By Andrew Pollack
The New York Times
January 1, 2011

With drug prices rising and many people out of work, pharmaceutical companies are increasingly helping patients with their co-payments.

Drug companies say the plans help some patients afford medicines that they otherwise could not.

But health insurers and some consumer groups say that in many cases, the coupons are just marketing gimmicks that are leading to an overall increase in health care costs. That is because they circumvent the system of higher co-pays on costlier drugs that insurers use to encourage consumers to use less expensive products.

Any shift to brand-name drugs can have a big impact on health care costs.

At District Council 37, a union representing public employees in New York City, 59 percent of claims for statins in the year ended in June 2009 were for brand-name products that cost the plan $17.3 million. The other 41 percent of claims were for generic statins, which cost only $179,000. A year ago, the health plan eliminated the co-pay on generic statins to encourage more use of them.

For very expensive drugs, co-pay assistance is almost de rigueur, because in some cases co-payments can be up to 20 percent of the price of the drug. Novartis’s new pill for multiple sclerosis, Gilenya, costs $48,000 a year, compared with $30,000 to $40,000 for rival drugs, which are injected. Novartis is offering to cover the entire co-pay, up to $800 a month, which is 20 percent of the drug’s monthly cost.

Jazz Pharmaceuticals has quadrupled the price of its narcolepsy drug Xyrem, to about $30,000 a year, over the last five years, according to a recent report from the securities firm Jefferies & Company. To cushion patients, the company recently increased its co-pay assistance to as much as $1,200 a month.

Drug companies cannot offer co-payment assistance for patients in federal programs like Medicare because such offers are considered an inducement to use a drug and in violation of anti-kickback laws. Some companies have responded by contributing to, or even helping to set up, charitable foundations that can provide co-payment assistance legally.

Executives at insurers and pharmacy benefit management companies say they would like to counter the cards and coupons but are not sure exactly how to do so. One problem is that the information they receive from pharmacies does not specify whether the co-pay was made by the patient or by the drug company.

“The payer doesn’t know, and the P.B.M. doesn’t know,” said F. Everett Neville, chief trade relations officer at Express Scripts, a pharmacy benefits manager. “We have no ability to stop it and no ability to prohibit it.”

http://www.nytimes.com/2011/01/02/business/02coupon.html?_r=1&pagewanted=all

Comment: 

By Don McCanne, MD

Should a health care system be designed to ensure that patients receive appropriate medications that they should have to relieve symptoms or cure disease? Of course. Yet co-payments (a dollar amount) and coinsurance (a percentage of the cost) impose on the patient financial barriers to the medications – barriers which frequently are not surmounted, and thereby may result in impaired health outcomes.

With our fragmented system of financing health care those seeking greater profits will always find another way to achieve their goals. In this instance, the pharmaceutical manufacturers have found a way to reduce or eliminate these financial barriers to their products.

In providing cost-sharing assistance to the patient, the manufacturers are not specifically removing barriers to the most appropriate products, but rather are removing barriers to their most profitable products, irrespective of whether or not they are the best choice. Since these are more expensive products, that increases the drug costs of the private insurers. Those of us paying premiums to private insurers that cover drugs are paying for these excess costs.

These practices do not require collusion with the physicians and pharmacists since their marketing practices are effective in creating a demand for their products regardless of the appropriateness.

Note that these pharmaceutical industry subsidies of co-payments and coinsurance are illegal in federal programs such as Medicare because they are the equivalent of kickbacks. If we had a Medicare program that covered everyone and eliminated the private intermediaries such as the insurers and pharmacy benefit managers, then these kickbacks wouldn’t exist. Drugs would be prescribed based strictly on appropriateness, and would be priced to provide fair profits for the pharmaceutical firms and fair costs for Medicare.

Coupons for Patients, but Higher Bills for Insurers

By Andrew Pollack
The New York Times
January 1, 2011

With drug prices rising and many people out of work, pharmaceutical companies are increasingly helping patients with their co-payments.

Drug companies say the plans help some patients afford medicines that they otherwise could not.

