Tag: "Pharmaceuticals"

The United Nations Report on Access to Medicines is a Public Health Hazard

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(A version of this Health Alert was published by RealClearHealth.)

Almost one year ago, the Secretary-General of the United Nations convened a High-Level Panel on Access to Medicines, which is world still suffering the burden of tropical diseases (such as river blindness, sleeping sickness, leprosy, and rabies.) According to World Health Organization, people in 185 countries needed treatment for neglected tropical diseases in 2014.

In the 21st Century, such numbers are shocking. However, the panel’s would have many harmful effects on the development of new medicines that benefit patients in both the developing and developed world. Indeed, it identifies the wrong culprit in the ongoing health catastrophe in the developing world.

Who Benefits From The “Right to Try” Experimental Medicines?

doctor-mom-and-sonThe Goldwater Institute has had great success getting states to pass “Right to Try” laws. Right to Try allows a desperately sick patient to take an experimental new medicine before the FDA has approved it.

Since I last wrote about this policy in November 2014, 31 states have passed Right to Try. Further, U.S. Senator Ron Johnson (R-WI) has tried to get a federal Right to Try law through the U.S. Senate.

However, there has been push-back. According to Allison Bateman-House of NYU Langone Medical Center, “there is no confirmed instance of anyone getting a drug through Right to Try.” Jonathan Friedlaender, a survivor of advanced metastatic melanoma, has written a compelling essay in Health Affairs, which concludes Johnson’s proposed federal law would not improve access to experimental medicines.

The problem has two parts:

A Modest Proposal To Reduce The Price of EpiPens

Epipen(A version of this Health Alert was published by Forbes.)

Posturing politicians on Capitol Hill conducted a hearing a few days ago, in which they grilled Heather Bresch, CEO of Mylan. N.V., which makes EpiPens. Prices of EpiPens have skyrocketed in the last few years. According to Aaron E. Carroll, writing in the New York Times, the real (inflation-adjusted) price of EpiPens has risen 4.5 times since 2004.

The politicians were more interested in wagging their fingers and tut-tutting at Ms. Bresch for the amount of money she has made, than actually figuring out a way to lower the price of EpiPens. (By the way, Ms. Bresch testified she has no intention of reducing prices in response to their badgering.) 

Hillary’s Campaign to Lower Drug Costs is a Real Downer

captureSpending on prescription drugs has grown tremendously over the past few decades. This is mainly due to the increase in the number of diseases and conditions treated using drug therapy. The truth is: most drugs are dirt cheap! However, a small portion — maybe 1 or 2 percent — are rather costly. As a result of that small percentage, drug prices have become a campaign issue accompanied by plethora of bad ideas.

Early in his campaign, Donald Trump even came out with some doozies, such as having the government negotiate drug prices for Medicare and importing drugs from abroad (that is: importing other countries’ price controls). He has since ceded these populist talking points to Hillary in favor of free-market ideas. He now advocates getting government out of the way, allowing competition to flourish. He understands that bureaucratic red tape at the U.S. Food and Drug Administration often prevents competition from holding drug prices in check.

Hillary Clinton is another story.

EpiPen:  A Case Study In Health Insurance Failure

I recently wrote a post describing EpiPen as a “Case Study in Government Harm,” describing how the government had made it possible for the manufacturer to increase prices of the life-saving drug multiple times without fear of retaliation. It is also a case study in how health insurance distorts our choices and increases their cost. I learned this by following an Internet advertisement for EpiPen down its rabbit hole.

The ad induced me to download my “EpiPen Savings Card” which would ensure I paid nothing for my EpiPens (up to six, according to the ad):

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However, I had to answer a skill testing question first: What was my insurance coverage? As you can see from the screenshot below, when I answered I had no insurance, the EpiPen savings card was figuratively ripped from my hand:

EpiPen: A Case Study of Government Harm

EpipenMuch has been written about the dramatic price hikes for EpiPens, which inject a drug that counters severe allergic reactions (anaphylactic shock). According to Aaron E. Carroll, writing in the New York Times, the real (inflation-adjusted) price of EpiPens has risen 4.5 times since 2004.

