America’s Health Insurance Plans (AHIP), the main trade association for health plans, has released research comparing pharmacy costs in states where Medicaid pharmacy benefits are “carved in” versus “carved out.”
“Carved in” means that a managed care organization manages the benefit. “Carved out” means the Medicaid bureaucracy manages it directly. The latter costs a lot more:
Across 28 states using the carve-in model, the net cost per prescription was 14.6%lower than the average net cost per prescription in states not carving in pharmacy.
This 14.6% differential created a $2.06 billion net savings in state and federal expenditures in FFY2014 for states deploying the carve-in model.
The seven carve-out states had a 20% increase in net costs per prescription from FFY2011-FFY2014 — in stark contrast to the 1% increase in net costs per prescription experienced by the 6 states that recently switched from a carve-out to a carve-in model.
The seven carve-out states “missed” a total of $307 million in savings in FFY2014 which would have occurred had they used a carve-in model.
New data from Express Scripts, a leading pharmacy-benefits manager (PBM) indicates that adverse selection in Obamacare exchanges actually got worse as open enrollment reached its hard finish in mid-April. As a PBM, Express Scripts has the best data on beneficiaries’ medical costs. Pharmacy claims are adjudicated immediately, whereas other claims can take weeks or months to adjudicate. We previously discussed Express Scripts’ study of pharmacy claims for the exchanges’ early sign-ups. These beneficiaries had specialty pharma claims 47 percent higher than the commercially insured population, which led to the conclusion that they were much, much sicker than expected.
The new release covers data for everyone who has signed up for coverage in Obamacare’s exchanges. There has been a lot of happy talk in the media that the huge sales and marketing surge in March (funded by taxpayers) likely led more healthy people to sign up at the end of open enrollment. In the most general sense, this is what happened, according to the new data. The later sign-ups were younger and in better shape when we consider only the more common conditions that are increasingly affecting our society, as shown in the graph:
There will be two national elections before the new health overhaul is substantially implemented (in 2014) and a third election the year it is supposed to be implemented.
Question: Will the voters reward office holders who supported ObamaCare, or will they vote for their opponents?
In thinking about this question, forget all the public opinion polls. Can you predict the outcome based on what you know about political science alone?
My prediction: Supporters of the new law are going to get creamed. There are four reasons: The law violates two bedrock principles of coalition politics that have been successful for the past 80 years; it abandons core Democratic constituencies; and it ignores the fundamentals of the politics of the health care sector.
If you are ordering prescription drugs from websites that are not approved by the National Association of Boards of Pharmacy (NABP), you may be disappointed by the results. This is the conclusion of a preliminary study of the inner-workings of the illicit global trade in pharmaceuticals, published by the American Enterprise Institute.
Eager to have a strong voice in the health care debate – and head off more draconian demands….. the pharmaceutical industry [has pledged] to contribute $80 billion in drug discounts and other savings over the next 10 years as a significant breakthrough on the road to health care reform.
The deal was negotiated in private among the industry, Senator Max Baucus, chairman of the Finance Committee and a crucial figure in shaping health reform, and the White House.
[However,] the Congress and the public should see these proposals as an opening bid and not the final word.
At present, no drug can reach the market without FDA approval…… Yet once a drug reaches the market, the FDA has no statutory power to "limit or interfere with the authority of a health-care practitioner to prescribe" how physicians use that drug to treat their patients…… estimates for off-label use of cancer drugs run from 50% to 70% of total usage, and perhaps higher.
[But] As matters now stand, no off-label use is possible for any drug that has not been certified for some particular on-label use. That necessarily reduces the number of drugs available on the market for off-label experimentation.
We found policies that [cut drug company revenues by 20 percent] could result in modest savings for consumers, in the best cases on the order of $5,000 to $10,000 per person over a lifetime.
In many other cases, those policies resulted in very substantial losses to consumers in the form of reduced life expectancy and those would be worth tens of thousands of dollars.
We found longevity declines on the order of about a half of year for people at the age of 55 when you look out to people who are alive in 2050 and 2060.
Bringing a new drug to market now requires on average 12 to 15 years, and costs have skyrocketed to more than $1.2 billion in no small part because the average length of a clinical trial increased 70% between 1999 and 2006. Perhaps the most ominous statistic of all is that drug manufacturers recoup their R&D costs for only one in five approved drugs.
Marcia Angell is former editor of The New England Journal of Medicine. In a much-publicized book, The Truth About Drug Companies, she charged that the pharmaceutical industry's new drugs "nearly always stem from publicly supported research." In a National Review Onlinepiece, Henry Miller dissects these claims:
According to a National Institutes of Health (NIH) study, NIH funding figured significantly in only four of 47 best-selling drugs.
Another study, by economist Benjamin Zycher & colleagues, found that among 35 important new drugs, private sector research was responsible for "central advances in basic science for seven, in applied science for 34 and in the development of drugs yielding improved clinical performance or manufacturing process for 28."
Only one in every 5,000 new products is ultimately approved as a new medicine. The direct and indirect costs of a new drug, from discovery to the pharmacy, are $1.3 billion. Only one in five drugs ultimately approved and marketed covers its R&D costs.
America’s Health Insurance Plans (AHIP), the main trade association for health plans, has released research comparing pharmacy costs in states where Medicaid pharmacy benefits are “carved in” versus “carved out.”