But health insurers and some consumer groups say that in many cases, the coupons are just marketing gimmicks that are leading to an overall increase in health care costs. That is because they circumvent the system of higher co-pays on costlier drugs that insurers use to encourage consumers to use less expensive products.

Any shift to brand-name drugs can have a big impact on health care costs.

At District Council 37, a union representing public employees in New York City, 59 percent of claims for statins in the year ended in June 2009 were for brand-name products that cost the plan $17.3 million. The other 41 percent of claims were for generic statins, which cost only $179,000. A year ago, the health plan eliminated the co-pay on generic statins to encourage more use of them.

For very expensive drugs, co-pay assistance is almost de rigueur, because in some cases co-payments can be up to 20 percent of the price of the drug. Novartis’s new pill for multiple sclerosis, Gilenya, costs $48,000 a year, compared with $30,000 to $40,000 for rival drugs, which are injected. Novartis is offering to cover the entire co-pay, up to $800 a month, which is 20 percent of the drug’s monthly cost.

Jazz Pharmaceuticals has quadrupled the price of its narcolepsy drug Xyrem, to about $30,000 a year, over the last five years, according to a recent report from the securities firm Jefferies & Company. To cushion patients, the company recently increased its co-pay assistance to as much as $1,200 a month.

Drug companies cannot offer co-payment assistance for patients in federal programs like Medicare because such offers are considered an inducement to use a drug and in violation of anti-kickback laws. Some companies have responded by contributing to, or even helping to set up, charitable foundations that can provide co-payment assistance legally.

Executives at insurers and pharmacy benefit management companies say they would like to counter the cards and coupons but are not sure exactly how to do so. One problem is that the information they receive from pharmacies does not specify whether the co-pay was made by the patient or by the drug company.

“The payer doesn’t know, and the P.B.M. doesn’t know,” said F. Everett Neville, chief trade relations officer at Express Scripts, a pharmacy benefits manager. “We have no ability to stop it and no ability to prohibit it.”

http://www.nytimes.com/2011/01/02/business/02coupon.html?_r=1&pagewanted=all

Should a health care system be designed to ensure that patients receive appropriate medications that they should have to relieve symptoms or cure disease? Of course. Yet co-payments (a dollar amount) and coinsurance (a percentage of the cost) impose on the patient financial barriers to the medications – barriers which frequently are not surmounted, and thereby may result in impaired health outcomes.

With our fragmented system of financing health care those seeking greater profits will always find another way to achieve their goals. In this instance, the pharmaceutical manufacturers have found a way to reduce or eliminate these financial barriers to their products.

In providing cost-sharing assistance to the patient, the manufacturers are not specifically removing barriers to the most appropriate products, but rather are removing barriers to their most profitable products, irrespective of whether or not they are the best choice. Since these are more expensive products, that increases the drug costs of the private insurers. Those of us paying premiums to private insurers that cover drugs are paying for these excess costs.

These practices do not require collusion with the physicians and pharmacists since their marketing practices are effective in creating a demand for their products regardless of the appropriateness.

Note that these pharmaceutical industry subsidies of co-payments and coinsurance are illegal in federal programs such as Medicare because they are the equivalent of kickbacks. If we had a Medicare program that covered everyone and eliminated the private intermediaries such as the insurers and pharmacy benefit managers, then these kickbacks wouldn’t exist. Drugs would be prescribed based strictly on appropriateness, and would be priced to provide fair profits for the pharmaceutical firms and fair costs for Medicare.

Editorial
The New York Times
December 29, 2010

On Dec. 22, just before they left town for the holidays, House Republican leaders released new budget rules that they intend to adopt when they assume the majority in January and will set the stage for even more budget-busting tax cuts.

The new Republican rules will gut pay-as-you-go because they require offsets only for entitlement increases, not for tax cuts.

It gets worse. The new rules mandate that entitlement-spending increases be offset by spending cuts only — and actually bar the House from raising taxes to pay for such spending.

Even worse, they direct the leader of the House Budget Committee to ignore several costs when computing the budget impact of future actions.

