High drug prices are a hot topic in politics right now. President Trump has made lowering them a cornerstone of his re-election bid and is pushing a variety of ideas to get that done.

But politicians — of either party — who want to rally the public around this have a challenge: Drug pricing is incredibly complex and convoluted. Just explaining what it is — let alone how to fix it — is really hard.

You know what’s great for understanding complicated things? Analogies.

How about: My love for you is like drug list prices — sky high and arbitrary.

No?

OK, here’s a favorite of Secretary of Health and Human Services Alex Azar: Drug list prices are like car sticker prices.

Azar is a former pharma executive, and currently the man in charge of executing Trump’s proposals to lower drug prices.

“Since 1958, car companies have been required to post their sticker prices,” he said in a speech last fall. “People still get discounts when they go to purchase a car, but sticker prices are considered an important piece of needed consumer information. There is no reason it should be any different for drugs.”

I spoke to four drug pricing experts from all over the country and nobody liked the car sticker price analogy. In terms of transparency, the comparison fits — knowing a base price is certainly useful. But it overstates the usefulness of that knowledge by implying that patients have much more power to act — to shop around or negotiate — than they actually do.

To begin with: “You’re not going to die if you don’t have a car,” says Erin Fox, a pharmacist who studies drug shortages at University of Utah Health. “But you could probably die if you don’t have your insulin.”

Prospective car buyers could always bicycle or take the bus. If they don’t like a deal, they can walk away, or try to haggle.

“When you go to the pharmacy you’re not negotiating with the pharmacist for the cost of your drugs,” says Adrienne Faerber, a lecturer at the Dartmouth Institute.

Then there’s the markup.

“When Chevy marks up the price of their car, maybe they’re marking it up 10%, or something like that, but many of these drug prices are marked up many times over,” says Robert Laszewski, a health policy consultant. “If Chevy jacked their prices up 400%, it might be a good analogy.”

It’s true that after drugmakers put money into developing, testing and actually making a drug, they can set the list price pretty much anywhere they want — whatever the market will bear.

“The better analogy to think about the pricing of drugs would be really expensive designer handbags,” Faerber suggests. “When you buy a really expensive designer handbag — tens of thousands of dollars — the materials that go into that handbag are not reflective of the actual price. That price that you’re paying is because it’s desirable, because it has a brand that has a lot of value associated with it, and because it is an indicator of potential scarcity.”

But this analogy misses all the other steps drugs go through before you get the price you pay. There are pharmacy benefit managers or PBMs — middlemen that haggle to reduce the price — and take a cut.

Insurers pay PBMs to negotiate with drugmakers over the price, and if you’re insured, you pay a slice of that price at the pharmacy. Sometimes it’s just a flat $5 copay, but more and more people are paying a lot more.

“You might have a high deductible plan — you may not have a choice, your employer may only offer a high deductible plan,” Fox says. “You’re going to be faced with full list price of medications until you hit your deductible.

“You can’t predict if you’re going to get a chronic disease or not. You can’t predict if you’re going to need an expensive medication or not,” Fox adds. “I think that’s where these high deductible plans that force patients to pay that full list price all at once are really a disservice to patients.”

Fox and many of the others I spoke to for this story pointed out that one of the most backward parts of this system is that the people who can least afford high drug prices pay the most.

Even if you have good insurance, says Stacie Dusetzina of Vanderbilt University, you’re still paying for high drug prices indirectly.

“People tend to not really think about the premiums that they’re paying for their insurance plan, which is really related to what you pay at the pharmacy counter,” Dusetzina says. Your copay might be cheap, but you might be paying a lot every month for your premium.

So list price does matter to all consumers — from those with no insurance to those with the very best health plans.

No matter what, you can’t see how high those list prices you’re paying for actually are, and you can’t negotiate a better deal.

Here’s one more shot at an analogy.

“Maybe it’s a little bit more like your rich uncle buying you a car,” Dusetzina says.

