FDA Approves First Biosimilar Drug; Still No Guidance on Names

 

The Food and Drug Administration has approved the first biosimilar therapy in the U.S.:electronic-medical-record

Many newer biotech drugs cost more than $100,000 per year, and together they account for nearly 30 percent of all U.S. drug spending. Five of the top 10 U.S. drugs by revenue are biotech medicines, according to IMS Health. Since their introduction in the 1980s, biotech drugs haven’t faced generic competition because the FDA did not have a system to approve copies.

In 2012, the FDA laid out a regulatory pathway to approve so-called “biosimilars.” That’s the industry term for generic biotech drugs, indicating they’re not exact copies. For years the biotech industry staved off competition by arguing their drugs were too complex to be reproduced by competitors. (Matthew Perrone and Linda A. Johnson, Associated Press via Denver Post)

VHA Sitting on Results of 140 Investigations

 

We recently noted that the government’s own watchdog has noted that the Veterans Health Administration is at high risk for fraud, waste, and abuse. Unfortunately, the public has little ability to see the evidence. USA Today has discovered that  the Veterans Health Administration has not been very forthcoming about the department’s shortcomings:

The Department of Veterans Affairs’ chief watchdog has not publicly released the findings of 140 health care investigations since 2006, potentially leaving dangerous problems to fester without proper oversight, a USA TODAY analysis of VA documents found.

It is impossible to know how many of the investigations uncovered serious problems without seeing the reports, but all concerned VA medical care provided to veterans or complaints of clinical misconduct.

The VA inspector general declined to provide the reports, say what’s in them or why the contents were kept from the public. (Donovan Slack, USA Today)

Government Bailouts Business Strategy for Obamacare Health Insurance Co-ops

 

The insolvent Iowa-based health insurance cooperative, CoOportunity Health, had to be taken over in December by Iowa insurance regulators.  Iowa and Nebraska’s Guarantee Associations — and state and federal taxpayers — are now on the hook for millions in claims the insurer could not pay.

CoOportunity Health wasn’t a traditional health insurer.  Rather, it was a taxpayer-funded, non-profit health insurance cooperative (co-op) established under the Affordable Care Act (ACA). The co-op program is plagued by numerous flaws. When co-ops were established, they had no customers and no historical actuarial data to assist in setting plan premiums.  Startup funds and cash reserves were mostly borrowed from taxpayers. According to industry data only one of the 23 co-ops was profitable last year (a 24th co-op located in Vermont failed before it even got off the ground). While some of the remaining co-ops are losing money because of small size, others appear to have the strategy of losing money to gain market-share at taxpayers’ expense.

Prior to its first open enrollment, chief operating officer (COO) Cliff Gold told the Lincoln, Nebraska Journal Star that ‘CoOportunity would be a market disruptor,’ and ‘we’re nonprofit, we have absolutely no profit motive.’ Apparently Gold’s comments were meant to be taken literally; CoOportunity lost around $163 million in 2014 — its first year selling health insurance.  An attorney hired to help liquidate the firm says doctors/hospitals are still owed some $100 million.  Unfortunately for Gold, even nonprofit health insurers need to earn a profit to avoid bankruptcy. The Iowa Insurance regulators shuttered the failing insurer once it became clear CoOportunity would not receive another government emergency solvency loan and its anticipated $126 million risk corridor (bad-risk) bailout would be reduced by about half.

Sicker-than-average Iowa and Nebraska residents flocked to the CoOportunity’s generous benefits. It offered large provider networks and rich benefit packagesall for a low premium. This sounds great if you’re an Iowa or Nebraska resident with chronic conditions.  But it’s not so good for taxpayers who have to bailout the losses. CoOportunity didn’t just suffer adverse selection — a situation where it attracted costlier-than-average members. It played a game of chicken with other insurers, when it purposely designed plans and set premiums it knew would disrupt the market.  Indeed, The Wall Street Journal referred to it as Fannie Med, in reference to Fannie Mae, the infamous government-supported mortgage insurer whose risky investment strategy contributed to the financial crisis that tanked the U.S. economy.

Weak Health Jobs Growth; Mostly in Hospitals and Physicians’ Offices

 

Today’s employment report, cheered as positive, had a grey lining for health workers. January’s report showed a big boost in health jobs, but that reversed itself in February.

Total nonfarm payroll increased by 295,000 from January, but only 24,000 (fewer than 8 percent of the total) were health jobs. And 9,000 of those jobs were in hospitals. Physicians’ offices saw 7,000 jobs, but employment in other health facilities grew only slightly or shrank (Table 1).

Galluping Away with the Uninsured

 

GallupGallup has released a teaser for its quarterly update of health-insurance coverage. Although the polling firm released only one datum (that the rate of uninsured fell to 12.3 percent in the first quarter from 12.9 percent in the fourth quarter of 2014) this was enough for President Obama to send forth a victory tweet.