Both Carroll and the Wall Street Journal have described how government has allowed EpiPen’’s manufacturer to hike prices so much. EpiPen is complicated, being both a drug and a device. The drug is very inexpensive, and not patented. The device is protected by patents issued in 2005, which expire in 2025.

First, the government made a couple of interventions in the market that allowed the manufacturer to raise prices above the free-market level. The federal government changed its guidelines such that the EpiPens have to be sold in packages of two (while customers might prefer just one, or at least an odd number). Also, the federal government gave public-emergency grants to states on condition they stockpile EpiPens.

CPI: Medical Prices Continue Upward March

BLSThe Consumer Price Index for July was flat. Medical prices, however, continued their upward march, increasing by one half of one percentage point. If prices for medical care had been flat, the CPI would have declined by 0.1 percent. Prescription drugs, physicians’ and other medical professionals’ services, and health insurance stand out even within medical care.

Over the last twelve months, prices for medical care have increased almost seven times faster than prices for non-medical items in the CPI. Price increases for medical care have contributed 40 percent of the overall CPI increase.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is flat, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. Consumers are seeing no relief from high medical prices.

What was Hillary Thinking When She Hatched Her Plan to Lower Drug Costs?

Newsflash! Hillary Clinton is concerned about your drug costs. Unfortunately, her plan could actually raise drug prices and force you to pay more, albeit indirectly. She proposes to accomplish both feats simultaneously by capping your prescription drug co-pays at no more than $250 per month. This reckless proposal is central planning of the ilk you would find in Cuba or Venezuela. But I’m getting ahead of myself.

CPI: Medical Prices Resume Upward March

BLSDue to vacation, I did not discuss June’s release of the Consumer Price Index for May, in which medical care prices were very moderate. This continued that which was observed in May (for the April CPI).

Unfortunately, prices for medical care resumed their upward march in the June CPI, released today. At 0.4 percent, prices for medical care increased twice as fast as the CPI for all items. Price changes for medical care contributed 16 percent of the price change for all items. Prescription drug prices, especially, resumed their increase. Prices for medical care services, on the other hand, were in line with the CPI for all items.

Over the last twelve months, prices for medical care have increased over four times faster than prices for all items other than medical care. Medical care price increases have contributed almost one third (29 percent) to the price increase of one percent for all items. Claims that consumers have experienced relief from medical prices are simply not grounded in data.

(See Table I below the fold.)

Should Drug Investors Worry About Medicare Revenues?

(A version of this Health Alert was published by Forbes.)

The pharmaceutical sector has held up quite well in this aging bull market. Now, a new political risk is on the horizon: The Independent Payment Advisory Board (IPAB), which was instituted in the 2010 Affordable Care Act. Starting in 2015, the IPAB was empowered to cut Medicare spending if costs increased faster than a certain rate. It quickly faded into the background as the growth in Medicare spending moderated after President Obama signed the Affordable Care Act.

Those days are gone. The latest annual Medicare Trustees’ report, published on June 22, indicates Medicare spending will cross the threshold for IPAB to swing into action in 2017. The 2017 threshold is determined by a target rate of growth which is the average of the change in the Consumer Price Index (CPI) and the medical-care component of the CPI. Estimates of both actual Medicare spending per capita and the target rate are calculated as five-year averages.

Table I, extracted from a recent presentation by Medicare’s Chief Actuary, illustrates why investors are becoming concerned. Table I highlights this year’s Medicare spending per capita will increase 2.21 percent (averaged over the five years, 2014 through 2018). The target rate is 2.33 percent, higher than the estimated actual rate, so the threshold is not crossed. IPAB remains asleep.

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