Poll suggests public opinion movement in the right direction

Posted by on Wednesday, Nov 25, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

In U.S., 51% Say Government Should Ensure Healthcare Coverage

By Justin McCarthy
Gallup, November 23, 2015

U.S. adults are slightly more likely to say it is the responsibility of the federal government to ensure all Americans have health insurance coverage (51%) than to say it is not the government’s responsibility (47%). The percentage who believe the government has that obligation is up six percentage points from 2014. This year marks the first time since 2008 that a majority of Americans say the government is responsible for making sure all citizens have health insurance.

From 2000 to 2008, between 54% and 69% of Americans said ensuring healthcare coverage for all citizens was the responsibility of the federal government. But the issue grew more divisive in 2009, as President Barack Obama worked to enact the Affordable Care Act, which Congress passed in 2010. Between 2009 and 2011, Americans were split nearly evenly on the matter. Then from 2012 to 2014, public opinion shifted, with slight majorities saying healthcare coverage was not the government’s responsibility.

Do you think it is the responsibility of the federal government to make sure all Americans have healthcare coverage, or is that not the responsibility of the federal government?

Percent saying, Yes, government responsibility:

2005  58
2006  69
2007  64
2008  54
2009  47
2010  47
2011  50
2012  44
2013  42
2014  45
2015  51

Which of the following approaches for providing healthcare in the United States would you prefer – a government-run healthcare system, or a system based mostly on private health insurance?

Percent saying, System based on private insurance:

2010  61
2011  56
2012  57
2013  61
2014  61
2015  55


Regarding views toward health care reform, there is a suggestion in these polling results from Gallup that the American public may be influenced more by politics than by policy, but that might be changing.

After experiencing unsustainable rises in health care costs along with the abuses inflicted upon us by the managed care industry, there was considerable support for having the government assume responsibility for health care coverage, peaking in 2006 at 69%.

The support persisted as a majority of the nation gathered around the candidacy of the man offering us HOPE – Barack Obama. Although a few Republicans were ready to work with President Obama and the Democrats on health reform, the Republican leadership decided that it was more important to make Obama a one-term president. Thus began one of the most politically polarized times in the history of the United States.

Although initially distracted by the financial crisis, the battle over health care reform quickly commanded the nation’s attention. Without regard to a consideration of beneficial health care policies, the Republicans demonized Obamacare, and their constituents joined in with a vengeance. Much of the bashing included intense anti-government rhetoric. By 2013, when reform was largely implemented, support for a government role had dropped to 42%. At the same time, support for private insurance plans, which formed the basis not only of Obamacare but also of the models proposed by the Republicans, was at 61%.

It is important to note that the Republican versions of private insurance were much less comprehensive than plans available today, but there was never a serious discussion of the policy implications of these plans which would leave patients with fewer benefits and exposed to even greater out-of-pocket costs than we have with today’s high-deductible plans.

Now that Obamacare has been implemented and patients are experiencing high premium costs, intolerable cost sharing, skyrocketing drug costs, and loss of choice of their health care providers, people are beginning to realize that private plans are failing on their promise to bring us higher quality at lower costs. There is a suggestion in the polls that people are beginning to lose faith in private insurance.

A bare majority – 51% – now say that it is the responsibility of the federal government to make sure that we all have health care coverage. A majority – 55% – say that the system should be based on private insurance, but that is declining from last year’s high of 61%. It is possible that support for private insurance may plummet as more individuals discover that they gave up their choices of physicians and hospitals in exchange for an insurance program that failed to protect them against financial hardship – what most believe to be the primary function of insurance.

As others make the some discovery, we may finally reach the critical threshold of support that we need to convince Congress to enact a single payer national health program – an improved Medicare for all. Can hardly wait.

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Beware the AHIP/PhRMA conspiracy

Posted by on Tuesday, Nov 24, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Drug makers and insurers, longtime rivals, eye an alliance on prices

By Dylan Scott
STAT, November 24, 2015

With rising drug prices such a hot topic here, drug makers and health insurers are both coming under heavy fire.

So much fire that they’re considering a radical response: working together.

After years of relentlessly attacking one another, leaders of the pharmaceutical industry and the health insurance lobby are considering — warily — cooperating to shape any federal legislation that emerges from the public outrage at the high cost of medications.

The two powerful lobbies remain fundamentally at odds in their agendas: In the most basic terms, drug makers want to make as much money as they can for their medicines, and insurance companies want to pay as little as possible.

But both lobbies have new leaders, who recently met for breakfast at a French bistro in what could turn out to be a tentative step toward an alliance. And both are under a lot of pressure from Congress and the Obama administration to figure out a unified response to high drug prices.

Health insurers

Marilyn Tavenner, a reserved, unflappable former hospital executive, took over at America’s Health Insurance Plans, the prominent health insurance lobby, in August. Six months earlier, she had resigned as the head of the federal Centers for Medicare and Medicaid Services, which made her one of the top federal officials overseeing the implementation of the Affordable Care Act.

In an interview with STAT, Tavenner described her goals this way: Stop the public relations battle with the drug lobbying group Pharmaceutical Research and Manufacturers of America over who deserves the blame for drug prices. And start a constructive dialogue about how to fix it.

Shortly after Stephen Ubl was named new head of the PhRMA lobby in September, Tavenner reached out to him, offering a sit-down to get acquainted. This month, they met for breakfast at Poste, an upscale French bistro in downtown Washington.

In terms of approaching lawmakers with a plan on pricing, she said, “I would want to go to PhRMA first and see if there’s something that we can take together as an initial solution. That would be my preference.”

Tavenner’s stance is simple: The insurance industry took a bigger hit under President Barack Obama’s health care law. Its market was significantly overhauled. So this time, it’s pharma’s turn.

“I would argue that [insurance] plans have definitely undergone a fundamental change,” Tavenner said, “and I’m not sure PhRMA’s there yet.”

She pointed to the health care law’s requirement that health plans disclose how much of their premiums are spent on actual health care, as opposed to administrative costs or profits. “Why wouldn’t that apply to PhRMA?” she asked.

Drug makers

Ubl, who started his career in Washington working for Republican Senator Chuck Grassley of Iowa, assumed his post at the beginning of November.

Drug makers… have one of the most experienced and influential lobbies, with big expectations about getting their way. The independent research firm APCO Insight recently ranked PhRMA, and its $200 million annual budget, as the most effective lobbying group in the nation’s capitol.

PhRMA officials in interviews emphasized their interest in working with insurers to find workable policies. But they also spent a lot of time reiterating how much health plans have changed under the Affordable Care Act, leading to consumers paying more of their own money for drugs.

“They are paying more, but not all of that is in relation to us and our products,” said Lori Reilly, PhRMA’s executive vice president for policy and research. “That’s in relation to how the system is changing and how the insurance benefit design has changed in a way that doesn’t always help patients.”

Drug makers want to turn the conversation to one of value — in particular, the value that they say their medicines provide by preventing people from getting sicker. That not only helps the patient but could save money for society in the long run, they argue.

If a breakthrough new drug comes to market, Reilly said, “will it have a big price tag? It might. If we really are moving toward a value-based health care system, then medicines that truly represent value should merit a larger price, and we’re comfortable with saying that should be the case.”

So what now?

Nobody is expecting any major legislation before a new Congress and president are sworn in in 2017. So for now, both sides are publicly posturing, trying to position themselves for backroom negotiations if and when the nitty-gritty work of drafting a bill gets underway.

