Life Science Compliance Update

April 04, 2017

JAMA Harps on PAOs

Pill_bottles_cash

JAMA Internal Medicine recently published an article, “Patient Advocacy Organizations, Industry Funding, and Conflicts of Interest.” The article focused on the nature of industry funding of patient advocacy organizations (PAOs) in the United States.

As the basis for the article, a survey was conducted from September 1, 2013, to June 30, 2014, of a nationally representative random sample of 439 PAO leaders, representing 5.6% of 7865 PAOs identified in the United States. Survey questions addressed the nature of their activities, their financial relationships with industry, and the perceived effectiveness of their conflict of interest policies.

Of the 439 surveys mailed to PAO leaders, 289 (65.8%) were returned with at least 80% of the questions answered. The PAOs varied widely in terms of size, funding, activities, and disease focus. The median total revenue among responding organizations was $299 140 (interquartile range, $70 000-$1 200 000). A total of 165 of 245 PAOs (67.3%) reported receiving industry funding, with 19 of 160 PAOs (11.9%) receiving more than half of their funding from industry. Among the subset of PAOs that received industry funding, the median amount was $50 000 (interquartile range, $15 000-$200 000); the median proportion of industry support derived from the pharmaceutical, device, and/or biotechnology sectors was 45% (interquartile range, 0%-100%). A total of 220 of 269 respondents (81.8%) indicated that conflicts of interest are very or moderately relevant to PAOs, and 94 of 171 (55.0%) believed that their organizations’ conflict of interest policies were very good. A total of 22 of 285 PAO leaders (7.7%) perceived pressure to conform their positions to the interests of corporate donors.

The study found that roughly two-thirds of a national sample of patient advocacy organizations (most of which were not for profit), reported receiving funding from for-profit companies. Twelve percent received the majority of their funding from industry; a median proportion of just under fifty percent of industry funding was derived from the pharmaceutical, device, and/or biotechnology sectors.

The authors of the study felt as though patient advocacy organizations engage in wide-ranging health activities. Although most PAOs receive modest funding from industry, a minority receive substantial industry support, raising added concerns about independence. Many respondents report a need to improve their conflict of interest policies to help maintain public trust.

Conclusion

As noted above, the article found that most advocacy organizations receive money from industry. Therefore, the authors of the study concluded that increased transparency and robust conflict of interest policies and practices are needed to help the non-profit organizations maintain their independence.

However, as we have noted time and time again, conflict of interest policies and practices (along with transparency efforts) are not always the answer, and are not usually required to help non-profit (or even for-profit) organizations maintain their independence.

Additionally, the sample size for the study was only 5.6% of the 7865 PAOs identified in the United States. This is such a small sample size, and any results assumed from such a small sample size, nationally representative or not, should not be taken as an impetus for change. Transparency is confusing to the general population, who typically care about getting the healthcare they need, when they need it. Patience assistance organizations play a large role in helping those who need healthcare and other related items get what they need – they should not be targeted as the new “bad guy.”

March 20, 2017

2016-2025 Projections of National Health Expenditures Data Released

Spending

National health expenditure is expected to grow an average of 5.6% annually from 2016 through 2025, according to a report published by Health Affairs (authored by the Centers for Medicare & Medicaid Services’ (CMS) Office of the Actuary (OACT)).

National health spending growth is projected to outpace projected Gross Domestic Product (GDP) growth by 1.2%. The report also projects that the health share of GDP will rise from 17.8% in 2015 to 19.9% by 2025. Growth in national health expenditures over this period is likely to be largely influenced by faster growth in medical prices, as compared to recent historically low growth.

For 2016, the report notes that total health spending is projected to have reached nearly $3.4 trillion, a 4.8% increase from 2015. The report also found that by 2025, federal, state and local governments are projected to finance roughly 47% of national health spending, a slight increase from 46% in 2015.

“After an anticipated slowdown in health spending growth for 2016, we expect health spending growth to gradually increase as a result of faster projected growth in medical prices that is only partially offset by slower projected growth in the use and intensity of medical goods and services,” says Sean Keehan, the study’s first author. “Irrespective of any changes in law, it is expected that because of continued cost pressures associated with paying for health care, employers, insurers, and other payers will continue to pursue strategies that seek to effectively manage the use and cost of health care goods and services.”  

