Study proves health, costs benefits of access to vital medicines; why I feel validated after panel rejection of such a hypothesis six years ago

About six years ago at a meeting in DC, I was in a crowded room listening to a panel sponsored by a very large and , among liberal groups , respected organization, talk about healthcare costs.

The Panel included a Ph.D. in healthcare economics. When the QA period came around, I asked her if she could provide any information about what the beneficial impact (overall) of lowering costs might be if Americans had access to safe, affordable medicines including via personal importation.

After she finished laughing at me, (apparently wanting to show their support and that they were not be mistaken to be , as I obviously was, a part of the great body of unwashed and ignorant people from outside The Beltway, the rest of the room joined in ) she brushed me off saying she just couldn’t see how lower medicine costs could be beneficial because of the enormity of the problem of what causes medical costs to rise, an issue which she noted I obviously didn’t understand.

I suggested that perhaps if people had access to lower-cost medicines there might be enhancement of the health and well-being of the patients taking the meds meaning that they could avoid future procedures, methods that would be more costly. The moderator then stepped in and asked for the next question. Today I feel validated by the following article Part D saved Medicare money, study finds

I believe my point was validated by the story since it seems to me that the same case can be made for those who, were it not for personal importation, would be denied the health benefits of a regimen made possible through access to safe, affordable medicines . And, by extension, if those who are denied the health benefits of access to a regimen of safe, affordable brand-name prescription medicines were able to afford their medicines, they would avoid later, more expensive and possibly life-threatening medical complications.

But, this will require a new appreciation of the importance of dealing with specifics of issues, avoiding the broad, sweeping—and largely theoretical and esoteric discussions that while providing intellectual satisfaction to those who claim superior knowledge because of their academic credentials do not consider issues from the perspective of everyday Americans. The story follows (highlighted areas are mine):

Part D saved Medicare money, study finds

Spending more money on drug therapies actually can be thrifty, at least for Medicare patients. That's the conclusion of a new study by Harvard Medical School and Brigham and Women's Hospital. As the Boston Business Journal reports, the researchers found that Medicare Part D, which subsidized drug purchases, led to lower costs for non-drug care.

Published in the Journal of the American Medical Association, the study compared medical spending on non-drug treatment both before and after Medicare Part D was implemented in 2006. Researchers used data from 2004 to 2007 on Medicare recipients who had limited drug coverage before Part D and on those who already had drug coverage when the new program came into force.

The researchers found that Part D cut other healthcare spending by about 10% per patient, or $1,200, for the group who had little drug coverage before the program. Costly inpatient care appeared to be reduced the most, while more cost-effective outpatient care wasn't affected as much. That's how drug treatment is supposed to work, of course, but this study offers dollar signs as hard evidence.

The Part D data ought to inspire Medicare to look at better integration of care, the researchers said. "These reductions in non-drug spending suggest Part D has not cost Medicare as much as initially expected," study author J. Michael McWilliams, a Harvard Medical School professor, said in a statement (as quoted by the BBJ). "This study exemplifies how spending on one type of service can affect spending on other types of care, which suggests that greater coordination and integration could lead to...higher value healthcare for elderly Americans."

Nation’s Health Care Bill To Nearly Double By 2020

By Phil Galewitz

KHN Staff Writer

The federal health law, which will expand coverage to 30 million currently uninsured Americans, will have little effect on the nation's rising health spending in the next decade, a government report said today.

The report by the Medicare Office of the Actuary estimated that health spending will grow by an average of 5.8 percent a year through 2020, compared to 5.7 percent without the health overhaul. With that growth, the nation is expected to spend $4.6 trillion on health care in 2020, nearly double the $2.6 trillion spent last year.

Health law critics said the report confirmed their concerns. "Most of us understood the health reform law was about expanding coverage not cutting costs," said Joseph Antos, a health policy expert at the conservative-leaning American Enterprise Institute.

But White House Deputy Chief of Staff Nancy-Ann DeParle said the report showed Americans were getting a good deal. "The bottom line from the report is clear: more Americans will get coverage and save money and health expenditure growth will remain virtually the same," she said on the White House blog.

