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Why U.S. medical costs are so high and where the system needs fixing

by Pat McNees (updated 7-30-19;  orig. published 11-11-15)
Why are our medical bills so high? Why aren't drug prices regulated, as they are in other countries? Where is most of our health care budget spent? Where can we improve the system? Why do we overtreat the rich and undertreat the poor? Who is in charge, when a patient needs complex chronic care? Has our market-driven medical care system served us well or do we suffer from its perverse incentives? Ours is the most expensive health care system in the world but it is not delivering the most effective health care. What can we do? Here are links to key articles explaining the high cost of medical care in the United States -- and whether we're getting what we're paying for.
Pharma is showering Congress with cash, even as drug makers race to fight the coronavirus (Lev Facher and Kaitlyn Bartley , STAT, 8-10-2020) The world’s biggest drug makers and their trade groups have cut checks to 356 lawmakers ahead of this year’s election — more than two-thirds of the sitting members of Congress, according to a new STAT analysis. It’s a barrage of contributions that accounts for roughly $11 million in campaign giving, distributed via roughly 4,500 checks from the political action committees affiliated with the companies. The drug industry has a clear stake in keeping the Senate in Republican hands — and its political spending in 2020 reflects that priority. Lots of details on who gets and supports what (or not).
The Health Insurance Hustle: Why Your Health Insurer Doesn’t Care About Your Big Bills Patients may think their insurers are fighting on their behalf for the best prices. But saving patients money is often not their top priority. Just ask Michael Frank. (Marshall Allen, ProPublica, 5-25-18)
A small group of patients account for a whole lot of spending (Drew Altman, Kaiser Family Foundation, 7-29-19) "Among people who get their coverage from a large employer, just 1.3% of employees were responsible for almost 20% of overall health spending, averaging a whopping $88,000 per year. A very small group of patients with major illnesses is responsible for an outsized share of health care spending, and new data show that prescription drugs are a big part of the reason their bills are so high....They often have HIV, MS, cystic fibrosis, rheumatoid arthritis, diabetes, cancer and other serious conditions requiring frequent and often costly care....Prescription drugs account for about 40% of this group’s costs, not counting rebates — compared with just 10% for the country as a whole. Their bills just for prescription drugs average out to about $34,000 per year. That’s much more than the average premium for family coverage. These are exactly the people our insurance system is failing. They have insurance and a major illness, but still struggle with their medical bills as deductibles and other out-of-pocket costs keep rising faster than wages. One solution might be to exempt this small group of high spenders with serious illnesses from drug or other copays, and limit their deductibles."
Health Insurers Make It Easy for Scammers to Steal Millions. Who Pays? You. ((Marshall Allen, ProPublica and Vox, 7-19-19) Health insurers are regarded as fierce defenders of health care dollars. But the case of David Williams shows one reason America’s health care costs continue to rise. The personal trainer spent years posing as a doctor and billing the nation’s top insurers, making off with millions.
What Can Be Done Right Now to Stop a Basic Source of Health Care Fraud (Marshall Allen, ProPublica, 7-19-19) Fraud is one reason we all pay so much for health care. But there are simple fixes that would make it more difficult for scammers to operate: Check to see whether people getting federal ID numbers that allow them to bill insurers have valid licenses. Require insurance companies to verify that the people they are paying are licensed medical providers. Require insurance companies to report cases of suspected fraud to state and federal regulators. Audits and the potential for fines may be needed to spur the insurers to file the reports.
Outrageous medical bills (examples, explained--but not justified!)
Pulling back the curtain on surprise medical bills
What you can do to challenge excessive medical bills
Government efforts to protect against wrongful medical billing
Hospital Financial Analysis: True Cost of Healthcare (David Belk MD, True Cost of Healthcare). What do the carefully researched numbers reveal? "The revenue for any health insurance company is tied directly to its expenses. In other words, the more a health insurance company spends each year, the more revenue they can earn (through premium increases the next year). Therefore, the last thing any health insurance company would want is for their overall expenses to drop. If their expenses were to drop, they couldn’t justify raising (or even maintaining) the amount they charge policy holders in premiums. That would be a disaster for them.
Since hospital utilization has been declining overall, it would be hard for private health insurance companies to continue to show an increase in their costs each year unless they deliberately overpaid hospitals, so that’s exactly what they do. Hospitals don’t mind being overpaid, so they’re not complaining. Since hospital bills always show enormous discounts from the insurance companies (due to persistent over-billing) most people wouldn’t suspect what the insurance companies are really doing. This way, both sides can work together to profit from our ignorance."
Marshall Allen Unearths Waste in Health Care ( Rachel Zamzow, Open Notebook, 2-13-18) "In 2012, ProPublica reporter Marshall Allen came across a staggering statistic: The U.S. health care system wastes an estimated $765 billion each year....Last year, Allen decided to root out the sources of squandered funds within the system—an investigation that culminated in a series called Wasted Medicine. Allen discovered how hospitals discard unused medical supplies, how some drug expiration dates are meaningless, and how drug companies knowingly make oversized eyedrops—a story that prompted a group of U.S. senators to introduce legislation to reduce wasteful packaging of medicines.
Wasted Medicine: Squandered Health Care Dollars (ProPublica Series). Includes A Hospital Charged $1,877 to Pierce a 5-Year-Old’s Ears. This Is Why Health Care Costs So Much. (Marshall Allen, ProPublica and NPR's Shots blog, 11-28-17). When a surgeon doing surgery on a child offers to throw in ear piercing as well, think twice about accepting.
--Paying Till It Hurts In her series on the cost of health care, Elisabeth Rosenthal interviews patients, physicians, economists, hospital and industry officials to examine the high price of health care. Buy her book: An American Sickness: How Healthcare Became Big Business and How You Can Take It Back . And read the series here--including the readers' comments (from both patients and doctors).
• Part 1: Colonoscopy: A case study in high costs The $2.7 Trillion Medical Bill: Colonoscopies Explain Why U.S. Leads the World in Health Expenditures (Elisabeth Rosenthal, Health, NY Times, 6-1-13) While the American medical system is famous for expensive drugs and heroic care at the end of life, a more significant factor in the nation’s annual health care bill may be the high price tag of ordinary services.
• Part 2. Pregnancy: Cash on delivery. American Way of Birth, Costliest in the World (Elisabeth Rosenthal, Health, NY Times, 6-30-13). Cash on delivery.
• Part 3. Joint replacement: A trip abroad. In Need of a New Hip, but Priced Out of the U.S. (Elisabeth Rosenthal, NY Times, 8-3-13)
• Part 4. Prescriptions. No room to negotiate. The Soaring Cost of a Simple Breath (Elisabeth Rosenthal, NY Times, 10-12-13)
• Part 5. E.R. Visit As Hospital Prices Soar, a Stitch Tops $500 (Elisabeth Rosenthal, NY Times, 12-2-13)
Think the E.R. Is Expensive? Look at How Much It Costs to Get There (Elisabeth Rosenthal, NY Times, 12-5-13) Ambulances, once free, are now generally run as businesses that contribute to America’s escalating medical bills.
• Part 6. Dermatology. The high earners. Patients’ Costs Skyrocket; Specialists’ Incomes Soar (Elisabeth Rosenthal, NY Times, 1-18-13) Check out reader responses on three questions: In your experience, do doctors and patients discuss cost as part of care, and, if so, how does that affect the doctor-patient relationship? When do costs influence care? If you are a provider, how have the financial incentives of the current payment system in the United States affected your practice? If you are a provider, how have the financial incentives of the current payment system in the United States affected your practice?
• Part 7. Chronic illnesses. Even Small Medical Advances Can Mean Big Jumps in Bills (Elisabeth Rosenthal, NY Times, 4-5-13)
Health Care’s Road to Ruin (Elisabeth Rosenthal, NY Times, 12-21-13) There are ways to lower costs. Is there the will?

Why do drug companies charge so much? Because they can. (Marcia Angell, Washington Post, 9-25-15) "Unlike every other advanced country, the United States permits drug companies to charge patients whatever they choose. ...Drug companies say high prices are necessary to cover their research and development costs" but most drugs "are invented not by the companies that sell them now but by someone else. Then, like big fish swallowing little fish, larger companies either buy small firms outright or license promising drugs from them. Very often, the original discovery occurs in a university lab with public funding from the National Institutes of Health (NIH), then licensed to a start-up company partly owned by the university and then to a large company. There is very little innovation at the big drug firms. Instead, their major creative output is trivial variations of top-selling medications that are already on the market (called “me-too drugs”), to cash in with treatments just different enough to justify new patents." Pharmaceutical companies are among the most profitable and "they spend more on marketing and administration than on R&D." ... "Congress has blocked Medicare from negotiating the price of drugs or creating a formulary for patients. It’s time that we, too, move to stop price-gouging by the pharmaceutical industry — even when no one notices."

CVS Health Is Sued Over 'Clawbacks' of Prescription Drug Co-Pays (Jef Feeley and Jared S Hopkins, Bloomberg, 8-9-17) CVS Health Corp. was sued by a California woman who accused the drugstore operator of charging customers co-payments for certain prescription drugs that exceed the cost of medicines. CVS, the largest U.S. pharmacy chain, overbilled consumers who used insurance to pay for some generic drugs and wrongfully hid the fact that the medicines’ cash price was cheaper. Woman says she paid $166 for medicine that actually cost $92. Chains worked with benefit managers on billings, suits say.

