April 1, 2011
Worth Reading This Week
Jane Yakowitz, Tragedy of the Data Commons, SSRN
David M. Studdert et al, Relationship between Quality of Care and Negligence Litigation in Nursing Homes, NEJM
Gregg D. Polsky, Reconstructing the Individual Mandate as an Escrow Account. Michigan Law Review First Impressions/SSRN
Tribe, Barnett and Fried Debate the Constitutionality of the Obama Health Care Reform
A very lively debate was recently held at the the Petrie-Flom Center for Health Law Policy, Biotechnology and Bioethics at Harvard Law School with leading constitutional scholars Randy Barnett, Charles Fried and Larry Tribe on whether the Obama Health Care Reform is constitutional. The video link is here.
Prosecutors and Pregnancy
Imagine your daughter is pregnant and living with her partner, the father-to-be of the child. Her partner leaves her, and your daughter becomes severely depressed. Driven to despair, she attempts suicide by swallowing rat poison. Doctors are able to save her life, and they deliver her viable fetus by cesarean section. The baby survives for a few days before dying from the poison. If your daughter lives in Indianapolis, the prosecutor will file murder charges against her.
I’ve roughly described the facts in State of Indiana v. Shuai, a case in which I’ve also authored an amicus brief on behalf of the American College of Obstetricians and Gynecologists, other medical groups and individuals in support of a motion to dismiss charges against Ms. Shuai.
March 31, 2011
Your ACO Primer Links
The ACO regulations are here. The DOJ/FTC proposed policy statement on antitrust is here. The HHS/OIG proposed rule is here. Finally, the New England Journal has published a commentary by Dr. Berwick, here. [NPT]
March 30, 2011
County Health Rankings Show That There Is More to Health Than Health Care
The Robert Wood Johnson Foundation and the University of Wisconsin released the new County Health Rankings today. The model for the rankings " is grounded in the belief that programs and policies implemented at the local, state, and federal levels have an impact on the variety of factors that, in turn, determine the health outcomes for communities across the nation."
These ranking are like an annual checkup for the country -- you can look on the website and find the ranking for health of every county nationwide, not just on average lifespan and mortality, but also on factors like access to healthy foods, obesity and smoking rates, and air pollution levels.
The Rankings allow anyone nationwide to get a snapshot of how healthy their county is, and how it stacks up to others.
Check this out: In addition to the Rankings themselves, the Robert Wood Johnson Foundation has produced an interactive calculator app that explores the relationship between education and health in any county nationwide. The calculator lets you raise and lower the education rate or average income in a county, and see how the change would be predicted to affect mortality. For instance: if adults in Wyandotte, Kansas – where 39% have some college education – had the same education levels as the top county in the state – Johnson at 78% -- more than one out of three deaths (38%) could be averted per year.
After Makena: Could a Risk Corridors Approach Balance Incentives and Access?
A form of progesterone known as 17P was used for years to reduce the risk of preterm birth. . . Because no companies marketed the drug, women obtained it cheaply from “compounding” pharmacies, which produced individual batches for them [at about $20 each]. Doctors and regulators had long worried about the purity and consistency of the drug and were pleased when KV won FDA’s imprimatur for a well-studied version, which the company is selling as Makena.
The list price for the drug, Makena, turned out to be a stunning $1,500 per dose. That’s for a drug that must be injected every week for about 20 weeks, meaning it will cost about $30,000 per at-risk pregnancy. . . . The approval of Makena gave the company seven years of exclusive rights, and KV immediately fired off letters to compounding pharmacies, warning that they could no longer sell their versions of drug.
A day after Stein’s article appeared, the FDA made it clear that “does not intend to take enforcement action against pharmacies that compound” 17P, “in order to support access to this important drug, at this time and under this unique situation.”
This is a fascinating, and in some ways, troubling response to the accusations of price-gouging by KV. Compounding pharmacists had already averred that “many of [KV's] assertions that the compounding of an FDA approved product is prohibited are not supported by the legal citations it references.” Though the FDA’s letter preserves access to 17P for now, that access could be revoked at any time. As the FDA states on its website:
FDA understands that the manufacturer of Makena, KV Pharmaceuticals, has sent letters to pharmacists indicating that FDA will no longer exercise enforcement discretion with regard to compounded versions of Makena. This is not correct. In order to support access to this important drug, at this time and under this unique situation, FDA does not intend to take enforcement action against pharmacies that compound hydroxyprogesterone caproate based on a valid prescription for an individually identified patient unless the compounded products are unsafe, of substandard quality, or are not being compounded in accordance with appropriate standards for compounding sterile products. As always, FDA may at any time revisit a decision to exercise enforcement discretion.