DeParle, who helped lead the White House efforts on the overhaul, said several delivery system reforms being tested under the health law will work to lower spending. "We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs," she said. She pointed to new programs that administration officials have said they hope to implement changing the way Medicare and Medicaid pay doctors and hospitals.

National health spending in 2010 grew at its slowest rate ever recorded – 3.9 percent – as a result of more Americans forgoing treatment because they had lost their jobs and their health coverage, said the report, which is being published online today by the journalHealth Affairs. In 2009, health spending grew by 4 percent.

The report estimates that spending on health will accelerate this year because the economy is expected to improve and people would have more disposable income to spend on medical care.

In 2014, when the major coverage expansions of the health law begin to take effect, national health spending is expected to grow 8.3 percent, according to the new analysis. But spending growth should return to its 6 percent historical average from 2015 to 2020 as some employers drop coverage and the so called "Cadillac tax" on high-cost insurance plans takes effect in 2018. "The effect is likely to be a slowdown in the growth of health services, health insurance premiums and health spending overall," the study said.

Meredith Rosenthal, a health economist at Harvard School of Public Health, said it is difficult to predict what impact the health law will have on slowing national health spending. "Many of the components of the law that are intended to control costs are still in draft form," she said citing experiments such as accountable care organizations and bundled payments that change how Medicare pays providers.

The number of Americans with employer-sponsored insurance will grow from 163 million last year to 170 million in 2014, the report estimated. But by 2020 that number is expected to drop to 168 million as a result of two factors: Baby Boomers joining Medicare and employers dropping health coverage for workers. Most of those workers would turn to new state insurance exchanges – or marketplaces –or Medicaid, the federal-state health program for low-income and disabled people.

The issue over how many employers would stop offering coverage has been a political flash point since the health law was approved in March 2010. Democrats maintain most employers would continue to provide coverage, but Republicans and other critics predict many companies would drop it because their workers will be able to go to new health exchanges. Starting in 2014, the health law requires all employers with 50 or more workers to provide coverage or pay a fine.

The Congressional Budget Office — the neutral scorekeeper — estimates that, by the end of the decade, 3 million fewer people will get health insurance from their employer. That’s slightly more than the Office of Actuary prediction.

The study authors stressed their projections could vary depending on many factors, including the overall state of the economy and how quickly people sign up for new coverage.

"These projections are definitely uncertain and that increases as we move along in the projection period," said Sean Keehan, a study author and an economist in the Office of the Actuary.

The Medicare actuaries acknowledged that they were off on one of their estimates last year. At that time, they predicted that national spending in 2009 would grow by 5.8 percent, instead of the 4 percent growth that the report said actually occurred. Keehan said one of the factors helping push that prediction off the mark was that fewer people than expected joined COBRA plans after losing their jobs and that resulted in fewer people with health coverage and less spending.

The office also predicted last year about 375,000 people would sign up for new Pre-existing Condition Insurance Plans by 2013. But since the plans began a year ago under the health law, only about 20,000 people have signed up.

CMS Chief Actuary Rick Foster attributed the lack of public awareness of the new insurance pools for the less-than-anticipated participation. He said his office took into account the low participation rates in making estimates for enrollment in Medicaid and insurance exchanges starting in 2014.

The report estimated about 13.9 million people would enroll in new state-based insurance exchanges in 2014 and the number of uninsured would drop by nearly 20 million in that year. Given how many millions of eligible people don’t sign up today for Medicaid, that prediction is highly speculative, said Steven Findlay, an analyst at Consumers Union.

PhRMA stands behind role in Healthcare negotiations

The following Publisher’s note is the opinion of Daniel Hines and RxforfAmericanHealth.blogspot.com, and does not reflect the viewpoint of Kaiser: The interview is reprinted here as a public service to offer insights into the workings of a powerful lobby within The Beltway. Gone are the days that legislation was shaped by citizen involvement, public hearings, and testimony from concerned citizens with specialized knowledge, not special interests: Yesterday we blogged about how PhRMA’s role in the behind-closed-door Healthcare Reform ‘negotiations’ and its supposed savings for Seniors in The Doughnut Hole really were a Magic Lantern Show. The following interview and PhRMA’s comments about not being able to identify the true extent of the savings provide, we believe, validity to our observations.