When the Patient Is a Gold Mine: The Trouble With Rare-Disease Drugs (Benjamin Elgin, Doni Bloomfield, and Caroline Chen, BloombergBusinessWeek, 3-24-17) With a flagship treatment that helps fewer than 11,000 people, how is Alexion making so much money? In the U.S., an orphan drug is defined as one that treats a disease affecting fewer than 200,000 people in the country. Orphan drugs accounted for a disproportionate share, 41 percent, of all medications brought to market in 2014. These drugs have helped millions of people...but have also caused a seismic shift in treatment costs....A fraction of a teaspoon of Soliris, administered in a single 35-minute treatment, costs more than $18,000, and patients might need 26 treatments a year for the rest of their lives. With this single drug accounting for almost all its revenue, Alexion has created enormous wealth out of an estimated 11,000 customers." This is an ugly story about drug company marketing practices".... History: "To address neglected research areas, Congress in 1983 passed the Orphan Drug Act, which gave drugmakers federal grants, tax incentives, and seven years of marketing exclusivity for new rare-disease treatments (vs. three to five years of exclusivity for a more common new drug). In the ensuing 34 years, more than 600 orphan drugs have been approved in the U.S., compared with 10 in the decade before the law was passed. But government-protected monopolies, combined with desperate patients, led to today’s prices." Do your homework. Read this article.
Reducing Medical Costs Where to start.
Collusion between Hollywood script writers and pharmaceutical companies isn’t new. Nor is the call to regulate it. (Mary Chris Jaklevic, HealthNewsReview.org, 6-1-17) 'Plenty has been written about a recent “disease awareness” plotline in ABC’s General Hospital that indirectly promoted ruxolitinib, the only prescription drug approved to treat a rare blood cancer called polycythemia vera (PV). The drug’s manufacturer, Incyte, said in a news release that it “teamed up” with the show and actress Finola Hughes, whose character was diagnosed with PV, “to raise awareness and inspire patients and caregivers impacted by these under-recognized blood cancers.”
non-branded “disease awareness” campaigns aren’t regulated like traditional direct-to-consumer ads, which are subject to explicit requirements including balanced portrayals of a drug’s efficacy and risks. Coverage highlighted an opinion piece in the Journal of the American Medical Association, in which oncologists Vinay Prasad and Sham Mailankody said disease awareness efforts “can lead to unintended consequences, including wasteful diagnostic testing, overdiagnosis, and inappropriate therapy.” They said “attempts may be necessary to regulate disease awareness promotions” including “collaboration and input from the FDA regarding the content of advertisements or disease awareness campaigns.”
What Broke My Father's Heart by Katy Butler (NY Times Magazine, 6-18-10). How putting in a pacemaker wrecked a family's life. Katy Butler's father drifted into what nurses call “the dwindles”: not sick enough to qualify for hospice care, but sick enough to never get better. She writes, of her parents: "I watched them lose control of their lives to a set of perverse financial incentives — for cardiologists, hospitals and especially the manufacturers of advanced medical devices — skewed to promote maximum treatment. At a point hard to precisely define, they stopped being beneficiaries of the war on sudden death and became its victims." Do read the whole article. Here's another excerpt: "Had we been at the Mayo Clinic — where doctors are salaried, medical records are electronically organized and care is coordinated by a single doctor — things might have turned out differently. But Middletown is part of the fee-for-service medical economy. Doctors peddle their wares on a piecework basis; communication among them is haphazard; thinking is often short term; nobody makes money when medical interventions are declined; and nobody is in charge except the marketplace." You may also want to read Knocking on Heaven's Door: The Path to a Better Way of Death

Pharmaceutical Product Hopping: A Proposed Framework For Antitrust Analysis (Michael Carrier and Steve Shadowen, Health Affairs blog, 6-1-17) One "reason for high prices has flown under the radar. When drug companies reformulate their product, switching from one version of a drug to another, the price doesn’t dramatically increase. Instead, it stays at a high level for longer than it otherwise would have without the switch. Although more difficult to discern than a price spike, this practice, when undertaken to prevent generic market entry, can result in the unjustified continuation of monopoly pricing, burdening patients, the government, and the health care system as a whole."
The Healthcare Industry and the USSR (YouTube video, Jeanne Pinder's wonderful talk, Ignite Health Foo 2013). See also Taking the mystery out of health care prices and the wonderful stories about Clear Health Prices.
Bitter Pill: Why Medical Bills Are Killing Us (Steven Brill, Time Magazine, Health & Family, 2-10-13). In the longest article Time has published, Brill tries to answer the question: “Why exactly are the bills so high?” Long but worth reading, on the outrageously excessive prices hospitals, pharmaceutical companies, doctors, and equipment manufacturers charge and how Medicare and other insurers deal with it, or not. See Steven Brill’s 26,000-word health-care story, in one sentence (Sarah Kliff, Wonkblog, Washington Post, 2-23-12). (The sentence: "The American health-care system does not use rate-setting." (In other countries, which set rates for what both private and public plans can charge for various procedures, health-care costs have not risen so much.) And don't ignore the Comments.

Equitable Access to Care — How the United States Ranks Internationally (Karen Davis and Jeromie Ballreich, New England Journal of Medicine, 10-23-14) "Notwithstanding Americans' impression that other countries ration care, for lower-income adults, obtaining timely primary care is a bigger problem in the United States than in other industrialized countries... even Americans with above-average income...are more likely than adults with above-average income elsewhere to report that during the past year, costs kept them from visiting the doctor for medical problems, from filling prescriptions or taking all recommended doses, or from getting recommended tests, treatment, or follow-up."

Patenting the PKU Test — Federally Funded Research and Intellectual Property (Diane B. Paul, New England Journal of Medicine, 8-29-13). "Norms governing what should count as a freely available public good have fundamentally changed since 1965. The shift began in the 1970s, when an 'economic competitiveness agenda,' prompted by the oil crisis and concern about Japanese competition, began displacing narratives of science's role in fighting communism and defeating disease." " The Bayh–Dole Act was followed by other bills promoting the commercialization of publicly funded research, a phenomenon soon exported worldwide. Aggressive commercialization of university research has since become the norm, with universities embracing patenting as an efficient way to transform knowledge into products, generate new income sources, recoup product-development costs, and motivate scientists." " The key principles debated in the Guthrie case underlie the conflicts that remain to this day between political and economic imperatives to commercialize research and the social and moral imperatives to promote public health."

Money-Driven Medicine: The Real Reason Health Care Costs So Much by Maggie Mahar. Among other points made: Today's market-driven medical system emerged over the past century thanks to trends that gradually stripped power from doctors and gave it to corporations, turning patients into profit centers.

5 Things I Didn't Know About Health Care (Until I Got Sick) (C. Coville, Cracked, 3-11-14) Three of them: The medical system is outdated, it doesn't allow for mental limits in the sick, if it doesn't understand your condition it will think you are crazy. "Sick people with potentially curable illnesses are shunted around between separate specialists who don't pay attention to anything except the body part they've been trained to focus on, a problem known as care fragmentation... Because of care fragmentation, sick people often have to coordinate their own care if they want to get treated correctly. But that's not as easy as it sounds, because ..."

Lies, Damned Lies, and Medical Science (David H. Freeman, The Atlantic, 10-4-10). Much of what medical researchers conclude in their studies is misleading, exaggerated, or flat-out wrong. So why are doctors—to a striking extent—still drawing upon misinformation in their everyday practice? Dr. John Ioannidis has spent his career challenging his peers by exposing their bad science.

Home Alone: Family Caregivers Providing Complex Chronic Care (Susan C. Reinhard, Carole Levine, and Sarah Samis, AARP's Public Policy Institute, Oct. 2012) "In a fragmented health care system, it is often difficult to pinpoint individual or institutional responsibility for action. As a result, people with chronic conditions and their family caregivers too often move from the care of one professional to another or from one care setting to another without a clear sense of who is in charge. All too often, no one is in charge. Expecting family caregivers to perform the medical/nursing tasks described in this report without substantial professional involvement is unrealistic and unacceptable."

The Diseases We Spend Our Health Dollars On (Drew Altman, WSJ, 3-3-15) An excellent chart breaking down our health spending dollar by disease. "The BEA found that spending for common illnesses such as a cold or strep throat grew faster than anything else over the 10-year period. Then came spending to treat endocrine disorders such as high cholesterol or diabetes. The bureau also found that the cost of treatment–-a combination of price and the complexity of services and technology used in treatment–-was the main culprit behind spending increases for diseases, not the number of cases treated."

The Thousand-Dollar Pap Smear (Cheryl Bettigole, New England Journal of Medicine, 10-17-13). "The first time a patient called me to say that she'd been billed more than $600 for her Pap smear, I was sure it was a mistake. The second time, I was less sure, and these days I am no longer surprised to find laboratory charges of $1,000 or more for a test that until recently cost only $20 or $30. ... we physicians and our staff are responsible for ordering these unnecessary tests and hence responsible for the huge bills our patients are receiving. Yet we are not doing this alone. Laboratories have learned that one easy way to increase revenue is to make it easy for clinicians to order more tests" Do read this one!

Treating vs. Healing: Understanding What Wellness Means to Patients (Johnny Hourmozoi,, Pacific Standard, 3-31-15) For those accustomed to Western medicine, it may seem crazy to refuse doctor-prescribed medicine. But to truly be a healer, doctors must understand what makes a patient feel well. "Evidence is the currency of contemporary Western medicine... In Iran, the emphasis is placed on healing, a concept intimately tied to notions of spirit and comfort—not morbidity and mortality."

How We Do Harm: A Doctor Breaks Ranks About Being Sick in America, a book by Otis Webb Brawley and Paul Goldberg, exposes the underbelly of healthcare today—the overtreatment of the rich, the undertreatment of the poor, the financial conflicts of interest that determine the care that physicians’ provide, insurance companies that don’t demand the best (or even the least expensive) care, and pharmaceutical companies concerned with selling drugs, regardless of whether they improve health or do harm.

Overtreated: Why Too Much Medicine Is Making Us Sicker and Poorer by Shannon Brownlee. Our health care is staggeringly expensive, yet one in six Americans has no health insurance. We have some of the most skilled physicians in the world, yet one hundred thousand patients die each year from medical errors. Brownlee dissects what she calls “the medical-industrial complex” and lays bare the backward economic incentives embedded in our system.

