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This Week in Health Care Reform: October 12th, 2018

Drugmakers exploit the patent system to extend monopolistic control over prices; a recent audit turns up billions of dollars in inappropriate care in Medicare; standardization leads to higher quality, lower costs for hospitals; and, obstacles remain in health IT investment.

Week in Review

Rx Patents: Addressing the rising cost of prescription drugs remains a priority for Americans, with two-thirds expressing growing concern over the issue, and even more regarding the cost of medicines in this country as unreasonable, according to a recent West Health Institute/NORC at the University of Chicago survey.  Perhaps of greater interest to policymakers, the nearly 9-in-10 respondents who feel this issue should be a priority for Congress.  Given the impact that rising drug prices have had on the evolving health care cost conversation, it should come as no surprise that increased attention has been paid to unraveling the intricate protections that have allowed pharmaceutical companies to price their products so indiscriminately.  As it turns out, drugmakers have been employing a tried-and-true tactic for years, one that sees them manipulate the patent system to their unrelenting benefit.  How it works is, a pharmaceutical manufacturer makes a small change to how an existing drug is either made or taken, which then allows them to envelop that product within a series of patent protections.  Typically, drug companies have less than 10 years of patent exclusivity once their drugs hit the market.  By layering on these secondary patents, they’re able to extend those rights.  Another way in which pharmaceutical companies game the system is by claiming multiple patents for a single drug in order to build protections from competitors, such as for the world’s best-selling drug, Humira, which its manufacturer, AbbVie, has wrapped in more than 100 patents.

OIG Audit: A recent audit performed for the Office of the Inspector General (OIG) at the Department of Health & Human Services (HHS), uncovered $5.7 billion in one year for care that was deemed neither necessary nor reasonable.  That sum was paid out by Medicare to hospital-based inpatient rehabilitation facilities (IRF) in 2013.  Auditors were asked to determine if the medical records from a randomized sample met federal coverage and documentation requirements for IRF claims.  Alarmingly, only 45 of the 220 sampled IRF stays were found to have been in compliance with all Medicare requirements.  Based on those findings, OIG was able to put a price tag on what Medicare had paid out, pointing to inadequate internal controls at IRFs that had failed to identify and prevent inappropriate admissions, in addition to a poorly designed payment system that did not align costs with payments, which OIG went on to say, may have further incentivized IRFs to admit patients inappropriately.

Variability: Reducing unnecessary variations in care delivery doesn’t have to come at the expense of health care systems’ ability to deliver high-quality, lower cost care, according to new data.  By analyzing more than 460 hospitals, researchers were able to establish that the highest quality facilities delivered lowered cost care for the vast majority of diagnoses included in the study (82 percent).  This, they indicated, was largely owing to investments in patient safety, including enhanced health IT tools, as well as the implementation of standardized care delivery methods.  This emphasis on care variation reduction has the potential to generate systemic savings without negatively impacting care – something researchers pointed out could save hospitals replicating this model up to $29 million annually

Health IT Investment:
Health systems leaders continue to encounter obstacles on the road to greater investment in IT.  A recent survey of industry experts brought into focus just what those obstacles are.  The first has to do with budget limitations.  The second, interoperability – namely, overcoming institutional barriers to getting systems to communicate with each other.  Next is the omnipresent temptation to buy the latest, emergent technology, which doesn’t always meet the specific needs of an organization.  And, finally, the difficult juggling act that’s required to ensure that any new investments in IT infrastructure are aligned with strategic initiatives, compliant with changing regulations, and reconciled against internal governance protocols.      

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