The complete, unedited interview/story follows:

PhRMA Chief Says Support For Health Law 'Was Right Decision'—The KHN Interview

By Bara Vaida

JUL 13, 2011

One year after John Castellani took control of PhRMA, the former manufacturing executive has steered the drugmakers' lobbying group to be ready for battle with the White House.

Gone are the days where the Pharmaceutical Research and Manufacturers of America, is making deals with a Democratic White House and spending $101 million on advertising to promote the new health law. That was the successful strategy of PhRMA’s previous leader, former Rep. Billy Tauzin, R-La. to ward off new regulations for the industry in the law. Now PhRMA has signaled that it will fight any attempt by congressional Democrats or the White House in the current deficit reduction talks to save money by cutting drug spending in government programs.

In a hastily scheduled press conference this week, Castellani made it clear that PhRMA opposes a Democratic proposal that would require drugmakers to pay rebates to the Medicare program for beneficiaries who qualify for both Medicare and Medicaid, known as the "dual eligibles." He said it would "do serious harm to the industry, serious harm to (pharmaceutical) jobs and we oppose it. … We opposed it in the context of the discussions around the [health law] and we oppose it now." And if the proposal succeeds, Castellani said there "would be the risk" that drug companies would begin to move their operations to countries outside the U.S.

Still, Castellani says the industry doesn’t regret supporting the health law because he says it "was the right decision under the political context at the time," although his group would like to see some changes in the law.

Castellani recently spoke with Kaiser Health News' Bara Vaida. Here is an edited excerpt:

Q. PhRMA made a $80 billion to $100 billion deal with the Obama administration during the health reform debate to stave off more regulations, angering many of your Republican allies in Congress. Are you sorry the industry made that deal?

A. No. No. It was the right decision under the political context at the time. You had a Democratic president and a Democratic Congress and sweeping legislation that affected our industry. The decisions that were made were appropriate given the political circumstances.

Q. How much was the final deal? $80 billion or $100 billion? What number is right?

A. I can't comment given the nature of how [the Medicare rebate] affects individual companies.

Q. You have said you would like to see the Independent Payment Advisory Board (IPAB) in the health law repealed. What are you doing specifically to lobby on that?

A. IPAB is fundamentally flawed. It has to be repealed in its existing form or mitigated. What we have been doing is talking to other groups that are affected by it and talking to members of Congress. There is a substantial bipartisan effort to repeal [IPAB] that is almost unrelated to what we are doing about it.

Q. The president targeted the drug industry in his recent deficit reduction plan, how do you feel about that?

A. The president proposed to shorten the period of data exclusivity for biologics. It was disappointing and a bit surprising. He talked in the State of the Union speech about owning the future and investing in technology, and (his efforts on biologics) is discouraging what he wanted to encourage.

Q. What about the deficit reduction plan proposed by Rep. Paul Ryan, R-Wis. Would you support or oppose that? Do you see any dangers to the drug industry?

A. We don't know enough about it. We do think we need to have a debate about how do you fundamentally change Medicare so that it can be affordable (for the future). All ideas ought to be on the table.

Q. What are you doing to manage the drug industry's reputation with the public? People feel drug companies charge too much for their products.

A. Obviously we need to be trusted by public policymakers and by patients and by clinicians, and that is something that we are committed to doing. The problem is the delivery system by which people get medicines. [The system] is designed to disproportionately show the cost of medicine, so even though we are only about 10 percent of total health care costs, we are 40 percent of out-of-pocket expenses. That makes people think that we are the most expensive part of the health care, when in fact we may have the most value and be much less expensive than acute care. The other problem is that we haven't done a good enough a job of explaining the scientific process in how difficult and potentially rewarding it is and we need to help people understand where we fit in the economy and the kinds of jobs we produce and the kinds of value-added we provide.

