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Importing Prescription Drugs Will Create More Problems than it Solves

September 11, 2019
12:03 pm

Several years ago, there was a significant push in Congress to allow wholesale importation of prescription drugs from other countries into the United States.  The Healthcare Leadership Council found itself in an opportune position to examine this idea, given that our membership includes not only pharmaceutical manufacturers and healthcare payers, but also the companies that would facilitate the distribution of these imported products.

We found that the promised cost savings from importation were an illusion.  When shipping, relabeling, storage, liability coverage and other costs were factored into the mix, the cost differential between medicines in this country and those from countries that employ government price controls was largely erased.  It has never been surprising that HHS Secretaries and FDA Commissioners from both Republican and Democratic presidential administrations over the years have attested that the risks connected with drug importation far exceeded any possible rewards.

But now the issue is back in a big way.  States – including Vermont, Colorado, and Florida – have passed legislation to set up their own drug importation programs, pending federal government approval, and the current administration has indicated a willingness to work with them in making this happen.  Also, Congress is once again considering importation legislation. This is troubling.

The only difference between the drug importation issue today and when we first examined it is that the dangers have exacerbated while the benefits have not.  There are certain facts that policymakers should keep in mind when contemplating the prospects of opening our borders to drugs from outside the U.S.

  • We already have a drug crisis in this country, much of it fueled by the proliferation of lethal fentanyl that is originating in other countries and finding its way here through our ports and via the international mail service.
  • The world is facing an enormous health challenge driven by the increase in counterfeit drugs. The World Health Organization has estimated that one in every 10 pharmaceutical products in low- and middle-income countries is falsified or substandard.  Opening our borders increases our exposure to this danger.
  • Since we first examined this issue, there has been an explosion in the number of online pharmacies.  According to the National Association of Boards of Pharmacy, there are over 35,000 online drug sellers and 96 percent of them are in violation of applicable laws.  Many of these operations are based in Canada, the nation often cited as the safe place from which to import drugs.
  • And just to dispense with the notion that importing drugs from Canada will drastically lower prices, the numbers simply don’t work.  Canada’s population is barely more than one-tenth that of the United States and our neighbors to the north have already been enduring problems with drug shortages.  The idea that Canada can provide a sufficient supply of prescription medications to meet American demands is ludicrous.

By all means, we should be having a national conversation on healthcare affordability and accessibility in the United States, seeking solutions that will ensure patients have access to the treatments they need while also maintaining an environment that incentivizes lifesaving medical innovation.  A serious discussion requires credible ideas, though, and drug importation doesn’t fit that bill.

Congress Poised to Step Up for Medical Innovation

April 12, 2019
1:30 pm

In a city as divided along partisan lines as Washington, D.C. is these days, you don’t often come across a legislative idea that wins broad support from both sides of the aisle.  The fact that a majority of the U.S. House of Representatives is sponsoring legislation to repeal the medical device excise tax is a strong indicator that it’s time to act to take this counterproductive tax off the books.

This week, a House bill to repeal the medical device tax was introduced by a quartet of lawmakers, Representatives Ron Kind (D-WI), Jackie Walorski (R-IN), Scott Peters (D-CA) and Richard Hudson (R-NC).  This legislation has 227 original cosponsors and follows the introduction of a companion bill in the U.S. Senate by Senators Pat Toomey (R-PA) and Amy Klobuchar (D-MN).

Congress has previously acknowledged the inherent flaws in this tax by suspending its implementation.  The next logical step is full repeal.  A 2.3 percent excise tax on medical device company revenues – not profits – is extraordinarily punitive and disproportionately harmful to innovators still trying to establish themselves in the marketplace.  The tax has had a negative effect on investment and job creation and undermines medical innovation at a time in which we need to be incentivizing it.

Chronic disease continues to be the greatest driver of healthcare cost escalation.  By continuing to develop more effective treatments and technology, we can enable patients and their healthcare providers to better manage these conditions and reduce the frequency of emergency room visits and acute care episodes.  An excise tax on the tools needed to improve quality of life and achieve greater health system sustainability makes no sense.  A bipartisan majority of Congress wants to do away with this tax.  They should move expeditiously to do so.