Political momentum might force the groups into the alliance that Tavenner and PhRMA are weighing. Recent polling has found that drug affordability is Americans’ number-one health care concern, and politicians are responding accordingly.

The Department of Health and Human Services convened a forum on drug prices last week that included top officials from both industries. The star panel featured Merck chief executive officer Kenneth Frazier, who also happens to chair the PhRMA lobby, and Kaiser Permanente chief executive Bernard Tyson, who sits on AHIP’s board.

Their differences were on full display.

Frazier stressed the drug industry’s commitment to value, while cautioning that it’s hard to define that. Tyson argued that the drug market must be overhauled because, in the end, a drug company can price a medication however it wants.

“To me, that says we’re not on a level playing field yet. That’s what the government should be looking at,” Tyson said. “There’s something wrong with the whole ecosystem.”



In new ad, Hillary Clinton puts insurance industry on notice

By David Nather
STAT, November 21, 2015

Democratic presidential candidate Hillary Clinton is featuring her proposal to rein in rising prescription drug prices in a new ad — with a populist twist that turns health insurance companies into the bad guys.

In the ad, released Saturday and being aired in New Hampshire and Iowa, Clinton highlights her history of work on health care issues and promises that one of her next fights will be about about “taking on insurance companies to bring down drug prices.”



Hillary Clinton’s Plan for Lowering Prescription Drug Costs

Hillary for America, The Briefing

Hillary Clinton believes we need to promote competition and leverage our nation’s bargaining power to lower drug costs on behalf of Americans.

Clinton’s plan will ensure that new drugs coming on the market provide value and high quality to consumers, rather than adding to cost without improving treatments and outcomes. Clinton recognizes that new drugs can constitute incredible breakthroughs in treating diseases from Hepatitis C to cancer to heart disease – and we need to ensure that there are proper incentives for real innovations that bring effective products to market. Clinton believes that Americans should not face extreme costs, or pay too much for drugs that do not in actuality improve on available treatments. She has a long and strong record of supporting the evaluation of the value, quality, and comparative effectiveness of new drugs. That’s why she’ll build on provisions in the Affordable Care Act that invest in private research, and other private efforts, to use the results of private-sector analyses to hold drug companies accountable for justifying their costs and ensure Americans pay drug prices that reflect the improved value new treatments provide.


Although what we needed was a single payer national health program, Congress and the Obama administration elected to protect the interests of the insurance and pharmaceutical industries by allowing their powerful lobby organizations, AHIP and PhRMA, to craft health care reform by merely expanding our fragmented, dysfunctional model that placed their interests first while falling far short of goals that were important for patients – universality, affordability, and health care choices.

By merely expanding our fragmented, dysfunctional financing system controlled largely by the private sector, perpetuation of existing problems plus the introduction of new problems by private sector innovations were inevitable. Of course, we’ve seen the expansions in the use of high deductibles which are causing financial hardship, and the increased use of narrow networks which are taking away patients’ choices in health care. As if these weren’t bad enough, the change that has caused the greatest distress, according to polls, has been the skyrocketing prices of drugs.

In decades past, physicians and hospitals were able to raise prices because patients were insulated from the escalating costs by their insurers. But health care spending increased to levels that threatened the affordability of insurance products because of the high premiums that were required to cover health care costs. That led to the managed care revolution, which, though tempered, left insurers in control of health care pricing through provider contracting.

Now that drug plans have become a standard, the pharmaceutical firms are insulated against the potential decline in their market that could occur with patient resistance to escalating drug prices. Although the insurers and pharmacy benefit managers do negotiate some discounts, they have not been able to prevent pricing of treatment regimens in the tens or hundreds of thousands of dollars.

The insurers need the support of their clients in fighting these prices that make their insurance premiums even less affordable. To do this they have created drug tiers which shift outrageous portions of the costs onto the patients. Thus the insurers have enlisted patients in their quest to make drugs once again affordable, while shifting the blame onto the pharmaceutical firms.

So now AHIP and PhRMA are joining forces to forge a compromise between keeping drug prices as high as possible while keeping insurance premiums low enough to maintain their market presence. Who is being left out of the negotiations? The patient.

Just as the Affordable Care Act increased administrative complexity for the benefit of the insurers and drug firms, the current negotiations will introduce more innovations that serve their industries well regardless of the impact on patients.

The likely outcome is that there will be some moderation in pharmaceutical pricing, just as there was with physicians and hospitals, along with an expansion of the principle that the patients must bear an income-depleting portion of the cost so that they don’t use highly expensive drugs that they don’t really need, or so the consumer empowerment theory goes.

People want the government to do something about these outrageous prices. AHIP and PhRMA would like to keep the government out it it. So what is the prospect that we may see truly effective government intervention, beginning with genuine price controls?

This year of presidential politics, nothing will happen. After the election, the Republican approach will be to reduce government involvement and allow the marketplace to work its magic. The problem with that is we already have the most expensive health care system in the world  precisely because we depend too heavily on the markets.

What would the Democrats offer? The leading candidate for president, Hillary Clinton, would “build on provisions in the Affordable Care Act that invest in private research, and other private efforts, to use the results of private-sector analyses to hold drug companies accountable for justifying their costs and ensure Americans pay drug prices that reflect the improved value new treatments provide.” She would rely on the private market!

We have a recipe for expensive, innovative drugs exclusively for the wealthy and whatever cheap generics that can be made available for the rest of us. As stated above, what we need instead is a single payer national health program for all of us.

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How would hepatitis C patients fare under single payer?

Posted by on Monday, Nov 23, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Cost-effectiveness of Early Treatment of Hepatitis C Virus Genotype 1 by Stage of Liver Fibrosis in a US Treatment-Naive Population

By Harinder S. Chahal, PharmD, MSc; Elliot A. Marseille, PhD; Jeffrey A. Tice, MD; Steve D. Pearson, MD, MSc; Daniel A. Ollendorf, PhD; Rena K. Fox, MD; James G. Kahn, MD, MPH
JAMA Internal Medicine, November 23, 2015 (online first)

In the United States, prevalence of chronic hepatitis C virus (HCV) infection is estimated to be 3.2 million and is the leading cause of liver-related deaths, hepatocellular carcinoma, and liver transplant.

With the introduction of HCV nucleotide analogue nonstructural protein 5A and B inhibitors, such as ledipasvir, ombitasvir, dasabuvir, and sofosbuvir, treatment duration has decreased for most patients to 12 weeks or less, with reduced toxic effects by the exclusion of interferon and often with the exclusion of ribavirin. The cure rate with the new therapies generally exceeds 90% and reaches 100% in some subgroups in clinical trials. The new drugs cost $1000 per day or more based on the wholesale acquisition price. Such costs are prohibitive for many patients and health care systems.

From the Discussion

The new HCV interferon-free therapies offer potentially huge individual and societal benefits but at a large cost. Health plans and health systems concerned about costs frequently require evidence of advanced liver fibrosis before authorizing the new therapies. We herein examined the health impact, cost, and cost-effectiveness of earlier treatment.

