Mylan overcharged Medicaid for EpiPen for years, despite warnings
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This past year list prices have gone up 12.4%, but companies only capture 2.8% of that. Which is about inflation.
Where is that other money going? You may want to ask your insurance company.
I don't know the details, but I do know my sister always carried two for her eldest (past tense because he's now in college and presumably carrying them himself now).
Medic units, that have trained personnel, that have all the equipment to draw up Epi from a $3 vial themselves, who are already on scene.
This leads to my county alone having to throw away $130,000/yr of EpiPens that don't get used before they expire. Because the state legislates that we're required to carry them.
Looks perfectly reasonable to me. Captive market, zero competition, reasonably fixed demand, and (best of all) disconnect between the person making the purchasing decisions and the one actually footing the bill.
This is the healthcare system our elected representatives have created for us. Either embrace it (which I guess means investing in an overweight portfolio of pharma companies) or send them a message to correct the core of the problem.
This reminds me of Martin Shkreli congress hearing [1]. A case of politicians blaming others for their own bad decisions.
They are talking about impoverished women with AIDS in Africa - and the drug company only has a license for the US, the drug itself has nothing to do with AIDS, and is free for half the patients and a $20 co-pay for the other half.
Your insurer isn't an endowment, it isn't a charity. Notwithstanding a few percent ROI on investing premiums, the only person paying these four digits is you. Or your employer. It's just amortized and spread among a group.
"It's not that bad, it's really only $20" is the big trick here. A much higher amount is being billed, and paid, even after negotiation. It's not coming from a magic money fairy.
The second page goes into detail about the rebates and discounts given to pharmacy benefit managers which partially explains the list price increases.
Article: http://www.forbes.com/sites/matthewherper/2016/08/30/the-con...
"The company is in the hot seat and it is a bit convenient that CMS decides after 19 years that Mylan has been wrong all along while it did nothing about it, just in time to suit Congress’ needs."
This product has been classified as a non-innovator product for the last 19 years and CMS is just getting around to it? Sure.
And whenever someone says the US gov't doesn't negotiate down drug prices, take a 2nd look at the Medicaid rebate. This is how those negotiations went....
CMS: Oh that's your price? We're going to go ahead and give ourselves a 13% discount (it's 23% for most drugs).
Drug company:....
No but the Medicare/Medicaid market is huge and they tend to pay their share on time and without hassle. Companies put up with the pricing nonsense because they net out on top.
This is certainly not true for providers (ie, hospitals and doctors). Medicare is notoriously painful with billing and reimbursements.
In addition, they don't come out ahead. In fact, Medicare reimburses about 7% less than COGS, which means providers are already losing money per patient before they have to think about covering their overhead.
The reason they accept Medicare is because it's very difficult, legally, not to. Despite this, Medicare has gotten so costly for them that many hospitals have recently started talking about finding a proper legal path to dropping Medicare altogether.
Source?
I'd find it hard to believe that doctor's are forced to accept patients with Medicare or Medicaid.
It's easier in private practice, but private practices are a dying breed - most doctors these days are employed. But hospitals are hard-pressed to do the same.
For an example, if you're a hospital and you have an an emergency room, you cannot refuse emergency care for a patient. That emergency care may or may not also result in an admission to the hospital, and that's a decision you can't make preferentially based on the insurance status of a patient (by law).
You can refuse to accept Medicare, in which case Medicare won't reimburse you, but that means that you're providing emergency care to 40% of the population for free[0]. So refusing service to Medicare patients means, among other things, not running an emergency room.
(Incidentally, some hospitals have done exactly this - either shutting down their emergency rooms entirely, or switching to freestanding ERs, which are (ironically) prohibited by law from accepting Medicare).
[0] Technically they bill the patients for this, but from a hospital's perspective, this is "for free" - they don't expect to collect on most bills they issue to self-paying patients for emergency services, which is why they're so quick to negotiate them down if you ask. They know self-paying patients are very unlikely to actually pay the full bill, so they'd rather discount it up-front than write it down.
