Replies to post #59573 on Biotech Values

[Jonathan Robinson]

In general, the government spending would not be as big a problem as is being made out EXCEPT for the fact that healthcare spending overall to GDP keeps rising. And even then, as long as good jobs are being created, and there is a basic safety net (not more extensive coverage as desired by the Democrats which would drive up spending even more), the US can probably handle it. It will require higher taxes and higher user fees, however, which can mostly (again except for the overall growth relative to GDP) be paid for by reduced direct personal spending. It will introduce government rationing to some extent as well as restrictions on doctors (many won't take Medicare) and SOON, government price controls on drugs (even though they are only 10% of costs directly and maybe 15% overall when hospital and other non-direct drugs are added).

Jon

[oldberkeley]

[DewDiligence]

Coming Soon: Health Care Debate, Part 2

[Please see #msg-27114485 and #msg-18495262 for related stories.]

http://www.nytimes.com/2008/03/02/weekinreview/02sack.html

>>
March 2, 2008
By KEVIN SACK

The skirmishing between the Democratic presidential candidates over the mechanics of universal health coverage will soon give way to a quite different general-election debate — about whether universal coverage should even be a national priority.

In the primaries, Senators Hillary Rodham Clinton and Barack Obama have magnified their differences over making health insurance mandatory because it provides a rare chance to differentiate themselves on an issue that matters deeply to Democrats. But they are fighting over the narrowest of bands in a broad policy spectrum, and the focus on universal coverage — rather than on cutting costs — may have far less resonance come Nov. 4.

Senator John McCain, the presumptive Republican nominee, agrees with the Democrats that the health system needs major repair. But his solution would stress cost-containment over assuring coverage for all. Its most controversial elements would fundamentally alter the employer-based insurance system through which 71 percent of insured Americans now get their health coverage.

Like President Bush, Mr. McCain wants to use tax policy to create an insurance marketplace that he says would be more competitive. He would end the longstanding tax exemption on health benefits paid by employers, to eliminate what he says is a bias against those who buy insurance individually.

Instead, anyone who buys health insurance would receive refundable tax credits of $2,500 per individual and $5,000 per family. To promote competition, Mr. McCain would allow policies to be sold across state lines and by organizations like churches and trade groups.

The most difficult to insure — the elderly and those with health problems — would be eligible for larger credits, though Mr. McCain has not specified the amounts. By contrast, the Democratic plans would simply prohibit insurers from denying coverage because of health status.

The McCain campaign has no estimate of how many of America’s 47 million uninsured would likely gain coverage under its plan. But Mr. McCain’s emphasis is elsewhere. “The biggest problem with the American health care system,” he said in an October speech, “is that it costs too much.”

The Democratic candidates have not ignored the cost side of the health care equation. Like Mr. McCain, both have articulated plans to reduce the rampant growth of health spending through improvements in prevention, electronic record keeping and chronic-disease management. When Mrs. Clinton introduced her health plan last year in a series of three speeches, she pointedly devoted the first to lowering costs.

But anyone paying attention to the Democratic campaign over the last two months could be excused for thinking that universal coverage is the candidates’ fundamental concern. Last Saturday, Mrs. Clinton drew attention by scolding Mr. Obama (“Shame on you, Barack Obama!”) for what she said was a distortion of her position in a mailing. Three days later, the candidates spent the first 16 minutes of their debate in Cleveland disagreeing over whether everyone should be required to have insurance (Mrs. Clinton says yes; Mr. Obama says only children should be).

Jonathan B. Oberlander, an authority on health politics at the University of North Carolina at Chapel Hill, predicted that in the general election the Democrats might regret how much time they spent discussing government mandates, and the tax increases they have proposed to support broad expansions of coverage. “It’s just not how you want to sell health reform,” he said.

Polling suggests that at least 9 of every 10 voters in November will be insured. Many will not see universal coverage as a matter of self-interest. The complex economic argument that the uninsured impose hidden costs on everyone else may be difficult to convey in sound bites.

And the electorate may be less receptive than participants in the Democratic primaries and caucuses. A December poll by the Kaiser Family Foundation found that 42 percent of Democrats said their top health policy concern was expanding coverage for the uninsured, while 35 percent said it was reducing costs. The priorities flipped when Republicans and independents were added to the mix, with 41 percent of all polled saying they cared most about reducing costs and 31 percent citing coverage for the uninsured.

Michael F. Cannon, the director of health policy studies at the Cato Institute, argues there is no way to know whether universal coverage — estimated by both Democratic campaigns to cost at least $110 billion — would be the most cost-effective means of improving the country’s health.