Although early treatment with sofosbuvir-ledipasvir is expensive, the net cost is substantially lower owing to savings in medical care and the likelihood of later treatment with a delayed treatment policy. Furthermore, we found substantial short- and long-term health gains. Thus, for sofosbuvir-ledipasvir treatment, treating patients at all fibrosis stages compared with waiting for advanced fibrosis is cost-effective (<$50 000 per QALY [quality-adjusted life-years] gained). A detailed analysis of timing of therapy by fibrosis stage shows that treating the disease at as early as stage F1 is cost-effective (ICERs [incremental cost-effectiveness ratios] of $50 000-$150 000 per QALY gained) and less than $50 000 per QALY gained when treatment is initiated at stage F2 vs stage F3. The ICER is lower when treatment is initiated at stage F3 compared with waiting for cirrhosis (stage F4).

Although the new therapies promise a high SVR [sustained virologic response], their long-term effects on clinical outcomes are not yet known. Sustained virologic response, a surrogate marker, may not lead to better long-term health outcomes with new treatments. Past studies with older regimens, however, have shown that achieving SVR can result in positive, long-term clinical benefits for patients. A 2011 systematic review61 found that achieving SVR can reduce liver-related mortality, incidence of hepatocellular carcinoma, and decompensation and foster regression of fibrosis and cirrhosis.

For budgetary considerations, if only 50% of eligible patients with HCV genotype 1 were to be treated with sofosbuvir-ledipasvir during the next 5 years, the cost of drugs in the United States would be $53 billion at current prices. Many payers negotiate prices, as has been seen with exclusivity deals with drug manufacturers. If a mean 46% reduction in drug prices occurred, the cost of treating 50% of patients with HCV genotype 1 during the next 5 years could be as high as $29 billion, partly offset by $3 billion in savings in the management of chronic HCV and advanced liver disease.


This analysis suggests that treatment with new HCV drugs is cost-effective when started with any evidence of fibrosis (stage F1). Because of the investment required for these drugs, budgetary constraints on health systems typically restrict access to insured patients until they experience higher levels of liver damage or failure of older treatments, and uninsured patients would be unable to receive treatment without patient assistance programs. A reduction in the price will improve cost-effectiveness and increase affordability and access.



Treatment of Hepatitis C Virus Infection in Real Life

By Hal F. Yee Jr, MD, PhD
JAMA Internal Medicine, Invited Commentary, November 23, 2015 (online first)

The US Food and Drug Administration approved the first daily oral antiviral for the treatment of hepatitis C virus (HCV) infection in November 2013. This and subsequent antivirals represented a marked improvement compared with the prior regimen of ribavirin and injectable interferon. However, the extraordinary costs of the medications have resulted in controversy as to which patients can and should be offered therapy.

In their joint HCV treatment recommendations, the American Association for the Study of Liver Diseases and the Infectious Disease Society of America (AASLD-IDSA) have recommended treatment “for all patients with chronic HCV infection, except those with limited life expectancy due to nonhepatic causes.”

The AASLD-IDSA panel tacitly acknowledges one of these obstacles in its recommendation that, “if resources limit the ability to treat all infected patients immediately as recommended, then it is most appropriate to treat those at greatest risk of disease complications before treating those with less advanced disease.” How might we reconcile the recommendation to treat all patients with HCV with the real-world constraints facing our patients, physicians, and health care systems?

The most prominent practical challenge faced in treating everyone infected with HCV is, as Chahal and colleagues write, the aggregate costs of the new antivirals. The retail cost of the antivirals for a single course of the most common treatment regimen approaches $100 000. In 2014, the first full year after approval of the initial oral antiviral treatment for HCV, total spending on medications for the treatment of HCV exceeded $12 billion. This amount represented more than 3% of the nation’s total prescription drug expenditures. Moreover, 70% of the increase in spending on prescription drugs during the initial year (ie, 2014) of Medicare expansion related to the Affordable Care Act was owing to spending on anti-HCV agents. Given an estimated 3 million US patients with HCV, funding to treat every infected person immediately appears problematic. Hence, those at the greatest and most urgent risk for clinical complications of their infection should be treated first as recommended by the AASLD-IDSA panel.

Less noticed than medication costs, but equally important to patients with HCV, is the difficulty of gaining access to a physician who can initiate treatment promptly. Many explanations for this difficulty exist. Notably, patients with liver diseases, including HCV, are represented disproportionally in populations with health disparity that have poorer access to clinical care, especially high-cost specialty care. In addition, these populations have cultural, environmental, and social determinants that negatively affect their health outcomes. Such patients face challenges such as being uninsured or underinsured, residing in locations far from specialty care or lacking transportation, not speaking or reading English, or lacking the ability to navigate a complex health care environment. Approaches for treating HCV that are equitable, so that every patient has fair access to treatment, and efficient, so that as many patients as possible can be offered therapy with the resources that are available, must be established.

Robust debate continues about which individuals to treat for HCV. Targeting those individuals at the greatest and most urgent risk for complications of HCV makes sense but only accomplishes a kind of triage. Policy and market initiatives to reduce the cost of HCV medications would enable treatment of many more people. Finally, individuals with HCV are overrepresented in health-disparity populations, and we must put in place mechanisms to reduce barriers to equitable care.



Expensive Drugs That Cure Hepatitis C Are Worth The Cost, Even At Early Stages Of Liver Fibrosis

By Laura Kurtzman
UCSF, November 23, 2015

It is worthwhile to give patients expensive new drugs that can cure their hepatitis C much earlier than some insurers are now willing to pay for them, according to a UC San Francisco study that models the effects of treating the disease early versus late in its development.

Researchers said they were surprised by the findings, since the drugs can cost up to $100,000 for a full course of treatment. But when they factored in the long-term medical cost of delaying treatment for hepatitis C, they found the savings, in combination with improvements in the quality of patients’ lives, were enough under current standards to justify using them even at early stages of liver fibrosis. Researchers said the drugs were therefore cost effective.

“The budgetary implications of widespread treatment are quite large at current drug prices,” said James G. Kahn, MD, MPH, a professor in the UCSF department of epidemiology and biostatics, as well as medicine. “However, these costs are time-limited, and they are lower than some other treatments that are less effective. In the U.S., we spend more than $140 billion a year treating cancer, often with less health benefit than is provided by the new hepatitis C treatments.”

The researchers said it was important to broaden the discussion beyond cost-effectiveness, to include the price of drugs.

“The benefits of early therapy are significant, since it increases the number of healthy life years for patients and decreases their chances of getting serious liver diseases, like liver failure and liver cancer,” said Harinder Chahal, PharmD, MSc, an assistant adjunct professor in the UCSF department of clinical pharmacy. “But the current prices are keeping early treatment out of reach for many patients, and this needs to be addressed.”


This important study shows that the new hepatitis C drugs, such as Harvoni, are cost effective for early disease as well as late disease. The problem is that about 3.2 million people have hepatitis C infections, and, at a per-patient cost of close to $100,000, the implications are huge for public and private health care budgets.

Not only is money an issue, but the populations disproportionately affected have health disparities with poorer access to clinical care, and are often uninsured or underinsured. As Hal Yee states in his commentary, “Approaches for treating HCV that are equitable, so that every patient has fair access to treatment, and efficient, so that as many patients as possible can be offered therapy with the resources that are available, must be established.”

One of the more important measures that we could adopt to address this disparity would be a single payer national health program. Not only would everyone be fully covered, but also a well designed single payer system improves resource allocation, thereby improving access.

