Brent Nyitray
Fairlington Blade
Let the mutherfuker burn!
jnc4p
Kevin S. Willis
Michigoose
lmsinca
markinaustin
Arcanaut
novahockey
quarterback
ScottC
yellojktI’ve been promising lmsinca a post on MedPAC for quite some time. They’re meeting again next week and will have a session (benefit redesign) that I think will be of more interest. So I’m going to combine the two meetings into one post.
Until then, a little nugget:
Just like the rest of the program, a small percentage of Part D (the drug benefit) beneficiaries account for the majority of program spending. For Part D, 8 percent account for 40 percent of total spending and 20 percent of the total prescriptions. In 2009, on average the “high-cost” beneficiary filled 111 prescriptions over the year. Each prescription cost an average cost of $110. The lower-cost beneficiaries, by comparison, filled 41 prescriptions at a cost of $42 each during the same time period. “High cost” tended to use more brand-name drugs (as opposed to generics).
It’s the same story over and over. There’s a small percentage of beneficiaries who are the cost drivers. Until we figure out how to control costs in this area the rest is rearranging the deck chairs.
Also, Medicare is estimated to reach six percent of GDP by 2040, and the Hospital Insurance Trust Fund will be unable to pay full benefits after 2024. That’s 13 years from now. The growth in expenses means that a beneficiary’s average out-of-pocket costs will increase faster than Social Security benefits.
Update: Slight edit to answer lms’ clarifying question.
Update II: A lot of criticism regarding Part D is directed at the non-interference clause, which prohibits the government from direct negotiation. Repealing this would have a negligible effect, according to CBO. Part of the reason is that it would not be a true negotiation, because the biggest tool the government could use, a restrictive formulary, is left off the table because it’s a political nonstarter. Also, before the MMA was enacted various prescription drug bills were kicking around congress for many years. The vast majority of them — republican and democratic — included this provision. As it stands, drug manufacturer negotiate with the prescription drug plans, who have every incentive to get a good deal. But again, they’re hamstrung by the requirement to have very inclusive formularies. In some class of drugs they’re required by law to include the vast majority of the available prescriptions — in every therapeutic category its at least 2 drugs.
Regarding re-importation, the law gives HHS the authority to do it, provided that the department can certify it can be done safely. FDA is worried about counterfeit drugs, tampered drugs, etc. There’s also the R&D argument. Haven’t spent too much time on this issue, but the NIH looked at it a few years back. Personally, I think it’s a band-aid approach to more systemic problems in the overall health care system.
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All Things in Moderation 
Thanks NoVAWasn't the design of Medicare Part D a failure? If the goal was to deliver affordable prescriptions to seniors, didn't the legislation leave two of the most beneficial cost saving measures out? My understanding was the bargaining by the government for prices and perhaps the re-importation of drugs from Canada would both have made the plan more cost effective. I'm finding all of this depressing as I see no end in sight for seniors or the rest of us. I'm obviously in favor of lowering the expense of end of life care as an advocate of Hospice, but I don't know how to get there. Are you saying that the average "high cost" beneficiary filled 111 prescriptions in one year at $110 each? That's just outrageous to me but a great boon to the pharmaceutical companies. A lot of us were discussing whether or not health care is a market similar to other consumer markets, I think not. We may wish it was, but whatever's going on is clearly a market distortion IMO.
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Hi lms — i'm crashing on something now, but will respond later. but, the "non-interference clause" (ban on gov negotiating) isn't the answer that it seems to be. i've got a CBO or GAO report around here somewhere on that. Would you like to put me on retainer? cut down on the hourly billing that way 🙂
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lol, I have a living breathing question mark in my head at all times.
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Thanx, NVH.
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Part of the reason is that it would not be a true negotiation, because the biggest tool the government could use, a restrictive formulary, is left off the table because it's a political nonstarter.Why is it a political nonstarter? And doesn't the VA pay somewhere around 50% less for drugs? Are their standards lower, I've heard they are, or do they negotiate better? I don't see why seniors can't use the same formulary. It's also my understanding that the pharmaceutical industry got a pretty good deal from Medicare Part D.I'm sure this is probably a drop in the bucket in the larger scheme of things but considering the way the bill was passed (60 minutes did an expose on that even) and who essentially wrote the bill, I'm a natural born skeptic. One person taking those 111 prescriptions at $110 is over $12,000 per year just for prescriptions. Presumably they fall into the donut hole for some of that but still, it's no wonder we're all going broke, government and individuals.You're probably out the door or on the way out, so have a nice weekend and thanks for all the info. It's a lot to think about.
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Another aspect is our patent system. You all may have heard about the recent story regarding a drug to prevent miscarriage (hydroxyprogesterone). This was being prepared at pharmacies and was relatively inexpensive. $10 bucks or so. There is a problem associated with compounding in that you don't get standard dosing.A pharma firm took on the task of a standardized mix, went through all the trials, and then proceeded to charge $1500 per dose. After a great outcry, the list price of Makena was reduced to $690 per dose and they promised to subsidize it for poor expectant mothers. Now. It did cost a significant amount to develop Makena ($200M). Problem being that the proposed price would have earned KV several billion dollars a year. I believe that's what people at the FTC call monopoly pricing. KV also threatened to sue any pharmacy that continued to provide the compounded drug.This isn't a unique case. Lundbeck picked up the rights to Indocin IV and jacked the price from $78 to $1500. They learned of a competitor to Indocin IV, NeoProfen, that would run about $500 per treatment course. So Lundbeck bought the rights to NeoProfen, too. Once the FDA approved it, Lundbeck sold NeoProfen for $1450 per treatment course. Gee. A $50 break. How generous.Big Pharma expects insurers to pick up the tab. And you wonder why insurance rates just went up. Again.BB
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I should note that Lundbeck was sued by the FTC and the State of Minnesota. The trial judge ruled in favor of the defendent and the case is being appealed.Well, gotta go pick up the kids. I'm still solo this weekend, so will be mostly inactive.BB
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