... or send it to Collections, charge it off, pick up the check for what might likely have been the negotiated amount anyway, take the difference in a tax write off, and debtor gets chased for the full Chargemaster rate...
To answer your question if they are required to "sell" to CMS, the basic answer is yes. In order to sell your drugs to Medicaid and Medicare patients, CMS requires a "Pharmaceutical Pricing Agreement" (PPA) to be signed. One part of that agreement is that you give a significant discount to CMS for certain patients. This is why I chuckle when people say "Medicare can't negotiate drug prices", which is true, but the gov't takes their pound of flesh other ways (Medicaid rebate, 340B rebate, which both have price increase penalties). There are examples of drugs where the manufacturer is required to sell them at "penny pricing". That is, $0.01 per unit of drug. This is usually due to the manufacturer cranking up the price really fast, but in the end they have to give the drug to the gov't for FREE.
Do companies have to enter in to a PPA? They don't have to, but since Medicaid and Medicare represent more than half of all patients in the US, you'd be stupid not to. There is one example where a drug company said "no thanks". It was J&J's over the counter division. I assume Medicare and Medicaid was a super small slice for that business so they just pulled out all together. Most companies can't afford to do that.
To add to what you're saying, this same effect also results in inflated prices for patients on private insurance and patients who are uninsured. When Medicare reimburses less than the direct cost of goods and services (which they do, in the aggregate), then providers have to make up the difference elsewhere.
That's why you see incredibly inflated bills for basic services. It's because private insurers and uninsured patients are in effect subsidizing Medicare through higher reimbursement rates, which get passed on to patients as higher out-of-pocket bills or higher premiums.
By the design of the program, the federal government is not permitted to negotiate prices of drugs with the drug companies, as federal agencies do in other programs. The Department of Veterans Affairs, which is allowed to negotiate drug prices and establish a formulary, has been estimated to pay between 40%[27] and 58%[28] less for drugs, on average, than Medicare Part D.
Although generic versions of [frequently prescribed to the elderly] drugs are now available, plans offered by three of the five [exemplar Medicare Part D] insurers currently exclude some or all of these drugs from their formularies.…Further, prices for the generic versions are not substantially lower than their brand-name equivalents. The lowest price for simvastatin (generic Zocor) 20 mg is 706 percent more expensive than the VA price for brand-name Zocor. The lowest price for sertraline HCl (generic Zoloft) is 47 percent more expensive than the VA price for brand-name Zoloft."
— Families USA 2007 "No Bargain: Medicare Drug Plans Deliver High Prices" Estimating how much money could be saved if Medicare had been allowed to negotiate drug prices, economist Dean Baker gives a "most conservative high-cost scenario" of $332 billion between 2006 and 2013 (approximately $50 billion a year). Economist Joseph Stiglitz in his book entitled The Price of Inequality estimated a "middle-cost scenario" of $563 billion in savings "for the same budget window".[29]:48
Former Congressman Billy Tauzin, R–La., who steered the bill through the House, retired soon after and took a $2 million a year job as president of Pharmaceutical Research and Manufacturers of America (PhRMA), the main industry lobbying group. Medicare boss Thomas Scully, who threatened to fire Medicare Chief Actuary Richard Foster if he reported how much the bill would actually cost, was negotiating for a new job as a pharmaceutical lobbyist as the bill was working through Congress.[30][31] A total of 14 congressional aides quit their jobs to work for the drug and medical lobbies immediately after the bill's passage.[32]
(Wikipedia)
There's corrupt, but that's a new low.
How the hell do we let people get away with this.
Yes, but Medicare Part D is not run by the federal gov't, it's run by private insurers (the gov't just pays them). Private Part D plans negotiate down the cost of drugs all the time. In fact, the actual costs of Part D have consistently come in lower than projected since the start of the program.
Private Part D plans get lump sum payments from the gov't to pay for patients. Each Part D plan bids on being a provider. So, when the Part D plan negotiates a lower price on a drug, they can bid lower for their overall plan and the savings get passed onto the gov't.