As far as the high prices paid for these new drugs, a single payer system would use administered pricing to obtain the best value, much as we already do with our Medicaid and VA drug programs.

Also, once the people of our nation have accepted the reality that public funding and public administration of our health care financing system create much greater value for us, they may also accept the principle that our government should play a greater role in guiding pharmaceutical research and development in the direction of providing us with even greater value for our drugs and biologics while directing the industry away from drug development policies designed primarily to further enrich the billionaires.

Oh, and generously fund the needle exchange programs since that is now the primary source of hepatitis C transmission. You can fund an awful lot of needles and syringes with the $100,000 that it costs to treat just one hepatitis C patient.

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Following up on my last blog post about how the pharmaceutical industry rips us off with its greed and disregard for the public interest, we need now to ask a more fundamental question—whether health care costs can ever be contained across the medical-industrial complex, given the failure of past incremental reform attempts, including the ACA after almost six years since its passage? Even more important, it seems obvious that we can never achieve universal access to affordable care unless and until we can get control of health care costs.

A brief look at cost containment under the ACA shows the dimensions of the problem, now reaching crisis proportions:

  • Drug prices are going through the roof, without any price controls, especially for specialty drugs; examples include Sovaldi, at $1,000 a pill, costing $84,000 for a 12-week treatment of hepatitis C ($94,500 when combined with another agent) (1), Daraprim at $750 a tablet after an overnight price hike of 5,000 percent for the life-threateningtoxoplasmosis (the price may be reduced later due to public outrage) (2), and the combination of Yervoy and Opdivo for advanced melanoma at $250,000 for the first full year of treatment. (3)
  • Cell and gene therapies for leukemia are now coming into use at a price of more than $500,000 per patient, according to Citigroup. (4)
  • Even if insured, patients can expect to pay at least 40 percent of these costs under insurers’ policies of “adverse tiering” for specialty drugs.
  • Specialty pharmaceuticals are estimated to account for 50 percent of drug spending by 2019. (5)
  • Most major pharmaceutical companies have either been convicted of fraud or reached fraud settlements for such practices as price manipulation and kickbacks.
  • As hospital systems expand and consolidate, they may raise prices by as much as 40 or 50 percent. (6)
  • We waste an estimated $150 billion a year on hospital bureaucracy and another $300 billion on private insurers’ overhead and the paperwork they impose on physicians. (7)
  • By 2024, U. S. health care spending is expected to account for almost one-fifth of our GDP. (8)

What happens when a patient has to deal with these rapidly increasing health care costs, especially when so many Americans are uninsured, underinsured, with stagnant annual incomes not keeping up with inflation? First, of course, many forgo care; already one in five don’t fill a prescription, and that number will certainly increase as more specialty drugs come on line. Patients confronting a new serious illness, such as cancer, may be helped by community support through bake sales and other efforts, but that is just another indicator of a system that doesn’t work. In desperation some may seek help by turning to crowd-funding or social media. (9) But many will be forced to forgo care altogether, have worse outcomes that could have been prevented in a more fair system with effective mechanisms of cost containment. Some will also end up declaring bankruptcy due to medical bills.   

Meanwhile, of course, the impacts of continuing unrestrained prices and costs of health care will have a devastating impact on public programs such as Medicare and Medicaid. Taking hepatitis C as an example, it is a serious illness affecting some 3.5 million Americans that can now be cured by Sovaldi and its accompanying agent at a cost approaching $100,000 per patient. Many of these patients depend on Medicaid for care, but Medicaid chiefs from both red and blue states are already calling for outright price controls and/or federal help to states trying to provide this treatment. (10)

Given the present political landscape in Congress, we can expect this appeal to fall on deaf ears, more cutbacks of an already underfunded Medicaid program, and a growing public health problem as hepatitis C remains undertreated. Medicaid programs in Pennsylvania are already denying nearly half of prescriptions for its treatment. (11)

We operate as if we can afford everything that our mostly for-profit health care industry brings to market, with little concern for its scientific evidence or individual, family, and governmental budgets. Already we know that up to one-third of health care services that are provided are either inappropriate or unnecessary, with some actually harmful. (12) More than 30 million full-body CT scans are performed each year for screening purposes, despite the lack of evidence of benefit or approval by the FDA or the American College of Radiology. (13) Dr. Peter Bach, oncologist at Sloan-Kettering Cancer Center, has estimated that 30 to 40 percent of spending on cancer care is of marginal value. (14)

Despite the goal of the ACA to make health care more affordable, we have to admit that it has failed to do so, and that containment of health care costs is still just an illusion in this country. Drug companies, medical device makers, hospital systems, and insurers are still free to set prices at what the traffic will bear, while the government is prohibited from negotiating prices, the FDA is permissive in some of its approvals, and cost-effectiveness analysis is not part of how we approach coverage or reimbursement policies.

Here are just three markers of how unaffordable health care is now, clearly a financial hardship for much of our population and unsustainable even into the near future:

  • The costs of health care for a typical family of four covered by an average employer-sponsored PPO plan in 2015 is $24,671; they have more than doubled over the last ten years, and will exceed $25,000 in 2016. (15)
  • The median annual income for American households in 2015 is about $53,800.
  • Because of the high cost of cancer drugs and care, patients with cancer in the U. S. are more than twice as likely to declare bankruptcy as patients with other diseases. (16)

We have to recognize that the more unaffordable health care becomes, the less access to essential care Americans have and the worse their outcomes will be. In order to fix this huge and growing problem, we need to think much more broadly about needed approaches, which will have to include a larger role of government to rein in excesses of the free market.  Single-payer national health insurance would allow the government to negotiate drug prices, establish annual budgets for hospitals and other facilities, and start a transition toward a more service-oriented industry. Other approaches would also help, including increased scrutiny of mergers among hospitals and drug companies, increased anti-trust enforcement, shortening patents that now extend monopolies, ending pay-for-delay by drug companies, banning direct to consumer advertising, restricting the revolving door between government, K street and industry, and tougher penalties for health care fraud.

Pie in the sky? Yes, if we think we can’t ever do it. But no, if we look at what almost all other advanced countries have already done.    


1. Rockoff, JD. Once-a-day hepatitis pill approved. Wall Street Journal, October 11-12, 2014: B1.

2. Pollack, A. Drug goes from $13.50 a tablet to $750 overnight. New York Times, September 20, 2015.

3. Loftus, P, Winslow, R. Melanoma treatment will cost $250,000. Wall Street Journal, October 2, 2015: B2.

4. Plumridge, H. Cancer therapies face hurdles getting to patients. Wall Street Journal, October 7, 2014: B1.

5. Express Scripts. 2011 drug trend report (Internet). St. Louis, MO, Express Scripts, April 2012.

6. Pear, R. F.,T.C. wary of mergers by hospitals. New York Times, September 17, 2014.

7. PNHP press release. Bureaucracy consumes one-quarter of U. S. hospitals’ budgets, twice as much as in other nations. Physicians for a National Health Program. Chicago, September 8, 2014.

8. Potter, W. The more skin in the game, the more Wall Street likes it. The Progressive Populist, April 15, 2015.

9. James, SD. Crowd-funding can help cure cost of cancer care. NBC News, June 4, 2015.

10. Associated Press. States ask Congress to intervene on drug prices. St. Louis Post-Dispatch, October 19, 2014.

11. Sapatkin, D. Medicaid denies half of prescriptions for new hepatitis C drugs, Penn study finds. Philly.com, November 14, 2015.