Medicine’s Top Earners Are Not the M.D.s (Elisabeth Rosenthal, NY Times, 5-17-13) "The biggest bucks are currently earned not through the delivery of care, but from overseeing the business of medicine. The base pay of insurance executives, hospital executives and even hospital administrators often far outstrips doctors’ salaries."

U.S. Health Care Lags Worldwide for Those Over 65 (Paula Span, Caring and Coping, NY Times, 12-12-14) A Commonwealth Fund report card comparing health care in industrialized countries since 1998 shows "mortifying lapses and problems" in the U.S., "despite spending more on health care than any other country in the world." The U.S. Medicare system provides "excellent coverage" overall, provides good coverage for seniors, but what Australia, Canada, France, Germany, the Netherlands, New Zealand, Norway, Sweden, Switzerland and the United Kingdom "share (aside from doing a better job for their elders than the United States, at lower cost) is that their systems cover all ages. Their elders are less likely to arrive at 65 trying to catch up after years without adequate medical care....Before they became Medicare-eligible, American seniors may have forgone preventive treatments or let conditions worsen because they couldn’t afford care."

How much are U.S. doctors worth? Depends who you ask (Harris Meyer, Modern Healthcare 6-24-14). High U.S. physician pay is only a minor component of sky-high U.S. healthcare costs (and U.S. doctors face a higher cost of medical education and medical liability premiums than doctors elsewhere). "And other professionals in healthcare, notably hospital, health plan and pharmaceutical executives, generally make even more money."

Why Are American Health Care Costs So High? (John Green on YouTube, 8-20-13) A little hyper, but worth a listen.

Hospitals Fail To Protect Nursing Staff From Becoming Patients (Daniel Zwerdling, All Things Considered, NPR, 2-4-15) Most hospitals have not taken aggressive action to protect the nursing staff from back injuries from lifting patients. Only slowly, reluctantly are hospitals adopting patient-lifting equipment. (Part 1 of a series on injured nurses.) Part 2: Even 'Proper' Technique Exposes Nurses' Spines To Dangerous Forces (2-11-15). And Part 3: Hospital To Nurses: Your Injuries Are Not Our Problem

Cost of medical school: USA vs France (Kevin Pho, KevinMD.com, 5-8-14) Visuals show dramatic differences. "If you want to pay me like a French doctor, also give me the French cost of medical school and the French medical malpractice system."

The Malpractice Mess (Atul Gawande, Annals of Medicine, New Yorker, 11-14-05) Who pays the price when patients sue doctors? "General surgeons pay anywhere from thirty thousand to two hundred thousand dollars a year in malpractice-insurance premiums, depending on the litigation climate of the state they work in; neurosurgeons and obstetricians pay upward of fifty per cent more." Paying into an insurance fund for those actually harmed by doctors might mean fewer mammoth, random windfalls but under the current system in America most of those who are harmed are not compensated (except the lawyers).

When Health Costs Harm Your Credit (Elisabeth Rosenthal, NY Times, 3-8-14)

Benefits Questioned in Tax Breaks for Nonprofit Hospitals (Elisabeth Rosenthal, NY Times, 12-17-13) Cities still reeling from the recession are challenging the billions of dollars in tax breaks granted to the nation’s nonprofit hospitals.

When Doctors Sell Out, Hospitals Cash In (Community Oncology Alliance, 7-8-13) Everything was the same about Mike Rosenberg’s routine visit to Atlanta Cancer Care in February – everything, that is, but the bill. Rosenberg went to the same office and saw the same staff to get the same blood work and the same medication he gets every month. But the cost difference was remarkable: Rosenberg’s out-of-pocket charge increased from $20 to $212. What his insurer had to pay exploded from $2,735 to $5,661.

New Analysis Shows Many 340B Hospitals Provide Minimal Charity Care; Small Percentage of 340B Hospitals Provide More (Community Oncology Alliance, 3-25-14)

Health Plans Seek Leverage When Physicians Submit Extremely High Bills (Joseph Burns, Managed Care, Aug 2011). One doctor demands $39,000 for a child’s surgery; another bills $56,890 for a bedside consultation. Aetna sued several New Jersey physicians over medical bills for out-of-network care, bills Aetna said were unconscionable.

How Doctors Are Paid Now, And Why It Has to Change (John Carroll, Managed Care, Dec. 2007). Everyone knows about the perverse incentive of fee-for-service medicine, but that hasn’t had much effect on its use. warped the way medicine is practiced, devaluing vital services such as doctor-patient discussions while pumping up rewards for expensive procedures and bigger volumes.

Patents, Profits, and the American People — The Bayh–Dole Act of 1980 (Howard Markel, N Engl J Med 2013; 369:794-796, August 29, 2013, DOI: 10.1056/NEJMp1306553). It's time for Congress to recalibrate Bayh–Dole. "When the Bayh–Dole Act was written, its aim was primarily to stimulate economic growth by more efficiently mining the untapped scientific riches of hospitals, laboratories, and universities. Much has changed since then.... Profits and patents can be powerful incentives for scientists, businesspeople, and universities, but new and ongoing risks — including high prices that limit access to lifesaving technologies, reduced sharing of scientific data, marked shifts of focus from basic to applied research, and conflicts of interests for doctors and academic medical centers — should be mitigated or averted through revisions of the law. All Americans should be able to share in the bounties of federally funded biomedical research."

Data uncover nation’s top Medicare billers ( Peter Whoriskey, Dan Keating and Lena H. Sun, Washington Post, 4-9-14). "Jonathan S. Skinner, a Dartmouth economist..."there are people who are operating in the gray area of health care who are causing Medicare to spend enormous amounts on health care that may be harmful to their patients.'”'

The top 10 Medicare billers explain why they charged $121M in one year (Jason Millan, Wonkblog, 4-9-14) "Some doctors said they were just passing through the payment to drug companies. But the Medicare payment system also incentivizes physicians to choose more expensive drugs, since they’re reimbursed for the average price of the drug plus 6 percent." See comments section for links to articles about pending big changes in Medicare payments to providers.

Manufactured Medicare outrage (Charles Lane, Opinion, Wash Post, 3-18-15) "Last fall, the Department of Health and Human Services released a comprehensive analysis showing that MA costs grew faster than they would have under fee-for-service between 2004 and 2013 — and that only upcoding, not patient demographics or other neutral factors, could explain this.

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Drugs, Big Pharma, conflicts of interest, and why U.S. patients pay too much for medication

by Pat McNees (updated 10-14-21) 
Highlights from below:  

• "Republican candidates blame skyrocketing drug costs on over-regulation and a few drug companies' 'pure profiteering,' but don't say that Medicare should negotiate drug prices or that the government should limit drug maker’s profits, steps that might dramatically shake up the marketplace....they’re not even making modest suggestions to stem rising costs, focusing instead on hammering a few headline-making companies that they portray as bad actors."

• "High cancer drug prices are harming patients because either you come up with the money, or you die."
• Polls show high drug costs as "voters' No. 1 health concern," but the candidates are "caught in the box of Republican free market orthodoxy — and also, of long-standing relationships with the pharmaceutical industry, a lobbying powerhouse on the Hill."
• In response to legislation requiring pharmaceutical sales reps promoting medicines at doctors' offices simply to reveal a price, pharma lobbyists were brought in to fight legislation requiring price transparency.
• It doesn't matter if a cheaper (often generic) version may be available if doctors don't pay attention to costs and consumers believe the more expensive drug is probably more effective. Moreover, doctors who do pay attention to costs have an incentive to prescribe the more expensive version of a drug, not the generic version. And pharmacies don't always pass along the declining cost of generic drugs to consumers.
• Provide "greater transparency in how drugs are priced, and how the money flows through the system. Pharmacy benefit managers have outsized power and take too much money from the system."
How U.S. Health Care Became Big Business (Terry Gross, Fresh Air, 4-10-17, interviews Elisabeth Rosenthal, author of An American Sickness: How Healthcare Became Big Business and How You Can Take It Back). "Health care is a trillion-dollar industry in America, but are we getting what we pay for? Dr. Elisabeth Rosenthal, a medical journalist who formerly worked as a medical doctor, warns that the existing system too often focuses on financial incentives over health or science. "We've trusted a lot of our health care to for-profit businesses and it's their job, frankly, to make profit." Rosenthal's new book, An American Sickness, examines the deeply rooted problems of the existing health-care system and also offers suggestions for a way forward. She notes that under the current system, it's far more lucrative to provide a lifetime of treatments than a cure. She talks about what consolidation of hospitals is doing to the price of care, about the ways the health-care industry stands to profit more from lifetime treatment than it does from curing disease, about how prices will rise to whatever the market will bear, about how to decipher coded medical bills, and about why we must learn to initiate conversations early on with doctors about fees and medical bills. She also talks about getting charged for "drive-by doctors" brought in by the hospital or primary doctor.

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Vox: EpiPen’s 400 Percent Price Hike Tells Us A Lot About What’s Wrong With American Health Care (Sarah Cliff, Vox, 8-23-16) The story of Mylan’s giant EpiPen price increase is, more fundamentally, a story about America's unique drug pricing policies. We are the only developed nation that lets drugmakers set their own prices, maximizing profits the same way sellers of chairs, mugs, shoes, or any other manufactured goods would. In Europe, Canada, and Australia, governments view the market for cures as essentially uncompetitive and set the price as part of a bureaucratic process, similar to how electricity or water are priced in regulated US utility markets.
Price of Snakebite Drug Is Sky High, But New Competitor Unlikely to Lower Costs (Carmen Heredia Rodriguez, KHN, 8-8-19) In a case reported by Kaiser Health News and NPR (a 9-year-old hiker snakebitten at dusk on a nature trail), an Indiana hospital last summer charged nearly $68,000 for four vials of CroFab. CroFab faces competition from a snake antivenin called Anavip. But few experts who study drug laws and drug prices expect this competition to reduce the cost for patients. Legal wrangling, the advantageous use of the patent system and the regulatory hurdles in creating cheaper alternative drugs stymie any serious price competition. Indeed, the antivenin is a case study of why drug prices are so high. Head-to-head competition between brand-name medicines may not meaningfully reduce prices. “When we allow a system of perverse incentives to flourish, this is the result we get,” said Robin Feldman, a professor at the UC Hastings College of the Law in San Francisco who specializes in pharmacy law.

