By David Morrill
Contra Costa Times
November 29, 2007

A U.S. senator said Genentech’s plan to restrict availability of its Avastin drug so doctors might be forced to use the more expensive medicine Lucentis to treat an eye disease will cost taxpayers $1 billion to $3 billion annually.

The South San Francisco-based biotech company’s decision “is of great concern to me,” U.S. Sen. Herb Kohl, D-Wis., said in letters to the U.S. Centers for Medicare and Medicaid Services and the Food and Drug Administration made public Wednesday.

Avastin is one of Genentech’s blockbuster cancer drugs. It treats patients with colon and lung cancer and is being studied worldwide in about 300 clinical trials for more than 20 tumor types.

But Avastin is also in the offices of eye doctors across the country, where it is being used to treat a major cause of vision loss, called neovascular age-related macular degeneration, or AMD.

The company’s superstar drug is going head-to-head with a drug called Lucentis that was approved last year by the U.S. Food and Drug Administration for AMD. Lucentis is also owned by Genentech.

The quandary is more than just two drugs that could potentially be used to fight the same eye disease. Lucentis costs about $2,000 per monthly dosage; Avastin could cost about $40.

Although it’s not stopping the off-label use of Avastin, Genentech did announce in October a move that some fear will make it harder for physicians to prescribe the medication.

Physicians need the help of specialized groups, called compounding pharmacies, to break down initial allotments of Avastin. The amount of the drug needed for eye injections is much smaller than what is required to treat cancer.

Genentech announced that as of January, these specialized pharmacies will no longer be able to purchase the product from wholesale distributors.

Some have asked Genentech to conduct a study comparing the effectiveness of Lucentis and Avastin in treating AMD, but the company has no plans to do so.

“For Genentech, we think our resources would be better spent to continue to do research in unmet patient needs,” said Krysta Pellegrino, spokeswoman for Genentech. “We believe that we’ve already shown that Lucentis is the right treatment for this eye disease.”

http://www.contracostatimes.com/news/ci_7588959?nclick_check=1

For more on this controversy:
http://www.allaboutvision.com/conditions/lucentis-vs-avastin.htm

Comment:

By Don McCanne, MD

Isn’t the marketplace beautiful?

Genentech found that the primary competition for its $2000 drug (Lucentis brand of ranibizumab) was its own expensive product for colon and lung cancer (Avastin brand of bevacizumab).

The pricing of drugs is not based simply on their development and production costs but rather is based more on what the market will bear. The ability of compounding pharmacists to greatly dilute the dose of Avastin to levels appropriate for treatment of the retina resulted in a plummeting of the price per dose compared to that of Lucentis.

As any successful business would do, Genentech made a decision to destroy its own competition with itself by prohibiting the legal sale of Avastin to the compounding pharmacists.

Since markets always result in lower costs through price competition, we certainly would not want the government to interfere through regulatory oversight. But since Genentech does not actually compete with itself it is able to set the highest prices attainable. And it is certainly understandable that Genentech does not want to do a head-to-head comparison study between its $2000 drug and its $40 drug.

The good news is that “U.S. government funds will be used to compare effectiveness and safety of the two different treatments. National Eye Institute (NEI) officials announced in October 2006 that they will launch their own clinical trials comparing outcomes of both Lucentis and Avastin as macular degeneration treatments.” (See allaboutvision link above.)

The likely bad news will be that, once again, our tax dollars will fund the research for private industry, and, if Avastin passes muster, Genentech will surely release it as a product specifically reformulated for retinal use, at a bargain price of $1900 per dose.

Isn’t our uniquely American health care system great?

By Patricia Neuman, Juliette Cubanski, Katherine A. Desmond and Thomas H. Rice
Health Affairs
November/December 2007

Rising health costs and an aging population present critical policy challenges. This paper examines the financial burden of out-of-pocket health spending among Medicare beneficiaries between 1997 and 2003. Over this period, median out-of-pocket spending as a share of income increased from 11.9 percent to 15.5 percent. In 2003, the 25 percent of beneficiaries with the largest burden spent at least 29.9 percent of their income on health care, while 39.9 percent spent more than a fifth of their income on health care. Results suggest that sustained increases in out-of-pocket spending could make health care less affordable for all but the highest-income beneficiaries.

http://content.healthaffairs.org/cgi/content/full/26/6/1692

Comment:

By Don McCanne, MD

Hmmm. Most of us are grateful that our seniors have Medicare coverage so that they don’t have to face financial hardship in the event of medical need. But is that assumption valid?

About 40 percent of Medicare beneficiaries spend more than 20 percent of their incomes on health care. For most of them that does constitute a financial hardship that is severe enough such that some will decline beneficial health care services simply because they can’t afford to pay for them.

Advocates of consumer-directed health care support increasing sensitivity to health care costs through higher premiums, deductibles, copayments, coinsurance, donut holes and whatever other patient cost-sharing techniques that can be devised. But Medicare beneficiaries don’t need more lessons on the high costs of their health care. What they need is more affordable access to that care.