12. Wennberg, JB, Fisher, ES, Skinner, JS. Geography and the debate over Medicare reform. Health Affairs Web Exclusive W-103, February 13, 2002.

13. Brenner, DJ, Hall, EJ. Computed tomography—an increasing source of radiation exposure. N Engl J Med 357: 2277-2284, 2007.

14. Bach, P, as quoted in McNeil, C. Sticker shock sharpens focus on biologics. News. J Natl Cancer Inst 99 (12): 911, 2007.

15. 2015 Milliman Medical Index. Will the typical American family of four be driving a “Cadillac plan” by 2018? Milliman Research Report, Seattle, WA.

16. Ramsey, S, Blough, D, Kirchhoff, A et al. Washington State cancer patients found to be at greater risk of bankruptcy than people without a cancer diagnosis. Health Affairs (Millwood) 32 (6): 1143-1152, 2013.

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The Commonwealth Fund demonstrates again that ‘Affordable Care Act’ is a misnomer

Posted by on Friday, Nov 20, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

How High Is America’s Health Care Cost Burden?

By Sara R. Collins, Munira Gunja, Michelle M. Doty, Sophie Beutel
The Commonwealth Fund, November 20, 2015


*  Health care costs are unaffordable for 25% of privately insured working-age people

*  53% of privately insured people with low incomes have unaffordable health care costs


One-quarter of privately insured working-age adults have high health care cost burdens relative to their incomes in 2015, according to the Commonwealth Fund Health Care Affordability Index, a comprehensive measure of consumer health care costs. This figure, which is based on a nationally representative sample of people with private insurance who are mainly covered by employer plans, is statistically unchanged from 2014. When looking specifically at adults with low incomes, more than half have high cost burdens. In addition, when privately insured adults were asked how they rated their affordability, greater shares reported their premiums and deductible costs were difficult or impossible to afford than the Index would suggest. Health plan deductibles and copayments had negative effects on many people’s willingness to get needed health care or fill prescriptions. In addition, many consumers are confused about which services are free to them and which count toward their deductible.

Exhibit 4

How easy or difficult is it for you to afford your deductible?

<200% FPL:  51% very difficult or impossible, or somewhat difficult

200%-399% FPL:  51% very difficult or impossible, or somewhat difficult

>400% FPL:  32% very difficult or impossible, or somewhat difficult


This update using the Commonwealth Fund Health Care Affordability Index demonstrates that health care remains unaffordable for one-fourth of privately insured adults and for over half of privately insured adults with incomes below 200% of the federal poverty level (FPL).

Of the several statistics in this report, one of the more telling is the percentage of people who find that their deductibles are unaffordable. Half of those with incomes below 400% FPL found their deductibles difficult to afford, but, perhaps more astonishingly, one-third of those with incomes above 400% FPL did as well ($46,680 for an individual or $95,400 for a family of four).

This is yet one more report that confirms that “Affordable Care Act” is a misnomer. Single payer please.

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ACA designed by and for the insurers, and yet they may walk

Posted by on Thursday, Nov 19, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

UnitedHealth May Quit Obamacare in Blow to Health Law

By Zachary Tracer
BloombergBusiness, November 19, 2015

The biggest U.S. health insurer is considering pulling out of Obamacare as it loses hundreds of millions of dollars on the program, casting a pall over President Barack Obama’s signature domestic policy achievement.

UnitedHealth Group Inc. has scaled back marketing efforts for plans sold to individuals this year and may quit the business entirely in 2017.

While millions of Americans have gained coverage under Obamacare since new government-run marketplaces for the plans opened in late 2013, in UnitedHealth’s case they haven’t been the most profitable. Customers the company has added have tended to use more medical care. UnitedHealth also said today that some people are signing up for coverage, getting care and then dropping their policies.

“We cannot sustain these losses,” Chief Executive Officer Stephen Hemsley told analysts on a conference call. “We can’t really subsidize a marketplace that doesn’t appear at the moment to be sustaining itself.”

UnitedHealth said it expects as much as $500 million in losses on the Obamacare plans in 2016.

While UnitedHealth has been slower than some of its rivals to sell Obamacare policies, the announcement may indicate that other insurers are struggling, said Sheryl Skolnick, an analyst at Mizuho Securities.

“If one of the largest and presumably, by reputation and experience, the most sophisticated of the health plans out there can’t make money on the exchanges, then one has to question whether the exchange as an institution is a viable enterprise,” Skolnick said.

Anthem and Aetna have said they’ll be patient as the exchange business develops, and that they expect it to eventually become profitable.

“It’s way too early to call it quits on the ACA and on the exchanges,” Aetna CEO Mark Bertolini said on an Oct. 29 conference call. “We view it still as a big opportunity for the company.”

Still, Bertolini said the market “remains challenging,” and Aetna reduced the number of states where it sells coverage to 15 for next year from 17.

Anthem said in late October that the company may need to wait until 2017 or 2018 for the individual exchange business to improve.


The Affordable Care Act was designed by the nation’s largest insurers to serve the interests of the nation’s largest insurers. It was almost as if the patients were not much more than a necessary nuisance, required only because an insurance market requires patients to purchase their plans. How is it working out for the insurers?The largest insurer in the nation – UnitedHealth  – has scaled back their marketing of ACA exchange plans and is considering totally exiting the exchanges by the end of next year. Two of the other largest insurers – Anthem and Aetna – have yet to profit from the exchanges and are waiting to see if the exchange business will improve before they decide about the future.

It is no secret what happened. The insurers had to agree to crucial reforms in the insurance market. They had to accept higher cost individuals with preexisting disorders; they had to cover ten categories of health care benefits; they had to limit excess administrative costs and profits by agreeing to minimum medical loss ratios, and they had to submit higher premium increases to insurance regulators for greater public scrutiny.

In other words, they had to agree to market basic insurance products to anyone who was eligible for them. With these requirements, premiums would be unaffordable for all but the wealthy. Thus ACA was crafted to keep premiums down by making lower actuarial value plans the standard – requiring greater cost sharing by patients, though with government subsidies for lower-income individuals. ACA also was crafted to provide government subsidies for the premiums to assist lower-income individuals with the purchase of these plans. That still was not enough so they used the leverage of narrow provider networks to contract for cheaper medical services, and they increased the deductibles, shifting more of their costs to patients.

Guess what. It isn’t working – for the insurers or the patients. Congress dumped on us an administratively complex system that has made it almost impossible for the insurers to offer a product with affordable premiums that still meets the basic plan elements required by the legislation. For the patients, the premiums and deductibles are not affordable for the average family, and they have had to give up their health care choices because of the narrow networks selected by the insurers.

Congress and the Obama administration did this one for the insurers. Yet the insurers are beginning to back out now. That’s just fine because it will allow us to replace them with a financing plan that is designed for patients instead. A well designed single payer national health program would make health care affordable for everyone while returning to them their choices in health care delivery.

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Why is Aetna designing plans for diabetics?

Posted by on Thursday, Nov 19, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

New Health Plans Offer Discounts For Diabetes Care

By Michelle Andrews
Kaiser Health News, November 17, 2015

Talk about targeted. Consumers scrolling through the health plan options on the insurance marketplaces in a few states this fall may come upon plans whose name — Leap Diabetes Plans — leaves no doubt about who should apply.

