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This Week in Health Care Reform - August 12th, 2016

A new report draws attention to the damage inflicted on small businesses by the health insurance tax; a previously overlooked class of drugs finds itself the object of drug manufacturers’ affections; and, large employers are increasingly turning to telehealth as a cost-saver.

Week in Review

Stopping the HIT: As recently covered, efforts to permanently repeal the health insurance tax (HIT) continue to draw support from lawmakers.  Given the HIT’s impact on small businesses, seniors, and working class families, it’s easy to see why elected officials would be keen on seeing the harmful tax eliminated.  Late last year, Congress passed a one-year suspension of the HIT in response to the hue and cry raised by stakeholders from across the health care spectrum, who continue to make the case for the tax’s permanent repeal.  A new report only serves to bolster their argument.  Released by the Employee Benefit Research Institute (EBRI), that analysis points to growing disruption in the employer-sponsored health benefits space, particularly from small businesses, who continue to struggle with the rising cost of health care.  One of the most onerous costs facing this group is the HIT, which, if not repealed, could lead to small businesses facing an estimated $5,000 increase in premiums over the next decade.
Booming Business: The escalating price of prescription drugs continues to reverberate across our health care landscape.  As stakeholders work furiously to shine a spotlight on the issue, new fronts in the ongoing battle open up.  What at one time was the primary issue – the unsustainable cost of new medicines – has now been supplemented by growing concern over the rising price of drugs already on the market.  According to one analysis, the price of naloxone, a drug used to treat opioid overdoses, has skyrocketed in the past few years.  Meanwhile, the price of EpiPens – carried by allergy sufferers the world over in case of emergency – has soared 450 percent since 2004.  And, now, it would seem, an entire new class of drugs has begun to experience a similar bend to their cost curve.  Known as “orphan drugs”, these medicines had largely been ignored by the pharmaceutical market given the rarity of the diseases that they were intended to treat.  However, in 1983, Congress passed a law to encourage drugmakers to pursue treatments for these rare diseases by offering attractive tax credits and monopoly protections, radically transforming the pipeline for these orphan drugs.  As a result, these rare diseases are no longer a neglected niche of the pharmaceutical market.  In fact, since the law’s passage, over 400 drugs have been approved.  Last year, alone, almost half of all novel drugs approved were so-called orphan drugs.  For their part, drugmakers have seized upon the opportunity, targeting diseases that previously would have been overlooked.  Unfortunately, given the market exclusivity perk of the law, this has also paved the way for exorbitant drug prices.  In fact, the median launch price of orphan drugs has doubled every five years since the law was first passed.
Telehealth Savings:
In their ongoing effort to rein-in health care costs, large employers are increasingly looking to telehealth to help them achieve cost-savings.  According to a new survey released by the National Business Group on Health, next year, nine-out-of-ten employers will make telehealth an option in states where it’s permitted.  The group went on to predict that by 2019, telehealth services would be a nearly universal offering amongst large employers (97 percent).  While partially motivated by their aforementioned focus on offsetting overall health care costs, the shift is also emblematic of employers’ corresponding desire to optimize how health care is accessed by, and delivered to, its workers.

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