IN THE NEWS
CALIFORNIA: PAVING THE WAY IN DRUG AFFORDABILITY AND ACCESSIBILITY
California’s new drug law requires companies to report drug price increases quarterly. Only companies that met certain standards — they raised the price of a drug within the first quarter and the price had risen by at least 16% since January 2017 — had to submit data. The companies that met the standards were required to provide pricing data for the previous five years. In its initial report, the state focused its analysis on drug-pricing trends for about 1,000 products from January 2017 through March 2019.
- Generic drugs saw the largest median increase of 37.6% from 2017 through the first quarter of 2019.
- The cost of a generic liquid version of Prozac rose from $9 to $69 in just the first quarter of 2019, an increase of 667%.
- Guanfacine, a generic medication for ADHD, on the market since 2010, rose more than 200% in the first quarter of 2019 to $87 for 100 2-milligram pills. Amneal Pharmaceuticals, which makes Guanfacine, cited “manufacturing costs” and “market conditions” as reasons for the price hike.
“Even at a time when there is a microscope on this industry, they’re going ahead with drug price increases for hundreds of drugs well above the rate of inflation.”
California’s transparency law also requires drugmakers to state why they are raising prices. Over time, that information, in addition to cost disclosures, could create “one of the more comprehensive and official drug databases on prices that we have nationwide,” Wright said. “That, in itself, is progress, so that we can get better information on the rationale for drug price increases.” But the data does not reflect discounts and rebates for insurers and pharmacy benefit managers and bears little resemblance to what consumers actually pay, said Priscilla VanderVeer, a spokeswoman for the trade group Pharmaceutical Research and Manufacturers of America.Excerpted from HealthLeaders, California’s New Transparency Law Reveals Steep Rise in Wholesale Drug Prices
Pharmacists in California will be able to dispense HIV prevention pills to patients without a doctor’s prescription after Gov. Gavin Newsom signed legislation that supporters say will greatly reduce the spread of infection.
Advocates of Senate Bill 159 say California is the first state to authorize pre-exposure prophylaxis, also called PrEP, and post-exposure prophylaxis, known as PEP, without prescriptions. California is already considered a leader in AIDS prevention, they say. PrEP is a once-daily pill for HIV-negative people while PEP is a medication that people take to prevent the virus from taking hold. Supporters say PEP significantly reduces the risk of infection, but only if started within 72 hours of exposure to the virus.
The California Medical Association was initially opposed to the legislation but became neutral on it after it was amended to limit the number of PrEP pills patients can get without a physician’s note to 60 days, said Anthony York, spokesman for the association. The law also prohibits insurance companies from requiring patients to get prior authorization before using insurance to get the drugs, eliminating another obstacle. Newson also signed legislation aimed at lowering the cost of prescription drugs. The new law targets so called “pay for delay” agreements, when makers of brand-name drugs pay for makers of similar generic drugs to delay putting the products on the market. Drug companies argue the bill will cause more delays for generic drugs by ensuring lengthy legal battles over patents.Reprinted from Modern Healthcare, California allows pharmacists to dispense HIV prevention meds without prescription
In 2019 there seemed to be constant discussion on whether importing drugs from Canada was an efficient method to reduce prescription drug prices in the US and in July we finally had the beginnings of an importation plan supported by the Trump Administration. Many states are looking to importation to help control drug costs however, there still needs to be cooperation from the Canadian government who worries that their market is too small to be able to satisfy our demand. It is estimated that Canada represents only 2% of global drug consumption while the U.S. represents 44%.
The Affordable Care Act has been a target of President Trump’s administration since the very beginning. They began with attempts to repeal and replace and when these proved unsuccessful, the focus turned to taking the ACA apart. Several changes have been successfully made to the ACA that have altered its impact, especially on taxes that have ultimately been repealed. At the very end of 2019 we saw the individual mandate repealed after it was ruled unconstitutional. There is still an appeal pending to determine if this ruling applies to the entire law or if it can be dissected out.