For example, the cost to make the Bush-era tax cuts permanent would be ignored, as would the fiscal effects of repealing the health reform law. At the same time, the new rules bar the renewal of aid for low-income working families — extended temporarily in the recent tax-cut deal — unless it is fully paid for.

http://www.nytimes.com/2010/12/30/opinion/30thu1.html

Rules draft (33 pages):
http://rules-republicans.house.gov/Media/PDF/112-Hres5-CP_xml.pdf

Comment: 

By Don McCanne, MD

Although long, the new Republican rules for the House of Representatives read somewhat like those jokes that are circulated around the Internet. When the fact sinks in that this is no joke but that these rules are very real, the inhumanity implicit in these new rules induces a feeling of despair.

Think of what these rules do for public funding of health care under the Patient Protection and Affordable Care Act. Because health insurance is too expensive and out-of-pocket costs are also unaffordable, government subsidies are necessary, but those called for in the act are inadequate. Many people who will need health care will face financial hardship unless the subsidies are increased.

Under the Republican rules, increases in these subsidies cannot be paid for by increasing taxes. Only reductions in other programs can be used. This is not unlike the prohibited act of cannibalizing one military vehicle to get another one up and running, when both vehicles are essential. Just as we have a responsibility to pay our taxes, our government has a responsibility to ensure that appropriate publicly-financed services will be there when needed, whether it’s maintaining our military vehicles, supporting transportation services in major snowstorms, or ensuring that everyone always has access to affordable health care.

Although the Republicans display a decidedly uncaring attitude toward the financing of important public services shared by most of us, they have an almost sacred devotion to protecting higher-income individuals from the need to pay their equitable share of the taxes to fund those services.

Any increases in spending for the public good must be offset by reductions in other services that would then no longer be available for the public good. Yet, under the new Republican rules, any tax reductions which would accrue primarily to the benefit of the wealthy do not have to be offset at all. Instead, those deficits are added to our debt burden and the debt burden passed on to our progeny.

Is the tax burden in the United States so great that we must sacrifice our public services while burdening ourselves with more debt simply to provide tax relief for the wealthy? The following chart provides that answer. The United States has one of the lowest tax burdens of all nations. The Republicans are catering to the rich at a great cost to the rest of us. What is really tragic is that it seems that, rather than electing representatives who care, the American voters would rather attend tea parties.

If the following OECD chart was not transmitted in this message, it can be accessed by scanning down to Chart A at this link:
http://www.oecd.org/document/35/0,3343,en_2649_37427_46661795_1_1_1_37427,00.html

Total tax ratio as percentage of GDP, 2008

Deficit Hypocrisy

Editorial
The New York Times
December 29, 2010

On Dec. 22, just before they left town for the holidays, House Republican leaders released new budget rules that they intend to adopt when they assume the majority in January and will set the stage for even more budget-busting tax cuts.

The new Republican rules will gut pay-as-you-go because they require offsets only for entitlement increases, not for tax cuts.

It gets worse. The new rules mandate that entitlement-spending increases be offset by spending cuts only — and actually bar the House from raising taxes to pay for such spending.

Even worse, they direct the leader of the House Budget Committee to ignore several costs when computing the budget impact of future actions.

For example, the cost to make the Bush-era tax cuts permanent would be ignored, as would the fiscal effects of repealing the health reform law. At the same time, the new rules bar the renewal of aid for low-income working families — extended temporarily in the recent tax-cut deal — unless it is fully paid for.

http://www.nytimes.com/2010/12/30/opinion/30thu1.html

Rules draft (33 pages):
http://rules-republicans.house.gov/Media/PDF/112-Hres5-CP_xml.pdf

Although long, the new Republican rules for the House of Representatives read somewhat like those jokes that are circulated around the Internet. When the fact sinks in that this is no joke but that these rules are very real, the inhumanity implicit in these new rules induces a feeling of despair.

Think of what these rules do for public funding of health care under the Patient Protection and Affordable Care Act. Because health insurance is too expensive and out-of-pocket costs are also unaffordable, government subsidies are necessary, but those called for in the act are inadequate. Many people who will need health care will face financial hardship unless the subsidies are increased.