So imagine that your rich uncle is the middleman, haggling over the car’s price on your behalf. He’s doing the negotiations, Dusetzina says, so the ultimate price doesn’t really matter to you, because you’re not paying for it directly. “But maybe it comes out of your inheritance in the end.”

“Not a very nice uncle!” Laszewski says, and laughs.

So — does he have any better ideas?

“I’m hard pressed to find anything in the American marketplace that comes close to this bizarre pricing system,” Laszewski says.

Not a handbag, not a car — just a weird, convoluted system that governs how Americans get their prescription drugs.

So, maybe, my love for you is like drug list prices: inexplicable.

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A global megacorporation best known for Band-Aids and baby powder may have to pay billions for its alleged role in the opioid crisis. Johnson & Johnson was the sole defendant in a closely-watched trial that wrapped up in Oklahoma state court this week, with a decision expected later this summer. The ruling in the civil case could be the first that would hold a pharmaceutical company responsible for one of the worst drug epidemics in American history.

Oklahoma Attorney General Mike Hunter‘s lawsuit alleges Johnson & Johnson and its subsidiary Janssen Pharmaceuticals helped ignite the opioid crisis with overly aggressive marketing, leading to thousands of overdose deaths over the past decade in Oklahoma alone.

The trial took place over seven weeks in the college town of Norman. Instead of a jury, a state judge heard the case.

During closing arguments Monday, Hunter called the company the “kingpin” of the opioid crisis.

“What is truly unprecedented here is the conduct of these defendants on embarking on a cunning, cynical and deceitful scheme to create the need for opioids,” Hunter said.

The state urged Judge Thad Balkman, who presided over the civil trial for seven weeks, to find Johnson & Johnson liable for creating a “public nuisance” and force the company to pay more than $17 billion over 30 years to abate the public health crisis in the state.

Driving the opioid crisis home has been a cornerstone of the Oklahoma’s lawsuit. In closing arguments Monday, one of the state’s attorneys, Brad Beckworth, cited staggering prescribing statistics in Cleveland County, where the trial took place.

“What we do have in Cleveland County is 135 prescription opioids for every adult,” Beckworth explained. “Those didn’t get here from drug cartels. They got here from one cartel: the pharmaceutical industry cartel. And the kingpin of it all is Johnson & Johnson.”

Johnson & Johnson’s attorney Larry Ottaway, rejected that idea in his closing argument, saying the company’s products, which had included the fentanyl patch Duragesic and the opioid-based pill Nucynta, were minimally used in Oklahoma.

He scoffed at the idea that physicians in the state were convinced to unnecessarily prescribe opioids due to the company’s marketing tactics.

“The FDA label clearly set forth the risk of addiction, abuse and misuse that could lead to overdose and death. Don’t tell me that doctors weren’t aware of the risks,” Ottaway said.

Ottaway played video testimony from earlier in the trial, showing Oklahoma doctors who said they were not misled about the drugs’ risks before prescribing them.

“Only a company that believes its innocence would come in and defend itself against a state, but we take the challenge on because we believe we are right,” Ottaway said in his closing argument.

Johnson & Johnson fought on after settlements

Initially, Hunter’s lawsuit included Purdue Pharma, the maker of OxyContin. In March, Purdue Pharma settled with the state for $270 million. Soon after, Hunter dropped all but one of the civil claims, including fraud, against the two remaining defendants.

Just two days before the trial began, another defendant, Teva Pharmaceuticals of Jerusalem, announced an $85 million settlement with the state. The money will be used for litigation costs and an undisclosed amount will be allocated “to abate the opioid crisis in Oklahoma,” according to a press release from Hunter’s office.

Both companies deny any wrongdoing.

The legal liability of ‘public nuisance’

Most states and more than 1,600 local and tribal governments are suing drugmakers who manufactured various kinds of opioid medications, and drug distributors. They are trying to recoup billions of dollars spent addressing the human costs of opioid addiction.

“Everyone is looking to see what’s going to happen with this case, whether it is going to be tobacco all over again, or whether it’s going to go the way the litigation against the gun-makers went,” says University of Georgia law professor Elizabeth Burch.