Providing financial disincentives to receiving beneficial health care services and products is the exact opposite of what our Medicare policies should be.

Do the nonelderly have a similar problem with a high percentage of out-of-pocket spending on health care? Since most seniors have lower incomes composed of social security benefits and retirement accounts, it would be expected that the out-of-pocket spending on health care would be higher as a percentage of total income for them than it would be for the nonelderly who have higher salaries and wages. And that is true.

Although about 40 percent of Medicare beneficiaries spend more than 20 percent of their incomes on health care, only 7.3 percent of nonelderly adults do likewise.

Wait a minute. 7.3 percent of nonelderly adults spend more than 20 percent of their incomes on health care? That’s close to 20 million people. And for a large percentage of them, having to spend over 20 percent of their incomes on health care does constitute a financial hardship.

Most other nations provide comprehensive health care to everyone at a much lower cost without the need to burden patients with excessive cost sharing. With what we are already spending on health care, certainly we could do as well.

By Jennifer E. DeVoe, MD, DPhil, Alia Baez, BA, Heather Angier, BA, Lisa Krois, MPH, Christine Edlund, MSc and Patricia A. Carney, PhD
Annals of Family Medicine
November/December 2007

This study was designed to identify barriers faced by low-income parents when accessing health care for their children and how insurance status affects their reporting of these barriers.

Families reported 3 major barriers: lack of insurance coverage, poor access to services, and unaffordable costs.

In summary, obtaining and maintaining insurance was the most important theme among all families. Comparing families in all insurance groups, insurance coverage issues were more often reported by families with uninsured parents or uninsured children. Access concerns were mentioned most often among those with public health insurance, whereas privately insured families more commonly mentioned unaffordable medical costs.

http://www.annfammed.org/cgi/content/full/5/6/511

Comment:

By Don McCanne, MD

This is yet another study of coverage, access and costs for low-income families. The findings are intuitive, not to mention having been supported by many other studies.

* For families with no coverage, obtaining insurance was their greatest concern.

* For families with public insurance such as Medicaid, access to care was their greatest concern.

* For families with private insurance, unaffordable medical costs were their greatest concern.

What does this mean?

For the uninsured, the consequences are obvious. In the event of medical need, being uninsured threatens both health security and financial security.

For those covered by public insurance targeted to low-income families, chronic underfunding remains a problem because of the lack of adequate political support for welfare programs. This results in a lack of willing providers, especially for specialized services. Thus access is a problem simply because the care is not available. Community Health Centers, if accessible, provide some basic needs, but cannot ensure access to more expensive, high-tech services.

For those with private insurance, health care costs remain a barrier to care. As this report states, “there is a growing number of low- and middle-income families with private health insurance who gain access to most services, but the high deductibles and co-pays prevent them from getting necessary care.”

The last statement above should concern us all. The financial barriers erected by private plans impact not only low-income families but also middle-income families as well. Yet most of the leading proposals for reform are based on a market of these private insurance plans. Lack of affordability is already a major concern, and it will only grow worse under these proposals.

The fact that this study indicated that public insurance causes access problems should not concern us since it represents a peculiarity of an underfunded welfare program – Medicaid. Our other public insurance program – Medicare – is funded at a level that assures an adequate number of willing providers, primarily because of continuing political advocacy for a popular program that eventually serves us all.

Medicare does have one problem that Medicaid does not, and that is excessive out-of-pocket cost sharing that creates affordability problems for some beneficiaries. But a new and improved Medicare for All, a single-payer national health program, would rectify that problem. Cost sharing that creates financial barriers to care would be removed.

We can have it all: health care that is universal, accessible and affordable.

For many, the road to ruined credit is pockmarked with medical collections, often for tiny amounts or billed in error. The truth is that medical debt rarely indicates whether a borrower is high risk.

By Liz Pulliam Weston
MSN Money
November 19, 2007

The Your Money message board is littered with complaints from folks whose otherwise pristine credit was sabotaged by a medical collection. Sometimes their records were besmirched over absurdly small amounts that nonetheless had big impacts on credit scores.

Medical collections are surprisingly common, at least according to a 2003 Federal Reserve study of consumer-credit reports. Nearly one in three consumers (31%) with a credit report had at least one collection account reported, and more than half of those were medical collections.

The amounts owed weren’t substantial: 36.5% of the medical collections were for $100 or less, and 86% were for $500 or less.

Yet any collection account is considered a major negative to lenders and to the credit-scoring formulas they use. Though the impact of a collection on your scores fades over time, it will shave off points for as long as the negative mark remains on your report — typically seven years.

Your chances of having your credit ruined by a medical bill are soaring for a variety of reasons:

* More people are uninsured or underinsured.

* Medical-debt collection has become big business.

* Medical billing is a mess.

Even when a consumer is covered by insurance, confusion abounds. Doctors and hospitals often insist the consumer is ultimately responsible for the bills, saying medical providers bill insurers only as a courtesy. Yet frequently the providers have agreements with insurers and government agencies to accept discounted reimbursement as payment in full; the providers aren’t supposed to pursue patients for payment.