Under the Republican rules, increases in these subsidies cannot be paid for by increasing taxes. Only reductions in other programs can be used. This is not unlike the prohibited act of cannibalizing one military vehicle to get another one up and running, when both vehicles are essential. Just as we have a responsibility to pay our taxes, our government has a responsibility to ensure that appropriate publicly-financed services will be there when needed, whether it’s maintaining our military vehicles, supporting transportation services in major snowstorms, or ensuring that everyone always has access to affordable health care.

Although the Republicans display a decidedly uncaring attitude toward the financing of important public services shared by most of us, they have an almost sacred devotion to protecting higher-income individuals from the need to pay their equitable share of the taxes to fund those services.

Any increases in spending for the public good must be offset by reductions in other services that would then no longer be available for the public good. Yet, under the new Republican rules, any tax reductions which would accrue primarily to the benefit of the wealthy do not have to be offset at all. Instead, those deficits are added to our debt burden and the debt burden passed on to our progeny.

Is the tax burden in the United States so great that we must sacrifice our public services while burdening ourselves with more debt simply to provide tax relief for the wealthy? The following chart provides that answer. The United States has one of the lowest tax burdens of all nations. The Republicans are catering to the rich at a great cost to the rest of us. What is really tragic is that it seems that, rather than electing representatives who care, the American voters would rather attend tea parties.

If the following OECD chart was not transmitted in this message, it can be accessed by scanning down to Chart A at this link:
http://www.oecd.org/document/35/0,3343,en_2649_37427_46661795_1_1_1_3742…

Total tax ratio as percentage of GDP, 2008

By Avery Johnson
The Wall Street Journal
December 29, 2010

Health insurers are preparing to capitalize on $40 billion of new opportunities to run privately managed Medicaid plans for the states, which would position insurers to benefit from the health overhaul’s expansion of Medicaid in 2014.

Medicaid is one of health insurers’ few bright spots, as their margins are pressed by regulatory crackdowns on premiums in their traditional policies. Gail Boudreaux, UnitedHealth’s executive vice president, told investors last month that: “The Medicaid space is a significant long-term growth opportunity for us. It’s a big market that’s getting even bigger.”

Budget crises mean cash-strapped states are more willing than ever to outsource their programs to private companies.

http://online.wsj.com/article/SB10001424052748704259704576033943934403286.html

Comment: 

By Don McCanne, MD

When you hear that the nation’s largest (in revenue) investor-owned insurer is looking at taxpayer-financed Medicaid as “a significant long-term growth opportunity,” be afraid. Be very afraid.

Insurers Bid for State Medicaid Plans

By Avery Johnson
The Wall Street Journal
December 29, 2010

Health insurers are preparing to capitalize on $40 billion of new opportunities to run privately managed Medicaid plans for the states, which would position insurers to benefit from the health overhaul’s expansion of Medicaid in 2014.

Medicaid is one of health insurers’ few bright spots, as their margins are pressed by regulatory crackdowns on premiums in their traditional policies. Gail Boudreaux, UnitedHealth’s executive vice president, told investors last month that: “The Medicaid space is a significant long-term growth opportunity for us. It’s a big market that’s getting even bigger.”

Budget crises mean cash-strapped states are more willing than ever to outsource their programs to private companies.

http://online.wsj.com/article/SB10001424052748704259704576033943934403286.html

When you hear that the nation’s largest (in revenue) investor-owned insurer is looking at taxpayer-financed Medicaid as “a significant long-term growth opportunity,” be afraid. Be very afraid.

Letters, The New York Times
December 27, 2010

To the Editor:

Re “In Health Law, Old Arguments Get New Airing,” by David Leonhardt (Economic Scene, front page, Dec. 15):

It is interesting to compare Ronald Reagan’s argument opposing Medicare as “socialized medicine,” a program that would take away the freedom of “our children and our children’s children,” with the words of one of his heroes.

