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March 9, 2016
U.S. health agency estimates 2015 prescription drug spend rose to $457 billion
Spending on prescription drugs is projected to have risen to $457 billion in 2015 and will likely continue to grow as a percentage of overall healthcare
spending, a U.S. government health agency said on Tuesday.
The 2015 increase is an increase of about 8 percent from 2014's prescription drug spending, which is also an estimated figure, the government
agency said.
Prescription drug spending is estimated to have accounted for 16.7 percent of $2.729 trillion spent on healthcare last year, the U.S. Department of
Health and Human Services' Office of the Assistant Secretary for Planning and Evaluation said in a report.
An estimated $328 billion was spent on retail drugs, the report said. It also estimated that another $128 billion was spent on non-retail drugs, such as
cancer treatments that are administered in a physician's office or hospital.
The affordability of medicines has become an important issue for the 2016 presidential elections, and has become part of the campaign platforms of
potential candidates Hillary Clinton and Donald Trump.
The agency forecast that total drug spending will grow to $535 billion in 2018 and represent about 16.8 percent of all healthcare spending. The
figures are based in part on National Health Expenditure Accounts estimates from the Centers for Medicaid and Medicare Services. These NHEA
estimates represent a drug's net price after adjusting for rebates and discounts. It estimated the non-retail drug spending portion as a ratio of retail
spending.
The agency said that from 2010 to 2014, the spending increase was due to the following factors: 10 percent due to population growth, 30 percent
due to the numbers of prescriptions per person increasing, 30 percent due to inflation and 30 percent due to price increases that were greater than
inflation.
Visit Reuters for the story.
China's drug-price cuts are hitting big pharma where it hurts
The world’s largest pharmaceutical companies are facing a roadblock in China as a state-led campaign to slash drug prices has triggered a
slowdown in sales growth.
One of the biggest problems: China’s government-run health insurance funds, which are struggling to keep up with an ageing population and surging
incidence of diseases like cancer or diabetes. As they grapple with tighter budgets and a slowing economy, many of these funds are capping
reimbursements to patients and pushing local authorities to negotiate with companies to lower drug prices.
More than $115 billion of drugs were sold in China last year, according to researcher IMS Institute for Healthcare Informatics, making it the world’s
second largest market after the U.S. China’s pharmaceutical market shrank by 1 percent in dollar terms from October to November, according to
Barclays Plc, a sharp contrast with the 17 percent expansion in the second half of 2013. As a result, companies from the U.K.’s GlaxoSmithKline Plc
to AstraZeneca Plc and New York’s Pfizer Inc. saw China sales growth weaken last year.
In the latest sign of price pressures for the industry, Li Bin, director of the National Health and Family Planning Commission said at a press
conference at the National People’s Congress on Tuesday that China has won price cuts of more than 50 percent in national-level bargaining with
drug companies on about five kinds of costly imported drugs for illnesses including cancer. The official didn’t specify the names of the drugs or the
manufacturers.
Chinese citizens pay premiums to the country’s public health insurance funds from their salaries, but those amounts are rising more slowly as the
economy has expanded at the slowest pace in 25 years. Ｍeanwhile, the insurance funds face rising costs because the country’s citizenry is ageing
so rapidly, said Joseph Cho of RDPAC, an industry group representing foreign drug companies in China.
The pressures on the public health system had a particularly visible effect in the fourth quarter, when Glaxo experienced a 25 percent decline in
China pharma sales. Merck’s fourth-quarter pharma revenue growth slowed to 2 percent from 13 percent in the same period a year earlier and
AstraZeneca’s fell by about two thirds to 6 percent, according to Bloomberg Intelligence.
Government insurance funds decide on the reimbursement levels at public hospitals, which treat about 90 percent of China’s patients and sell 70
percent of the country’s drugs. By the end of last year, many hospitals had hit their reimbursement caps and had to curb prescriptions of more
expensive drugs from multinationals while also postponing costly surgeries and inpatient stays, said Cho. About 185 of China’s 380 locally-managed
public health insurance funds appear to be making losses, he said, citing research from a local academic.
Both Chinese and foreign companies have been hurt as all drug manufacturers must compete in local bidding to sell their medicines in public
hospitals. Some like the Eastern Zhejiang province have asked for cuts of 10 to 20 percent as a requirement to participate in local tenders, according
to consultancy McKinsey & Co. Companies can decide to take the cuts or drop their bids, essentially stopping sales of certain drugs in parts of the
country.
Visit Bloomberg for the story.
Fee-for-Service still dominates in U.S.
Nearly 95% of all provider visits used fee-for-service payment methods in 2013, an increase of more than a percentage point since 2010, according
to a study published March 7 in Health Affairs.