And it's not fair to compare Medicare Part D prices to what the VA pays. The VA is a pretty small slice of the market and there is statutory language about the discounts they must receive. A lot of it isn't even negotiated.
And finally, Medicare couldn't negotiate lower prices if it wanted to. Right now, Medicare Part D has a hell of a time excluding a drug from their formulary. They basically can't say "no, patients can't use this drug". If they can't say no, then what leverage do they have over drug companies? The rules on how Medicare can manage their formulary would have to change before they could start negotiating.
I'd add that the government "choosing a plan" web site is rather good, give it a list of drugs and it'll tell you what you'll pay next year, modulo changes. It's also not difficult to manipulate it to play what if games, e.g. every once in a while I get a sinus infection, and it takes 30 days of a not so cheap generic antibiotic to be sure to cure it. So I put that drug on and off my list, to make sure it'll be acceptably priced if I have bad luck next year. Displays quality survey data that seems to have some relation to reality, makes enrolling in a new plan a snap, etc. etc.
There are soccer players here in the UK that get paid £100k per week to do nothing- noone is up in arms to regulate that market?
I agree, there are plenty of examples where regulation works. The National Health Service in the UK is a shining example of this (it has its own issues but what can you expect when you are running one of the largest organisations in the world?). There are succesful regulations that reward companies (such as with subsidies and other indirect incentives) to choose the 'morally correct' option (this is done for example in the EU to limit environmental impact of industry).
I believe we're saying the same thing. Regulations are needed, and we cannot expect companies or the market to do it themselves.
If anything needs regulation, it's campaign finance.
No disagreement on the need to regulate campaign finance, either.
Putting themselves in almost a situation of monopoly on epipens in the US (which you can't fault the high cost of entry for, I'm quite happy that medical devices have high standards) then yes, they should have a moral obligation to sell Epipens at a fair price.
I agree it is pretty grim if pricing of a medical device would literally cause death although I'm not sure that is the case.
> Putting themselves in almost a situation of monopoly on epipens
Monopolies are exactly why economic regulation exists.
They're not paying their players ten times market rates. They're paying their players 1x market rates. The market rate for those players happens to be very high. That's the whole point.
Those players aren't being made possible by the patent system and medical regulatory agencies though. If you can play soccer better than them you can go take their position, but if you make a cheaper EpiPen you won't be able to compete. (Though that may be changing, the FDA seems ready to fast track some competitors.)
Plus most patients are not qualified to make medical decisions about whether a procedure is correct.
Well, there's a couple reasons for this beyond "Well, fuck even trying to be transparent."
1.) Many physicians, nurses, etc. aren't employed directly by a hospital, but instead come in under contract as part of a physician group. Hospitals charge their own fees for use of their facilities, which are completely opaque from the physicians working there in this case, every specialty contracted by a different group handles their own billing as well - this makes it incredibly challenging to try to even get an estimate when everyone is working on their own.
2.) Medical care is more like visiting a mechanic to fix your car than it is just buying a service. Even if you could try to get a reasonable quote, complications come up, part of an encounter for "I am feeling sick" is diagnosing you in the first place which can have a lot of variety in just how much is done based on the symptoms. I can say it's gonna cost $120 for you to come into an urgent care and see a doctor, but depending on what happens it could very well cost more.
3.) Billing is separate from everything else in most cases. In the first point I mentioned I work for a billing company owned by a physician group, notice the "owned by". We aren't part of our parent company in the day-to-day, in fact we collect our own revenue and the amount of money flowing between us is very one-directional (we take our billing fee and the rest goes straight to them) - the same goes with many other aspects of our operations, there is cooperation but we're still on very different sides of the fence. With that said, our providers have very little to no insight into what we actually do, they just know we code the encounters and send out claims then collect money - some may have an idea what `R10.9` means, but most don't, or which of the ED visit codes (99281-99285) are appropriate. All of this work that goes into coding an encounter is because that is what insurance companies base their allowable charges off, and it's our job to make sure it's coded appropriately so we get appropriate compensation for the services rendered. WE handle all of this work, to the physicians it's just a black box - they treat the patient, they get paid.