In 1944 Winston Churchill, while still prime minister, said that “our policy is to create a national health service in order to ensure that everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”

Humphrey Taylor
New York, Dec. 15, 2010

The writer is chairman of the Harris Poll.

http://www.nytimes.com/2010/12/28/opinion/lweb28health.html

“In Health Law, Old Arguments Get New Airing,” by David Leonhardt:
http://www.nytimes.com/2010/12/15/business/economy/15leonhardt.html

And…

Actually, Reagan Wasn’t So Proud of That 1965 Medicare Speech

By David Weigel
The Washington Independent
August 21, 2009

In the last month, there’s been a rediscovery of Ronald Reagan’s 1965 recording “Ronald Reagan Speaks Out Against Socialized Medicine.” Something that’s largely been forgotten, though, was that a much more famous Reagan quote — his “There you go again” dismissal of President Jimmy Carter in the 1980 presidential debates–came when Reagan denied that he really meant this, or that he was “opposing the principle of providing care for” seniors in 1965.

http://washingtonindependent.com/56004/actually-reagan-wasnt-so-proud-of-that-1965-medicare-speech

Comment: 

By Don McCanne, MD

Winston Churchill represented the view of most conservative politicians in recent history when he said that “everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”

Even Ronald Reagan tried to erase his personal history of opposing Medicare by stating during the debate with President Carter, “I happened to favor the other piece of legislation and thought that it would be better for the senior citizens and provide better care than the one that was finally passed.”

So what has happened? Why are conservative politicians in the United States implicitly paying homage to the Chicago school of economics when their policies result in tens of millions of Americans being denied equal opportunities to benefit from the best and most up-to-date medical services that Winston Churchill spoke of? Does the faith in the abstraction of free market ideology really trump the actual health and welfare of the citizenry?

It would be too much of a stretch to classify this as a folie en masse. However the feigned obliviousness toward the unmet needs of fellow citizens can hardly be interpreted as anything other than heartless neglect driven by greed.

The conservatives and their moderate co-conspirators have updated Russell Long’s famous quotation: Don’t tax you, don’t tax me, and above all don’t even consider taxing that rich man behind the tree even if it means destroying social justice and common decency along with it.

Two Views of Health Law

Letters, The New York Times
December 27, 2010

To the Editor:

Re “In Health Law, Old Arguments Get New Airing,” by David Leonhardt (Economic Scene, front page, Dec. 15):

It is interesting to compare Ronald Reagan’s argument opposing Medicare as “socialized medicine,” a program that would take away the freedom of “our children and our children’s children,” with the words of one of his heroes.

In 1944 Winston Churchill, while still prime minister, said that “our policy is to create a national health service in order to ensure that everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”

Humphrey Taylor
New York, Dec. 15, 2010

The writer is chairman of the Harris Poll.

http://www.nytimes.com/2010/12/28/opinion/lweb28health.html

“In Health Law, Old Arguments Get New Airing,” by David Leonhardt:
http://www.nytimes.com/2010/12/15/business/economy/15leonhardt.html

And…

Actually, Reagan Wasn’t So Proud of That 1965 Medicare Speech

By David Weigel
The Washington Independent
August 21, 2009

In the last month, there’s been a rediscovery of Ronald Reagan’s 1965 recording “Ronald Reagan Speaks Out Against Socialized Medicine.” Something that’s largely been forgotten, though, was that a much more famous Reagan quote — his “There you go again” dismissal of President Jimmy Carter in the 1980 presidential debates–came when Reagan denied that he really meant this, or that he was “opposing the principle of providing care for” seniors in 1965.

http://washingtonindependent.com/56004/actually-reagan-wasnt-so-proud-of-that-1965-medicare-speech

Winston Churchill represented the view of most conservative politicians in recent history when he said that “everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”

Even Ronald Reagan tried to erase his personal history of opposing Medicare by stating during the debate with President Carter, “I happened to favor the other piece of legislation and thought that it would be better for the senior citizens and provide better care than the one that was finally passed.”