TRUMP ADMIN RELEASES PLAN FOR STATES TO IMPORT (SOME) DRUGS FROM CANADA
The Department of Health and Human Services and the Food and Drug Administration have announced a pilot project to allow state to import drugs from Canada. The new project will also allow drug manufacturers to import their own products. There are some restrictions to a drug’s eligibility for importation. In order to be eligible for importation a drug must already be an approved product in Canada and it must not be a controlled substance, a biologic – including insulin, or intravenously injected. All drugs deemed eligible would need to be relabeled and go through additional testing to make sure it is not degraded. The importation plan includes guidance from the FDA for drug companies to voluntarily import their product from Canada where the price is lower due to their single-payer system.Source FierceHealthcare, Congress poised to repeal HIT, medical device and ‘Cadillac’ ACA taxes as part of spending deal
CONGRESS REPEALS THE ACA’S CADILLAC, HIT, AND MEDICAL DEVICE TAXES AND ENACTS THE SECURE ACT
On December 20, 2019, President Trump signed the Further Consolidated Appropriations Act of 2020 (HR 1865) into law. The main purpose of this legislation is to continue funding certain government operations. However, the bill also includes a number of employee benefits-related provisions. Specifically, the bill repeals the tax on high cost health coverage (aka the Cadillac tax), the health insurance tax (HIT), and the medical device tax. The bill also adopts the Setting Every Community Up for Retirement Enhancement (SECURE) Act relating to retirement plans.
ACA Tax Repeals
Cadillac Tax: The Cadillac tax was introduced by the ACA and would have imposed a 40% excise tax on employer-sponsored coverage that exceeded a certain threshold. The tax was originally set to become effective in 2018, but had been delayed through 2022. HR 1865 completely repeals the tax, meaning it will never be imposed on any employer plan.
HIT: The medical device tax was a 2.3% excise tax on manufacturers and importers of certain medical devices. The tax was originally set to become effective in 2013, but has been delayed multiple times. HR 1865 repeals the tax entirely.
Medical Device Tax: The medical device tax was a 2.3% excise tax on manufacturers and importers of certain medical devices. The tax was originally set to become effective in 2013, but has been delayed multiple times. HR 1865 repeals the tax entirely.
The repeal of these taxes is welcome news to the health and welfare industry and employers, as the taxes have been widely opposed since the adoption of the ACA.
HR 1865 adopts the SECURE Act, which is the most comprehensive retirement legislation passed since the Pension Protection Act of 2006. The law includes sweeping changes that will affect how retirement plans are offered.
Some of the highlights of the legislation are as follows:
- Traditional IRA contributions can continue past age 70.5
- Open multiple employer plans can be offered, allowing employers with no connection to join together to offer retirement benefits to their collective employees
- Relaxed 401(k) safe harbor rules
- Increased credits for small businesses that start a retirement plan
- Eligibility for long-term part-time employees
- Penalty-free distributions for birth or adoption
- Increase in age for minimum required distribution (from 70.5 to 72)
- Portability of annuity investments
- Fiduciary safe harbor for employers that select a lifetime income provider
- Lifetime income disclosure requirements
- Elimination of the stretch IRA strategy, requiring non-spouse IRA beneficiaries to deplete inherited IRAs within 10 years
The SECURE Act enjoys widespread bipartisan support, as many in Congress and in the retirement plan industry believe that it will make retirement plans more accessible to those who don’t have them. The life insurance and annuity industries are also looking forward to the opportunities presented given the ability to fund 401(k) plans with annuities and the option to use life insurance as an inherited stretch IRA alternative. As the law is enacted and regulations formulated, we’ll continue to keep you updated
FIFTH CIRCUIT RULES INDIVIDUAL MANDATE UNCONSTITUTIONAL, PUNTS ON WHETHER ENTIRE ACA MUST FALL
On December 18, 2019, a three-judge panel of the US Court of Appeals for the Fifth Circuit ruled that the minimum essential coverage (MEC) provision (otherwise known as the “individual mandate”) of the Affordable Care Act (ACA) is unconstitutional. However, the appeals court declined to rule on whether the individual mandate rendered the entire ACA unconstitutional or if it can be severed from the ACA. The appeals court remanded that matter back to the district court to make the determination. As a reminder, the matter came before the appeals court after US District Judge Reed O’Connor of the Northern District of Texas ruled that the individual mandate was unconstitutional and so integral to the ACA that the entire law must be overturned.
