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This Week in Health Care Reform: August 23rd, 2019

Hospitals are on track to spend more on drugs next year; meanwhile, pharmaceutical manufacturers are up to their old tricks; a new study shows that pharmacy benefits managers pass along the majority of the drug rebates they negotiate; and, stakeholders collaborate on an innovative claims initiative.

Week in Review

Hospital Rx Spending: According to a new forecast, hospitals and health systems are projected to spend 4.57 percent more on pharmaceuticals next year.  The analysis, released by health care performance improvement company Vizient, projects anticipated trends in drug pricing based on the purchasing patterns of Vizient’s member companies, including community hospitals, pediatric facilities, and academic medical centers.  Additional takeaways from the report reinforce the outsized role that prescription drugs will continue to play in driving up health care costs, including the rising price of specialty drugs and how drug shortages will continue and contribute to higher costs for everyone.

Rx Pricing: To put a finer point on the above, last month, one drugmaker jacked up the price of one of its products 1,300 percent.  That company, American Regent, recently won approval for a revamped version of an old product, Selenium, which it then discontinued in order to clear a path for the new version, Selenious Acid.  Neither version is even really a drug, but more of an essential mineral used by hospitals to provide nutrients to patients intravenously.  The older Selenium cost around 4 cents per microgram, compared to the 57 cents the company is now charging for Selenious Acid.  The aggregate impact of the increase, however, will be significant.  For example, the hospitals in the Cleveland Clinic’s network spent approximately $80,000 on Selenium last year.  In 2020, those same hospitals will spend nearly $1 million on the new product.

Rebates: Having found themselves under increasingly withering scrutiny, the pharmaceutical industry has sought to deflect responsibility for the rising cost of prescription drugs, most recently, claiming that the rebates negotiated on behalf of consumers and payers by pharmacy benefits managers (PBMs) are to blame.  However, a new report from the nonpartisan Government Accountability Office (GAO) undermines their paper-thin argument.  Their analysis found that in 2016, nearly all of the savings generated from rebates passed along to Medicare Part D plans, leaving premiums relatively flat for price-sensitive seniors with prescription drug plans.  In fact, those rebates and other price concessions negotiated by PBMs accounted for roughly 20 percent of all spending in Part D, with plans receiving 99.6 percent of those savings, which allows them to better stabilize premiums for consumers and beneficiaries.  Put another way, according to GAO, in 2016, PBMs retained less than 1 percent of the $18 billion worth of rebates they extracted from drugmakers

Claims Collaboration:
A diverse group of health care stakeholders recently announced an innovative partnership with the technology industry aimed at developing a new model that would make medical claims data easier for patients to access.  The collaboration, which includes Apple, Anthem, Google, Humana, and Microsoft, seeks to build off an open application recently launched by the Centers for Medicare & Medicaid Services (CMS) called Blue Button 2.0 that allows third-party apps and developers to connect to, and make sense of, Medicare claims data.  This new effort by stakeholders capitalizes on CMS’ MyHealthEData pilot, allowing the collaborators to make strides towards enhanced health record interoperability, which has long been pointed to as an integral piece in connecting patients to the right care at the right time.      

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Experts continue to line up in opposition to the establishment of a federal arbitration process in the ongoing legislative debate surrounding putting an end to surprise medical bills.  With Congress poised to pick up the issue upon their return from August recess, it’s all the more important that they hear from their constituents.  Health Action Network members have already sent hundreds of letters to lawmakers, urging their federal elected officials to support surprise medical billing legislation that protects consumers from rising health care costs and to oppose efforts to include an arbitration-type model into the bills being considered.  If you haven’t, take a moment to contact your lawmakers to urge them to protect consumers from surprise medical bills and rising health care costs.

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