Category: Health

States Move Ahead of Fed To Reduce New Drug Prices

On July 5, 2018

In Drug Pricing, Health, Health insurance, Medicaid, Medicare, Solution

(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

By Patrick Hill

On July 2, 2018

In Health, Health insurance, Medicaid

(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.”

EPA Abdicates Common Good Responsibility to Ensure Clean Water

By Patrick Hill

On June 27, 2018

In Climate Change, Common Good, Environment, EPA, Health, Pollution

Photo: commonfloor.com

The Wall Street Journal yesterday disclosed that Scott Pruitt, EPA Director, is working to limit the veto power of the agency over large projects impacting water quality. The agency has used the veto power sparingly – only 13 times since it was given the authority in the Clean Water Act of 1972.

Pruit believes the veto authority has gone too far impeding economic development, “I am concerned that the mere potential of EPA’s use of its… authority before or after the permitting process could influence investment decisions and chill economic growth by short-circuiting the permitting process,”, in a 4 page memo to regional staff.

Why is this clean water common good responsibility so hard to execute? If a person dumped all his waste water and sewage in the street in front of his neighbors’ house, the neighbor would be upset and rightfully so. So, why do we treat mines, real estate developments, or port development any differently? Is it because they are trying to make a profit while desecrating the land so it is ok?

Chromium-6 a known carcinogen made famous in the movie ‘Erin Brockovich’ has been found in the drinking water of millions of Americans. The non-profit Environmental Working Group has been monitoring the status of chromium-6 found in 2017 the substance in the drinking water of over 200 million people. So, there are dangerous substances that still need to be monitoring in our drinking water.

The EPA has not taken in its public stewardship responsibility to the level of other countries, there are thousands of chemicals that can cause pollution and possible health hazards – none have been added to the pollutants list since 2000. The list is small only 90 are covered in the Clean Water Act out of about ten thousand. In the European Union they closely track over 2,500 different chemicals.

While the EPA is not as diligent as it needs to be, President Trump a year ago weakened the Clean Water Act requirement that mining companies ensure that water dumped into streams be cleaned to safe water standards. The policy shift impacts the drinking water of over 117 million people.

Source: Scientific American, – 3/10/17

The GOP Administration continues to undermine protections in place for 40 years to ensure clean water is available to all citizens. The lead levels found in Flint, Michigan water show that in some areas around the country the job is not getting done. Weakening the Clean Water Act in regard to mining dross and limiting the use of EPA veto on projects are just two examples of an indifferent and dangerous attitude by the agency.

Next steps:

In a Gallup poll 57 % of the people said they favor ensuring environmental quality over economic growth when a decision needs to be made.

Source: Gallup – 4/2/18

When are we going to get a government that represents the will of the people on issues of our very survival like the environment? The EPA Director worked as attorney general in Oklahoma relaxing environmental laws and now he is plowing ahead not protecting the public and not steadfastly defending the common good. Congress needs to act to update the Clean Water Act from updates in the 1980s, give the EPA a clear message that protecting the public is the first priority over economic costs.

Mississippi Life Expectancy Same as Libya – Why?

By Patrick Hill

On June 19, 2018

In Health, Health insurance, Heartland Economics, Life Expectancy, Trump Trade War

Photo: newsok.com

An insightful analysis in the Journal of the American Medical Association and the World Health Organization shows how far we are behind in Heartland medical care. A comparison of life expectancies in many of our Heartland states are as poor as many war torn or developing countries in pairings like, Mississippi – Libya, Tennessee – Gaza Strip, in a similar range as Libya and Gaza fall Kentucky, West Virginia, Arkansas, Louisiana, and Alabama.

Sources: JAMA, WHO, Signal The Wall Street Journal, The Daily Shot – 6/18/18

Many of these states in the South and Midwest have the highest rates of cancer, diabetes, and opioid use in the U.S. As globalization took many factory jobs away from the Heartland, medical service providers, doctors and other health professionals left for cities or the coasts where they had transferable skills and could make a better income. Plus, the number of rural hospital closures has been accelerating in the past 8 years with 120 going out of business since 2005. Researchers at the University of North Carolina who led the study believe the trend in more closings will continue to accelerate as costs go up, people move out and businesses are financially challenged. Good health is often found where there are good incomes and healthy businesses.

We noted in our blog of March 25^th that:

“Personal Income growth rates in heartland regions continue to lag the coasts by 3.8 to 2.0 % comparing income growth from 2016 to 2017. The following chart from the US Bureau of Economic Analysis shows how large the gap is:”

Source: US Bureau of Economic Analysis, The Wall Street Journal, The Daily Shot – 3/26/18

“Core issues for the lack of growth are young people moving out, industrial companies leaving for non-union states or moving factories overseas, automation, poor health, slow Internet speeds and fewer education opportunities. Added to these issues which have trended in these ways over the past 20 years are now tariffs on imports with soybean farmers threatened in the Midwest with a possible loss of $624 million where they already are competing with lower price soybean products from Brazil.”

As the Trump Trade War heats up prices of many Heartland agriculture crops have been falling such as soybeans by 2.20 % and corn by .62 % today alone. As prices and foreign customers find other suppliers Midwest and South farmers will find their customers have moved onto other countries hurting sales.

Other tariffs in steel and aluminum are squeezing Midwest businesses.

“In the advanced manufacturing sector which is based in the Midwest and South will likely see increases in imported aluminum and steel prices of between 10 – 25 % used in their products they resell. These price increases threaten their ability to compete and may have to lay off workers.”

The situation is in a downward spiral, as federal tariff and trade policies don’t help in turning around the economic, health and educational opportunities for these mostly rural regions.

Next Steps:

Our heartland neighbors continue to feel under siege from many different directions. We discuss these issues in our blog – The Hallowing Out of America’s Heartland. We recommend that a major set of investments be made with the federal government providing seed funding for a partnership between non-government organizations, health services providers, universities, corporations and state and local government. To bring focus to the development process we propose that Heartland Development Centers (HDCs) be located in key regions maybe near a major university – land grant universities are good candidates located in rural communities. Experts from across the country in HDCs would join together with local leaders in customizing solutions to build entrepreneurship centers, high quality health services, high speed Internet services, job and career training and other services necessary to renew the economic vitality of these regions.

GOP Administration Announces Work Requirement for Medicaid To Reduce Rolls

By Patrick Hill

On January 12, 2018

In Health, Health insurance, Medicaid

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.