The question of whether the individual mandate is unconstitutional or not hinges upon the tax penalty imposed upon taxpayers who fail to obtain health insurance that provides MEC. A previous ruling by the US Supreme Court, back in 2012, determined that Congress had the authority to create an individual mandate in the ACA through its power to tax. Thus, as long as the law imposed a tax, the mandate was constitutional. In late 2017, Congress reduced the tax to $0, and in response 20 states and two individuals challenged the ACA on the basis that Congress waived its authority to impose the individual mandate when it declined to impose a tax. Both the district court and the appeals court accepted this argument.
The appeals court remanded back to the district court the issue regarding whether the individual mandate causes the whole ACA to fail. The appellate court asks the district court to determine two things: 1) which provisions in the ACA are so intertwined with the individual mandate that they must also be severed from the ACA; and 2) whether the court can enjoin only those provisions of the ACA that injure the states and individuals that brought the suit or declare the ACA unconstitutional only as to those states and individuals.
The lawsuit will continue to move through the courts for some time. California, one of the states defending the ACA in this lawsuit, has already indicated that it will appeal this decision to the Supreme Court. Even if the Supreme Court declines to take up the matter at this time, the district court must now reconsider key issues, as noted above, and issue new rulings that will very likely be appealed as well. Although it is very difficult to predict the course of any lawsuit, it is not unreasonable to expect this one to take many more months to resolve.
For employers and group health plans, the Fifth Circuit decision does not change any requirements or obligations currently imposed under the ACA. Specifically, employers should continue their efforts toward timely ACA employer reporting and compliance with other coverage mandates, as the regulatory agencies will continue enforcing the ACA.
Most important drugs approved in the last decade
The New Year will end in a zero, making this a perfect opportunity to look back at the past 10 years of drug approvals. Complaints abound that the drug industry lacks innovation. A quick perusal of the new drugs approved over the last decade shows that isn’t so. We dug through every drug that passed muster with the Food and Drug Administration starting in 2010 and identified ten — along with a dozen honorable mentions — that have had the biggest impact on the companies that sell them, on medicine, and on society as a whole. There’s no questioning the impact of every one of these drugs. But with almost every one, there is controversy about something else: their price. That’s why the public debate about the cost of prescription drugs has only gotten louder over the past decade.
- Keytruda, approved September 2014
- Opdivo, approved December 2014
- Honorable mention: Yervoy, approved March 2011
- Trikafta, approved October 2019
- Jardiance, approved August 2014
- Victoza, approved January 2010 1/2/2020
- Honorable mentions: Farxiga, Invokana, Trulicity, and Rybelsus
- Zolgensma, approved May 2019
- Honorable mentions: Kymriah and Yescarta, approved August and October 2017
- Imbruvica, approved November 2013
- Honorable mention:Xalkori, Lynparza, Vitrakvi
- Harvoni, approved October 2014
- Honorable mention: Mavyret, approved August 2017
- Onpattro, approved August 2018
- Honorable mention: Hemlibra, approved November 2017
- Subsys, approved January 2014
- Keytruda, Merck
- Trikafta, Vertex Pharmaceuticals
- Harvoni, Gilead Sciences
- Imbruvica, AbbVie/Johnson & Johnson
- Zolgensma, AveXis/Novartis
- Hemlibra, Roche
- Jardiance, Boehringer Ingelheim/Eli Lilly
- Eliquis, Bristol-Myers Squibb
- Yescarta, Kite Pharma/Gilead Sciences
- Onpattro, Alnylam Pharmaceuticals
New drugs are launching with ever higher prices
The average launch prices for new brand-name drugs have skyrocketed over the past decade, according to an analysis from drug research firm 46brooklyn.