Q. What about PhRMA's political reputation? Some Republicans remain angry over your support for health reform?

A. People try to portray us as Democrat or Republican. We are not. We are pro PhRMA. Lawmakers that recognize the value of PhRMA to their states and the economy and the costs of medicine are the people we support. The grumbling will always be there. There will always be someone who will find a reason why we should be doing something differently than we are going to do.

Q. You've acknowledged the industry spent about $25 million in the 2010 election cycle to get candidates elected. How much will you spend in the 2012 cycle?

A. We will support the candidates that support the industry, and I don't know who that is yet. It's too early. Really. I am not playing hide the peanut. I will tell you when I know (how much) it is.

Q. You say 75 percent of all prescriptions filled are generics rather than brand-name, what does that mean for PhRMA and the industry's business model?

A. Generics are an important part of the medicine life cycle. We produced all of them. They are our children. But if you are going to continue to innovate, you have to continue to support returns for the inordinate investment it takes to find new medicines. It is $1 billion to $1.3 billion over 10 to 12 years to develop a new medicine, so you have to have the mix of patent protections if you are going to have the rewards for that innovation. If you don't want to pay for the innovation, then you have to say to American patients, we have invented everything that we can invent. But we don't believe that. There are still discoveries out there. The problem with what the president proposed and when people say we ought to go to all generics, is generic companies don't spend money on research and development. We do.

Q. What about comparative effectiveness. PhRMA on its blog says it is a good thing, but the industry fights it.

A. Here is one of the issues that is difficult to deal with. The discovery process is an iterative one. Let's take some of the work done on HIV/AIDS. When (researchers) started out, you were talking about extending life for six months, then a year, then 18 months and then over years it turned HIV into a chronic disease. Clinicians learned, and the results got better over time. Comparative effectiveness can be good if it looks at the spectrum of the options available over a long enough period of time to know what the real value is.

Kaiser Health News reporter Mary Agnes Carey contributed to this article.

Why Congress and the President should embrace personal importation of prescription medicines to reduce costs of health care, stimulate economy

What must be described as the most, ‘Oh, Really?” news coming from The Beltway is the headline from the Los Angeles Times to let us know that “ Drug Makers Seek To Block Deficit-Talk Demands For Discounts.”

The Pharmaceutical Industry has never really stopped spending millions of dollars to protect its ability to impose the highest drug prices in the world on U.S. citizens, prices created through back-door, secret deals with Pharma by people who are supposed to represent the public interest, namely bureaucrats, Congressmen and Senators, and sadly, in the most recent example, the President of the United States himself.

I say sadly, because then-Senator Obama was in favor of personal importation of safe, affordable brand-name prescription medicines from licensed, registered pharmacies in Tier One Countries whose oversights and standards of safety meet or exceed those of the United States.

He was even a co-sponsor of the Dorgan-Snowe bill, the Pharmaceutical Market Access and Drug Safety Act supporting the concept of personal importation

However, it really didn’t matter since in what had become a ritual of each session of the U.S. Senate, the proposed legislation failed to receive the votes needed for passage.

So, it was with a great deal of anticipation that we looked forward to the newly elected President Obama, confident that he would take advantage of the huge Democrat majorities in the House and Senate to break the hold of Pharma upon the nation. .

But, in a classic case of Inside The Beltway hubris, the new legislation brought forth by Senators Snowe and Dorgan was troublesome although on the surface, it appeared to be the same legislation as previous attempts.

However, many supporters of personal importation, including me, believed that the proposed legislation had a fatal flaw—namely too great an emphasis upon medicines from Canada to the exclusion of those from Australia, New Zealand, et al., since at the time, sources from the Canadian International Pharmacy Association (CIPA) were estimating that as much as 80 percent of the brand-name medicines being sold by Canadian mail order pharmacies were from Tier One countries other than Canada.