So what has happened? Why are conservative politicians in the United States implicitly paying homage to the Chicago school of economics when their policies result in tens of millions of Americans being denied equal opportunities to benefit from the best and most up-to-date medical services that Winston Churchill spoke of? Does the faith in the abstraction of free market ideology really trump the actual health and welfare of the citizenry?

It would be too much of a stretch to classify this as a folie en masse. However the feigned obliviousness toward the unmet needs of fellow citizens can hardly be interpreted as anything other than heartless neglect driven by greed.

The conservatives and their moderate co-conspirators have updated Russell Long’s famous quotation: Don’t tax you, don’t tax me, and above all don’t even consider taxing that rich man behind the tree even if it means destroying social justice and common decency along with it.

By Geri Aston
American Medical News
December 27, 2010

As of Nov. 1, only 8,011 people were enrolled in the Pre-Existing Condition Insurance Plan, numbers from the Dept. of Health and Human Services show.

People who have been denied coverage by private insurers because of a preexisting condition and who have been uninsured for at least six months are eligible to participate in PCIP. The idea is to give patients who have no access to private coverage because of their condition a way to get insurance while they wait for the state-based health insurance exchanges to launch in 2014.

Almost 6 million Americans are potentially eligible for the program, which runs through 2013.

http://www.ama-assn.org/amednews/2010/12/27/gvsa1227.htm

Comment:

By Don McCanne, MD

One of the highly touted transitional programs of the Patient Protection and Affordable Care Act is the temporary high risk health insurance pool program designed to provide health insurance for individuals with preexisting conditions. Until the state insurance exchanges are in operation in 2014, this program provides a source of insurance coverage for eligible individuals who have been rejected by private insurers because of preexisting conditions.

How successful has the program been so far? After four months of this three and one-half year program, 99.9 percent of eligible individuals have not yet been enrolled. Only 8,011 out of about 6,000,000 eligible have.

Several explanations have been advanced as to why participation is so low, but they are trivial compared to the most fundamental reason. Our fragmented, dysfunctional health financing system based on private insurance plans will never be capable of bringing everyone in and making the premiums and out-of-pocket spending affordable. As this program demonstrates, trying to apply patches to a rickety financing infrastructure will never be adequate to provide health security for everyone.

We need to dump the crumbling financing infrastructure based on the obsolete model of private plans and replace it with the sturdy structure of an improved Medicare that covers everyone.

Only 8,000 enroll in health plan for preexisting conditions

By Geri Aston
American Medical News
December 27, 2010

As of Nov. 1, only 8,011 people were enrolled in the Pre-Existing Condition Insurance Plan, numbers from the Dept. of Health and Human Services show.

People who have been denied coverage by private insurers because of a preexisting condition and who have been uninsured for at least six months are eligible to participate in PCIP. The idea is to give patients who have no access to private coverage because of their condition a way to get insurance while they wait for the state-based health insurance exchanges to launch in 2014.

Almost 6 million Americans are potentially eligible for the program, which runs through 2013.

http://www.ama-assn.org/amednews/2010/12/27/gvsa1227.htm

One of the highly touted transitional programs of the Patient Protection and Affordable Care Act is the temporary high risk health insurance pool program designed to provide health insurance for individuals with preexisting conditions. Until the state insurance exchanges are in operation in 2014, this program provides a source of insurance coverage for eligible individuals who have been rejected by private insurers because of preexisting conditions.

How successful has the program been so far? After four months of this three and one-half year program, 99.9 percent of eligible individuals have not yet been enrolled. Only 8,011 out of about 6,000,000 eligible have.

Several explanations have been advanced as to why participation is so low, but they are trivial compared to the most fundamental reason. Our fragmented, dysfunctional health financing system based on private insurance plans will never be capable of bringing everyone in and making the premiums and out-of-pocket spending affordable. As this program demonstrates, trying to apply patches to a rickety financing infrastructure will never be adequate to provide health security for everyone.

We need to dump the crumbling financing infrastructure based on the obsolete model of private plans and replace it with the sturdy structure of an improved Medicare that covers everyone.