Why it matters: The U.S. prescription drug market increasingly has thrived on high initial price tags and subsequent increases. That has resulted in higher premiums and out-of-pocket costs for new drugs, as well as more expensive generics.
Between the lines: Pharmaceutical companies are not raising prices of existing drugs as frequently as they used to, due in part to political heat. However, more new drugs are coming out with 6- and 7-figure list prices — most notably drugs like Zolgensma and Luxturna.
Higher starting prices for brand-name drugs are costly on their own, but they also beget higher starting prices for their generics
By the numbers: Using data from Elsevier’s Gold Standard Drug Database and the federal government, analysts at 46brooklyn organized the launch prices of both brand and generic drugs for each year they came out, going back to 2006.
The median monthly price of a new brand-name drug has increased 381% since 2006 (from $150 to $722).
The median monthly price of a new generic drug has increased 712% since 2006 (about $100 to almost $800).
These are list prices, not net prices, and therefore do not reflect any rebates given by manufacturers to middlemen. But these prices still affect patients’ out-of-pocket costs, and some list prices could be close to actual net prices paid depending on the contract and marketplace.
One step further: Almost 80% of all generic drugs studied had no decrease in their average wholesale price in the past 5 years.
The bottom line: There is systemic failure in the pharmaceutical market. Rising starting points for drugs benefit every entity, except patients.Reprinted from Axios, New drugs are launching with ever-higher prices
Waste accounts for one-quarter of healthcare spending
A new study found waste accounts for roughly one-quarter of all U.S. healthcare spending, an estimate that’s in the same ballpark as its predecessors.
The cost of waste in the U.S. healthcare system ranges from $760 billion to $935 billion annually, according to a JAMA review of 54 peer-reviewed studies, government reports and other information, released Monday. The study found one-quarter of that could be cut using interventions found to reduce waste.
The current study divided waste into six previously identified categories. Administrative complexity accounted for the most waste, at $265.6 billion annually. Below that was waste due to pricing failure, which costs $230.7 billion to $240.5 billion annually. Failure of care delivery accounts for $102.4 billion to $165.7 billion annually. Overtreatment or low-value care results in $75.7 billion to $101.2 billion in waste annually. Waste related to fraud and abuse costs between $58.5 billion and $83.9 billion annually. Finally, failure of care coordination generates $27.2 billion to $78.2 billion in waste annually.
The study also estimated potential annual savings from measures shown to cut waste. In aggregate, those interventions could save $191 billion to $282 billion annually, or about 25% of the total cost of waste.
Dr. Ashish Jha, professor of health policy in the Harvard T.H. Chan School of Public Health, thinks part of the solution will be to address healthcare’s irrational pricing. One potential tool is price transparency improvement that will help people shop around for the lowest-cost care, although there’s not much evidence that such efforts are helpful in lowering prices.
Enhanced regulation of healthcare monopolies could also help, Jha said. In recent years, he said federal agencies haven’t adequately pushed back against mergers and acquisitions, but that’s partly because they’re underfunded. Another difficult but potentially helpful task would be to either break up large health systems or enable new providers to enter markets, he said. Jha said the federal government could lower drug prices by importing generic drugs from other countries and potentially negotiating drug prices directly.Reprinted from Modern Healthcare, Waste accounts for one-quarter of healthcare spending
A LOOK FORWARD
Top 4 Healthcare Trends to Watch
2020 will put a spotlight on healthcare. As we get closer to the next presidential election, the questions of who pays for it, who is covered, and how efficiently care is delivered will all be elevated to the national debate stage. At the same time, current market forces will push the industry to reconcile rising costs and navigate rapid innovation in a traditionally-siloed delivery system. As the healthcare industry transitions, what lies ahead? These are the top healthcare trends to watch in the coming year:
We are about to re-think mental healthcare
Now more than ever, employers are attuned to mental healthcare because of the generational makeup of the workforce. Millennials, especially, are more comfortable talking about their mental health than those from previous generations. Given the technological advances over the past decade, there is also an opportunity to follow an individual’s life over time, which will allow early warning and detection of mental illness. The technology to identify, support, and treat mental illness exists, but it becomes more of a cultural and generational issue when thinking about how to drive employees to mental healthcare resources.
