Medical Bills are Open-Price Contracts: A Victory for the Little Guy

This blog has often covered the problem of outrageous medical bills, and explored whether patients have a responsibility to pay the balance on charges that are not covered by insurance.  One common pattern is that the patient agrees to pay “all reasonable charges” when they arrive at the emergency room or other provider, and then months later receives an incomprehensible bill for seemingly outrageous amounts.  The costs of the same healthcare can vary wildly from provider to provider, even in the same locale, and there seems to be little rhyme or reason.  (This is a common refrain of Elizabeth Rosenthal’s 2017 book.)

According to very basic contract law, when the agreement between a buyer and seller does not specify the prices to be charged (aka an “open price contract”), the seller may not demand more than a “reasonable” amount.   Years ago, I was involved in nationwide litigation against non-profit hospitals, raising this theory and alleging that their billing practices contradicted their state and federal “charitable” tax exemptions, since they were driving poor people into bankruptcy and foreclosure.  That litigation had a few notable wins, when several hospital systems agreed to adopt explicit charity care policies and stop some of the more egregious practices, such as putting liens on their patients’ houses.  Some of these reforms became an industry standard and then part of the Affordable Care Act.

Overall, however, this litigation was challenging, because courts tended to hold that the reasonableness of each patient’s medical bills had to be litigated individually – often with expert witnesses and comparable data from the healthcare provider and other competitors.  With only a few thousand dollars at stake for each patient, the courts’ refusal to aggregate the litigation left many consumers without an effective recourse to challenge their unreasonable bills. Contingent-fee attorneys tend to look for larger stakes to make their investment of time and expenses worthwhile. Continue reading

Special Deals for States?

By Christopher R. Robertson

Over at HuffPo, Craig Konnoth has a short-but-smart piece exploring the Constitutionality of the logrolling deals now underway to persuade Alaska Senator Lisa Murkoswki to support the latest effort to repeal Obamacare.  Would other states have a right to object to a deal that showered special benefits on Alaska?  Konnoth explains how an “equal sovereignty” principle has emerged in recent Supreme Court decisions, and suggests that it may provide some grounds for challenging this sort of special treatment.

I am left wondering about the longstanding practices of states requesting and receiving waivers from the Federal government.  For example, Maryland has for decades enjoyed a Medicare waiver, which allows it to regulate prices.  Massachusetts has a $52B waiver to put its Medicaid members in accountable care organizations.   Do these violate equal sovereignty too?

Maybe the answer is that all states are treated equally in their right to apply for such waivers, under several explicit statutory vehicles, which have yielded several hundred such applications.  These are not simply bribes to secure votes in Congress.  On the other hand, some of these waivers were very much the result of politically-charged negotiations between conservative governors (such as Indiana’s Mike Pence) and the Obama administration, who granted these waivers as a way to expand insurance coverage.  Maybe that’s not so different than what Murkowski is demanding?

On related questions, also check out Brian Galle’s piece over at Medium.com.

How the FDA Produces Knowledge (and Is Not So Weird)

Credit: SalFalko

The Federal government has wrested billions of dollars from the drug and device industry in settlements of claims that the companies broke the law by promoting their products “off-label” for uses not approved by the FDA.  In response, companies have asserted that promotions are a form of speech, protected by the First Amendment. Speech regulations are especially worrisome when motivated by paternalism.  This argument has received some traction in the courts, and is now getting a favorable look by the Trump administration.

I have argued (here, here, and here) that this law is not actually a speech regulation.  Nor is it paternalistic.  Instead, it is simply a vanilla regulation of a behavior (shipment of product in interstate commerce), which depends on various sources of evidence (including speech) as revealing whether the actor has an illicit intent (an unapproved use of the product).  The pre-market approval system, which requires that companies prove safety and efficacy for all intended uses, solves a collective action problem to produce information as a public good.  This is our key social mechanism for producing knowledge about safety and efficacy.  If this law is unconstitutional in the off-label context, the entire pre-market approval system would seem to be as well.