Anatomy of a 97,000% drug price hike: One family's fight to save their son (Wayne Drash, CNN, 6-29-18) At 7 months, Trevor was diagnosed with infantile spasms, a rare and catastrophic form of epilepsy. The diagnosis was devastating, forcing the family to cancel an overseas move and fight for their son's life. It also thrust them into the unregulated world of America's drug prices. Trevor's doctors said he needed a "miracle drug" known as Acthar. But between Trevor's birth and diagnosis, the price of the drug had shot up from $1,600 a vial to more than $23,000 a vial -- making him one of the first children caught up in one of medicine's most controversial price hikes. Trevor would need at least five vials....Questcor Pharmaceuticals had paid a mere $100,000 for the rights to the drug in 2001. The company first raised the price from $40 to $750 a vial shortly after acquiring it. The price doubled over the next few years. Then, on August 27, 2007, the price shot up overnight from $1,600 to $23,000 a vial. The hike was so dramatic that the Epilepsy Foundation, the American Epilepsy Society, the American Academy of Neurology and the National Association of Epilepsy Centers fired off a letter demanding answers.'
• Step therapy ('fail-first" drug policies allow health insurance to practice medicine. Designed to keep insurance costs down, step therapy ("fail first") protocols insist that a patient start with a traditional lower-cost drug and advance to a newer, more expensive drug only if the first drug fails to produce the desired results. For new drugs that are clearly more effective, this means doctors and patients have to jump through hoops to get patient to the more effective drug, in order to get insurance coverage."
• 'It’s sort of embedded in the health care system that the price is never the price, unless you’re a cash-paying customer,' Mr. Fein said. 'And in that case, we soak the poor.'”'
• A Pro Publica investigation shows that many doctors are being paid by the same drug companies whose medicines they prescribe.

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• The public ranks the pharmaceutical industry right between the oil industry and insurance companies in overall favorability."
• Why do drug companies charge so much? Because they can. Because they've got the politicians wrapped around their little fingers.

Here are SOME of the stories about escalating U.S. drug costs that could be fixed, if politicians did what they should:
Drug Trade Group Quietly Spends ‘Dark Money’ to Sway Policy and Voters (Jay Hancock, KHN and New York Times, 7-30-18) "In 2010, before the Affordable Care Act was passed by Congress, the pharmaceutical industry’s top lobbying group was a very public supporter of the measure. It even helped fund a multimillion-dollar TV ad campaign backing passage of the law." Last year it ostensibly stayed out of the fray when Republicans mounted effort to repeal and replace the law. But it provided financial support of another group, the American Action Network (AAN), "which was heavily involved in that effort to put an end to the ACA, often referred to as Obamacare, spending an estimated $10 million on an ad campaign designed to build voter support for its elimination....PhRMA was one of AAN’s biggest donors the previous year, giving it $6.1 million, federal regulatory filings show. And PhRMA had a substantial interest in the outcome of the repeal efforts. Among other actions, the GOP-backed health bill would have eliminated a federal fee paid by pharmaceutical companies, one estimated at $28 billion over a decade....The conservative-leaning AAN has become one of the most prominent nonprofits for funneling “dark money” — difficult-to-trace funds behind TV ads, phone calls, grass-roots organizing and other investments used to influence politics. Such groups have thrived since the Supreme Court’s Citizens United decision in 2010, which loosened rules for corporate political spending, and amid what critics say is nonexistent policing of remaining rules by the IRS."
How Scientific Is Modern Medicine Really? (Dana Ullman, HuffPost blog, 6-20-10, updated 12-6-17)The British Medical Journal’s “Clinical Evidence” reviewed approximately 2,500 treatments and found:

• 13 percent were found to be beneficial

• 23 percent were likely to be beneficial

• Eight percent were as likely to be harmful as beneficial

• Six percent were unlikely to be beneficial

• Four percent were likely to be harmful or ineffective.

• 46 percent were unknown as to whether they were efficacious or harmful.

       'A survey in England found that 90 percent of infants were prescribed drugs that were not tested for safety or efficacy in infants. There is almost a 350 percent increase in adverse drug reactions in children prescribed an off-label drug than children who were prescribed a drug that had been tested for safety and efficacy.'Doctors today commonly assert that they practice “scientific medicine,” and patients think that the medical treatments they receive are “scientifically proven.” However, this ideal is a dream, not reality, and a clever and profitable marketing ruse, not fact.'
Eyes Fixed On California As Governor Ponders Inking Drug Price Transparency Bill (April Dembosky, KQED, NPR, and Kaiser Health News, 10-6-17) California bill would compel drug companies to justify price hikes. Insurers, hospitals and health advocates are waiting for Gov. Jerry Brown to deal the drug lobby a rare defeat, by signing legislation that would force pharmaceutical companies to justify big price hikes on drugs in California. The bill would require drug companies to give California 60 days’ notice to state agencies and health insurers anytime they plan to raise the price of a drug by 16 percent or more over two years. They would also have to explain why the increases are necessary. In addition, health insurers would have to report what percentage of premium increases are caused by drug spending. Drugmakers spent $16.8 million on lobbying from January 2015 through the first half of this year to kill an array of drug legislation in California, according to data from the secretary of state’s office.

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FDA Repays Industry by Rushing Risky Drugs to Market (Caroline Chen, ProPublica, 6-26-18) As pharma companies underwrite three-fourths of the FDA’s budget for scientific reviews, the agency is increasingly fast-tracking expensive drugs with significant side effects and unproven health benefits. Example? Patients on Uloric, a gout drug, suffered more heart attacks, strokes and heart failure in two out of three trials than did their counterparts on standard or no medication. And since the FDA fast-tracked approval of Nuplazid (a drug for hallucinations and delusions associated with Parkinson’s disease) and it went on the market in 2016 at a price of $24,000 a year, there have been 6,800 reports of adverse events for patients on the drug, including 887 deaths as of this past March 31.
As States Target High Drug Prices, Pharma Targets State Lawmakers (Jay Hancock and Shefali Luthra, Kaiser Health News, 2-1-18) State lawmakers are likely to consider drug-price transparency bills this year in Connecticut, Michigan, Oregon, Washington and New Jersey, to name just a few. Many of the measures are similar to a new California law that requires drugmakers to justify big price increases. (To fight that law, the industry hired 45 lobbying firms.) PhRMA set the stage in 2016 by establishing a group that ultimately spent $110 million to defeat a high-profile California ballot initiative requiring state agencies to pay no more for drugs than does the federal Department of Veterans Affairs. A PhRMA-linked group spent more than $50 million to defeat a similar ballot measure last year in Ohio. PhRMA wrote checks to hundreds of legislative candidates and political action committees in dozens of states in 2016, newly available IRS filings show. Drug prices are “something that’s completely out of control,” said Kirk Talbot, chairman of the House insurance committee, adding that he gets constituent requests to rein in prescription medicine prices. "PhRMA argued that informing doctors of wholesale drug prices is irrelevant to patients. What matters is consumers’ out-of-pocket payment, not the rest of the cost that’s often picked up by insurance, they said." But high drug prices are a large part of the reason insurance is increasing in cost.
• In response to legislation requiring pharmaceutical sales reps promoting medicines at doctors’ offices simply to reveal a price, pharma lobbyists were brought in to fight legislation requiring price transparency.

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Climbing Cost of Decades-Old Drugs Threatens to Break Medicaid Bank (Sydney Lupkin, KHN, 8-14-17) Skyrocketing price tags for new drugs to treat rare diseases have stoked outrage nationwide. But hundreds of old, commonly used drugs cost the Medicaid program billions of extra dollars in 2016 vs. 2015, a Kaiser Health News data analysis shows. Eighty of the drugs — some generic and some still carrying brand names — proved more than two decades old. Even after a medicine has gone generic, the branded version often remains on the market. Medicaid recipients might choose to purchase it because they’re brand loyalists or because state laws prevent pharmacists from automatically substituting generics. Even after a medicine has gone generic, the branded version often remains on the market. Medicaid recipients might choose to purchase it because they’re brand loyalists or because state laws prevent pharmacists from automatically substituting generics.
Collusion or Coincidence: The Making of a Drug Shortage (David Belk, MD, Huff Post, 8-18-17) Multiple pharmaceutical companies stopped producing a commonly prescribed blood pressure medication (the beta blocker atenolol) at the same time and for no apparent reason. Was this the result of collusion or merely a coincidence? Was this an effort to get patients onto the newer, higher priced nongeneric drug?
20 States Accuse Generic Drug Companies of Price Fixing (Katie Thomas, NY Times, 12-15-16) The suit’s focus is two drugs, a delayed-release form of the antibiotic treatment doxycycline hyclate, and glyburide, a commonly used diabetes drug. The price of doxycycline has surged in recent years, and it was singled out by members of Congress and others as a prime example of unexplained price increases for generic drugs. See also News of Charges in Price-Fixing Inquiry Sends Pharmaceuticals Tumbling (Katie Thomas, NY Times, 11-3-16) "Drug companies have come under intense scrutiny over the last two years over the prices of their drugs, particularly old drugs that have lost their patent protection but have, in some cases, jumped in price. In the case of doxycycline, an antibiotic, for example, the price went from $20 a bottle in October 2013 to $1,849 by April 2014, according to members of Congress who are investigating drug prices. The same report found that the price of a pill of digoxin, an old heart medicine, rose to $1.10 in 2014 from 11 cents in 2012."
Scroll down for stories about EpiPen price gouging.
Middlemen Who Save $$ On Medicines — But Maybe Not For You ( Francis Ying, Julie Appleby, Stephanie Stapleton, Kaiser Health News, 8-2-17) Pharmacy benefit managers — companies that are often unnoticed and even less understood by most consumers — hold an important place in the prescription drug-pricing pipeline. In this video, Kaiser Health News examines the role of PBMs in the drug pricing pipeline -- detailing the emergence of these multimillion-dollar corporations and the impact they have on medication costs and patients’ access to these treatments. The big three PBMs are: CVS Caremark, Optum RX, and Express Scripts. They make money and get rebates, may favor the meds with the biggest rebates (for them, not us), and apparently do not pass savings on to consumers.