Moreover, the problem persists for at least one other drug, colchicine. As Arthur Allen explains at Slate,
The colchicine and [17P] stories have their roots in the FDA’s historically complex relationship with the drug industry. Since 1962, the agency has required that all new drugs be proven safe and efficacious before hitting the market. Many drugs marketed before 1962, however, remain on sale without having been formally approved by the FDA and are technically illegal. In 2006, the FDA launched the Unapproved Drugs Initiative, aimed at getting rid of as many of these drugs as possible. . . .
The FDA campaign has two approaches. In some cases, the agency simply warns companies to stop producing and shipping unlicensed drugs by a given date. In other cases the FDA warns a group of companies producing a particular class of drug, notifying them that it plans to crack down on their unapproved substances. The idea here is to give the companies an opportunity to submit their drugs to the rigorous testing required for FDA approval. This is what happened with . . . at least 86 newly approved drugs. The problem is that after submitting such drugs to expensive testing, drug makers typically jack up the prices, in a position to do so under congressional patent incentives aimed at producing innovative drug research. The FDA has no say in how a drug is priced.
As the Post notes, KV says it “is spending more than $200 million to develop the drug and conduct follow-up studies that the Food and Drug Administration demands.” Had it kept its pricing power, it was estimated that Makena would cost the US health care system $4 billion per year. Assuming that 3/4 of that would be revenue to Makena, and it lasted for the full 7 years of exclusivity, that would be a $21 billion return on a $0.2 billion investment. That seems excessive, especially given that KV didn’t develop the drug. On the other hand, if the Makena price were to be reduced one hundredfold, that’s a $0.21 billion return on a $0.2 billion investment. Unless we hit some serious deflation, that doesn’t cover the time value of the money invested in studies and development.
Are there any better models here? Stein’s story says that “experts said the FTC could sue KV if it concludes the company is illegally impairing competition,” but I don’t see the theory there. The FTC has lamented post-merger price hikes for life sustaining drugs (see FTC v. Lundbeck), but has precious little authority over price hikes here. Perhaps liberal constitutional law professors could fuse the “medical self-defense” theory of Eugene Volokhwith the expansive Yoo/Vermeule/Posner theories of executive power, and find inherent executive authority here to save preemies? Probably not; the current Supreme Court is only receptive to creative con law from one side of the political spectrum.
Another idea is for legislation to create “risk corridors” for researchers who engage in the FDA’s Unapproved Drugs program, as CMS has for prescription drug insurance plans in Medicare Part D. As Kip Piper explains,
Using a system of risk corridors that compares actual incurred drug benefit costs to estimated costs submitted in bids, Medicare limits the profits and losses of Part D drug plans. Specifically, if a Medicare drug plan’s actual benefit costs exceed expected (bid) levels by a sufficient degree, the plan will receive an additional federal payment to cover a portion of the loss. However, if a drug plan’s actual spending falls sufficiently below projections, the plan must share some of the profit with the feds. Risk corridors apply to actual and expected drug benefits costs but exclude plan administrative costs and federal reinsurance payments.
Unfortunately, estimates of the value of testing unapproved drugs vary widely. The FDA’s director of the FDA’s Office of New Drugs and Labeling Compliance insists on the importance of these programs. But, looking specifically at colchicine, an Austin rheumatologist said “Doing one trial in patients and a few drug interaction studies doesn’t justify marketing exclusivity and a 50-fold increase in price.” As Allen puts it, we need “legislative remedies to improve the drug supply without costing the public an arm and a leg.”
