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This Week in Health Care Reform: October 25th, 2019

An investigation connects doctors to millions of dollars in payments from drug and device companies; ERs create financial hardships for patients; federal officials take a closer look at hospital mergers; and, drug launch prices are found to be skyrocketing.

Week in Review

Payments: Back in 2013, nonprofit news outlet ProPublica detailed what, at the time, was an alarming discovery – namely, that nearly two dozen doctors had each pocketed more than half a million dollars giving promotional talks and consulting for drug companies.  Despite the backlash, it seems the practice has only become more commonplace.  In its latest update to its tracking database, ProPublica found that more than 2,500 physicians have received at least $500,000 apiece from drugmakers and medical device manufacturers in the past five years alone.  Drilling further into their findings, more than 700 of those doctors were found to have received at least $1 million.  A couple of things, however, are static, such as the amount of money these industries are spending.  From 2014 to 2018, drug and device companies spent between $2.1 billion and $2.2 billion a year paying doctors for consulting or speaking fees, in addition to meals, travel, and gifts.  Additionally, roughly the same number of doctors – 600,000 – received such payments in a given year.  While it’s hard not to take a somewhat dim view of all the participants exposed by the data, some are quick to point out that the bulk of the questionable payments seem to originate from the medical device industry.

ERs: Data has already established that hospitals are by far the biggest cost in our $3.5 trillion health care system.  With these health systems receiving $1 out of every $3 spent on health care, hospitals boast a margin of 8 percent, well above that of other major stakeholders, such as the pharmaceutical and insurance industries.  A new survey set out to contextualize these costs by better understanding how high medical bills have affected Americans.  According to the results, 69 percent of respondents experienced financial hardship due to medical bills in the past 5 years.  Tellingly, the vast majority had insurance coverage.  What also stood out is that more than half said that someone in their household had visited an emergency room (ER) over that period.  Some reported not having paid off the bills stemming from those ER visits.  However, despite ERs often being the source of the surprise medical bills that have come to dominate the health care policy conversation, respondents said that inpatient hospital visits were the source of the most disruptive expenses.

FTC Investigation: The Federal Trade Commission (FTC) has launched an investigation into the impact that certificates of public advantage (COPAs) have had on health care costs, quality, and access.  COPAs have been exploited by hospitals to shield mergers from regulatory antitrust scrutiny.  Hospitals have long pointed to mergers as necessary to better achieve the efficiencies they argue come with greater scale and scope.  Unfortunately, every study not funded by hospitals has shown the opposite to be true – specifically, that these mergers lead to less competition and higher prices.  It’s against that backdrop, that the FTC has issued orders for information, seeking data from five insurers and two regional health systems, in an attempt to enhance its own understanding of the COPA issue and inform future regulatory guidance and enforcement

Rx Launch Prices:
As drug manufacturers have found themselves increasingly under attack for outrageous price increases to existing products, a subtle shift has taken place that has seen the average launch price for new brand-name drugs skyrocket over the past decade.  And, not only has this led to higher premiums and out-of-pocket costs for consumers, but it’s also driven up the price of generics.  According to a new analysis, since 2006, the median monthly price for a new brand-name drug has increased 381 percent, from $150 to $722.  Separately, the median monthly price for a new generic drug over that same period has gone up 712 percent, from around $100 to nearly $800.      

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