If you want price transparency many things need to change in the industry.
There's a couple of companies that make generic versions of it, so you can get a pair for $150, but the branded version costs ~$400.
> Mylan should have been paying a higher rebate of 23 percent, but did not do so because the company improperly classified EpiPen, despite being told its classification was incorrect.
If a regular person defaults on paying their taxes, the IRS can seize their property and stuff. Why are Mylan's EpiPen warehouses not being seized to pay for these rebates? Instead, they are being gently chided saying "you really should have paid more, because um, the law requires it?"
In my opinion, due to massive lobbying, there are really one set of rules in the US for regular people, and a different set for the ultra rich and large corporations. I would be delighted to be offered a working alternative explanation, or seeing massive financial and possibly criminal penalties for Mylan executives (if willful misclassification is proven).
> were [not] written by the same people for the same purposes...there's no reason to be shocked that they are different in content and application
This argument is circular in nature. "Different laws are different, because they are different". Why are they different? Could it have anything to do with the fact that Mylan spent several million dollars lobbying various lawmakers? (https://www.opensecrets.org/lobby/clientsum.php?id=D00002776...)
The government really doesn't go full bore after "you should have checked Box A instead of Box B" situations unless something really egregious happens, and that's true for little people too. When there is a big corp, involved in something like this, it's almost always true that there is ambiguity about which Box should've been checked. All these things get the blessing of some tax lawyer who doesn't want to go to jail.
Here there doesn't look like there has been an adjudication (a decision in a lawsuit proving Mylan owes something). Until then, it's just some official's statement.
Why can't the same be true of Mylan? "Garnish" their profits; and if it was done wrongly, they can sue the relevant Government department.
I'm guessing there are issues of scale of bad behavior involved here, and perhaps wage garnishing is really true only for "egregious" cases. My point is that maybe large lobbying pharma companies making insane profit margins off up-marked drugs ought to an egregious case too.
He gave the example of how the sheriff paid a gas station a visit when gas first reached a dollar. He said the gas station had two choices: sell at 99.9¢ or lower or shut down the gas station.
Now you've excused yourself from the discussion because you have no arguments left. I'm fine with this.
http://jamanetwork.com/journals/jama/article-abstract/254569...
Drug prices are high because of all the government-granted monopolies.
"[The] federal government is prohibited from negotiating drug prices on behalf of Medicare Part D plans."
http://www.politifact.com/wisconsin/statements/2012/sep/04/t...
It probably doesn't take much guessing to figure out which industry's lobbyists helped that one along.
What has to happen before regulation is more consistently applied here in the US?
They're great because they have to be _and_ being great leads to success. You can, with solid engineering, completely understand and prevent failing. There aren't any act-of-God accidents. How and when aircraft fail is designed from the start; when they do fail there is always a cause and it's always fixable.
You can read plenty of NTSB reports about accidents (and they take mistakes which don't actually result in harm very seriously too) and they really do point out incompetence and stupidity. The most important part is that it isn't about blame or prosecution, it's about finding, fixing, and preventing problems. Revenge against people who screw up intentionally or not isn't helpful, making it impossible to screw up is.
In any case, one could regard the FAA's primary failure being that the airliner market is a duopoly. The FAA and its counterparts have helped make it so expensive to develop and approve new aircraft that only two companies can do it, and even they only design one new airplane every ten-twenty years. Bombardier, which is a large and established aircraft manufacturer could afford to develop an airliner, but not to get it approved; this results in slow progress, high prices, and little competition.
It would be interesting, if impossible to know how safe aircraft would be if Boeing and Airbus were granted an unregulated monopoly. I would guess their aircraft would be very safe and expensive (as they currently are), just like 'Ma Bell's service was in the days of its monopoly.