The challenge for employers: Understand how to integrate physical and behavioral health programs
New tech standards are changing the way we measure health information and record data
Data and how to use it have now been a part of the national healthcare dialogue for a while. As medicine becomes more personalized, care is streamlined between providers, and valuebased contracting becomes more common, we will begin to see care delivery oriented around a person’s social, mental, and physical status within their community. To do that, we need easily accessible, sharable health data.
The challenge for employers: While it’s evident that allowing employees (patients) to access and share their health data could directly affect cost, quality and access to healthcare, the benefit to the employer is less obvious.
2020 will be consumer-focused
The combination of data innovation, rising healthcare costs, and targeted, personalized care has pushed the industry to create new digital point solutions for all stakeholders, in particular patients and caregivers. The result is a DIY approach to care facilitated in new settings, like over the phone or in the home using telemedicine, HIPAA-compliant Amazon Alexa, and at-home vital monitoring, to name a few examples. The digital health sector is on track to raise over $8 billion in investments this year. The consumerization of the industry has been fueled by tech companies, startups, and new entrants vying to empower individuals to make financial and other decisions about their care and to help them navigate the healthcare system. That’s started with an effort to give patients access to their own data, which in turn could help them see a more holistic picture of their health now and in the future.
The challenge for employers: Putting employees in the driver’s seat when it comes to managing their and their loved ones’ healthcare is not a new concept. Where employers could make an impact is demonstrating the relationship between healthcare costs, innovative point solutions, and social, mental, and physical health.
Companies new to the health industry are reshaping the market
Retailers, tech giants, banks, telecom, and other consumer brands are investing in the health landscape. Everything from healthcare coverage and care delivery to enabling the use and storage of data—these companies recognize an opportunity to create B2C and B2B offerings using technology as a way to engage customers.
Many of these brands are entering the healthcare ecosystem through partnerships or acquisitions. Lyft and Uber have partnered with third parties, hospital systems, and electronic medical record (EMR) companies to develop a new modality of care: delivering patients to the hospital. Other companies like Apple are betting that patients will be the key to creating industry interoperability and lowering costs. The tech giant has acquired startups focused on personal health data and improving patient care. Amazon, Google, JP Morgan, Best Buy, AT&T, Samsung, and many other brands are investing in and exploring how to impact care delivery and reach their existing customer base from a new angle. They are also driving incumbents to find more creative ways to spread risk, finance care, and advance a pay-for-value mentality.
The challenge for employers: The amount of rapid growth inside and outside the industry might make it difficult to cut through the noise and weigh which options work best for individual employee populations.
Reprinted from Leader’s Edge, Top 4 Healthcare Trends to Watch
Safety Tip: VAPING AND MARIJUANA
The deadly lung illness linked to vaping could prompt the U.S. and others to legalize marijuana, Tilray is one of the largest and most sophisticated producers of premium medical cannabis in the world.
- Health officials are calling the disease EVALI, short for e-cigarette or vaping product use associated lung injury. Most patients have reported vaping THC, the active ingredient in marijuana, according to the Centers for Disease Control and Prevention. The latest national and state findings suggest products containing THC, particularly those bought off the street or from other informal sources, are linked to most of the cases, the CDC said.
- To date, the CDC has confirmed 2,051 probable vaping illness cases and 39 deaths. The CDC doesn’t know exactly what’s making people sick, but health officials say they are narrowing in on vitamin E acetate, a compound found in some THC vaping products.
- Marijuana advocates, in recent months, have renewed calls for legal and regulated marijuana amid the vaping outbreak. They say regulation of the substance will make people safer.