In a new piece out on SSRN, my physician co-author Victor Laurion develops the example of the drug Seroquel XR, to show how a federal prosecution for off-label promotion caused the company to perform scientific research on two new indications (general anxiety disorder and major depression).  A detailed discussion of the regulatory record shows how physician prescribing was improved by this public information, regardless of whether the FDA approved the new indication.  In this way, the FDA protects the liberty of physicians and patients to try drugs for new uses, even while holding companies to the proof of any uses that they actually intend.  The fact that the company’s intention is shown by speech evidence is immaterial. Continue reading

Is it legal for Trump to punish health insurers that do not support repeal of Obamacare?

By Christopher Robertson

In a recent story about how the health insurance marketplaces are being destabilized by the Trump administration’s vacillation, the LA Times reports:

At one recent meeting, Seema Verma, whom Trump picked to oversee the federal Medicare and Medicaid programs, stunned insurance industry officials by suggesting a bargain: The administration would fund the CSRs if insurers supported the House Republican bill to repeal the Affordable Care Act.

For what its worth, the Trump administration denied that she had done so.  But if she did, is that legal?  Can politicians actually offer to give money from the Federal Treasury to companies in exchange for their political support (or withhold it for lack of that support)?  If Ms. Verma was corruptly offering a “quid pro quo” exchange (as TalkingPointsMemo says), that would fit the statutory definition of the crime of bribery, as I discuss in a 2016 paper, The Appearance and Reality of Quid Pro Quo Corruption. However, this case also implicates the First Amendment rights of the insurance companies to support or oppose the Obamacare repeal. Continue reading

Conflict of Interests Disclosures Come to PubMed

By Christopher Robertson

Scholars and policymakers have long been concerned that the biomedical science literature — and thus the practice of medicine — is biased by the companies who fund research on their own products.  Prior research has shown that industry-funded studies tend to produce results favorable to their company sponsors.  One solution is disclosure of industry funding, so that physicians and other consumers of the biomedical literature can weigh scientific findings accordingly.

My prior work with Aaron Kesselheim, Susannah Rose, and others has found that adding such disclosures to biomedical abstracts could make a big difference — physicians understand them and will rely upon them.  Nonetheless, most journals bury the disclosures at the end of articles, which are often hidden behind paywalls and not nearly as salient as the methods and findings displayed in the abstract.  For the Institutional Corruption Lab of the Edmond J. Safra Center, I worked with a team of hackers to create a browser extension that proves the feasibility of adding those disclosures into PubMed, a Federal government database of the scientific literature.

Thankfully, that browser extension is becoming obsolete, as the National Library of Medicine (part of the NIH) has begun implementing such disclosures themselves, right in PubMed.   A search reveals that nearly 80,000 abstracts now have such tags.  While a lot in absolute terms, it is a small minority of the 17 million abstracts covered by PubMed.  Commentators have suggested that as much as 70% of the funding for clinical trials comes from industry, so we should expect millions of abstracts to have such disclosures.

Thus we are still a long way from comprehensive and effective disclosure.  There are two problems. Continue reading

Another Way to Cut Medical Malpractice Damages?

By Christopher Robertson

To limit liability and increase predictability, scholars and policymakers have long focused on capping damages awards.  In particular, they have been worried that there are many runaway jury awards for non-economic damages (i.e., pain and suffering).  Because these are not based on tallies of medical bills or lost wages, these are the least predictable component of the jury’s award.   Still, statutory caps on damages effectively nullify the jury’s determination (and the trial judge’s oversight) of how much to compensate a plaintiff for pain and suffering.  The laws substitute an arbitrary maximum instead (which, in many states, has not adjusted with decades of inflation).

There is now a cottage industry of scholarship that tries to understand the effects of these state caps on payouts, the supply of physicians, liability insurance, economic damages awards, and the aggregate cost of medical care (which may decrease or increase).  (See a synthesis of the literature.)

In new work with John Cambpell and Bernard Chao, I study a different way to cabin jury awards for non-economic damages.  Rather than capping runaway awards ex post, some states have tried to prevent them in the first place, by manipulating what a jury hears in closing arguments.   Continue reading

National Survey Suggests that Off-Label Status is Material to Informed Consent

By Christopher Robertson

As many readers of this blog know, the FDA requires that, prior to entering the market, companies prove safety and efficacy for each intended use of their products, but physicians are then free to prescribe the products for any other uses.  (Companies are not allowed to promote off-label uses however.)