Mr. Cannon, a libertarian who used his blog to found the Anti-Universal Coverage Club, acknowledges that a substantial body of research has shown that health coverage can improve health outcomes. Studies by the American Cancer Society, for instance, have found that the uninsured are significantly more likely than those with private insurance to be diagnosed with cancer in late stages rather than early stages.

But he cites a highly-regarded 2001 survey by two University of Chicago researchers, Helen Levy and David Meltzer, who said, “there is no evidence at this time that would allow us to say whether money aimed at improving health would be better spent on health insurance or on inner-city clinics, community-based screening programs for hypertension or advertising campaigns to encourage good nutrition, to name just a few possibilities.”

Mr. Cannon, along with a number of conservative theorists, contend that spending on unneeded procedures, medical errors and hospital infections is a more dire problem than the cost of caring for the uninsured. They say that waste accounts for a much larger share of the country’s $2.1 trillion health care bill, and that at least twice as many Americans are estimated to die each year from medical errors as from lack of access to care.

The toxic politics of appearing to support any rationing of care has kept candidates in both parties from seriously confronting the overuse and misuse of health care, they say [#msg-18495262]. Without change, health spending is projected to double by 2017, eating up 20 percent of gross domestic product [#msg-27114485].

“The pernicious aspect of this cry for universal coverage is that it is too easy for politicians,” said Joseph R. Antos, a health policy expert at the American Enterprise Institute. “The hard work is getting at the underlying inefficiencies in the health system, the perverse incentives that have everybody operating in the dark.”

Supporters of universal coverage counter that its benefits would go well beyond its impact on health spending. Mrs. Clinton, for instance, speaks passionately about making health care in America more equitable and removing the ability of insurance companies to “determine who lives and who dies, who gets health care and who does not.”

Len M. Nichols, director of health policy for the New America Foundation, and a supporter of a health insurance mandate, said the ledger also must account for the economic and social costs of the deaths, disabilities and bankruptcies attributable to lack of insurance. “The right question is: would coverage expansion add enough social and economic value to merit the investment?” he said. “The literature suggests a resounding yes.”

Other health experts say it would be regrettable if the general election devolves into a debate that pits coverage against cost. In fact, they say, the government must fight on all fronts simultaneously to have any chance at meaningful change. “If reforming U.S. health care results only in expanded access to care, costs will increase faster but with limited health benefits,” Thomas R. Frieden, New York City’s health commissioner, wrote last week in The Journal of the American Medical Association. “If only cost controls are instituted, even more individuals will be denied access to needed care. Health care must be restructured to make maximizing health the organizing principle.”
<<

[DewDiligence]

Pfizer CEO Eyes Biogenerics

http://www.reuters.com/article/marketsNews/idUKN0562810620080305

>>
Wed Mar 5, 2008 6:03pm EST

NEW YORK (Reuters) - Pfizer Inc (PFE) sees the emerging area of generic biotechnology medicines as an "opportunity" for the world's largest drug company, Chief Executive Officer Jeff Kindler said on Wednesday.

Pfizer has expressed its intent to become a major player in biotech drugs, which are more complicated to manufacture than traditional pills and often more expensive. However, the interest in lower-cost generic versions of such biotech drugs would separate it from most other brand-pharmaceutical makers [not from NVS, obviously].

"I do think that's an opportunity for us," Kindler said in response to a question during a 5-hour meeting with industry analysts and investors in New York.

U.S. regulators are weighing the creation of a pathway for generic versions of biotech drugs, which are generally derived from human proteins and therefore more complicated to duplicate than traditional chemicals.

But Kindler said he expected there will be a regulatory pathway and that Pfizer was well prepared to be involved.
<<

[DewDiligence]

Payers Aim to Rein In Specialty-Drug Spending

[As previously stated, FoB’s in the US are a matter of when, not if. As used in this article (and in general parlance), the term “specialty drugs” includes: i) all biopharmaceuticals; and ii) small-molecule drugs that are expensive and used to treat serious medical conditions.]

http://online.wsj.com/article/SB120597290404750401.html

>>
By MARILYN CHASE
March 20, 2008

Sharply rising expenditures for cancer drugs and other high-priced medicines are prompting employers, health plans and pharmacy-benefit managers to redouble efforts to rein in spending.

To curb use, payers are pushing for legislation to permit generic-drug companies to sell cheaper versions of biotech drugs [i.e. FoB’s]. They are reinforcing rules about trying cheaper therapies first and early certification of patients' prescriptions. Some seek novel solutions such as paying drug companies based on how well a drug works, rather than how much is used.