The remaining sliver of payments were paid under capitation, "in which a physician or other provider receives a fixed monthly payment per patient,
regardless of the services provided," report Samuel H. Zuvekas, PhD, and Joel W. Cohen, PhD, both from the Center for Financing, Access and
Cost Trends at the Agency for Healthcare Research and Quality, Rockville, MD.
"As health economist Paul Ginsburg wrote in 2012, many policy makers equate payment reform with eliminating fee-for-service payment," Dr.
Zuvekas and Dr. Cohen write. "New models that attempt to shift the focus of payment from quantity to quality may be more successful than
traditional capitation."
However, an announcement last week from the US Department of Health and Human Services (HHS) suggests that change in payment models
could be speeding up since 2013, as Medicare reimbursements move away from fee-from-service toward accountable care organizations.
Dr. Zuvekas and Dr. Cohen analyzed data on the prevalence of capitation from 1996 through 2013, using the agency's annual Medical Expenditure
Panel Surveys of physician offices.
Capitation payment methods dropped from 6.6% of patient visits in 2007 to 5.3% in 2013, establishing the remaining 94.7% of visits as fee-forservice payments. Even among health maintenance organizations, 17.9% of private health maintenance organizations and 8.4% of Medicaid health
maintenance organizations used capitation, whereas the majority reimburse physicians on a fee-for-service basis.
Despite the Affordable Care Act's intent to employ innovative payment mechanisms for more efficiently delivered care, the attempt to move away
from fee-for-service arrangements has been unsuccessful.
"Previous efforts at payment system reform focused on pure capitation, which involved shifting all or most of the risk of caring for patients to
providers," Dr. Zuvekas and Dr. Cohen write. Yet, "financial losses associated with pure capitation in many physician groups led providers to reject
100 percent risk sharing as a payment method."
The authors suggest that a potentially more successful approach than traditional capitation may be employing new models that base payments on
quality instead of quantity.
“For example, the Medicare Pioneer [accountable care organization] demonstrations are designed to test a shared-savings payment policy for
organizations that are willing to accept some of the financial risk for providing care,” Dr. Zuvekas and Dr. Cohen write.
Visit MedScape for the article.
FDA issues warning about magnetic interference between breast tissue expanders with magnetic ports and ICDs or pacemakers
The FDA is aware of reports of magnetic interference between breast tissue expanders with magnetic injection ports and either implantable
cardioverter-defibrillators (ICDs) or pacemakers in patients, interfering with the functioning of these cardiac devices.
The FDA analyzed peer-reviewed literature, device labeling, adverse event medical device reports, and information from ICD manufacturers,
healthcare organizations, and professional societies. At this time, the FDA believes that there is a very small population at risk, as it is generally
uncommon for patients with an ICD or pacemaker to have breast reconstruction. However, they are alerting healthcare providers to this risk, so you
can help prevent it.
Breast tissue expanders are temporarily used (no more than six months) to prepare patients for reconstructive breast surgery after mastectomy, and
to treat under-developed breasts or other soft-tissue deformities. Some breast tissue expanders have a magnetic injection port to guide the surgeon
when injecting saline fluid to expand them.
In patients with a magnetic-port breast tissue expander who also have an ICD or pacemaker, the magnetic port can come close enough to the
cardiac device to cause magnetic interference. This interference causes the ICD or pacemaker to enter “magnet mode." ICDs in magnet mode will
not deliver life-saving shocks or anti-tachycardia pacing therapy, which can be life-threatening to the patient if a dangerous abnormal heart rhythm
were to occur.
Visit the FDA for more information.
BD, Apax Partners to form joint venture for respiratory solutions
BD (Becton, Dickinson and Company), announced a definitive agreement to sell 50.1 percent of its Respiratory Solutions business to funds advised
by Apax Partners, a global private equity firm, and form a joint venture that will operate as a new, independent company.
The new company will include all business lines within BD’s Respiratory Solutions business including Ventilation, Respiratory Diagnostics, Vital
Signs and AirLife, and have estimated annual revenue of approximately $900 million.
BD’s Respiratory Solutions facilities will transfer to the new company, including locations in Yorba Linda, CA; Palm Springs, CA; Plymouth, MN;
Mexicali, Mexico; Cotia, Brazil; Hoechberg, Germany and Shenzen, China. The new company will employ more than 5,000 associates around the
world. BD will retain 49.9 percent of the company as a significant but non-controlling minority owner.
Visit BD for the announcement.
CMS proposes to test new Medicare Part B prescription drug models to improve quality of care and deliver better value for Medicare
beneficiaries
The Centers for Medicare & Medicaid Services (CMS) announced a proposed rule to test new models to improve how Medicare Part B pays for
prescription drugs and supports physicians and other clinicians in delivering higher quality care. CMS values public input and comments as part of
the rulemaking process, and looks forward to continuing to work with stakeholders through the rulemaking process to maximize the value and
learning from the proposed tests.