But the legal strategy is complicated. Unlike the tobacco industry, from which states won a landmark settlement, the makers of prescription opioids manufacture a product that serves a legitimate medical purpose, and is prescribed by highly trained physicians — a point that Johnson & Johnson’s lawyers made numerous times during the trial.

Oklahoma’s legal team based its entire case on a claim of public nuisance, which refers to actions that harm members of the public, including injury to public health. Burch says each state has its own public nuisance statute, and Oklahoma’s is very broad.

“Johnson & Johnson, in some ways, is right to raise the question: If we’re going to apply public nuisance to us, under these circumstances, what are the limits?” Burch says. “If the judge or an appellate court sides with the state, they are going to have to write a very specific ruling on why public nuisance applies to this case.”

Burch says the challenge for Oklahoma has been to tie one opioid manufacturer to all of the harms caused by the ongoing public health crisis, which includes people struggling with addiction to prescription drugs, but also those harmed by illegal street opioids, such as heroin.

University of Kentucky law professor Richard Ausness agrees that it’s difficult to pin all the problems on just one company.

“Companies do unethical or immoral things all the time, but that doesn’t make it illegal,” Ausness says.

If the judge rules against Johnson & Johnson, Ausness says, it could compel other drug companies facing litigation to settle out of court. Conversely, a victory for the drug giant could embolden the industry in the other cases.

Earlier in the trial, the state’s expert witness, Dr. Andrew Kolodny, testified that Johnson & Johnson did more than push its own pills — until 2016, it also profited by manufacturing raw ingredients for opioids and then selling them to other companies, including Purdue, which makes Oxycontin.

“Purdue Pharma and the Sacklers have been stealing the spotlight, but Johnson & Johnson in some ways, has been even worse,” Kolodny testified.

Kolodny says that’s why the company downplayed to doctors the risks of opioids as a general class of drugs, knowing that almost any opioid prescription would benefit its bottom line.

The state’s case also focused on the role of drug sales representatives. Drue Diesselhorst was one of Johnson & Johnson’s busiest drug reps in Oklahoma. Records discussed during the trial showed she continued to call on Oklahoma doctors who had been disciplined by the state for overprescribing opioids. She even continued to meet with doctors who had patients who died from overdoses.

But Diesselhorst testified she didn’t know about the deaths, and no one ever instructed her to stop targeting those high-prescribing physicians.

“My job was to be a sales rep. My job was not to figure out the red flags,” she said on the witness stand.

The role and responsibility of doctors

Throughout the trial, Johnson & Johnson’s defense team avoided many of the broader accusations made by the state, instead focusing on the question of whether the specific opioids manufactured by the company could have caused Oklahoma’s high rates of addiction and deaths from overdose.

Johnson & Johnson’s lawyer, Larry Ottaway, argued the company’s opioid products had a smaller market share in the state compared to other pharmaceutical companies, and he stressed that the company made every effort when the drugs were tested to prevent abuse. He also pointed out that the sale of both the raw ingredients and prescription opioids themselves are heavily regulated.

“This is not a free market,” he said. “The supply is regulated by the government.”

Ottaway maintained the company was addressing the desperate medical need of people suffering from debilitating, chronic pain — using medicines regulated by the Food and Drug Administration and the Drug Enforcement Administration. Even Oklahoma purchases these drugs, for use in state health care services.

Next steps

Judge Thad Balkman is expected to announce a verdict in August.

If the state’s claim prevails, Johnson & Johnson could, ultimately, have to spend billions of dollars in Oklahoma helping to ease the epidemic. State attorneys are asking that the company pay $17.5 billion over 30 years, to help abate” the crisis in the state.

Balkman could choose to award the full amount, or just some portion of it, if he agrees with the state’s claim.

“You know, in some ways I think it’s the right strategy to go for the $17 billion,” Burch says. “[The state is saying] look, the statute doesn’t limit it for us, so we’re going to ask for everything we possibly can.”

In the case of a loss, Johnson & Johnson is widely expected to appeal the verdict. If Oklahoma loses, the state will appeal, Attorney General Mike Hunter said Monday.