Supporters who questioned the intent of the bill were told by staff to like it or lump it (a direct quote). So, the enthusiasm for the legislation, not the concept, dwindled among many who would otherwise have supported the bill enthusiastically as they had done for years.

At the same time, the President immediately found that the pharmaceutical industry was just the sort of strange bedfellow that he could lie down with. In return for support of his Healthcare ‘Reform’, the President claimed that he had negotiated with PhRMA, the trade association of the pharmaceutical manufacturers, to provide relief for Seniors trapped in the Doughnut Hole by reducing the prices of their meds for the beleaguered Seniors by 50 percent. Utilizing the funny math that has become a Hallmark of his Administration, the President based his Administration’s estimates of the savings upon existing drug prices.

Of course, Pharma immediately, began raising its prices at a rate that far outstripped the Cost of Living, and, since the 50 percent deal didn’t kick in for a year, recouped much of the hoped-for and claimed savings.

The deal with Pharma was just one small part of the closed-door sessions of special interests that led to the botched opportunity to address the real problem of health care in the United States—as Jimmy McMillan noted about New York rents: “The rent is too damned high.” The same is true of the role of prescription medicines: “The cost is too damned high.”

In a touch of irony, one of the pivotal figures of the ‘Gang of Six’ during the Health Care debate was Senator Snowe, the co-author of the previous Dorgan-Snowe bills supporting Personal Importation. (In what has become an annual rite, Senator Snowe is the Co-Sponsor with Senator Debbie Stabenow (D-MI) of this Senate session’s resurrected bill seeking to allow personal importation of prescription medicines.(Publisher’s Note: Like previous versions of the proposed legislation, the language was crafted by staff. Rep. Ron Paul (R-TX) has a House bill to allow personal importation in the hopper, and his version is much simpler, reflecting his Libertarian leanings. His bill would allow Americans to make their own decisions about where to purchase prescription medicines and to trust their common sense to exercise good judgment in discerning sources of safe, effective medicines free of what some believe is a burdensome—and possibly costly—oversight requirement in Senators Snowe’s and Stabenow’s version, which has a number of co-sponsors.)_

The web site, WhoRunsGov, noted that Senator Snowe and her staff were working to “exert her outsize influence on the healthcare bill.” Unfortunately, even with her record of support for lowering prescription drug prices, the Senator was unable to utilize that ‘outsize influence’ to get true price reduction in prescription medicine via price negotiation or personal importation. Instead, Pharma racked upon another victory.

But, contrary to the old saying about how many times opportunity knocks (once if didn’t know), President Obama and Speak John Boehner (R-OH), now have a unique opportunity to address one an issue that could provide a true stimulus to the tottering economy by putting billions of dollars in consumer pockets, reduce the deficit by billions, and do so all while providing the health benefits that access to a regimen of access to vital medicines can provide—embrace the right of Americans to act in a responsible manner exercising their own good judgment to step up their purchases of safe, affordable brand-name medicines from Tier One Countries outside the United States.

Estimates are that consumers could save as much as $80 billion over the next decade, and that the Federal Government could reap savings of $19 billion in the same period.

It is hard to explain why our elected officials have been so unable to grasp what is a win-win situation—improved health for U.S. citizens, more money for consumers to spend on necessities and, perhaps, even some non-essential items for their own enjoyment. In a recent speech on the Senate Floor, Senator Dick Durbin (D-IL) noted that the continuing costs of healthcare were a major contributor to the fiscal crisis the nation faces. It seems it might be a grudging admission that the real problem caused by the President’s Affordable Care Act (Obamacare) was that the emphasis should have been on cost-containment and not coverage.

But, it’s another case of the American people being ahead of those inside The Beltway, where an atmosphere of immunity from real-life problems prevails. The fact is that for more than a decade, literally millions of people have turned to personal importation as a safe source of vital brand-name medicines. It is time for the Obama Administration and Congress to embrace the benefits personal importation can provide for even more Americans, knowing that by so doing, they will be acting in the best interests of the health and well-being of Americans, while derailing Pharma’s role as a major driver of health care costs.