Medicare Part D Facts Keep Getting in the Way of Politics

August 10, 2018
11:56 am
It’s campaign season, so that means we’re seeing an escalation in the number of politicians who insist that the federal government must involve itself in “negotiating” prices for the Medicare Part D prescription drug program.  (I put negotiating in quotations because it’s a misnomer to suggest that government negotiates in the understood sense of the world.  It is closer to reality to say that the feds set prices.)
The problem with this assertion regarding Medicare Part D is that the facts keep getting in the way.
Last week, the Centers for Medicare and Medicaid Services announced that average monthly premiums for Part D plans are expected to drop from $33.59 in 2018 to $32.50 in 2019.  This is the second consecutive year in which average premiums will have declined and follows several previous years in which premium levels remained relatively flat.   In other words, the inference that urgent action is needed to fundamentally change the Medicare Part D structure isn’t supported by any evidence that consumers are being harmed by the status quo.
In fact, the approach employed when Congress created the Medicare prescription drug program just over a decade ago remains just as viable today.  The best way to maintain affordability is to empower consumers to select from several competing drug plans on the basis of value.  Part D enrollees will naturally gravitate to the plans that cover the drugs their physicians prescribe and do so at affordable cost.
That’s not to say there aren’t actions that need to be taken regarding Part D.  For example, Congress needs to act expeditiously to address the “out of pocket cliff,” the forthcoming change in the out-of-pocket spending threshold that must be met in order to qualify for catastrophic coverage.  If not address, this “cliff” will cost beneficiaries several hundred dollars that many can’t afford.
On the whole, though, when politicians tell you this political season that we need a heavier government hand in Medicare Part D pricing, please be aware that the numbers don’t back up that claim.

Quantifying the Medicare Advantage advantage

July 25, 2018
2:51 pm

In the 15 years since its inception, the increase in popularity of Medicare Advantage (MA) – health coverage provided by private plans in contrast to traditional fee-for-service (FFS) Medicare – has been undeniable.  Roughly half of all Medicare-eligible seniors are enrolled in Medicare Advantage plan and that proportion keeps rising.

Now there is a new addition to the growing body of evidence that MA plans are not only serving their enrollees well, but is bringing greater overall value to the Medicare program than that generated by the FFS approach.

A newly-released study by Avalere Health, Medicare Advantage Achieves Better Health Outcomes and Lower Costs for Beneficiaries with Chronic Conditions Compared to Fee-for-Service Medicare, finds that Medicare Advantage is outperforming traditional FFS Medicare with higher rates of preventive screenings, fewer avoidable hospitalizations, and fewer emergency room visits.  In other words, healthier patients and significant dollar savings.

Overall, the Avalere study found that MA beneficiaries had 23 percent fewer emergency stays and 33 percent fewer emergency room visits than their peers in FFS coverage.  This wasn’t the result of MA plans enrolling healthier individuals at the outset.  Rather, the study found that a greater percentage of MA beneficiaries were in clinical and social risk categories that traditionally drive up costs in FFS Medicare.

Avalere found that MA outperformed FFS on a range of cost, utilization, and outcome metrics in caring for individuals with one or more chronic health conditions.  Among patients with diabetes, for example, those enrolled in MA experienced 73 percent fewer serious clinical complications than FFS beneficiaries.  And patients dually eligible for Medicare and Medicaid – who generally have more complicated and serious health conditions – had 49 percent fewer hospital visits and a 17 percent lower average-cost-per-beneficiary in MA plans.

Former Congresswoman Allyson Schwartz, president and CEO of the Better Medicare Alliance (of which the Healthcare Leadership Council is a member) said “this study adds to the growing body of evidence showing the ability of Medicare Advantage to align incentives to better manage the care for a high-need population with multiple chronic conditions.”  These patients, of course, account for the most significant portion of our country’s healthcare spending.

This study adds fuel to the argument that we can enhance healthcare quality and better contain spending through improved patient health when healthcare entities compete on the basis of value.

An Expert Look at 2018 Healthcare Trends and Their Potential Impact

February 08, 2018
6:05 pm

President and CEO of Premier healthcare alliance, Susan DeVore, discusses her predictions of what 2018 will bring in a Health Affairs article.  Ms. DeVore, a member and former chair of the Healthcare Leadership Council, shares her optimism regarding the commitment to innovation and competition that is driving the industry towards value-based care and the increased utilization of actionable data.  Her assessment of current trends focuses on how growth and changes in all healthcare sectors have an impact on providers, and further solidifies the importance of the work being done to improve access to care as well as outcomes.

The article is copied below and the original publication can be found here.


What To Watch In Health Care In 2018: Six Key Trends

At the start of 2018, the health care industry is on the cusp of more significant change. The GOP Congress has moved health care away from the center of their public policy agenda, creating more certainty and a clearer view. Of course greater certainty doesn’t mean total certainty, especially as market trends and business realities continue to shift. As providers move into 2018, we still feel confident in making some predictions as to what the future holds.

Clearer Skies Ahead, Pockets Of Turbulence

Uncertainty is expected during any major political transition, but it reached an all-time high for health care leaders in 2017. The fog has largely cleared, and 2018 will be a year of health care leaders starting to place their bets. Here’s what health care leaders see.