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Report: Here's What The Feds Can Do To Cut Drug Prices (Alison Kodjak, Shots, NPR, 11-30-17) Drug prices are too high, and we had better do something about it. That is the nutshell conclusion of a 201-page report from the National Academies of Sciences, Engineering and Medicine. The independent advisory group's report lists dozens of suggestions for what U.S. officials could do to rein in those rising prices. Many have been tossed around Washington for years. And given the power of the pharmaceutical lobby — it has spent more than $200 million on lobbying so far this year, according to the Center for Responsive Politics — few of them are likely to be implemented soon. Key recommendations: Allow the federal government to negotiate drug prices and refuse to cover some expensive medications. Speed the approval of generics and biosimilars and ensure patients have access. Shed light on who pays what for prescription drugs. Discourage those endless ads pushing prescription drugs and stop giving patients coupons to try medication. Cut the cost to consumers for their prescription drugs. Take away incentives for doctors to administer high-cost drugs. But even in the dissent, there was some agreements, specifically in the need for greater transparency in how drugs are priced, and how the money flows through the system. The dissenters suggest that pharmacy benefit managers have outsized power and take too much money from the system. (But do read the whole article!)
'Talk about an unholy alliance': Lawyers, doctors and pharmacies (William Bender, Philly.com, Philadelphia Inquirer, 9-22-17) Three partners at Pond Lehocky, the biggest law firm in town for workers’ compensation case, "and its chief financial officer are majority owners of a mail-order pharmacy in the Philadelphia suburbs that has teamed up with a secretive network of doctors that prescribes unproven and exorbitantly priced pain creams to injured workers — some creams costing more than $4,000 per tube. Pond Lehocky sends clients to preferred doctors and asks them to send those new patients to the law firm’s pharmacy, Workers First....Some of the doctors sending patients to Workers First also own a piece of the pharmacy, enabling them to make money from both patient care and the prescriptions....Legal and medical ethicists say breaking down the walls among lawyers, doctors, and pharmacists can lead to conflicts of interest and create a financial incentive to prescribe the costliest drugs — whether or not they are medically appropriate — or to prolong workers’ comp legal disputes to boost revenues....These sorts of doctor- and lawyer-owned pharmacies are largely unknown outside of the local workers’ comp industry and are not fully understood even within legal and medical communities, because the lawyers and physicians behind them have kept a low profile or sought to conceal their ownership."

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Flurry of Federal and State Probes Target Insulin Drugmakers and Pharma Middlemen (Sarah Jane Tribble, Kaiser Health News, 10-30-17) 'With the price of a crucial diabetes drug skyrocketing, at least five states and a federal prosecutor are demanding information from insulin manufacturers and the pharmaceutical industry’s financial middlemen, seeking answers about their business relationships and the soaring price of diabetes drugs....Insulin makers Eli Lilly, Novo Nordisk, Sanofi and top pharmacy benefit manager CVS Health are targets in the state investigations. Several of the financial filings note that the state and federal prosecutors want information regarding specific insulins for specific dates in relation to “trade practices.” They appear to be looking into potentially anti-competitive business dealings that critics have leveled at this more than $20 billion niche market of the pharmaceutical industry...These include whether drugmakers and middlemen in the supply chain have allowed prices to escalate in order to increase their profits. At the same time, prominent class-action lawyers are bringing suits on behalf of patients. At the same time, prominent class-action lawyers are bringing suits on behalf of patients. Steve Berman, an attorney best known for winning a multibillion-dollar settlement from the tobacco industry, alleged collusion and said it was time to break up the “insulin racket.” The price of insulin — a lifesaving drug — has reached record highs as Eli Lilly, Novo Nordisk and Sanofi raised prices more than 240 percent over the past decade to often over $300 a vial today, with price rises frequently in lockstep...in the final months of 2007, Sanofi’s Lantus cost $88.20 per vial and Novo Nordisk’s Levemir $90.30 a vial. Today, after increasing in tandem over the years, Lantus costs $307.20 per vial and Levemir runs $322.80 for the same amount, based on average wholesale prices."
Timeline: Insulin Market Under Scrutiny (Sarah Jane Tribble, KHN, 10-30-17)
Drug Charity May Shutter After U.S. Faults Pharma Influence (Robert Langreth and Benjamin Elgin, Bloomberg, 11-29-17) Caring Voice Coalition, a nonprofit that takes money from drug companies to help patients pay for medicines, may close since an Office of Inspector General citation finds that the organization improperly allowed donors to influence operations and the use of patient data. The medical charity, which received hundreds of millions of dollars from pharmaceutical companies, lost a crucial stamp of approval from the U.S. government, after allowing its donors improper influence over how the nonprofit was run. For the last decade, the Mechanicsville, Virginia-based foundation has been one of the biggest patient assistance charities in the U.S. It helps patients afford expensive drugs by funding health insurance co-payments that can otherwise total more than $10,000 a year. Without the charity, funded almost entirely by drugmakers, many patients might not be able to afford life-saving medicine.
Big Pharma Spends on Share Buybacks, but R&D? Not So Much (Gretchen Morgensen, Fair Game, NY Times, 7-14-17) A new academic study reveals that big pharmaceutical companies have spent more on share buybacks and dividends in a recent 10-year period than they did on research and development. Many big pharmaceutical companies are living off patents that are decades-old and have little to show in the way of new blockbuster drugs. But their share buybacks and dividend payments inoculate them against shareholders who might be concerned about lackluster research and development. “The key cause of high drug prices, restricted access to medicines and stifled innovation, we submit, is a social disease called ‘maximizing shareholder value,’” the study’s authors concluded.

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How U.S. Health Care Became Big Business (Fresh Air, NPR, 4-10-17) Terry Gross interviews Elisabeth Rosenthal, editor of Kaiser Health News and author of a super-important book, An American Sickness: How Healthcare Became Big Business and How You Can Take It Back. Rosenthal explains how health care became big business and how the pricing and billing of medical services, devices and prescription drugs became so complicated even a lot of doctors don't understand it. "But basically if you look at drug prices, for example, there was a miraculous drug called Gleevec which really changed cancer patient's lives when it came out maybe 10, 15 years ago. Now there are many, many kind of copycat versions of Gleevec. We call them in the profession sons of Gleevec. And they're all four or five times more expensive than Gleevec was when it came out. So if you were looking at a world where an economic market worked, you would think, wow, there are 10 of these now so the price should have come down - it hasn't....the ultimate lesson of much of American health care is that prices rise to whatever the market will bear. And another concept that I think is unique to medicine is what economists call sticky pricing, which is a wonderful term. It basically means - and you see this over and over again in the drug sphere and also in the hospital chargemaster sphere - once one drug maker, one hospital, one doctor says hey, we could charge 10,000 for that procedure or that medicine. Maybe it was 5,000 two months ago, but once everyone sees that someone's getting away with charging 10,000, the prices all go up to that sticky ceiling."

Patient assistance charity says U.S. contacted it in probe (Nate Raymond, Reuters, 9-25-17) "A U.S. charity that offers assistance to patients seeking help to cover out-of-pocket drug costs on Monday said it has been contacted in a connection with federal investigation into drugmakers’ financial support of non-profits like itself....Drug companies are prohibited from subsidizing co-payments for patients enrolled in government healthcare programs like Medicare. But companies may donate to non-profits providing co-pay assistance as long as they are independent. Amid increased attention to rising drug prices, concern has arisen that donations from drugmakers to patient-assistance groups may be contributing to price inflation....The U.S. Attorney’s Office also as part of a civil settlement said Aegerion violated a anti-kickback law by funneling funds through PSI to induce Juxtapid purchases by defraying patient’s co-payment obligations for the drug, which eventually cost $330,000 annually....In Aegerion’s case, prosecutors said after the U.S. Food and Drug Administration in 2012 approved Juxtapid for treating high cholesterol in people with a rare genetic disease, Aegerion promoted it for patients who did not have the condition."