Offered by Aetna in four regions next year, the gold-level plans are tailored for the needs of people with diabetes. They feature $10 copays for the specialists diabetics need such as endocrinologists, ophthalmologists and podiatrists, and offer free blood sugar test strips, glucose monitors and other diabetic supplies. A care management program with online tools and coaching helps people manage their condition day-to-day. The plans also offer financial incentives, including a $50 gift card for getting an A1c blood test twice a year to measure blood sugar levels and a $25 card for hooking up a glucometer or biometric tracker to the Aetna site.

It’s unclear whether the diabetes plans are a good buy for people with diabetes. The cut rates for specialist visits only apply if they’re related to diabetes care, not for other conditions someone may have. Meanwhile, coverage for medications, which may cost consumers hundreds of dollars every month, is no different in the diabetes plans than in other gold plans.

This isn’t the first time that an insurer has designed a health plan for people with diabetes, but it appears to be the first on the health insurance marketplaces. They are part of a new line of plans Aetna is introducing, called leap plans, aimed at helping Aetna build its retail business. Aetna says they are simpler to use and will have more personal customer service.


Aetna Innovation Health Leap Gold Diabetes Plan


Private insurers use innovation to maintain a competitive marketplace presence for their insurance products. Health care costs are so high that premiums become unaffordable without the introduction of innovations. Two ubiquitous examples are lower-cost narrow networks of providers, and shifting health care costs to patients through higher deductibles. Now Aetna is introducing an innovative plan targeted to one specific disorder – diabetes. How does this work, and who benefits?

This is a somewhat bizarre innovation since insurers traditionally have used various devious strategies to try to avoid selling their products to individuals anticipated to have higher health care costs. Diabetics certainly fall into this category. So what are they doing here that makes this a rational strategy?

It should be noted that the Aetna Innovation Health Leap Gold Diabetes Plan is a gold plan with an actuarial value of 80 percent (the individual pays 20 percent of the average costs of covered services). Lower-income individuals who would be eligible for subsidies for their covered out-of-pocket expenses must buy a silver plan (70 percent actuarial value) to qualify for those subsidies. So this plan is designed for individuals with higher incomes that would disqualify them for the out-of-pocket subsidies – individuals who would be more capable of paying higher premiums and greater out-of-pocket expenses anyway – the carriage trade.

So how can Aetna keep these plans affordable if they are deliberately marketing them to individuals with diabetes? First of all, they do increase the premium paid for the plan since patients would think that it is worth the difference because they are getting a plan that is customized to take better care of their diabetes. The insurers also use other innovations to keep spending under control. For example, although they include in their networks enough providers to take care of diabetes, they can keep the rest of the network as narrow as possible, thereby impairing access to care beyond their diabetes.

So how well is diabetes covered under this plan? In the example given – routine maintenance of well-controlled type 2 diabetes – for $5,400 of allowed costs, the plan pays $2,720 and the patient pays $2,680 – almost half. However, Aetna includes the disclaimer that “Your own costs will be different depending on the care you receive, the prices your providers charge, and the reimbursement your health plan allows.”

For individuals with significant disorders such as diabetes, out-of-network care is common and may be unavoidable. The deductible for an individual for out-of-network care in this Aetna plan is $20,000 ($40,000 for a family) and only allowed charges apply. The patient is also responsible for a coinsurance of 50% after the out-of-network deductible is met. Thus if the patient is charged $50,000 for out-of-network care, and the charge allowed by the insurer is $20,000, the patient must pay the entire $50,000 charge, and Aetna pays nothing.

Suppose the out-of-network charges are $50,000 but the insurer’s allowed charges are $30,000. In this case the patient pays the $20,000 deductible, $5,000 of the remaining allowed charges, and the $20,000 balance that was not allowed – a total of $45,000. The insurer pays $5,000 or a mere 10% of the bill.

Other features of the plan are of concern. The plan uses tiering of pharmacy benefits, and the patient could end up with very large out-of-pocket costs for their essential diabetes medications. Weight loss programs and bariatric surgery are specifically excluded even though many diabetics could benefit from these services. Several out-of-network services require precertification or the patient pays not only the $20,000 deductible and the 50% coinsurance, but would also have a penalty of a 50% reduction in the meager allowed benefits, up to $400. And so on.

So who gains? A diabetic patient might be better off if the only care received is for diabetes,  but diabetics have a high incidence of serious concomitant disorders. Under this plan care for conditions other than diabetes could be restricted by narrower networks, higher cost sharing, and other restrictions of the plan. Plus the premium paid is higher. The insurer can benefit by providing a product that might have market appeal for a given sector (diabetics), resulting in greater enrollment. However, the insurer does bear some risk. The additional premium and the restrictions and cost sharing in the plan may not be enough to offset the additional costs of care that diabetics require, not to mention that an increase in insurer profits might not be realized.

Perhaps the most fundamental flaw with this proposal is that one condition is selected for better coverage whereas all other conditions have offsetting direct or indirect reductions in coverage, which goes one step further in disrupting the risk pooling that is essential in well functioning insurance programs. It is moving away from the direction in which we should be headed.

Just think of how single payer would eliminate these issues without having to play the games devised by the private insurers for their own benefit.

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Is public health no longer relevant?

Posted by on Thursday, Nov 19, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

The Future of Public Health

By Thomas R. Frieden, M.D., M.P.H.
The New England Journal of Medicine, October 29, 2015

The Role of Government

A responsive government can maintain that people are responsible for their own health while also taking public health action that changes default choices to make it easier for people to stay healthy. Key public health actions do one of three things, all of which are now well accepted but were initially controversial. The first is to promote free and open information — such as truth-in-advertising laws and nutrition-facts panels. The second is to protect people from harm caused by others — for example, by detecting adulterated food, prohibiting alcohol-impaired driving, and protecting workers and the public from second-hand smoke. Legal and policy changes in this area often both reflect and accelerate changes in social norms. The third is to implement societal interventions when individuals cannot efficiently or effectively protect their own health through such policies as vaccination mandates, clean air regulations, water fluoridation, micronutrient fortification of food, and elimination of lead in paint and gasoline — interventions that have all greatly improved the health of Americans.

The Future

In the future, clinical medicine could see costs increase without substantial improvement in health outcomes. Alternatively, new delivery models and technology could substantially increase healthy life expectancy. The public health field, for its part, may not be able to keep pace with changing risks and increased opposition to core public health actions that promote healthy living — or it could expand its past successes to further reduce tobacco and alcohol use, control persistent infectious diseases, increase physical activity, improve nutrition, and reduce harms from injuries and other environmental risks.

By working more closely together, clinical medicine and public health can help each other improve health maximally — and emphasize society’s responsibility to promote both healthy environments and consistent, high-quality care. Public health organizations can publicize information on health outcomes and risks that clarifies the need for, or achievement of, substantial progress. Clinical experts can identify and validate preventable harms and effective interventions to protect patients.

The involvement of many parts of society, including government agencies, health organizations, nongovernmental organizations, clinicians, the private sector, and communities, is increasingly important for success. Everyone benefits when people are healthier.

Accountability for outcomes is essential — public health’s obsession with denominators can reduce the number of people missed by interventions that improve health and save lives. Working together, clinical medicine and public health can ensure that people live active and productive lives far longer than was ever thought possible.