Instead of a sweeping set of legislative changes to the Affordable Care Act, the elimination of the individual insurance mandate is now the symbolic emblem of “repeal.” While some project that the mandate’s demise will lead to a decline in the private insurance market, it remains to be seen how the elimination will ultimately play out given the mandate’s relatively weak incentive for individuals to purchase coverage. The strong economy is causing employers to offer health coverage to compete for talent, and the probable enactment of the exchange market stabilization legislation should serve to calm the exchange market, potentially lowering premiums. Going forward, focusing on states will likely become the “replace” strategy for Republicans in 2018, with a larger number of waivers granted to experiment with programs, giving states greater control and reason to consider expanding Medicaid coverage. Health care leaders are viewing 2018 as a year of greater insurance market stability, with the number of insured Americans holding steady or possibly increasing over the latest numbers.

There is also more certainty around the movement to value-based care. Last year’s raging health care debate caused health care leaders to question the movement to alternative payment models (APMs). That momentum, however, is returning, and the experienced and more transparent leadership in the Department of Health and Human Services (HHS) by Alex Azar should provide significant reassurance to providers on both insurance market certainty and the movement to value-based care.

Health care leaders still face major financial threats. Bad debt continues to grow, reaching $38.3 billion in large part due to the rise of high-deductible health plans. Hospitals have taken $148 billion in Medicare payment cutssince 2010, and these cuts are scheduled to continue. Some states are cutting Medicaid reimbursement. 82 rural hospitals, as well as many urban hospitals, have closed since 2010. This year’s $1.6 billion cut in 340B payments will crush some of the most financially challenged hospitals treating the most vulnerable patient populations. Hospitals continue to be disadvantaged in the design of many of the Centers for Medicare and Medicaid Service (CMS)’s pay for performance and alternative payment models. As a result, hospital margins remain in low single digits, and the Medicare Payment Advisory Commission projects that the Medicare margin will fall to negative 11 percent in 2018.

Attention, Value Shoppers: The New Health Care Market

2018 will be a year of a renewed focus by CMS on paying for value, particularly with the continued ramp up of the Medicare Access and CHIP Reauthorization Act of 2015 that incents clinicians to take risk, and new APMs that create attractive alternatives for fence sitting providers.

Perhaps more notable today are private sector actions to expand and accelerate the value-based payment movement and disrupt the status quo. Given the clear signals, health care leaders are focused on gaining scale and/or vertical integration to position themselves favorably for an expansion of value-based care. Unlike past merger efforts to command greater market power, today’s consolidation is often more driven by the goal to integrate care delivery and achieve savings.

There is a new form of competition emerging. Providers and payers are organizing themselves into vertically-integrated, high-value care and financing networks. Health care leaders are actively exploring commercial, employer, and Medicare Advantage risk-based programs through either ownership models or partnerships. The most recent mega-deals by CVS and Aetna, Humana and Kindred, Ascension Health and Providence Health, Aurora Health Care and Advocate Health Care, as well as the ongoing provider acquisitions by insurance goliath UnitedHealthcare, all send a clear message: insurers, physician groups, health systems, and even retail organizations are each seeking to compete as high value care and financing networks.

The CVS/Aetna merger, for instance, is based on a strategy that they will be able to disrupt the system with a retail pharmacy and e-enabled high value provider network. The Advocate/Aurora merger is seeking to achieve regional scale by combining two of the nation’s leading clinically integrated physician networks, hospitals and other provider settings, and pharmacy capabilities in the greater Chicago-Milwaukee region. UnitedHealthcare appears to acquire more physician practices each day. We anticipate more mergers and acquisitions in 2018. As the merger and acquisition activity heats up, the question remains: Who will be best at capturing and engaging patients and customers?

Washington must be careful not to undermine this movement by confusing integration to deliver efficient, high-quality care with consolidation to reduce competition. This emerging model needs to be supported by continuing the movement by public payers to APMs and careful thought by anti-trust regulators.

Episode 2018: The Consumer Strikes Back

For providers to succeed as stewards of new care delivery networks, they need to play the game differently. This means a number of new capabilities, including creating clinically integrated physician networks, collecting and integrating data, and applying analytics to find cost, work flow, and quality improvement opportunities. It also means providing more outpatient clinics and offering additional access points, establishing preferred post-acute care networks, creating new incentive and payment arrangements, building physician measurement systems to assess performance, and negotiating successful alternative payment models with public and private payers.

To ultimately succeed, however, health leaders realize that they need to, above all else, excel at attracting and engaging patients, families, caregivers, and consumers. 2018 will be the year of focus on patient capture and engagement. Providers will work with their patients, families, and caregivers to develop approaches so they more actively manage their health and health care.