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Orphan Drugs: The good, the bad, and the greedy. Important pieces (and videos) on the orphan drug machine, on how pharmaceutical companies are gaming the system, on how the patients with rare diseases have become a gold mine for drug manufacturers, who accept a seven-year monopoly to provide drugs for rare diseases and then milk the system for off-label uses at the premium price afforded by the monopoly.
The Senate bill does nothing to fix America's biggest health care problem (Sarah Kliff, Vox, 6-30-17) The biggest problem in American health care -- prices -- is one that the Republican health care plans won’t really try to solve. To be fair, it’s one that Obamacare didn’t touch, either. Health care prices aren’t part of the American health care debate. But they need to be. Other developed countries use price controls in medicine. The government negotiates with drug companies, device makers, and doctors to set lower prices. The United States does set medical prices for the 50 million elderly Americans who rely on Medicare. The Republican plans put the burden of high prices more squarely on patients
The Complex Math Behind Spiraling Prescription Drug Prices (Katie Thomas, NY Times, 8-24-16) "Many people are covered by health plans with large deductibles that require them to pay the full price of their drugs until they hit their limit, which can be thousands of dollars a year. And more plans are requiring patients who need expensive specialty drugs to contribute a percentage of the list price. Drug companies often help cover patients’ out-of-pocket costs through assistance programs, but not always. So patients who are the sickest and require the most expensive drugs are the most vulnerable to soaring drug prices. 'It’s sort of embedded in the health care system that the price is never the price, unless you’re a cash-paying customer,' Mr. Fein said. 'And in that case, we soak the poor.'”'
Tracking Who Makes Money On A Brand-Name Drug (Julie Appleby, Kaiser Health News, 10-6-16)
A new Parkinson’s drug is a long-acting version of a cheap generic. Should it cost $30,000 a year? (Adam Feuerstein, STAT Plus, 8-25-17)
Sounds Like A Good Idea? Regulating Drug Prices (Julie Rovner and Francis Ying, KHN, 7-11-16

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Waste in Cancer Drugs Costs $3 Billion a Year, a Study Says (Gardiner Harris NY Times, 3-1-16) "The federal Medicare program and private health insurers waste nearly $3 billion every year buying cancer medicines that are thrown out because many drug makers distribute the drugs only in vials that hold too much for most patients, a group of cancer researchers has found. Some of these medicines are distributed in smaller vial sizes in Europe, where governments play a more active role than the United States does in drug pricing and distribution. Where governments play a more active role than the United States does in drug pricing and distribution....“Drug companies are quietly making billions forcing little old ladies to buy enough medicine to treat football players, and regulators have completely missed it,” said Dr. Peter B. Bach, director of the Center for Health Policy and Outcomes at Memorial Sloan Kettering and a co-author of the study. “If we’re ever going to start saving money in health care, this is an obvious place to cut.”... Pfizer and Merck spend just 17 percent of their revenues finding new drugs.
The Orphan Drug Machine (KHN video, 6 minutes)
The Prescribers: Inside the Government's Drug Data (major Pro Publica investigation by Charles Ornstein and colleagues). Stories include Medicare’s Failure to Track Doctors Wastes Billions on Name-Brand Drugs (Charles Ornstein, Tracy Weber and Jennifer LaFleur, 11-18-13); How a Simple Fix to Reduce Aberrant Prescribing Became Not So Simple (Charles Ornstein, 2-10-17); ‘Let the Crime Spree Begin’: How Fraud Flourishes in Medicare’s Drug Plan (Weber and Ornstein, 12-19-13); As Opioid Epidemic Continues, Steps to Curb It Multiply (Ornstein, 5-12-16); Brand-Name Drugs Increase Cost But Not Patient Satisfaction (Ornstein, 11-19-15); An Unintended Side Effect of Transparency (Stephen Engelberg, 5-12-16); and more.

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To Save On Drug Costs, Insurer Wants To Steer You To ‘Preferred’ Pharmacies (Pauline Bartolone, California Healthline, 3-9-17) "Blue Shield of California wants to create “a tiered pharmacy network” in its 2018 small- and large-group plans, according to preliminary proposals the company submitted to the California Department of Managed Health Care (DMHC)...consumers still would have a broad selection of pharmacies, but they would have to choose a “preferred” pharmacy to maintain this year’s copayment amount. Outside of that network, consumers could pay up to $50 more for the same prescription...Advocates with Consumers Union, which hasn’t taken a position on the most recent Blue Shield proposal, say pharmacy networks could create more complexity for lower-income people in an already complicated health insurance system, one that faces more uncertainty under an Obamacare repeal....Imholz said creating economic incentives to steer patients toward network pharmacies could inconvenience the most vulnerable patients. If the preferred pharmacy is farther away, or in a rural area, lower-income patients dependent on public transit could have a harder time reaching the preferred pharmacy..."
Doctors' incentives to prescribe expensive drugs (links to several articles on the subject)

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Behind The EpiPen Monopoly: Lobbying Muscle, Flailing Competition, Tragic Deaths (Pauline Bartolone, Kaiser Health News, 9-8-16) 'Mylan, the company that raked in $1 billion last year for the EpiPen, takes credit for passing “legislation in 48 states” to ensure schools have them. But its political maneuvering is only one reason the company has, in its own words, become “the number one dispensed epinephrine auto-injector.”'...'Indeed, Mylan’s presence in state houses across the country has grown exponentially. The company added lobbyists in 36 states between 2010 and 2014, according to the Center for Public Integrity, outpacing every other U.S. company. And it spent more than $1.3 million lobbying in 16 states since 2012, according to the National Institute on Money in State Politics.' 'The school give-away program brings visibility and credibility to the EpiPen brand, building a consumer base beyond schools. “It’s kind of like the first hit’s for free...”'
The EpiPen, a Case Study in Health System Dysfunction (Aaron E. Carroll, The New Health Care, NY Times, 8-23-16) "Epinephrine isn’t an elective medication. It doesn’t last, so people need to purchase the drug repeatedly. There’s little competition, but there are huge hurdles to enter the market, so a company can raise the price again and again with little pushback. The government encourages the product’s use, but makes no effort to control its cost. Insurance coverage shields some from the expense, allowing higher prices, but leaves those most at-risk most exposed to extreme out-of-pocket outlays. The poor are the most likely to consider going without because they can’t afford it. EpiPens are a perfect example of a health care nightmare. They’re also just a typical example of the dysfunction of the American health care system."
Getting Patients Hooked On An Opioid Overdose Antidote, Then Raising The Price (Shefali Luthra, Kaiser Health News, 1-17-17) First came Martin Shkreli, the brash young pharmaceutical entrepreneur who raised the price for an AIDS treatment by 5,000 percent. Then, Heather Bresch, the CEO of Mylan, who oversaw the price hike for its signature Epi-Pen to more than $600 for a twin-pack, though its active ingredient costs pennies by comparison. Now a small Virginia company called Kaleo is joining their ranks. It makes an injector device that is suddenly in demand because of the nation’s epidemic use of opioids, a class of drugs that includes heavy painkillers and heroin. Called Evzio, it is used to deliver naloxone, a life-saving antidote to overdoses of opioids. Experts say the device’s price surge is way out of step with production costs, and a needless drain on health-care resources. And competition is limited: One of the few consumer-friendly alternatives to Evzio is a nasal spray device for naloxone. (In another Mylan parallel, Kaleo offers coupons to patients with private insurance, so they don’t have any co-pay when they pick up the device.)

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The $4,500 injection to stop heroin overdoses (Shefali Luthra, Kaiser Health News, Business, Washington Post, 1-29-17). "Evzio is used to deliver naloxone, a life-saving antidote to overdoses of opioids. As demand for the product has grown, Kaleo has raised its twin-pack price to $4,500, from $690 in 2014....It’s another auto-injector that delivers an inexpensive medicine. One difference, though, is that Evzio talks users through the process as they inject naloxone....Still, experts say the device’s price surge is way out of step with production costs and a needless drain on health-care resources....Kaleo, which is trying to blunt the pricing backlash and turn Evzio into the trusted brand, is dispensing its device for free — to cities, first responders and drug-treatment programs. Such donations were also essential to the EpiPen’s business strategy." The exorbitant price doesn't matter so much when the drug is provided through institutional buyers such as the VA, but in poor areas where poor people are not covered by health insurance, it can mean life or death. "EpiPen happened, and everyone was like, ‘Wow, this is terrible, we shouldn’t allow this to happen,’ ” he said. “And we haven’t done anything about that, and it’s not clear what the solution is. Now, shocker, it’s happening again.”

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E-cigarette critics get research dollars from industry competitors (Kathy Hoekstra, MinnesotaWatchdog.org, 4-10-17) The nicotine patch "is one of four nicotine replacement therapies (NRT) approved by the FDA to help people quit smoking. Three others are prescription-only. Nicotrol NS is a nicotine nasal spray, while Chantix and Zyban are non-nicotine medications. The FDA, however, does not report success rates for these products. And the best Smokefree.gov can do is say they “increase your chances of quitting successfully.” FDA doesn't report success statistics on quitting smoking, and the research criticizing e-cigarettes is funded by pharmaceutical firms.
Why the U.S. Pays More Than Other Countries for Drugs (Jeanne Whalen, WSJ, 11-30-15) Norway, an oil producer with one of the world’s richest economies, is an expensive place to live. A Big Mac costs $5.65. A gallon of gasoline costs $6. But one thing is far cheaper than in the U.S.: prescription drugs. A vial of the cancer drug Rituxan cost Norway’s taxpayer-funded health system $1,527 in the third quarter of 2015, while the U.S. Medicare program paid $3,678. An injection of the asthma drug Xolair cost Norway $463, which was 46% less than Medicare paid for it. (KHN summary)
Sticker Shock Forces Thousands Of Cancer Patients To Skip Drugs, Skimp On Treatment (Liz Szabo, Kaiser Health News, 3-15-17) With new cancer drugs commonly priced at $100,000 a year or more, hundreds of thousands of cancer patients are delaying care, cutting their pills in half, or skipping drug treatment entirely. The jaw-dropping costs of new cancer medications have led to widespread criticism of the pharmaceutical industry, on Capitol Hill and beyond. Six of the 39 cancer drugs on the market in 2010 doubled or tripled in price by 2016; one quadrupled in price; one drug’s price increased eightfold.
$2.6 Billion to Develop a Drug? New Estimate Makes Questionable Assumptions (Aaron E. Carroll, The Upshot, NY Times, 11-18-14) The questionable assumptions: time costs ($1.2 billion), that drug is a "new molecular entity" developed in-house by pharmaceutical firm (few new drugs are), etc., plus which the costs are tax deductible (that is, covered by taxpayers). It "might be more accurate to say that it’s the cost to develop certain new molecular entities for which pharmaceutical companies did all of the research. That’s very few drugs, in the scheme of things."