The actions come amid fresh evidence that so-called specialty pharmaceuticals are among the biggest drivers of escalating health costs. Express Scripts Inc., a St. Louis pharmacy-benefits manager, said in a report due out in April, that spending for these drugs jumped 14% in 2007. That is down from 21% growth the company reported for 2006 but still several times the inflation rate. Medco Health Solutions Inc., a Franklin Lakes, N.J., pharmacy-benefits manager, said its preliminary figures show spending in the category rose 12% to 14%.

Specialty-drug spending in the U.S. could reach $99 billion by 2010, nearly double the $54 billion spent in 2006, says Steven Miller, chief medical officer of Express Scripts, which manages drug benefits for health plans that cover 55 million people.

Specialty drugs include biotech and other drugs for serious diseases such as cancer, multiple sclerosis and inflammatory maladies such as rheumatoid arthritis. The average prescription for these medicines runs more than $1,500 and some top $100,000 a year. By contrast, conventional brand-name pills for problems such as high blood pressure high cholesterol, and depression run roughly $90 to $120 a month.

Specialty drug outlays are growing even as spending for conventional pills decline due to patent expiration and cheaper generic competition.

But generic competition for biologics, under way in Europe, hasn't yet emerged in the U.S. because laws enabling regulatory approval are lacking.

Bills paving the way for cheaper biotech drugs are pending in Congress, but debate rages over details. [Don’t we know it!] Biotech companies, who prefer the term "biosimilars" to biogenerics, say that copying a biotech drug is more complicated than knocking off a pill. They want biogenerics to undergo clinical trials to prove safety and efficacy. That could drive up costs.

Dr. Miller, who was on Capitol Hill this month to lobby for a biogenerics bill, said such legislation could decelerate specialty-drug spending. "The savings would be $71 billion over the course of the decade, starting with $3.5 billion in the first year," he said.

Big employers worried about escalation of specialty-drug costs are ramping up lobbying through the Coalition for a Competitive Pharmaceutical Market, a business group pushing for passage of biogenerics laws. Among them are General Motors Corp., Ford Motor Co., and Caterpillar Inc.

"Like the rest of America, our population's use of specialty drugs continues to grow at an increased rate compared to standard chemical compounds," said Cinde Kirman, chief pharmacist for the Detroit auto maker's one million employees, retirees and dependents.

At Caterpillar, the Peoria, Ill., heavy-equipment maker, specialty-drug costs rose 11% in 2007 to $20 million, atop its regular prescription benefits of $160 million. Sid Banwart, vice president of human services, last year testified before Congress that biogeneric competition would expand "access to these important innovations."

Biomedical companies contend that the quest for therapies entails heavy research and development, clinical trials and a high failure rate that drive the cost of bringing one successful new drug to market as high as $1 billion.

The Biotechnology Industry Organization, a trade group, wants legislation to offer incentives like 14 years protection beyond the normal patent life. But after a bill with a similar provision was introduced in Congress late last week, the Generic Pharmaceutical Association protested, saying "it will be decades" before affordable biogenerics are available.

Dr. Miller of Express Scripts says legislators have told him chances are slim of passing a bill this presidential election year.

Express Scripts says the cost of an average monthly cancer-drug prescription rose 15.8% to over $1,800 last year, while an average monthly prescription for multiple-sclerosis treatments rose 12.1% to over $1,600. Among new specialty drugs approved last year, the report cited GlaxoSmithKline PLC's Tykerb, a breast-cancer treatment which costs about $2,900 a month. A Glaxo spokeswoman confirmed the price, adding it is less than some comparable treatments. Another drug that debuted last year was Gilead Sciences Inc.'s pulmonary-arterial hypertension treatment Letairis, which costs $3,940 a month. On Feb. 1, Gilead said it raised the price of Letairis to $4,060 a month, adding it sought parity with other oral drugs in its class.

In addition, Express Scripts said it paid more last year for existing cancer drugs. Celgene Corp.'s Thalomid, for instance, an oral drug for multiple myeloma, increased 27.2% to $4,742 per prescription in 2007 from $3,728 in 2006. Roche Holding AG's oral chemotherapy drug Xeloda rose 17.9% to $1,200 per prescription in 2007 from $1,018 per prescription the previous year. Celgene had no immediate comment on Thalomid's pricing. A Roche spokeswoman said its wholesale-acquisition cost -- the price it charges drug wholesalers to buy an average monthly prescription of Xeloda -- rose 15.58% last year.