In health care finance, the “cost-shift” hydraulic is a familiar model. When policymakers cut reimbursements for, say, Medicare or Medicaid, providers still have the same income target, and respond by raising prices for the privately insured. One scholar estimated that the privately insured pay over 120% of costs, while Medicare payments are between 95 and 99%. We might think of pharmaceutical patents as another manifestation of “cost-shifting,” from the future (which will enjoy drugs in the public domain) to the present (which must pay the monopolist’s price). Other forms of exclusivity can also lead to that type of cost-shift, as the Makena controversy makes clear.
Perhaps the people most benefited by a regime of more intense pharmacovigilance and evidence-based medicine should be asked to pay something for that new reassurance. But they shouldn’t be price gouged. A risk corridors approach might better balance patients’ interests in research on, and reasonable prices for, unapproved drugs.
Blocking Implementation of the Patient Protection and Affordable Care Act (PPACA)
Politico reports on successful efforts at the state level by health care law opponents to block creation of health insurance exchanges. Of course, if the states do not set up exchanges, then the federal government will do it for them. And polling data in March showed the public to be more favorable about PPACA than earlier in the year. Still, officials at HHS and the White House undoubtedly would prefer to see greater acceptance of the law by now.
Biosafety Protocol Improving with Age
The Secretariat of the Convention on Biological Diversity (CBD) has released the eighth issue of "Biosafety Protocol News." It commemorates the 10th anniversary of the adoption of the Cartagena Protocol on Biosafety, the treaty governing the movements of living modified organisms (LMOs) related to biotechnology. It is a useful report because it highlights future directions and the challenges of implementation. One of the greatest challenges is helping countries address illegal trade in possibly dangerous LMOs. The newsletter reports that secretariats of six Multilateral Environmental Agreements (MEA) and five international organizations are attempting to address this problem with the Green Customs Initiative, which appears to be making some headway. Also, information sharing has been improved. Since 1998, the International Centre for Genetic Engineering and Biotechnology (ICGEB) has managed and shared a bibliographic collection of articles of scientific studies relevant to biosafety and risk assessment of biotechnology. This is accessible through a Biosafety Clearing-House portal. There are many other encouraging developments described in the newsletter, but overall, it seems that with the rapid advances in biotechnology, more resources are needed to enable information sharing, better safety measures, and implementation capacity-building. The newsletter mentions additional protocols that are under consideration to improve the Cartegena Protocol.[MM]
They're Coming! The ACO Regulations are Coming!
We were promised the Accountable Care Organizations regulations before the end of March. That means this week, and rumors are flying about their bulk. Politico reports, here, that we may be staring at 1000 pages of regulations and that we will see them on Thursday (because HHS won't want to release them on April Fools Day!). [NPT]
March 29, 2011
Ronen Avraham, Market Solutions, and Practice Guidelines
Instead of nonprofit groups producing free guidelines, or insurance companies producing ones that serve their own interests, the government should require health care providers to buy or license guidelines from what I call private regulators, for-profit companies with expertise in evidence-based medicine. Doctors would have immunity from malpractice cases if they followed the guidelines. However, the private regulators themselves would be liable if their guidelines were found to deviate from optimal care.
March 28, 2011
Voluntary Enrollment Strategies
The GAO has issued a new letter report, available here, that addresses strategies for encouraging voluntary health insurance enrollment (i.e., leaving on one side PPACA issues such as the individual mandate and insurance industry regulation). Based on interviews with analysts and stakeholders GAO reported the following strategies as likely having traction:
(1) Modify open enrollment periods and impose late enrollment penalties. (2) Expand employers' roles in autoenrolling and facilitating employees' health insurance enrollment. (3) Conduct a public education and outreach campaign. (4) Provide broad access to personalized assistance for health coverage enrollment. (5) Impose a tax to pay for uncompensated care. (6) Allow greater variation in premium rates based on enrollee age. (7) Condition the receipt of certain government services upon proof of health insurance coverage. (8) Use health insurance agents and brokers differently. (9) Require or encourage credit rating agencies to use health insurance status as a factor in determining credit ratings.
Notwithstanding these strategies for voluntary enrollment the mandate and regulatory elephants in the room were difficult to ignore. Of the four themes or frames cited by the interviewees, the second was "regardless of the particular approach taken to increase voluntary enrollment in the absence of an individual mandate, the availability of affordable, high-quality health care plans with a basic set of benefits, and full coverage of preventive care services is essential to encouraging voluntary enrollment in the coverage." [NPT]