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Wyden-Grassley Sovaldi Investigation Finds Revenue-Driven Pricing Strategy Behind $84,000 Hepatitis Drug (report of Senate Committee on Finance on hearings on the price of Sovaldi (sofosbuvir), a drug that cures most hepatitis C. Those hearings provide a case history in how a company prices a drug, says Norman Bauman (reporting in an email on part of a meeting of the NY chapter of AHCJ 2-15-17). Their pricing was summarized in a Powerpoint slide that was part of a committee report, on page 2 of the document The Pricing of Sovaldi (https://www.finance.senate.gov/imo/media/doc/3%20The%20Pricing%20of%20Sovaldi%20(Section%203).pdf), a PDF of chapter 3 from the government report. "Aside from payer access and physician demands, there are a number of softer issues that could affect Gilead's final pricing decision."
$2.6 Billion to Develop a Drug? New Estimate Makes Questionable Assumptions (Aaron E. Carroll, The Upshot, NY Times, 11-18-14) The questionable assumptions: time costs ($1.2 billion), that drug is a "new molecular entity" developed in-house by pharmaceutical firm (few new drugs are), etc., plus which the costs are tax deductible (that is, covered by taxpayers). It "might be more accurate to say that it’s the cost to develop certain new molecular entities for which pharmaceutical companies did all of the research. That’s very few drugs, in the scheme of things." Major findings include: Gilead justified Sovaldi’s high price point based on price-per-cure. Gilead set a high price for Sovaldi with an eye toward ensuring a future high price for Harvoni. Gilead underestimated the degree of access restrictions that it expected would result from its pricing decision. Despite significant access restrictions, Gilead refused to significantly lower the net price. The burdens on Medicare, Medicaid, and the Bureau of Prisons were significant. Competition entered the market, prices responded, but there are still significant concerns. Among headlines: 18-Month Investigation Reveals a Pricing and Marketing Strategy Designed to Maximize Revenue with Little Concern for Access or Affordability. Report Includes Landmark Release of Medicaid Data: In 2014, More than $1 Billion Spent by Medicaid Programs on Sovaldi Treated Less than 2.4 Percent of Enrolled Patients with Hepatitis C. Medicare Spent More on Gilead Hepatitis C Drugs in the First Half of 2015 than in All of 2014. "These hearings are the best case history of how a company prices a drug."
Medicare Weighing Changes to Doctor Drug Payments, Memo Shows ( Zachary Tracer and Sasha Damouni, Bloomberg Business, 2-9-16). Medicare has been criticized for giving doctors a financial incentive to administer drugs that are most expensive. A memo discussing how Medicare may change the way it reimburses for drugs was released prematurely. The memo suggests that Medicare contractors who process payments set up a system allowing the government to vary by geographic location how much it reimburses doctors for the drugs they administer.
Open Payments (Centers for Medicare & Medicaid Services's new open database of information about doctors' relationships with drug manufacturers and other health care businesses.

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GOP candidates stuck on drug prices (Paul Demko and Sarah Karlin, Politico, 12-1-15) Republican candidates blame skyrocketing drug costs on over-regulation and a few drug companies' "pure profiteering," but don't say that "Medicare should negotiate drug prices or that the government should limit drug maker’s profits, steps that might dramatically shake up the marketplace....they’re not even making modest suggestions to stem rising costs, focusing instead on hammering a few headline-making companies that they portray as bad actors. " Polls show high drug costs as "voters' No. 1 health concern," but the candidates are "caught in the box of Republican free market orthodoxy — and also, of long-standing relationships with the pharmaceutical industry, a lobbying powerhouse on the Hill."
Use Medicare’s Muscle to Lower Drug Prices (NY Times editorial, 9-21-15) One way to reduce drug costs for older patients on Medicare -- who often live on modest incomes, are in poor health, and take four or more prescription drugs -- is to reverse the policy set by the 2003 Medicare Modernization Act, which created Medicare’s prescription drug program. "At Republican insistence, that law barred the federal government from negotiating with drug manufacturers. ...Congressional Republicans would no doubt balk at having the federal government negotiate Medicare drug prices, but the public is clamoring for action, and it’s the right thing to do."
Why We Allow Big Pharma to Rip Us Off (Robert Reich, Moyers & Co., 10-6-14) "...while other nations set wholesale drug prices, the law prohibits the U.S. government from using its considerable bargaining power under Medicare and Medicaid to negotiate lower drug prices. This was part of the deal Big Pharma extracted for its support of the Affordable Care Act of 2010."
Generic Drug Prices Are Declining, But Many Consumers Aren’t Benefiting (Charles Ornstein, ProPublica, and Katie Thomas, New York Times, 8-8-17) Outcry has been building over the rising cost of brand-name medications, but the price of generic drugs has been moving in the opposite direction. The stock prices of generic manufacturers have tumbled, but many consumers aren’t paying less at the pharmacy counter.
Journalists learn about intricacies of prescription drug pricing (Liz Seegert, Covering Health, Association of Health Care Journalists, 2-27-17) Why are drug costs so high in the United States? This and other questions were addressed at a meeting of the New York chapter of AHCJ. What can justify a "$50,000 cancer drug that extended life for an average of 17 days"? A helpful summary of what several experts explained about how we in the U.S. end up with exploitative prices on some drugs. Among points made: (1) "It’s the doctor, not the patient, who decides what to prescribe. Our current system also rewards doctors for prescribing more expensive drugs. Why prescribe the generic when you can make more money prescribing the brand? (2) Doctors are making those decisions, typically, with little information about cost . Now with more patients in high-deductible plans with a coinsurance model, there’s sticker shock and people are asking questions. (3) Nobody knows if we are spending the right amount on drugs, said Peter Bach, MD, director of the Memorial Sloan Kettering’s Center for Health Policy and Outcome. Moreover, we do not know if we are spending it on the right drugs, either.
Healthcare expert for sale (Trudy Lieberman, CJR, 12-6-12) Revolving door between government jobs and lobbying for industry--is it any wonder Medicare is not allowed to negotiate lower drug prices with pharmaceutical industry?
In Cancer Care, Cost Matters (Peter B. Bach, Leonard B. Saltz, and Robert E. Wittes, OpEd, NY Times, 10-14-12). "At Memorial Sloan-Kettering Cancer Center, we recently made a decision that should have been a no-brainer: we are not going to give a phenomenally expensive new cancer drug to our patients. The reasons are simple: The drug, Zaltrap, has proved to be no better than a similar medicine we already have for advanced colorectal cancer, while its price — at $11,063 on average for a month of treatment — is more than twice as high." "This political climate also helps explain why the Affordable Care Act precludes Medicare from changing its coverage or payment amounts based on cost comparisons like the one we have outlined, even when two drugs appear to work equally well. And it is probably why neither presidential candidate has addressed runaway cancer drug prices. But if no one else will act, leading cancer centers and other research hospitals should."

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Pain: A Political History by Keith Wailoo. Read what Rebecca Davis O' Brien wrote about it in this Atlantic review (8-18-14): "The pain of the fetus and the pain of the taxpayer mattered most; the addict’s pain was suspect, the housewife's pain imagined." "The result is gaps in treatment, a glut of pills, and a landscape of addiction—the inevitable consequence of our "unquenchable appetite for relief."
The Cost of Cancer Drugs (Leslie Stahl, 60 Minutes, CBS, 10-5-14--you can listen or read transcript.) Dr. Leonard Saltz: "We're in a situation where a cancer diagnosis is one of the leading causes of personal bankruptcy." "... we as a society have been unwilling to discuss this topic and, as a result, the only people that are setting the line are the people that are selling the drugs." Dr. Peter Bach: "Medicare has to pay exactly what the drug company charges. Whatever that number is." "The challenge, Dr. Saltz at Sloan Kettering says, is knowing where to draw the line between how long a drug extends life and how much it costs." "High cancer drug prices are harming patients because either you come up with the money, or you die." Gleevec as a life-saving drug that makes patients a slave to it and its high cost. Dr. Leonard Saltz: " I don't know where that line is, but we as a society have been unwilling to discuss this topic and, as a result, the only people that are setting the line are the people that are selling the drugs."
Top Prescription Plan to Offer $1 Alternative to $750 Pill (Andrew Pollack, NY Times, Business Day, 12-1-15) "Turing Pharmaceuticals’ effort to charge $750 a pill for a 62-year-old drug is facing a new headwind: The nation’s largest prescription drug manager plans to back an alternative that costs only $1 per pill....Daraprim, known generically as pyrimethamine, is the treatment of choice for toxoplasmosis, a parasitic infection that can be serious for babies and people with AIDS. While there is no patent protection on such an old compound, there are no generic versions approved for sale in the United States, in part because the market is small."
Express Scripts Offers Low-Cost Alternative to Turing Drug (AP, NY Times, 12-1-15) The nation's biggest pharmacy benefits manager is muscling back into the debate over soaring drug costs by promoting a less-expensive alternative to a life-saving medicine with a list price of $750 per pill. Other drugmakers have also recently purchased the rights to old, cheap medicines that are the only treatment for serious diseases and then hiked prices. The practice has triggered government investigations, politicians' proposals to fight "price gouging," and heavy media scrutiny. Express Scripts, which manages prescription drug benefits for about 85 million people, has long been a vocal critic of rising drug prices.

How High Drug Prices Weigh on the Sickest Americans (Drew Altman, Think Tank blog, WSJ, 12-28-15) "The more drugs people take and the sicker they are, the more likely they are to experience problems paying for prescription medicines–or to forego them altogether because of cost....The pattern holds for seniors on Medicare as well. Twenty percent of seniors taking prescription medicine report difficulty paying for their drugs. Among seniors taking four or more medications, the share rises to 29%.
Lawmakers, Candidates Target High Drug Prices (Stephanie Armour, WSJ, 11-15-15) Lawmakers and the Obama administration are ratcheting up efforts to target pharmaceutical companies over high-priced drugs, a sign that legislators are trying to bridge partisan differences to tackle a key driver of rising health care costs.
Prescription Drugs’ Sizable Share of Health Spending (Drew Altman, Think Tank, WSJ, 12-13-15) "As big a problem as rising drug prices have been for consumers and payers, drug spending represents only 10% of national spending on health. Yet ... drug spending represents almost double that share of health spending (19%) in employer health insurance plans. That is not too much less than the 23% employers spend on inpatient hospital care.
Why Higher Drug Costs Are Consumers’ Biggest Cost Worry (Drew Altman, WSJ Think Tank blog, 9-8-15). We "asked which health costs people with health coverage find to be the greatest burden. As the chart shows, deductibles led a closely bunched list, followed by premium payments, drug costs and doctor visits. Deductibles have been rising steadily each year, especially for people who work for smaller employers, as insurance has gradually been moving from more to less comprehensive, with more 'skin in the game' for consumers."...Seventy-six percent of the public blames drug companies for high drug prices – with just 10% blaming insurers. The public ranks the pharmaceutical industry right between the oil industry and insurance companies in overall favorability."

