Blog

California Healthline reported that specialty drugs have been posing a challenge to CalPERS, a pension system for retired California public employees. While accounting for only 1% of prescriptions, specialty drugs accounted for roughly 30% of the pension system's total pharmaceutical spending.

California Healthline reported that specialty drugs have been posing a challenge to CalPERS, a pension system for retired California public employees. While accounting for only 1% of prescriptions, specialty drugs accounted for roughly 30% of the pension system's total pharmaceutical spending.

Apparently, CalPERS has fairly successfully encouraged the use of generics, which now account for roughly 85% of their prescriptions. Last year saw headlines of how some specialty drugs (which generally do not have generic alternatives) cost more than $100,000 for a regimen.

These findings are likely representative of what many health insurance plans are experiencing. Left unchecked, increased reliance on specialty drugs will result in higher premiums. Perhaps a continuing trend in this area will force a discussion of what benefits should be covered by basic health plans.

In another sign of how health care in America is changing, members of a collaborative charged with improving health outcomes have recommended that providers offer some sort of warranty on their services. The cited example suggests that patients should not be financially liable for their care if they experience certain avoidable complications. The article draws a comparison with certain professions where if workers in those industries fail to maintain basic standards, the customer expects not to pay.

In another sign of how health care in America is changing, members of a collaborative charged with improving health outcomes have recommended that providers offer some sort of warranty on their services. The cited example suggests that patients should not be financially liable for their care if they experience certain avoidable complications. The article draws a comparison with certain professions where if workers in those industries fail to maintain basic standards, the customer expects not to pay.

This recommendation follows in the same vein as what Geisinger Health System has already pioneered. Likewise, Medicare has started to reduce payments if providers have poor outcomes. As patients are expected to pay more and more out-of-pocket, it would not be hard to imagine their becoming savvier in their shopping for certain operations and preferring guarantees such as this one.

The National Academy of Sciences issued a report that outlined recommendations for the federal government to make medicines more affordable. The New York Times and NPR both summarized the recommendations.

Among the recommendations are the ideas that the federal government should negotiate prices with drug manufacturers and that the government should be able to deny coverage of certain drugs. The first part seems obvious, although prior legislation prohibits the federal government from doing so. The second part is also important in that it gives drug manufacturers a strong incentive to market their products heavily to physicians and patients without concern for efficacy or price-effectiveness. Generally, people would not be willing to pay more for a product than the perceived benefit; however, since insurance shields consumers from much of the cost, the manufacturers can be paid handsomely by the government as long as they can convince consumers that the benefit of their product exceeds the out-of-pocket costs. In such a situation, the payer (the government, in this case) may design policies to encourage the use of more cost-effective products.

The report also recommended steps to foster competition, including expediting the review of generics and attacking an industry practice known as "pay for delay," where a drug manufacturer pays a generics manufacturer to delay introducing a competing product.

The National Academy of Sciences issued a report that outlined recommendations for the federal government to make medicines more affordable. The New York Times and NPR both summarized the recommendations.

Among the recommendations are the ideas that the federal government should negotiate prices with drug manufacturers and that the government should be able to deny coverage of certain drugs. The first part seems obvious, although prior legislation prohibits the federal government from doing so. The second part is also important in that it gives drug manufacturers a strong incentive to market their products heavily to physicians and patients without concern for efficacy or price-effectiveness. Generally, people would not be willing to pay more for a product than the perceived benefit; however, since insurance shields consumers from much of the cost, the manufacturers can be paid handsomely by the government as long as they can convince consumers that the benefit of their product exceeds the out-of-pocket costs. In such a situation, the payer (the government, in this case) may design policies to encourage the use of more cost-effective products.

The report also recommended steps to foster competition, including expediting the review of generics and attacking an industry practice known as "pay for delay," where a drug manufacturer pays a generics manufacturer to delay introducing a competing product.

Interestingly, the report also recommended removing the financial incentives given to doctors to prescribe more expensive medicines (for example, giving the doctor a percentage of the price of the drug). Apparently, when HHS considered such changes last year, parts of the medical community "launched an intense lobbying effort against it."

Happy Thanksgiving from the team at DocSpot!

Happy Thanksgiving from the team at DocSpot!

Kaiser Family Foundation compiled and published year-over-year changes to the Affordable Care Act premiums through an interesting interactive presentation. Readers can get a heat map of percent changes across the nation, across the different metallic tiers of coverage.

Kaiser Family Foundation compiled and published year-over-year changes to the Affordable Care Act premiums through an interesting interactive presentation. Readers can get a heat map of percent changes across the nation, across the different metallic tiers of coverage.

A particularly interesting feature of the presentation is that it allows readers to get a sense of how much difference they might pay after accounting for the subsidies. Just because the premiums rise does not necessarily mean that patients will pay more after subsidies. The interactive tool presents options for different income levels for a hypothetical 40 year-old person.