(Thomas R. Frieden, MD, MPH, is the Director of the Centers for Disease Control and Prevention [CDC])



Public Health’s Falling Share of US Health Spending

By David U. Himmelstein, MD, and Steffie Woolhandler, MD, MPH
American Journal of Public Health, November 12, 2015 (online ahead of print)


We examined trends in US public health expenditures by analyzing historical and projected National Health Expenditure Accounts data. Per-capita public health spending (inflation-adjusted) rose from $39 in 1960 to $281 in 2008, and has fallen by 9.3% since then. Public health’s share of total health expenditures rose from 1.36% in 1960 to 3.18% in 2002, then fell to 2.65% in 2014; it is projected to fall to 2.40% in 2023. Public health spending has declined, potentially undermining prevention and weakening responses to health inequalities and new health threats.


An analysis of the economic and political forces driving public health funding is beyond the scope of this brief report, but it is clear that public health funding has languished over the past decade. It is projected to continue falling as a share of overall health spending, although, like any projection, this should be interpreted cautiously.

The Affordable Care Act originally promised a $15-billion boost in public health funding. However, a 2012 law cut funding for the Affordable Care Act’s Prevention and Public Health Fund by $6.25 billion. Sequestration, which cut federal spending across the board beginning in 2013, reduced it even further; fiscal year 2015 appropriations are less than half the $2 billion originally budgeted.

Meanwhile, many state and local governments — the main source of public health dollars — have faced fiscal challenges. Whereas state medical care spending has continued to increase, public health spending has not.

There is no absolute measure of the optimal level of public health spending. However, an Institute of Medicine panel recently concluded that public health agencies are markedly underfunded, and that US health spending is out of balance, with spending for clinical care disproportionately high compared with spending for “population-based activities that more efficiently and effectively improve the nation’s health.” The current trajectory of health spending seems unlikely to close the funding gap identified by the Institute of Medicine panel.


A century ago life expectancy was 54. Today it is 79. Public health has played a much greater role in realizing this gain than has clinical medicine. Although most health funds are being directed to clinical services, public health services will need support to continue and to expand the gains that have been more important to society as a whole.

Government must remain responsive to the nation’s health needs. Recognizing that, Congress included in the Affordable Care Act a $15 billion boost in public health funding. However, that was reduced in 2012 legislation by $6.25 billion, and then further reduced by sequestration. Public health appropriations for 2015 are less than half of the $2 billion budgeted.

How can these reductions be justified? The need for austerity? Not based on the billions of dollars being fed into the coffers of the wealthiest amongst us. Less need for government public health services? Not unless we are willing to accept a surge in preventable disease epidemics and injuries from public hazards. Can we justify these reductions based on the ideological principle that the responsibility for health should be shifted from the government to the individual? Even ideologues can suffer or die from uncontrolled epidemics, from uncorrected public hazards, or because of a lack of beneficial interventions that were not implemented.

In addition to these important public health actions, we would also benefit by adopting a government-run health care financing system – a single payer national health program. The failure to act makes our Congress one of the greatest public health hazards that we face. Electing the right people to Congress may be the most important single measure that we could take to maintain and improve the health of our nation.

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The recent 5,000 percent overnight price increase of Daraprim brought the crisis of drug costs once again to the front burner of public discussion and outrage. Daraprim is a 62-year-old drug that is the standard of care for treating toxoplasmosis, a life-threatening parasitic infection. It was acquired a month earlier by Martin Shkreli, a former hedge fund manager turned CEO of start-up Turing Pharmaceuticals. Shkreli has admitted that the drug costs less than $1 a tablet to make, and that it sold for $13.50 a tablet until he increased the price to $750 a tablet. At 32, Shkreli had a checkered past on Wall Street, having started MSMB Capital, a hedge fund in his 20s, after which he lobbied the FDA not to approve drugs that he was shorting, then starting Retrophin, another pharmaceutical company in 2011, from which he was fired by its board last year for allegedly using it as his personal piggy bank to pay back angry investors. He remains unrepentent, now saying that “This isn’t a greedy drug company trying to gouge patients, it is us trying to stay in business.” (1)

This is not an isolated example, just the latest of a longer-term problem—pharmaceutical companies buying up rare drugs, then making huge price increases. Of the 25 drugs with the fastest-rising prices over the past two years, 20 are owned or have been acquired by firms that were involved in hedge fund, private equity or similar speculative attacks during that time. As pharmaceutical companies, speculators and investors pocket enormous profits, patients lose as this pattern gets repeated time after time:

  • “Speculative capital is used to acquire an existing branded drug
    from an established pharmaceutical company.
  • Because the drug is branded, no generic exists, and the producer is
    granted a monopoly on the sale of the drug.
  • Once the acquisition is completed, the company drastically
    increases the price of the pharmaceutical.
  • Because no generic exists, customers who need the drug are forced
    to accept any price dictated by the companies.” (2)

As Dr. Marcia Angell, former editor of the New England Journal of Medicine, has documented in her excellent book, The Truth About the Drug Companies: How They Deceive Us and What to Do About It, Big PhRMA has a long history of exploitive pricing and business practices. Here are some of the ways by which they serve themselves with total disregard for the public interest:

  1. Buy up drugs to avoid generics—“pay to delay.” Pay for delay agreements are frequently made by brand-name pharmaceutical companies to pay a generic competitor to hold its competing generic product off the market for a specified period of time, thereby avoiding competition for a lower-priced generic. The Federal Trade Commission has investigated many of these agreements and brought enforcement actions against some; overall they are estimated to cost American consumers $3.5 billion a year. (3)
  2. Combine two old drugs and charge much more. Duexis is a pain-reliever that combines two old drugs, the generic equivalents of Motrin and Pepcid. When prescribed separately, the two together would cost no more than $40 a month, but about $1,500 a month as Duexis. Horizon Pharma, its manufacturer, has developed a system, “Prescriptions Made Easy” to circumvent efforts by insurers or pharmacists to switch patients to generic components, or even to over-the-counter versions. (4)
  3. Exaggerate the costs of research and development. Although the drug industry claims to spend an average of $1.3 billion on R & D to bring out a new drug, an exhaustive 2011 study put that number at $98 million in U. S. dollars (5); moreover, about 85 percent of the industry’s products are not innovative, just “me too” drugs, with a slight change in structure intended to replace a drug that is going off patent. (6)
  4. Oppose price controls. The drug industry has long lobbied against price control and importation of drugs from Canada or other countries. As one example, Billy Tauzin, a former Democrat turned Republican Congressman from Louisiana, played a leading role in the design and passage of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA), which turned the prescription drug benefit over to the private sector and prohibited the government from negotiating drug prices. (7) As a result, the prices the government pays for prescription drugs under Medicare Part D is 73 percent higher than for Medicaid and 80 percent higher than for the Veterans Administration, (8) while the prices for the 30 top-selling drugs in the U. S. have risen almost four times as fast as the volume of prescriptions between 2010 and 2014. (9)
  5. Deceptive direct to consumer advertising (DTC). Although banned in many countries, DTC has burgeoned in the U. S. since the later 1990s, typically hyping the benefits of drugs and often selling us new “diseases,” such as erectile dysfunction and low testosterone, and even the risk of disease, such as osteopenia for osteoporosis. DTC has led to exponential increases in drug sales and profits, encourages patients to engage in self-diagnosis and to seek specific medications from their physicians, who often respond to their requests. (10)
  6. Phase IV drug trials, also known as “seeding trials,” lack scientific credibility. They are typically run by drug companies’ marketing departments, with harmful effects not publicized, as in the case of Pfizer’s seizure drug, Neurontin, where later litigation documents showed that this “study” was more marketing than research. (11)
  7. In an effort to reduce costs and increase profits, many drug companies outsource manufacturing of their drugs to other countries. In many cases, the quality of their products is thereby compromised. (12)