And there's quite a bit of competition; Boeing and Airbus are integrators, they don't build all of the parts and there are plenty of parties competing for the various parts. Likewise they both make the largest aircraft exclusively, but as you get smaller you add more and more alternatives to the mix.
You're also wrong about no new models. They release updates and changes all the time. Completely new planforms just aren't needed. The basic design is fundamentally unchanged and doesn't need to be changed. There's just nowhere to go. Only small iterations of improvement.
The fact that there are no new aircraft manufacturers coming on-line only proves that the regulators have created a duopoly.
The DC-10 is notable for having several major crashes due to design flaws, which significantly reduced sales of that aircraft.
I trust the market more because the government has proved to be far more corruptible. There should be a government option for sure, but regulations should focus more on making the healthcare market healthy.
* Open straightforward pricing
* Removal of trademark protections for named drugs
* Reducing patent terms, adding affordability conditions
* Publicly funding research with open access requirements
* Mandating manufacture of unpopular or poorly competitive drugs to get patent protections
* Adding efficiency to approval and regulation process
It seems all too obvious that a single payer system in America would get overrun with regulatory capture and skyrocket costs in sweetheart deals.
A disproportional amount of research and medical industry happens in the US. In a way, many of the developed nations' medical systems are made possible by the American medical economy. We end up paying for more of the development and exporting our technology for as much as we can get. The cost structure wouldn't be the same worldwide if America switched.
We have 50 states. Each one of them is capable of setting up a single payer healthcare system on it's own, yet none of them have. Not for lack of trying, but none have been successful. I don't think we should even have the national conversation at all until at least one state finds success implementing it themselves.
Ignoring all of that just from a purely financial perspective, the amount of money spent on health care simply can't be explained through research, both in quantity and when it comes to the reality of what people actually pay for which treatments.
Medical research doesn't explain why people think twice about calling an ambulance or go as far as taking a taxi or driving themselves or a loved one to a hospital in an emergency. If you do that in Germany, you'll get a lecture and will be considered an idiot who has unnecessarily endangered themselves.
http://www.bizjournals.com/pittsburgh/news/2015/02/27/mylan-...
Still, research investment doesn't come close to explaining the much higher healthcare costs seen in the US.
How about US prescription drug marketing costs (something that's illegal in most other countries)? Drug marketing costs are similar or higher than R&D costs in many cases - why does drug marketing even exist?
So even though there is marketing going on the actual effect is rather minimal.
Right. There are currently no known failures in the private system. Let's stick with that.
To countermand that, what is needed are policies to ensure competition. Compulsory patent licensing for starters, and a dual-source requirement for prescription medications paid for by the state would be another.
What we have had, and continue to have is not a free market, and it doesn't serve you to have it continue as such.
Proved? Has the U.S. government actually been proven to be more corruptible than private industry?
I realize you might have been using a bit of overly-strong language, and not actually meant that in a literal way.
Still, frankly speaking, I trust the government a heck of a lot more than private businesses like Comcast or the health insurers.
Your statement, all the same, leaves me wondering if somehow I've missed out on some news stories or something, that shows how the government is corrupt while BCBS or UnitedHealth act with integrity.
I trust an insurance company and healthcare provider because they are adversaries. Insurance vs insurance, insurance vs provider, provider vs provider. They're being driven with competition and ultimately greed. If one of them does a bad job, another that's doing better will replace it. They're all playing with their own money.
A government bureaucrat tough doesn't really have any skin in the game. They might be driven by good natured ideals, but I think that's far too vulnerable to compromise. From politicians being bought by lobbyists to a revolving door between industry and bureaucracies personal greed leads only to healthcare providers and government colluding for their own individual benefits to the detriment of the citizen who has no option but to pay taxes and get the services of the single healthcare system.
In theory a benevolent dictator is the ideal form of government, but in reality the people with power just aren't angels. You can use competition and greed for the greater good if you do it properly, you just have to recognize what you're doing and how to manipulate human behavior for the best outcome.
