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This Week in Health Care Reform - October 14th, 2016

The EpiPen fallout continues to make waves, as states struggle with rising Medicaid drug costs; the FTC weighs in against a potential regional hospital merger; and, telehealth utilization draws focus.

Week in Review

Medicaid Rx: Late last week, EpiPen manufacturer Mylan reached an agreement with the Department of Justice that will see the company pay $465 million to settle allegations that it had underpaid Medicaid programs by misclassifying its emergency injectable as a generic product.  Already under intense scrutiny for having increased the price of EpiPen more than 500 percent since 2007, Mylan was quick to point out that the settlement doesn’t involve any admission of wrongdoing by the company.  Meanwhile, states find themselves struggling to cover the rising costs of prescription drugs, which could lead to unwelcome changes for beneficiaries and health plans.  Despite deploying all the tools in their arsenals to combat the issue, state budgets are quickly reaching their breaking point.  With the advent of expensive, new specialty drugs exerting upward pressure on the cost curve, states, which depend on predictability in order to effectively balance their budgets, are unable to absorb the dramatic price increases that have asserted themselves as the de rigueur pricing model for the pharmaceutical industry.
FTC Opposition:
The proposed merger of the two dominant health systems in the Tri-Cities region of Northeast Tennessee and Southwest Virginia met with opposition last week as the Federal Trade Commission (FTC) urged regulators in the latter state to reject the deal, citing “significant concerns” over the deal’s eventual impact to consumers.  Specifically, if approved, the two systems, Mountain States Health Alliance and Wellmont Health Systems, would control 71 percent of the geographic area they both serve.  In their opinion, the FTC argued that allowing the systems to combine would create an anticompetitive health care environment in Virginia, resulting in higher prices and lower quality. 
Telehealth Use:
For their part, many employers have already recognized the role that telehealth can play in helping them control rising health care costs.  However, its ability to keep those costs in check is only effective if their employees are willing to take advantage of the offering.  According to a survey released by the National Business Group on Health, only 3 percent of employees of the nearly 70 percent of large employers making telehealth available as a benefit have used the services in the first half of the year.  Despite the low utilization rate, employers are undeterred, believing in telehealth’s potential to, not just lower their health care costs, but boost worker productivity, as well.  And, it would seem, there’s reason to be optimistic as, earlier this week, California-based health network, Kaiser Permanente, reported that more than half of its patient transactions last year (52 percent) were conducted online via virtual visits or the health system’s apps.

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