To combat this trend, Express Scripts and Medco say they are tightly managing their formularies with rules governing drug selection, usage and dose. Medco is enforcing what it calls step therapy rules, says Tim Wentworth, president of its Accredo unit. Patients are required to start treatment on the lowest-priced drug first, advancing to more expensive alternatives only if and when the cheaper drug fails to work.

Medco officials say they are also cracking down on off-label drug use by enforcing evidence-based treatment guidelines, pre-certification requirements, and transparent accounting of the reason for the prescription. Such discipline has cut inappropriate biologics uses like human-growth hormone injections for body builders or youth seekers.

Aetna Inc., the big Hartford, Conn., health insurer, is exploring a "pay-for-performance" strategy in which a drug's price would be tied to efficacy. "Some people have spectacular results" taking pricey biotech drugs while "others have no results," says Edmund Pezalla, national medical director of Aetna Pharmacy Management. The idea, already being tried in Europe, is to negotiate drug prices based on whether a patient responds to a treatment. While details are scarce, some companies provide rebates in cash for products if patients don't achieve the desired therapeutic benefit.

Aetna hasn't nailed such a deal yet. "We've gotten some preliminary feedback and companies are willing to discuss this," Dr. Pezalla said. "We're looking at data, they're looking at data. Hopefully we'll come up with an arrangement with at least one pharmaceutical firm that will pave the way for this."
<<

[DewDiligence]

Re: Potential $$$ savings from FoB's

HSP has an amusing counter that shows US year-to-date expenditures on (branded) biologics drugs:

http://www.hospira.com/AdvancingWellness/biogenerics.aspx

HSP, of course, wants to be a player in the FoB arena.

[DewDiligence]

Healthcare Consumed 17.6% of US GDP in 2009

[That’s up 100 basis points from 2008 and the highest % in US history. This post should be read in conjunction with the charts in #msg-27114485 and #msg-44712778.]

http://online.wsj.com/article/SB10001424052748703675904576064173290792358.html

›JANUARY 6, 2011
By PETER LANDERS

Health spending rose to a record 17.6% of the U.S. economy in 2009, as the overall economy shrank and higher federal Medicaid spending helped to push up health costs.

The figures released Wednesday don't reflect any impact from the Obama administration's health overhaul, which passed in March 2010, but they illuminate the problem of ever-rising health costs that drove the debate over the biggest change to the health system in a generation.

According to the federal government's number crunchers, the U.S.'s total health spending rose 4% in 2009 to $2.49 trillion. That was the smallest percentage increase in the half-century that spending has been tabulated, owing to the recession that led many people to cut out-of-pocket spending and hospitals to curtail expansion plans.

Still, health spending took a greater share of the economy— up one percentage point from 16.6% in 2008—because gross domestic product shrank 1.7% in 2009. The figures were published in the journal Health Affairs.

Federal spending on Medicaid, the federal-state health-insurance program for the poor, rose nearly 22% in 2009. That was partly because millions of people signed up for the program amid the recession, and also the result of extra federal Medicaid spending included in the economic-stimulus bill passed early in 2009.

"You've got this explosion in federal spending," said the libertarian Cato Institute's Michael Cannon, who called the surge in health spending unsustainable when the annual federal budget deficit tops $1 trillion.

Supporters of Medicaid say the program is working as it's supposed to during an economic downturn. "It's the safety net for the private sector. It goes up when the private sector goes down," said Ethan Rome, executive director of Health Care for America Now, a liberal group that supported the health law.

Hard-pressed states reduced their Medicaid spending by 10% in 2009, with the federal support helping them weather the increase in the rolls.

Some states say their Medicaid burden is still too high, especially because the health law is set to add some 16 million people to the program starting in 2014. The recent increase in Medicaid spending "will pale in comparison to what federal and state budgets will face under the unprecedented Medicaid expansion in the health law," said Sen. Orrin Hatch of Utah, the incoming top Republican on the Finance Committee.

Texas and a few other states have even discussed dropping out of Medicaid altogether, but that is unlikely because they would have to find other ways of covering the poor and elderly people who rely on Medicaid to pay their nursing-home bills.‹

[DewDiligence]

CMS actuaries—>healthcare’s share of US GDP will increase to 19.4% by 2027 from 17.9% in 2017, assuming no legislative changes:

https://www.wsj.com/articles/health-care-spending-projected-to-accelerate-as-population-ages-11550696400