This means engaging the patient in their health and health care outcomes from the beginning. This involves providing prevention, diagnosis, and monitoring services that support the total care experience. Done well, it creates stickiness to a high value care network. Organizations are focusing more on this from a human resources training and measurement vantage point. They are also establishing patient portals, providing wearable devices, implementing patient educational programs, screenings, and pushing targeted materials to patients based on their current and anticipated needs.

For example, one of our members is providing home monitoring tools as well as tablets for video consults to help patients meet their health goals. The program focuses on total patient care from prevention to recovery. Few people leave the program, and the organization has reduced overall costs by 34 percent per year and hospitalizations by nearly 50 percent.

Financial Imperative, Meet Actionable Data

A certainty for health system leaders is the need to improve productivity and efficiency. The approach, however, is going beyond the past’s focus on reducing head count and cost of supplies.

After years of avoiding care efficiency and standardization initiatives due to the difficulty of persuading clinicians to embrace them, health care leaders now have a larger and more urgent financial imperative to identify and isolate wasteful practices, cost outliers, and the root causes for the inefficiencies. The keys to success are a strong case for change and a prioritization of efficiencies that yield both cost and quality improvements. This is, therefore, all about data and analytics.

Recent cost containment efforts we have pursued with our members provides a sense of scale.  These health care systems range in size from 6 to 19 hospitals and their care transformation work has achieved savings ranging from $180 to $250 million over two years. Another specific example is a health system member of ours that realized $13 million in savings by driving care process standardization across their departments that touch just ICU and blood utilization. In addition to the savings they also improved their quality scores and reduced patient complications and readmissions. Premier data found a lot of opportunity for other hospitals around ICU stays, potentially reducing expensive ICU stays by 200,000 days across 786 hospitals. This is precisely where providers are now focusing their efforts.

2018 will be the year of delivering efficient, highly reliable care. With today’s financial imperative and actionable data, health care leaders are achieving a new level of efficiency and productivity.

America’s Other Drug Problems: Cost And Competition

Rising drug prices continue to be a dominant concern to health care leaders. Pharmaceutical innovation holds great promise for helping providers achieve their mission to improve and sustain patient lives, but it’s also a Catch-22. As providers are increasingly assuming accountability for the health outcomes of a population, six figure drug price tags and unpredictable price increases threaten financial planning and cool the enthusiasm for taking risk. 2018 will be a year of increased legislative and regulatory policymaking to foster increased drug market competition.

The FDA has and will continue to step up its game with new initiatives designed to unleash more competition that can moderate drug price trends. These include encouraging new market entrants to rapidly start developing generics in classes where there is no competition, streamlining the generic drug approval process, promoting biosimilars and taking steps to prevent branded drug makers from exploiting programs like the Risk Evaluation and Mitigation Strategy and citizens’ petitions.

Congress will also be getting into the act this year. We expect the Fair Access for Safe and Timely (FAST) Generics Act and the Creating, Restoring Equal Access to Equivalent Samples (CREATES) Act, among other legislation, will help eliminate loopholes that can slow the introductions of competitor products.

Finally, manufacturers are developing new ways to demonstrate product return on investment in response to provider demands. There is increasing use of real-world evidence to demonstrate value as well as use of outcomes measures to quantify results. While value-based contracting is still in the early stages, manufacturers are looking to measure and launch these programs.

Emerging And Converging Digital Health

In every single aspect of health care, the digital revolution is making itself felt: new apps are getting patients more engaged; health sensors and wearables are creating terabytes of new, granular data, and machine learning, natural language processing, and artificial intelligence techniques and tools are all emerging new technologies. What’s more, precision medicine, telehealth, blockchain technology, and new personalized digital devices are being infused into all parts of the workflow and consumer experience.

The biggest impediment to effective use of data continues to be the lack of interoperability, especially among the electronic health records, which impedes care coordination and efficiency. While providers are waiting on HHS to implement the interoperability provisions of the 21st Century Cures Act, they are wasting no time in building data warehouses that assemble the multiple sources of data necessary to provide quality care and make informed decisions across the continuum of care. Growth of data warehouse systems and data analytics is one of the fastest growing technology areas as health systems seek actionable information to help them manage the total cost of care at a site and across sites of care.

Consequently, there is a growing and acute need for a trained workforce able to deploy, implement, and maintain health information technologies and systems and increasingly complex medical devices.  Today’s electronically connected, data-and evidence-driven health care system requires staff with data science and data analysis skills. These skills are essential in gathering, interpreting, protecting, and analyzing large and complex data sets. Data management, cyber security, and governance is essential to precision medicine, value-based care and payment and population health.

These are the big trends we see impacting health care providers in 2018.

We are encouraged by the outlook. We are hopeful Congress and the Trump administration will encourage and not impede this progress to high value networks, increased competition among pharmaceutical manufacturers, and increased access to health information.