This story is part of NPR’s reporting partnership with StateImpact Oklahoma and Kaiser Health News, a nonprofit news service of the Kaiser Family Foundation. KHN is not affiliated with Kaiser Permanente.

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An unusual state regulation that dictates how doctors need to treat a specific disease appears to be paying off in New York, according to a study published Tuesday.

The disease is sepsis, which is the most common cause of death in hospitals. And the regulations came into being after the story of 12-year-old Rory Staunton became a cause célèbre.

As his mother Orlaith Staunton tells it, Rory came home from school one day with a scrape he’d gotten in gym class. It didn’t seem like a big deal, but Rory’s health quickly took a turn.

“During the night I heard him throwing up and I went out and he said, ‘It’s my leg, Mom, it’s my leg.'”

His temperature spiked above 103 and he couldn’t keep anything down the next day, so she took him to their pediatrician in New York City.

The doctor decided Rory had the flu and sent him on to the hospital to get fluids. Staunton says doctors in the emergency room decided it was simply a stomach bug and sent him home. But Rory kept getting worse.

“We brought him back into hospital — that was on Friday night — and he died on Sunday evening,” Staunton says. “He went straight into intensive care when we brought him back in. And it was after he died that we were told that he had died from sepsis.”

She says she’d never heard of sepsis, even though the illness strikes more than a million Americans a year and kills more than 250,000 annually.

Sepsis is an overreaction of the body’s immune system to an infection. Common symptoms include fever, chills, difficulty breathing and an elevated heart rate.

If the hospital had diagnosed Rory correctly during his first visit and treated him aggressively, Staunton says, he likely would have lived.

She and her husband, Ciaran, “were angry and we wanted to do something that would bring about some change in how sepsis was being diagnosed and how people would know what sepsis was,” she says.

And as a result of their efforts, Rory’s death in 2012 catalyzed action in New York state, which in 2013 imposed “Rory’s Regulations,” a directive to doctors and hospitals on how to treat sepsis. The key is rapid diagnosis, a prompt jolt of antibiotics, and careful management of fluids.

Jeremy Kahn, a critical care physician at the University of Pittsburgh who also studies health policy and management, says doctors like him don’t like to be directed how to treat their patients. They prefer to follow professional guidelines. But as is surprisingly common, doctors are slow to adopt best practices. And that’s true for sepsis.

“The decades of undertreating patients with sepsis has a bit weakened our position,” Kahn says, “and it’s time to be a little, be more open about, accepting about these regulatory approaches.”

But first Kahn and his colleagues wanted see whether the New York regulations really did make a difference. Sepsis death rates are declining nationwide, so the question is whether New York’s rules led to faster improvement compared to other states.

Kahn and his colleagues compared the rate of improvement in New York to that of other states and concluded that “these regulations had their intended effect of reducing mortality,” he says. The results were published in JAMA, the journal of the American Medical Association.

One reason some doctors have been reluctant to embrace the regulation is that it expects them to follow a specific set of practices, including a formula regulating how much fluid to infuse and when.

“There’s a lot of concern in the clinical community that this much fluid can harm at least some patients with sepsis,” Kahn says. While the rules overall may be saving lives, this element of them may actually be counterproductive. But doctors aren’t supposed to deviate from them.

There clearly is still room for improvement in treating sepsis, so rules need to be flexible enough to embrace improvements as they emerge, Kahn says. “The evidence changes all the time,” he says, “and when you enshrine [what is currently] ‘best practice’ into laws or regulations then you become less nimble.”

Another question is whether New York’s success would be repeated elsewhere. New York state started off much worse than many other states, so it’s possible the regulations simply helped the state catch up with others, he says.

“It does call into question what kind of impact these regulations will have in other states that may have better sepsis outcomes at baseline,” Kahn says.

That matters because a few other states have similar regulations or laws, and more than a dozen more are considering them. The Stauntons started a foundation, which is now trying to push this nationwide.

Orlaith Staunton says it just won’t do to leave it to the judgment of individual doctors.