I mean, alternatively, doesn't the ultimate utilization of what the market can bear mean "no aggression pacts" between companies? As far as I've observed change in local options and markets in recent years hasnt been from innovation or disruptive new comers in many healthcare fields but instead buyouts and mergers consolidating the power until you're left with giants that just sort of leave one another alone. This doesn't breed competition, it breeds complacaency and a market with extremely few choices.
I don't know the answer but this idea that corporations will fight for our dollar doesn't sit well with me, as the current state of healthcare options shows this to not be the case. The barrier of entry just on cost (equip, doctors, medicine) excluding regulatory issues is prohibitive, and doubly so for insurers. Disruptive forces that would provoke competition or a change in pricing just seems too difficult to get off the ground.
The government _does_ have a role in this. They need to be there to foster the healthy competition environment with appropriate legislation and regulation. Part of that healthy regulation is punishing highly illegal "no aggression pacts" and enforcing antitrust laws to prevent mergers that would suck out the competition.
Not to mention that the US pays for much of the defense costs for NATO (on purpose with good reason) which further distorts what one country could actually afford and why you couldn't just force a different model on the US and expect success.
Then why aren't US states building medical systems? They're on par with EU states for size and economy.
It's a big shift to the economy. Taking what's now a benefit for a huge chunk of workers and turning it into a tax of both businesses and individuals. It's not an easy thing to do, you have to adjust people's compensations to make up for it and lots of people will be unhappy with the change.
Look, knock government all you want, but unambiguous and strongly-phrased claims like that need something better than "this is so because I trust that this is so". Otherwise, we're just in truthiness territory.
"A government bureaucrat tough doesn't really have any skin in the game."
Neither does a contract specialist in an insurance company, of course. Both are just showing up for a job. Only one of them has a specific profit motive in mind, though. And it seems to be the exclusive domain of private industry to reward middle managers for short-term results, no matter what long-term problems those short-term gains create for the organization.
Man, the more we go over this, the more I trust the government to manage something as life-altering as health care. They're responsive to all citizens, we get to conduct regular changes of power, there's no profit motive, and we've got a wonderful model in a ton of other countries for how well it could work.
"In theory a benevolent dictator is the ideal form of government ..."
Whoa! What?? Where on earth did you get that? For someone who likes markets as much as you seem to, I'm really surprised you wouldn't endorse something that reflected, you know, the will of the people.
Ski patrol took me down the hill. They threw me in an ambulance. They gave me some pain drugs which blurred my memory. The ambulance took me to the nearest hospital. When I arrived there, they gave me several options to remedy my shattered leg. I chose one - the next day I could not remember the other options nor why I chose the option I did.
So I'm just curious. Where in that equation would open straightforward pricing have helped? Would I have refused an ambulance ride? Would I have done the research to call my own? Would I have requested to be taken to another hospital - the next closest one, by my guess, being an hour away? Should I call ahead and make sure their prices are reasonable?
I don't understand how the free market can work with medical care. People oftentimes are not in a position to make decisions based upon price. The free market answer to "not dying" is "I'll pay everything I have".
Even then, a counter anecdote, I live in a city with maybe 4 hospitals within minutes at any given time and another dozen within a half hour or so. In the most dire situations I would have a choice and with anything less than critical I have a wide variety of options to choose from. If I need medications there are dozens of pharmacies to choose from.
Yeah if you break your leg in the back woods, you're not going to have a choice for the initial care. But you will have a choice for any follow-up care. Also other people who aren't you using that same hospital will have choices between it and it's further away competition.
You're right the "I'm dying and far away from urban areas" is a pretty location-based captive market, but it's far from the whole market.
When I was a young teenager I broke my arm at a school event and ended up sitting in a hospital bed for hours waiting for them to find my parents to give consent for treatment. Even most broken bones have some pretty wide time periods to find and travel to the best hospital option. (Just not a broken femur, that shit is serious)
The low funding is why you do not hear about groundbreaking Polish drugs.