Additional findings from the report include:

  • Total national health spending growth: Growth is projected to have been 4.8% in 2016, a bit slower than the 5.8% growth in 2015, likely because of slower Medicaid and prescription drug spending growth. In 2017, total health spending is projected to grow by 5.4%, expected to be led by increases in private health insurance spending.
  • Medicare: Medicare spending growth is projected to have been 5.0% in 2016 and is expected to average 7.1% over the full projection period of 2016 through 2025. Faster-than-expected growth after 2016 primarily reflects utilization of Medicare-covered services increasing to approach rates closer to Medicare’s longer historical experience.
  • Private health insurance: Spending growth is projected to have slowed from 7.2% in 2015 to 5.9% in 2016, a trend that is related to slower growth in private health insurance enrollment. Spending growth is projected to increase to 6.5% in 2017, due in part to faster premium growth in Marketplace plans related to previous underpricing of premiums and the end of the temporary risk corridors.
  • Medicaid: Projected spending growth slowed significantly in 2016, down to 3.7%, down from 9.7% in 2015, largely reflecting slower growth in Medicaid enrollment. Spending growth is expected to accelerate and average 5.7% for 2017 through 2025 as projected per-enrollee spending growth rises over that timeframe. The increasingly larger share of the Medicaid population who are aged and disabled and who tend to use more intensive services is likely to drive that impetus.
  • Medical price inflation: Medical prices are expected to increase more rapidly after historically low growth in 2015 of 0.8% to nearly 3% by 2025. This faster projected growth in prices is influenced by an acceleration in both economy-wide prices and medical specific prices and is projected to be partially offset by slowing growth in the use and intensity of medical goods and services.
  • Prescription drug spending:  Drug spending growth is projected to have been 5% in 2016, following growth of 9% in 2015, mainly due to slowing use of expensive drugs that treat Hepatitis C. Growth is projected to average 6.4% each year for 2017 through 2025, likely influenced by higher spending on expensive specialty drugs.
  • Insured Share of the Population: The proportion of the population with health insurance is projected to increase from 90.9% in 2015 to 91.5% in 2025.

March 17, 2017

Op-Ed in The Hill on Allowing Medicare to Directly Negotiate Drug Prices

1398029625000-OURVIEW

Dr. Rafael Fonseca, a Chair of the Department of Medicine at the Mayo Clinic in Arizona and Distinguished Mayo Investigator, recently wrote an editorial in The Hill, a Washington, DC, based newspaper focused on politics in Congress.

In the editorial, Dr. Fonseca opined that allowing Medicare to directly negotiate drug prices, as has been advocated by a variety of voices (both in and out of the industry), would actually hurt seniors’ access to new drugs.

Dr. Fonseca uses the Veterans Affairs (VA) as an example of what happens when government programs are allowed to negotiated their own drug prices. Currently, the VA pharmacy benefits program negotiates drug prices and pays far less for drugs than many other providers. In order to contain costs, however, the program does not cover many of the newest, most effective treatments.

According to the editorial, many of those drugs that are not covered are “newly approved drugs with no substitutes available.” According to an August 2016 report by Xcenda consultants, only three of the 25 most innovative drugs were available in the VA drug formulary. Compare that to 11 Medicare Part D plans that covered all 25. The majority of Medicare plans covered 21 of the 25 drugs. 

Dr. Fonseca believes that popularity and the “will” of the public will continue to force through “doing something” on prescription drug prices. He believes that there are “three essential things that we must understand about drug costs and how we can address the challenge,” before taking such a risk:

  1. Innovative treatments are expensive to develop. While the cost of some prescription drugs can be high, consider that it takes an average of more than $2.5 billion to bring a drug to market, according to the Tufts Center for the Study of Drug Development. By allowing the marketing of drugs earlier in the approval process, speeding up approvals for competing compounds, and reducing the costs to bring new treatments to market, the FDA could allow for more price competition without harming innovative and access to effective treatments.
  2. Innovative drugs offset other healthcare costs. Medicine has changed dramatically for the better, and mostly because of the new drugs clinicians have in their toolbox. A 2012 Congressional Budget Office study estimated that for every one percent increase in medication utilization, overall Medicare program costs fell by one-fifth of a percent.

Since 1991, the nation's cancer death rate has dropped by 25 percent, according to a recent report by the American Cancer Society. Some cancers, like chronic myelogenous leukemia, are no longer a death sentence; metastatic melanoma, previously a death sentence, can now sometimes be controlled such as was done for President Carter. Hepatitis C can be cured with a short course of pills; and today the life expectancy of HIV patients is about the same as the general population. It is important to remember that today's drug treatments are, often, enormous advances in disease treatment. 

3. Price controls will kill innovation. The United States is the engine of innovation in healthcare, producing roughly half of the world's new drug treatments in the past decade. But the current proposals could threaten patient access and the development of future treatments. Health care economists John A. Vernon and Joseph A. Golec found that price controls imposed in the EU between 1986 and 2004 not only reduced R&D spending, they also "resulted in about fifty fewer new drugs and about seventeen hundred fewer scientists employed in the EU." Rather than feasting on the goose that lays the golden eggs, we should be looking for ways to grow more geese.

Conclusion

There is no denying that Medicare and other government-funded programs are facing a serious funding crisis and that changes to the programs are long overdue. However, it is important to review history and not make the same mistakes that have already been made in attempting to resolve the issue. Instead, Dr. Fonseca believes that “Medicare beneficiaries should have more freedom to choose the coverage and services that best meet their individual needs and preferences.”

Newsletter


Preview | Powered by FeedBlitz

Search


 
Sponsors
April 2017
Sun Mon Tue Wed Thu Fri Sat
1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30