Medicare Part B covers prescription drugs that are administered in a physician’s office or hospital outpatient department, such as cancer
medications, injectables like antibiotics, or eye care treatments. The proposed Medicare Part B Model would test new ways to support physicians
and other clinicians as they choose the drug that is right for their patients.
The proposed rule is designed to test different physician and patient incentives to do two things: drive the prescribing of the most effective drugs, and
test new payment approaches to reward positive patient outcomes. Among the approaches to be tested are the elimination of certain incentives that
work against the selection of high performing drugs, as well as the creation of positive incentives for the selection high performing drugs, including
reducing or eliminating patient cost sharing to improve patients’ access and appropriate use of effective drugs.
The proposed rule seeks comments on testing six different alternative approaches for Part B drugs to improve outcomes and align incentives to
improve quality of care and spend dollars wisely; these include:
Today, Medicare Part B generally pays physicians and hospital outpatient departments the average sales price of a drug, plus a 6 percent add-on.
The proposed model would test whether changing the add-on payment to 2.5 percent plus a flat fee payment of $16.80 per drug per day changes
prescribing incentives and leads to improved quality and value. The proposed change to the add-on payment is budget neutral.
Discounting or eliminating patient cost-sharing. Patients are often required to pay for a portion of their care through cost-sharing. This proposed test
would decrease or eliminate cost sharing to improve beneficiaries’ access and appropriate use of effective drugs.
Feedback on prescribing patterns and online decision support tools. This proposed test would create evidence-based clinical decision support tools
as a resource for providers and suppliers focused on safe and appropriate use for selected drugs and indications.
Indications-based pricing. This proposed test would vary the payment for a drug based on its clinical effectiveness for different indications.
Reference pricing. This proposed model would test the practice of setting a standard payment rate—a benchmark—for a group of therapeutically
similar drug products.
Risk-sharing agreements based on outcomes. This proposed test would allow CMS to enter into voluntary agreements with drug manufacturers to
link patient outcomes with price adjustments.
A fact sheet with more information about the proposed rule is available at CMS.
Zika fears prompt feds to ship blood to Puerto Rico
The federal government is shipping blood and blood products to Puerto Rico because of worries that local supplies might be contaminated with
mosquito-borne Zika virus.
The Health and Human Services Department said it was organizing shipments of blood products from the continental United States to Puerto Rico,
where Zika is spreading fast.
The FDA has asked people living in or traveling from Zika-affected zones to delay giving blood until they are in the clear.
"In the absence of special measures to screen for infection or reduce pathogens, the risk of Zika virus transmission through blood products is
considered likely based on the most current scientific evidence of how Zika virus and similar viruses (flaviviruses) are spread, and what is currently
being reported about transfusion-associated infection occurring outside of the United States," HHS said in a statement.
Visit NBC for the story.
U.S. military spending millions to make cyborgs a reality
The U.S. military is spending millions on an advanced implant that would allow a human brain to communicate directly with computers.
The Pentagon's research arm, the Defense Advanced Research Projects Agency (DARPA), hopes the implant will allow humans to directly interface
with computers, which could benefit people with aural and visual disabilities, such as veterans injured in combat.
In January, DARPA announced it plans to spend up to $62 million on the project, which is part of its Neural Engineering System Design program.
The implant would be small -- no larger than one cubic centimeter, or roughly the size of two stacked nickels -- according to DARPA.
The implantable device aims to convert neurons in the brain into electronic signals and provide unprecedented "data-transfer bandwidth between the
human brain and the digital world," according to a DARPA statement announcing the new project.
DARPA sees the implant as providing a foundation for new therapies that could help people with deficits in sight or hearing by "feeding digital
auditory or visual information into the brain."
A spokesman for DARPA told CNN that the program is not intended for military applications. But some experts see such an implant as having the
potential for numerous applications, including military ones, in the field of wearable robotics -- which aims to augment and restore human
performance.
The U.S. military is currently developing a battery-powered exoskeleton, the Tactical Assault Light Operator Suit, to provide superior protection from
enemy fire and in-helmet technologies that boost the user's communications ability and vision. The suits' development is being overseen by U.S.
Special Operations Command.
In theory, the proposed neural implant would allow the military member operating the suit to more effectively control the armored exoskeleton while
deployed in combat.
In its announcement, DARPA acknowledged that an implant is still a long ways away, with breakthroughs in neuroscience, synthetic biology, lowpower electronics, photonics and medical-device manufacturing needed before the device could be used.
DARPA plans to recruit a diverse set of experts in an attempt to accelerate the project's development, according to its statement announcing the
project.
Visit CNN for the story.