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This Week in Health Care Reform - August 15th, 2014

Steep discounts for Sovaldi in other countries come to light; recent analysis examines the economic factors behind the slowdown in health care spending; virtual doctor visits are on the rise; a consideration of the effect that transparency has on cost and choice; and, the White House launches a new digital initiative aimed at improving government technology.


Week in Review

Sovaldi Discounted: With so much attention being paid to how the cost of Sovaldi is ravaging budgets across the health care spectrum, what’s only been quietly acknowledged to this point is what other countries are being charged for the hepatitis C drug.  Earlier this year, it had been reported that Gilead Sciences, the drug’s manufacturer, was making the 12-week course of Sovaldi available in Egypt for $900, or at a 99 percent discount to what they’re charging in the United States.  Last week, it was announced that the drug would be offered at the same discounted rate in India (although some argue that even at that price, the cost is unacceptable in the country).  Estimates peg the number of people around the world suffering from hepatitis C at approximately 170 million – with just over 3 million of those living in the United States, there’s growing turbulence over the severe price discrepancy.  In Germany, for instance, Sovaldi is priced at $67,000, while in Canada and the United Kingdom, it’s at about $55,000.  Both, while still high, are far less than the $84,000 being charged to patients in this country.  While Gilead continues to offer up the cost-effectiveness defense as a way of justifying its overall pricing determination, experts find their argument, much like the discrepancy in what different countries are being charged for its breakthrough drug, doesn’t quite add up. 

Economic Slowdown:
Recent trend analyses highlight that health care spending in this country has slowed down.  While some see causality between the decrease in outlays and the implementation of the Affordable Care Act, others have dug below the surface and believe the trend to be attributable to other economic factors, rather than any structural change to the health care system.  In fact, further analysis indicates that the majority of the slowdown (70 percent) is mostly due to the recession.  Independent research would appear to back up those claims, showing a slight uptick in the health care price index (1.7 percent) as the economy has steadily improved.  As experts seek to map out an accurate cause-and-effect narrative, others take issue with the whole practice of tethering health care spending to overall GDP estimates.

As the practice of telemedicine continues to draw support and make advances, it stands to reason that a corresponding uptick in its utilization would be in the offing.  Evidence would suggest something of an arms race beginning to develop as stakeholders look to take advantage of what’s quickly becoming the wave of the present.  Insurers are already investing heavily in bringing new technological innovations to consumers and patients, pointing to the potential cost-savings offered by their widespread adoption as reason enough.  Case in point: New estimates suggest that nearly one-in-six doctor visits will be virtual this year, resulting in $5 billion in expected savings.    

We live in the age of the informed consumer.  For most of us, making a big purchase usually means doing research, reading reviews, and comparing prices.  Why then should health care be any different?  That’s the question more and more consumers have started asking themselves, resulting in a clarion call for greater transparency across the board.  The operating principle at work here is simple: If health care consumers know more, then, it stands to reason, they can make better informed decisions.  Why, for instance, is it so much harder to find out what an appendectomy might cost then it is to figure out how much that same hospital charges for parking?  As supporters and opponents of the Affordable Care Act debate the law’s ability to deliver on its eponymic promise, the march towards greater price transparency in the delivery of health care continues.

Digital Team:
If last year’s rollout of the federal insurance exchange marketplace website,, taught us anything, it’s that technological issues, especially those on this order of magnitude, often require digital response teams.  Looking to put this hard-learned lesson to good use, the White House announced this week that it was creating a permanent technology strike force to deal with these types of systemic, infrastructure issues.  The aptly-named U.S. Digital Service will be made up of a select group of programmers and engineers with orders to make federal websites more user-friendly, identify and fix underlying tech issues, and help upgrade the government’s technology infrastructure.  Meanwhile, Republican lawmakers aren’t quite ready to move on from the debacle and are continuing to press the Administration for details regarding the contracts behind the website’s failed execution and subsequent launch.  However, that task could prove to be slightly more difficult as it was revealed last week that some of the emails now being sought by investigators might be missing.  While a recordkeeping lapse is being blamed for the gaps, Health & Human Services (HHS) officials are working to reconstruct the data.  Separately, just prior to the House hearing that led to the discovery that those emails were missing, a Government Accountability Office (GAO) report quietly opened up a new line of attack for those looking to place the blame for the failed website squarely at the feet of its administrators, calling into question the culture at HHS which led officials to ignore warnings flagged by GAO ahead of last fall’s launch.

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Looking Ahead

The House Majority Leader shares his agenda for when members return in September, while Republicans in the Senate have their sights trained on November and what they’ll do if they retake the majority.  And, new challenges are identified ahead of, both, the next open enrollment period and next year’s tax filing deadline. 

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