies and insurers gouging patients with soaring prices while they make hefty profits and executives pocket huge compensation packages.  Drug companies need to stop buying back their stock, wasting the money that could be used to bring the price of their drugs by billions of dollars.  Congress needs to give HHS the power to negotiate prices and effectiveness limits on drugs of dubious value the way most developed countries in the world do today.  Over the past decade pharmaceutical companies have found that their exorbitant prices have not stuck in Europe or other developed country market, so they jack up the price of the medication in the U.S. where there is little regulatory constraint.

Federal Judge Strikes Down Medicaid Work Rule

(Editor Note: Insight Bytes focus on key economic issues and solutions for all of us, on Thursdays we spotlight in more depth Solutions to issues we have identified. Fridays we focus on how to build the Common Good. Please right click on images to see them larger in a separate tab.)

Photo: gcgi.com

Last Friday, a federal judge struck down a policy shift by the state of Kentucky approved by the GOP Administration to require all Medicaid patients to work, or volunteer to receive benefits.  Judge James E. Boasberg of Federal District Court for the District of Columbia, an appointee of President Obama, handed down a ruling that the Trump administration’s approval of the plan had been “arbitrary and capricious” because the plan had not provided for state support of medical insurance for all citizens “ a central objective of Medicaid.

We noted in our blog on the topic last January:

“The White House announced approval of a work requirement for Medicaid  recipients, yet most already work.  Why?  The Kaiser Family Family found in 2016 that 59 % of  Medicaid patients already work:

Source: The Kaiser Family Foundation – 2016

So of the 41 % not working who is going to work?  The Administration said those that are disabled, ill, in school or caregiving will not be required to work or provide community service. Does that mean that those that are retired will be required to find work? Only 8 % said they could not find work.  We view this as the beginning  of an effort to cut down the rolls and thus the costs of Medicaid.  Instead of being viewed as a welfare program, Medicaid should be viewed as medical insurance.  We don’t ask Medicare enrollees to work, and private insurers don’t ask for patients to work.”

We are pleased to see that Judge Boasberg agreed with us that Medicaid should be viewed as medical insurance not a benefit for work program.

The view that if people don’t work they don’t need health insurance is patently false. People need health insurance from the day they are born, whether they are working or not, married or not, being a volunteer or caregiver or not. What happens today is we all pay in increased premiums and health provider pricing for those that do not have insurance when health they use medical services.  Often, these uninsured patients are charged an exorbitant price which is not usually what the cost is of he service or test, they patient can’t pay it because they have no insurance, then the hospital writes off the loss.  Finally, to recover these unfunded losses the hospital charges more to other patients because the uninsured patient is an overhead cost.

Next Steps 

Our recommendation is for a national medical insurance program for all which is inclusive of employer based plans for those that are working.  We detailed our plan in our blog – The Free Ride Is Over: Time for Single Payer Insurance. As we noted in our call for a single payer plan:

The idea of insurance is that we establish a large pool of 360 million people, to spread the costs of the sick along with the well, so that when the well get sick they will have services that don’t cost an unreasonable amount.  The health insurers have somehow talked the American public into the idea that they get to cream off the well pool from the sick one (which is more expensive) and then sock it to people that are sick.  That is just plan wrong.”

GOP Administration Announces Work Requirement for Medicaid To Reduce Rolls

Photo: ahrq.gov

The White House announced approval of a work requirement for Medicaid  recipients, yet most already work.  Why?  The Kaiser Family Family found in 2016 that 59 % of  Medicaid patients already work:

Source: The Kaiser Family Foundation – 2016

So of the 41 % not working who is going to work?  The Administration said those that are disabled, ill, in school or caregiving will not be required to work or provide community service. Does that mean that those that are retired will be required to find work? Only 8 % said they could not find work.  We view this as the beginning  of an effort to cut down the rolls and thus the costs of Medicaid.  Instead of being viewed as a welfare program, Medicaid should be viewed as medical insurance.  We don’t ask Medicare enrollees to work, and private insurers don’t ask for patients to work.

Next Steps:

Enroll US citizens into healthcare insurance at the time of birth (our blog in depth),  establishing a healthcare account with Medicare for all.  The idea of insurance is that we establish a large pool of 360 million people, to spread the costs of the sick along with the well, so that when the well get sick they will have services that don’t cost an unreasonable amount.  The health insurers have somehow talked the American public into the idea that they get to cream off the well pool from the sick one (which is more expensive) and then sock it to people that are sick.  That is just plan wrong.

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