“It’s not enough to say, ‘Leave it to me and I’ll recognize it when I see it,’ ” she says. “Because clearly it has not been recognized. I think good doctors will agree that this is something that needs to be regulated.”

She hopes the new scientific results will sway some of the doctors and hospitals who are resisting a government mandate.

That won’t happen overnight. Demetrios Kyriacou, an emergency medicine physician at Northwestern University, wrote a cautionary editorial in JAMA saying that “major public health interventions cannot be based on [Kahn’s] single observational study.”

“Because demands on nurses and physicians to provide rapid intensive care to patients in critical settings can affect patient treatment,” he wrote, “any strategy aimed toward reducing sepsis-related morbidity and mortality must be based on convincing evidence before being mandated by governmental regulations.”

You can contact NPR Science Correspondent Richard Harris at rharris@npr.org.

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Health insurers that treat millions of seniors have overcharged Medicare by nearly $30 billion over the past three years alone, but federal officials say they are moving ahead with long-delayed plans to recoup at least part of the money.

Officials have known for years that some Medicare Advantage plans overbill the government by exaggerating how sick their patients are or by charging Medicare for treating serious medical conditions they cannot prove their patients have.

Getting refunds from the health plans has proved daunting, however. Officials with the Centers for Medicare & Medicaid Services repeatedly have postponed or backed off efforts to crack down on billing abuses and mistakes by the increasingly popular Medicare Advantage health plans offered by private health insurers under contract with Medicare. Today, such plans treat more than 22 million seniors — more than 1 in 3 people on Medicare.

Now CMS is trying again, proposing a series of enhanced audits tailored to claw back $1 billion in Medicare Advantage overpayments by 2020 — just a tenth of what it estimates the plans overcharge the government in a given year.

At the same time, the Department of Health and Human Services Inspector General’s Office has launched a separate nationwide round of Medicare Advantage audits.

As in past years, such scrutiny faces an onslaught of criticism from the insurance industry, which argues the CMS audits especially are technically unsound and unfair and could jeopardize medical services for seniors.

America’s Health Insurance Plans, an industry trade group, blasted the CMS audit design when details emerged last fall, calling it “fatally flawed.”

Insurer Cigna Corp. warned in a May financial filing: “If adopted in its current form, [the audits] could have a detrimental impact” on all Medicare Advantage plans and “affect the ability of plans to deliver high quality care.”

But former Sen. Claire McCaskill, a Missouri Democrat who now works as a political analyst, says officials must move past powerful lobbying efforts. The officials must hold health insurers accountable, McCaskill says, and demand refunds for “inappropriate” billings.

“There are a lot of things that could cause Medicare to go broke,” she says. “This would be one of the contributing factors. Ten billion dollars a year is real money.”

Catching overbilling with a wider net

In the overpayment dispute, health plans want CMS to scale back, if not kill off, an enhanced audit tool that, for the first time, could force insurers to cough up millions in improper payments they’ve received.

For more than a decade, audits have been little more than an irritant to insurers, because most plans go years without being chosen for review and often pay only a few hundred thousand dollars in refunds as a consequence. When auditors uncover errors in the medical records of patients the insurers were paid to treat, CMS has simply required a rebate for those patients for just the year audited — relatively small sums for plans with thousands of members.

The latest CMS proposal would raise those stakes enormously by extrapolating error rates found in a random sample of 200 patients to the plan’s full membership — a technique expected to trigger many multimillion-dollar penalties. Though controversial, extrapolation is common in medical fraud investigations — except for investigations into Medicare Advantage. Since 2007, the industry has successfully challenged the extrapolation method and, as a result, largely avoided accountability for pervasive billing errors.

“The public has a substantial interest in the recoupment of millions of dollars of public money improperly paid to health insurers,” CMS wrote in a Federal Register notice late last year announcing its renewed attempt at using extrapolation.

Penalties in limbo

In a written response to our questions, CMS officials said the agency has already conducted 90 of those enhanced audits for payments made in 2011, 2012 and 2013 — and expects to collect $650 million in extrapolated penalties as a result.