Working to Lower Drug Costs by Challenging Questionable Patents (Gretchen Morgenson, Fair Gae, NY Times, 11-27-15) J. Kyle Bass made a fortune in the financial crisis when his hedge fund, Hayman Capital Management, bet big against subprime mortgages. Now Mr. Bass is wagering against pharmaceutical companies that he says exploit the patent system, keeping drug prices — and their profits — in the stratosphere. He has a formidable colleague in the effort: Erich Spangenberg, a man who became reviled in Silicon Valley for bringing lawsuits against technology companies that he contended had infringed on a patent. By mid-November, the firm had filed 33 requests for patent reviews, targeting 13 drugs from a dozen companies

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Pfizer’s Long War on Taxation (Andrew Ross Sorkin, Dealbook, NY Times, 11-30-15) "Long before Pfizer conceived of merging with Allergan in a $150 billion deal to rid itself of what its chief executive called an “an uncompetitive tax rate” in the United States, the company was deploying various tax avoidance strategies dating back to at least 1976....Pfizer has received at least $50 million in federal subsidies over nearly the last 15 years, according to the Corporate Research Project, a nonprofit that tracks corporate subsidies. And, still, it wants to leave the United States and move its headquarters to Ireland....The only way to end the inversion craze, or whatever tax avoidance plan comes next, is to comprehensively reform the corporate tax code."
Doctors Often Receive Payments From Drug Companies (Neal Conan, Talk of the Nation, NPR, 9-13-11) A Pro Publica investigation shows that many doctors are being paid by the same drug companies whose medicines they prescribe. By 2013, all doctors must report any payments from pharmaceutical companies to the federal government, and those records will be available to the public.
Dollars for Doctors: How Industry Money Reaches Physicians (a major Pro Publica investigative series, by by Eric Sagara, Charles Ornstein, Tracy Weber, Ryann Grochowski Jones and Jeremy B. Merrill, 9-24-14) In recent years, drug companies have started releasing details of the payments they make to doctors and other health professionals for promotional talks, research and consulting. As of 2014, 17 companies published the information, most because of legal settlements. Several pieces appeared in this series and are still online. See also We’ve Updated Dollars for Docs. Here’s What’s New. (Ryann Grochowski Jones, Mike Tigas and Charles Ornstein, Pro Publica, 12-13-16) "Companies made about $2 billion in general payments to 618,000 physicians each year, in addition to another $600 million a year to teaching hospitals. General payments cover promotional speaking, consulting, meals, travel, gifts and royalties, but not research. The specific doctors who received payments changed quite a bit from 2014 to 2015; a quarter of doctors who received a payment in 2015 didn’t receive one in 2014, and vice versa. The 10 drugs for which companies spent the most in payments to physicians in 2015 (teaching hospital payments not included) were blood thinner Xarelto ($28.4 million), rheumatoid arthritis drug Humira ($24.9 million), diabetes drug Invokana ($20.9 million), hepatitis C drug Viekira ($19.2 million), blood thinner Eliquis ($18.8 million), diabetes drug Bydureon ($18.5 million), testosterone drug Androgel ($15.3 million), thyroid drug Synthroid ($14.7 million), synthetic hormone Lupron ($14.3 million) and diabetes drug Victoza ($11.9 million)."
MIA In The War On Cancer: Where Are The Low-Cost Treatments? (Jake Bernstein, Pro Publica and The Daily Beast, 4-23-14) Big Pharma’s focus on blockbuster cancer drugs squeezes out research into potential treatments that are more affordable. Says one researcher: “What is scientific and sexy is driven by what can be monetized....Animal studies, in vitro experiments and analysis of patient outcomes suggest that aspirin might help inhibit breast cancer from spreading. Yet even her peers on scientific advisory boards appear uninterested, she says. "For some reason a drug that could be patented would get a randomized trial, but aspirin, which has amazing properties, goes unexplored because it's 99 cents at CVS," says Michelle Holmes.
Pay to Prescribe? Two Dozen Doctors Named in Novartis Kickback Case (Theodoric Meyer, ProPublica, 5-3-13)
Dollars for Docs How Industry Dollars Reach Your Doctors (Eric Sagara, Charles Ornstein, Tracy Weber, Ryann Grochowski Jones and Jeremy B. Merrill, for ProPublica, Updated 3-3-14). See if Your Health Professional Has Received Drug Company Money.
As Full Disclosure Nears, Doctors’ Pay for Drug Talks Plummets (Charles Ornstein, Eric Sagara and Ryann Grochowski Jones, ProPublica, 3-3-14) As transparency increases and blockbuster drugs lose patent protection, drug companies have dramatically scaled back payments to doctors for promotional talks. This fall, all drug and medical device companies will be required to report payments to doctors.
Medicare Drugs Turn Doctors into Millionaires (Walter Russell Mead & Staff, The American Interest, 4-10-14)
Prescribing Under the Influence (E. Haavi Morreim, Markkula Center of Applied Ethics, Santa Clara University)

Why Are Drug Costs So High in the United States? (Roxanne Nelson, Medscape Multispecialty, 11-19-14--registration required).
Patent-Protected Oral Cancer Drugs Are Drivers of High Costs (Roxanne Nelson, Medscape Multispecialty, 10-13-14)
'Parity' Laws for Costly Oral Cancer Drugs Not a Solution (Nick Mulcahy, Medscape Specialty, 10-2-14)
Cancer Drug Costs: Oncologists Must Be 'Part of the Solution' (Zosia Chustecka, Medscape Multispecialty, 9-6-13)
Price of 'Phenomenally Expensive' Cancer Drug Slashed (Nick Mulcahy, Medscape Multispecialty, 11-9-12)

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Administration Is Seeking Ways to Keep Prescription Drugs Affordable (Robert Pear, Politics, NY Times, 11-20-15) News about soaring drug costs, such as the decision by Turing Pharmaceuticals to raise the price of a 62-year-old treatment for parasitic infection to $750 a pill from $13.50 overnight, has focused public attention and anger on pharmaceutical costs. Researchers are developing remarkable cures, but they might be out of reach for people who need them most. Opinion polls show that a majority of Americans of both political parties support government action to hold down drug costs. Some proposals have languished in Washington for years, such as allowing the government to negotiate with drug companies to obtain lower prices on medications for Medicare. Others urged reconfiguring health insurance policies so they pay drugmakers more for medicines that are highly effective. Patients might not have any co-payments for “the highest-value drugs,” he suggested, but would face higher co-payments for drugs with fewer proven benefits. "No one expressed the views of the many Republicans in Congress, who oppose any increase in the federal role in setting, regulating or negotiating prices." Federal officials could take administrative actions to help slow the growth of drug spending in federal health programs.
• What's the value of a drug? Norman Bauman: "Suppose you're dying of cancer, and a drug company has a drug which will save your life. How much is your life worth? That's the value of the drug. The company realizes that there's a supply-demand curve. If they price the drug at $1,000, they can sell 1,000 doses, save 1,000 lives, and make $1
million. If they price the drug at $100,000, they might only sell 100 doses, and save only 100 lives, but they make $10 million.
Big Pharma Quietly Enlists Leading Professors to Justify $1,000-Per-Day Drugs (Annie Waldman, ProPublica, 2-23-17) "As it readies for battle with President Trump over drug prices, the pharmaceutical industry is deploying economists and health care experts from the nation’s top universities. In scholarly articles, blogs and conferences, they lend their prestige to the lobbying blitz, without always disclosing their corporate ties."
Customers Sue UnitedHealth Over Prescription Drug Co-Pay Costs (Reuters, 10-5-16) UnitedHealth Group Inc has been sued by three customers who accused the largest U.S. health insurer of charging co-payments for prescription drugs that were higher than their actual cost and pocketing the difference.

Liz Fowler, Top Obama Health Care Aide, To Lobby For Johnson & Johnson (Christina Wilkie, Huff Post, 12-5-12)

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Medicare Drug Planners Now Lobbyists, With Billions at Stake (Olga Pierce, ProPublica, 10-20-09) The Guardian follows the saga of Liz Fowler, healthcare lobbyist extraordinaire
AZT's Inhuman Cost (OpEd, NY Times, 8-28-89) "Drug companies deserve high profits on new drugs to encourage invention and risk-taking. What makes the cost of AZT hard to swallow is that all the invention and much of the risk was undertaken by the Federal Government....In 1984, Samuel Broder of the National Cancer Institute encouraged companies to submit possible anti-AIDS drugs for screening by a special test developed in his laboratory. Burroughs Wellcome sent in AZT, a compound it happened to have on its shelves after studying it for another purpose."
Hospitals probed on use of drug discounts (Ames Alexander and Karen Garloch, Charlotte Observer, 9-29-12). U.S. Sen. Chuck Grassley, Congress’ leading critic of nonprofit abuses, has asked three of North Carolina’s largest hospitals to share information about their use of a rapidly growing discount drug program, saying they don’t appear to be passing along the “massive” savings to patients.
After Merger, Two Competing Drugs and Billion-Dollar Questions (Gretchen Morgenson, Fair Game, NY Times, 11-13-15) The investing world is riddled with conflicts of interest that can surprise even the most sophisticated investor. Learning that lesson the hard way are holders of an instrument issued in 2011 when Sanofi, the giant French pharmaceutical company, took over Genzyme, a biotech concern based in Cambridge, Mass.

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