Not so fast: As the press release itself notes, a large proportion of the newly “insured” are not actually insured, but on Medicaid. Medicaid is a welfare program. Consider the question: “Do you have health insurance coverage?” It is as if people receiving cash welfare payments answered the question, “Do you have a job?” in the affirmative.

Safety-Net Hospitals Profit Under Obamacare

 

Guess what? Those safety-net hospitals in states that did not expand Medicaid, which were pleading that they would go bust unless that welfare program grew, are doing just fine:

Hospitals that treat many poor and uninsured patients were expected to face tough financial times in states that did not expand Medicaid under the federal law known as Obamacare.

That’s because they would get less Medicare and Medicaid funding under the Affordable Care Act, while still having to provide high levels of charity care.

But in some of the largest states that did not expand Medicaid, many safety-net hospitals fared pretty well last year — even better than in 2013 in many cases, according to their financial documents. KHN looked at the performance of about a dozen such hospitals in Florida, Texas, Georgia, Tennessee, South Carolina, Virginia and Kansas, which released their 2014 financial results. (Phil Galewitz, MedCityNews)

Senate Dems: Get Pregnant, Then Get Health Insurance

 

Women joggingWhile everyone else is wondering whether the Supreme Court will replace Obamacare in 37 states with the actual Affordable Care Act as written, some Democratic U.S. Senators are urging women to dive deeper into Obamacare’s perverse incentives by encouraging them to delay getting health insurance until after they become pregnant.

As reported by Lydia Wheeler in The Hill, Senator Patty Murray has round up 36 signatures on a letter addressed to U.S. Health & Human Services Secretary Sylvia Burwell urging her to pull yet another “special enrollment period” out of her bag of tricks.

In a statement, Christina Postolowski, health policy manager of Young Invincibles, said she’s thrilled to see a growing chorus of leaders calling on the administration to create a special open enrollment period to make maternity coverage available to pregnant women year-round.

According to Postolowski’s December 2014 report “Without Maternity Coverage” maternity care and delivery ranges from $10,000 to $20,000 without complications.

A Grand Bargain for Intellectual Property in International Trade Deals?

 

vaccine-shotBloomberg View columnist Caroline Freund has proposed a thoughtful grand bargain for brand-name pharmaceutical firms’ data exclusivity in international trade deals.

Unfortunately, the column confuses two related but different issues: Patent protection and data exclusivity. The former is available to anyone who invents a better mousetrap. It is an important type of intellectual property (IP), and the U.S. leads the world in protecting inventors’ IP.

Obamacare versus the Affordable Care Act

 

A similar version of this Health Alert appeared at Forbes.

In March 2010, Congress passed, and President Obama signed, the Patient Protection and Affordable Care Act (ACA). The ACA was never implemented as written. The ACA authorizes subsidies to health insurers operating in state-established exchanges, but not the federal exchange. Some 37 states opted not to establish their own exchanges. Nevertheless, the Administration has been paying subsidies to insurers in those 37 states.

On March 4, the Supreme Court heard oral arguments in King vs. Burwell. At stake is the Administration’s payment of subsidies to health insurers operating in states which use the federal exchange. The Supreme Court is expected to announce its decision by July. A decision to uphold the ACA, as written, will surely cause millions of people to stop paying premiums that will double, triple, or more after the Supreme Court strikes down the illegal subsidies.

Many assert that this will cause an immediate crisis that Congress and the President will have to resolve immediately. This is an overly dramatic reading of events.

First, those who will drop Obamacare plans are not enthusiastic consumers of Obamacare. Last year, about one in five Obamacare enrollees stopped paying premiums. Rather, employer-based health benefits have been shrinking as Obamacare has increased the regulatory burden of offering benefits on employers, and incentivized them to reduce working hours. According to the Congressional Budget Office, there will be 2.5 million fewer full time jobs in 2017 than if Obamacare had not been enacted.

To Reduce Drug Prices, Solve R&D Crisis

 

A new NCPA study concludes that Congress must act to reduce the regulatory burden on pharmaceutical research and development.

Reducing the prices of specialty drugs requires improving the productivity of research and development (R&D). On that front, the news is sobering. Last December, Deloitte and Thomson Reuters examined newly introduced drugs from the 12 pharmaceutical companies with the largest R&D budgets.5 They found it cost $1.3 billion to bring one of these new compounds to market. However, the peak sales forecast for each of these drugs declined by 43 percent, dropping from an average of $816 million in 2010 to $466 million in 2013.

The high nominal prices of new drugs do not compensate for the smaller patient populations they target. Deloitte and Thompson Reuters estimate the internal rate of return (IRR) of R&D spending has dropped in half since 2010, from 10.5 percent to 4.8 percent. Sales of new drugs are not overcoming the loss of patents, weak pricing power for older drugs, or the reduced productivity of R&D.