Though that figure reflects only a minute percentage of actual losses to taxpayers from overpayments, it would be a huge escalation for CMS. Previous Medicare Advantage audits have recouped a total of about $14 million — far less than it cost to conduct them, federal records show.

Though CMS has disclosed the names of the health plans in the crossfire, it has not yet told them how much each owes, officials said. CMS declined to say when, or if, they would make the results public.

This year, CMS is starting audits for 2014 and 2015, 30 per year, targeting about 5% of the 600 plans annually.

This spring, CMS announced it would extend until the end of August the audit proposal’s public comment period, which was supposed to end in April. That could be a signal the agency might be looking more closely at industry objections.

Health care industry consultant Jessica Smith says CMS might be taking additional time to make sure the audit protocol can pass muster.

“Once they have their ducks in a row,” she says, “CMS will come back hard at the health plans. There is so much money tied to this.”

But Sean Creighton, a former senior CMS official who now advises the industry for health care consultant Avalere Health, says payment error rates have been dropping because many health plans “are trying as hard as they can to become compliant.”

Still, audits are continuing to find mistakes. The first HHS inspector general audit, released in late April, found that Missouri-based Essence Healthcare Inc. had failed to justify fees for dozens of patients it had treated for strokes or depression. Essence denied any wrongdoing but agreed it should refund $158,904 in overcharges for those patients and ferret out any other errors.

Essence also faces a pending whistleblower suit filed by Charles Rasmussen, a Branson, Mo., doctor who alleges the health plan illegally boosted profits by overstating the severity of patients’ medical conditions. Essence has called the allegations “wholly without merit” and “baseless.”

Essence started as a St. Louis physician group, then grew into a broader holding company in 2007, backed by prominent Silicon Valley venture capitalist John Doerr, with his brother Thomas Doerr, a St. Louis doctor and software designer. Neither would comment for this story.

How we got here

CMS uses a billing formula called a “risk score” to pay for each Medicare Advantage member. The formula pays higher rates for sicker patients than for people in good health.

Congress approved risk scoring in 2003 to ensure that health plans did not shy away from taking sick patients who could incur higher-than-usual costs from hospitals and other medical facilities. But some insurers quickly found ways to boost risk scores — and their revenues.

In 2007, after several years of running Medicare Advantage as what one CMS official dubbed an “honor system,” the agency launched “Risk Adjustment Data Validation” audits. The idea was to cut down on the undeserved payments that cost CMS nearly $30 billion over the past three years.

The audits of 37 health plans revealed that, on average, auditors could confirm just 60% of the more than 20,000 medical conditions CMS had paid the plans to treat.

Extra payments to plans that had claimed some of its diabetic patients had complications, such problems with eyes or kidneys, were reduced or invalidated in nearly half the cases. The overpayments exceeded $10,000 a year for more than 150 patients, though health plans disputed some of the findings.

But CMS kept the findings under wraps until the Center for Public Integrity, an investigative journalism group, sued the agency under the Freedom of Information Act to make those results public.

Despite the alarming findings, CMS conducted no audits for payments made during 2008, 2009 and 2010 as they faced industry backlash over CMS’ authority to conduct them, and the threat of extrapolated repayments. Records released through the FOIA lawsuit show some inside the agency also worried that health plans would abandon the Medicare Advantage program if CMS pressed them too hard.

CMS officials resumed the audits for 2011 and expected to finish them and assess penalties by the end of 2016. That has yet to happen, amid the continuing protests from the industry. Insurers want CMS to adjust downward any extrapolated penalties to account for coding errors that exist in standard Medicare. CMS stands behind its method — at least for now.

At a minimum, argues AHIP, the health insurers association, CMS should back off extrapolation for the 90 audits for 2011-13 and apply it for 2014 and onward. Should the agency agree, CMS would write off more than half a billion dollars that could be recovered for the U.S. Treasury.

Kaiser Health News is a nonprofit, editorially independent program of the Kaiser Family Foundation. KHN is not affiliated with Kaiser Permanente.

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