As a result of these kinds of pricing and business practices, Americans are forced to pay the highest prices in the world for pharmaceutical products. Gilead’s new drug Sovaldi, combined with another agent into a single once-a-day pill for hepatitis C, will cure most patients over a 12-week course, but its cost of $94,500 will break the bank for patients, families, and government payers at both federal and state levels. (13) Many newer cancer drugs cost more than $100,000 a year, with some priced even higher, such as Bristol-Myers Squibb’s latest melanoma treatment at $250,000 over a year. (14) As a consequence of these costs, one in five Americans forgo treatment with these drugs. A recent poll by the nonpartisan Kaiser Family Foundation found that Americans across the political spectrum believe the cost of prescription drugs is their number # 1 health concern, with 63 percent calling for government action (even including 56 percent of Republicans). (15)

The cost of prescription drugs is becoming a campaign issue in the 2016 presidential election cycle. So far the Republican candidates have been mostly silent on the issue. Senator Bernie Sanders, who for many years favored Medicare using its bargaining power to negotiate drug prices, has introduced a bill in the Senate, the Prescription Drug Affordability Act of 2015, that would: allow importation of drugs from Canada, end “pay-for-delay,” require more transparency from drug companies about their R & D, and impose stricter penalties for fraud convictions of major branded drug makers. (16) Hillary Clinton is competing with Bernie on this issue by recently calling for capping out-of-pocket drug expenses at $250 a month, drug makers to spend a defined portion of their profits on R & D, allowing importation of lower-cost drugs from other countries, allowing Medicare to negotiate drug prices, and ending tax breaks for pharmaceutical advertising. (17)

The cost of prescription drugs has reached crisis proportions in this country. Patients, families and government payers can no longer afford the outrageous costs by an out-of-control drug industry that puts greed over the public interest. This problem can be fixed with broad non-partisan support and political will that challenges PhRMA.


1.Pollack, A. Drug goes from $13.50 a tablet to $750 overnight. New York Times, September 20, 2015. http://www.nytimes.com/2015/09/21/business/a-huge-overnight-increase-in-a-drugs-price-raises-protests.html?_r=0

2. Hedge funds attack American health care. Hedge Clippers, September 30, 2015.

3. FTC Staff Study. Pay-for-Delay: How Drug Company Pay-Offs Cost Consumers Billions. Federal Trade Commission, January 2010.

4. Pollack, A. Drug makers sidestep barriers on pricing. New York Times, October 19, 2015.

5. Light, DW, Warburton, R. Demythologizing the high costs of pharmaceutical research. BioSocieties, 2011, pp. 1-17.

6. Light, DW (ed) The Risk of Prescription Drugs. New York. Columbia University Press, 2010.

7. Adamy, J, Hitt, G. CEOs tally health-bill score. Wall Street Journal, October 19, 2009: A3.

8. Gower, K. Big PhRMA price-gouges Medicare Part D, study shows. Public Citizen News, September/October 2015, p. 13.

9. Walker, J. Price increases drive drug firms’ revenue. Wall Street Journal, October 6, 2015: A1.

10. Rosenberg, M. Fourteen years of deceptive television drug advertising. OpEdNews.com. Reprinted from Public Citizen’s Health Research Group in Health Letter 27 (5): 7, 9, 2011.

11. Krumholtz, SD, Egilman, DS, Ross, JS. Study of Neurontin: titrate to effect, profile of safety (STEPS) trial. Arch Intern Med 171 (12): 1100-1107, 2011.

12. Loftus, P. New lapses at J&J’s Doxil supplier. Wall Street Journal, December 9, 20122: B4.

13. Rockoff, JD. Once-a-day hepatitis pill approved. Wall Street Journal, October 11-12, 2015: B1.

14. Loftus, P, Winslow, R. Melanoma treatment will cost $250,000. Wall Street Journal, October 2, 2015: B2.

15. Perrone, M. Drug prices top Americans’ list of health care concerns. The Washington Post, October 28, 2015.

16. Sanders, B. Statement. The Prescription Drug Affordability Act of 2015. September 10, 2015.

17. Healy, P, Sanger-Katz, M. Hillary Clinton proposes cap on patients’ drug costs as Bernie Sanders pushes his plan. New York Times, September 22, 2015.

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Many find that high deductibles make their ACA plans all but useless

Posted by on Monday, Nov 16, 2015

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Many Say High Deductibles Make Their Health Law Insurance All but Useless

By Robert Pear
The New York Times, November 14, 2015

Obama administration officials, urging people to sign up for health insurance under the Affordable Care Act, have trumpeted the low premiums available on the law’s new marketplaces.

But for many consumers, the sticker shock is coming not on the front end, when they purchase the plans, but on the back end when they get sick: sky-high deductibles that are leaving some newly insured feeling nearly as vulnerable as they were before they had coverage.

In many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more, a New York Times review has found. Those deductibles are causing concern among Democrats — and some Republican detractors of the health law, who once pushed high-deductible health plans in the belief that consumers would be more cost-conscious if they had more of a financial stake or skin in the game.

In Miami, the median deductible, according to HealthCare.gov, is $5,000. (Half of the plans are above the median, and half below it.) In Jackson, Miss., the comparable figure is $5,500. In Chicago, the median deductible is $3,400. In Phoenix, it is $4,000; in Houston and Des Moines, $3,000.

In employer-sponsored health plans, deductibles have also been rising as companies shift costs to workers. Still, the average annual deductible in employer plans, $1,320 for individual coverage according to the Kaiser Family Foundation, is considerably less than the deductibles in many marketplace plans.

Sara Rosenbaum, a professor of health law and policy at George Washington University who supports the health law, said the rising deductibles were part of a trend that she described as the “degradation of health insurance.”

Insurers, she said, “designed plans with a hefty use of deductibles and cost-sharing in order to hold down premiums” for low- and moderate-income consumers shopping in the public marketplaces.


The deductibles are out of control. The anecdotes in the full article (link above) demonstrate that many people find that their insurance is “all but useless” simply because they cannot afford to pay the deductibles. Anecdotes do not constitute a scientifically valid study, but they certainly do tell us what is happening to individuals out in the real world.

Insurers needed to keep premiums affordable in order to maintain a viable market of private plans. They do that by shifting costs to patients through ever higher deductibles. This was inevitable through the reform model selected for the misnamed Patent Protection and Affordable Care Act. Because of the large deductibles, actual health care is not affordable for individuals with modest incomes and thus patients do not have the protection that they need.

The three trillion dollars that we are already spending on health care is enough to provide all essential health care services for everyone. With a properly designed financing system there is no need to erect financial barriers to care since cost containment can be achieved through patient-friendly policies such as those of a single payer national health program.

Without proper reform, “degradation of health insurance” will progress. People will face greater financial hardship because of medical bills. People will suffer more because of forgone health care. People will die.

This isn’t right. We need an improved Medicare that includes everyone.

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