Meanwhile, insurers are constantly changing what’s covered and by how much, and providers move in and out of covered networks. Providers also claim some insurers deliberately drag their heels on reimbursements, adding to the chaos and uncertainty.

“Insurance companies are often contributing to the false reporting of medical debt,” said (Travis Plunkett, a spokesman for the Consumer Federation of America), as tussles over payment increasingly get turned over to collection agencies.

http://articles.moneycentral.msn.com/Banking/YourCreditRating/WhyMedicalDebtsShouldntCount.aspx?page=all

Comment:

By Don McCanne, MD

So you have excellent coverage. About six months ago you received medical care for what proved to be a minor problem. The care included a couple of office visits, a few laboratory tests, medical imaging, two prescriptions, and you’re fine now.

Since then you’ve received numerous statements from your insurer documenting the physician visits, laboratory tests, medical imaging facility services, radiologist’s fee for interpretation of studies, and documentation from the pharmacy benefit manager. Each statement included many numbers, but the only number that really caught your attention was the dollar amount after the statement, “You are not responsible for paying this amount.” That appeared on several of the forms, though the amount noted was confusing since it didn’t seem to fit with any of the other numbers on the page. In the meantime, you have received statements from each of the medical professionals and health care institutions involved stating that your insurance has been billed and that this is the amount due (the total, non-adjusted charge), but since no payment yet appears you decide to wait until payment is actually made by the insurer and the disallowed amount is adjusted off. Otherwise you really don’t know what you should pay.

Within the past week, you have received notices from two different collection agencies representing two of the billing entities. Since your coverage is excellent, it is clear that there is some error here. What do you do?

The first step is to take out your insurance contract to see what is covered. Check for deductibles, copayments (dollar amount), coinsurance (percentage of the charges), tiering of benefits (different coverage for different levels of products or services), capping of benefits (maximum to be paid under specific categories), amounts to be paid by a fund such as a health savings account, and any other innovative features specific to your coverage. Then check to see if each professional and institution is contracted with your insurer. Since the list you have is a few years old, be sure to obtain a current list of providers. Then determine precisely how much is to be paid by the insurer, how much is to be adjusted off, and how much you are responsible for paying. The set of numbers will likely vary depending on whether or not the professional or the institution is currently contracted. Now retrieve from your records every notice of change in benefits that you received from the insurer at each annual renewal. Go back and change the numbers based on these notices, being certain that you apply the changes in chronological order.

Okay. Now that you’ve done this, you find that you do owe the amounts for which you are responsible after payments were made to the providers and the disallowed amounts were deducted. But the amounts demanded by the collection agencies are greater than the amounts that are your responsibility.

Since obviously there is an error, you now contact the administrative staff of one of the providers that are dinging you. The staff member insists that their ledger for your account is correct and that the insurer has obviously made an error. They don’t have time to help you further and insist that you contact your insurer since that’s your responsibility anyway.

After hours of punching through automated phone systems with endless times on hold, dropped calls, referrals to other departments, you finally end up where you began, and a real person in India tells you that all of their numbers are correct. She explains that the provider apparently did not adjust off the full disallowed amount, assuming, of course, that you did pay the deductibles and coinsurance that you owed. Oh.

So you call back the provider and explain that you will send payment for the deductible and coinsurance that you owe, but you want them to adjust off the balance that was disallowed. Sorry. The account has already been turned over to the collection agency and you will have to deal with them.

The collection agency responds by stating that they have nothing to do with insurance contracts. All they have is the amount that the provider turned over to them for collection, and that is the amount that you must pay. If you want an adjustment made, you’ll have to contact the provider.

Take a break from this one, and start the process over with the other collection agency. (Repeat the last six paragraphs here.)

Enough. Just pay the whole d*** thing and consider later whether to go through the grief of trying to obtain refunds from the providers. But at least this will keep your credit report clear. Sorry. These delinquencies have already been reported by both collection agencies. You can receive a free credit report if it’s been over a year since your last request, but you’ll have to pay a fee to find out how many points were deducted from your credit score.

What is really sad is that, with what you believe to be a really great health insurance plan, and with an honest effort to comply with the rules of your plan, and in spite of considerable personal inconvenience, you can become one of the more than 15 percent of individuals who end up with an impaired credit rating merely because of the administrative complexity inflicted on us by the private insurance industry.

With a single payer national health program, you go to your health care professional, receive your tests, and then follow the treatment program that you decide on after further consultation with your healthcare professional. The bills go to the single payer; you receive a statement of services and payments only to keep the process transparent.

Why are our politicians telling us that this isn’t politically feasible? Do we really want to continue to include screwed up credit reports on our list of the perverse features of an exclusively American health care system?

Do we really want to protect the thriving big business of medical-debt collection? After all, aren’t they merely an extension of the medical insurance administrative profession that we prize so highly?