A recent national survey by Consumer Reports includes two interesting findings:

  1. About two-thirds (63%) of Americans “would not take a doctor prescribed medication that has been approved by the FDA, but not for their specific condition.”
  2. Almost all Americans (94%) “say they have never been told by a physician that a medication they were taking was not approved by the FDA for their condition.”

Patients are right to be skeptical of off-label uses, though they may not appreciate just how common they are.  In fact, most off-label use is unsupported by scientific evidence as to safety and efficacy.  A new report by the FDA illustrates several off-label uses that were subjected to rigorous clinical trials and turned out to be ineffective or dangerous.   For example, Aliskiren is approved for treatment of hypertension and was used off-label for prevention of congestive heart failure (CHF) complications.  A large trial showed that, although it did not significantly improve CHF mortality, it did significantly increase rates of kidney failure for CHF patients.  We do not know how many other off-label uses would fail if similarly tested.   Continue reading

The ACA’s Real Effect: Moving the Goalposts

By Christopher Robertson

“I believe and I look forward to working with you to make certain that every single American has access to the highest-quality care and coverage that is possible. … [W]e believe it’s appropriate to put in place a system that gives every person the financial feasibility to be able to purchase the coverage that they want for themselves and for their family.”

That quote is not from Barack Obama.  It’s from Trump HHS nominee Tom Price, and it shows just how successfully the ACA has shifted the American political landscape towards universal coverage. As I argued earlier this month in STAT, with Glenn Cohen and Holly Fernandez Lynch, the debate is now about how to get universal health insurance coverage, rather than whether to do so.

Republicans will of course favor market-oriented approaches, and they will find difficulty conceiving a plan that is farther to the right than the ACA itself while actually achieving the goals that Price promises.  But for now, even if the ACA is soon repealed, it has succeeded in moving the goalposts for health policy.

Income-Scaling of Cost-Sharing Gains Traction

By Christopher Robertson

With 148,000 members, the American College of Physicians (ACP) is the largest medical-speciality organization.  This summer, its board released a new report on the growing financial burdens faced by patients who enjoy health insurance but are nonetheless exposed to unbearably large costs for healthcare.  At the end of the day, cost-sharing is just the absence of insurance for those costs.

ACP calls for a range of reforms, including “income-adjusted cost-sharing approaches that reduce or directly subsidize the expected out-of-pocket contribution of lower-income workers to avoid creating a barrier to their obtaining needed care.”  As I have argued, the Affordable Care Act includes income-based subsidies for cost-sharing in the Marketplaces, but these are currently being challenged in court, and do not apply to the employer-based system or Medicare, which together cover the vast majority of patients.

Hillary Clinton has also advanced a plan to create progressive refundable tax credits for people who spend more than 5% of their income out-of-pocket.   The advantage of such a tax-based approach is that it reaches patients regardless of where they get their insurance (except for Medicare, which is excluded).  The disadvantage is that it leaves people in a state of financial insecurity until they get their refunds.  A better approach would scale cost-sharing exposure in the first place, a power that I have suggested is already available under Federal law and which is self-funding.

Fighting the Next Pandemic: Airline Vaccine Screens

By Christopher Robertson

Whether it is Ebola, H1N1, the season flu, or the next nasty bug that we cannot yet even imagine, if we wanted to efficiently spread the disease, one could not do much better than packing several Flight routeshundred people into a cylinder for a few hours, while they eat, drink, defecate, and urinate.  Even more, to make sure that the disease cannot be contained in a particular locality, we could build thousands of those cylinders and move them rapidly from one place to another worldwide, remix the people, and put them back in the cylinders for return trips back to their homes, schools, and jobs.

We are (hopefully) not going to stop airline travel.  But we can make it a lot safer, by ensuring that almost everyone who boards these flights is vaccinated.  That’s the thesis of a new paper out this week.

Airlines carry two million people every day.  And, prior research has shown that airline travel is a vector of disease.  In fact, when the September 11 attacks caused airline travel to fall, seasonal flu diagnoses fell too.

The threat of pandemics is quite real, and more generally, the mortality and morbidity associated with infectious disease is a severe public health burden.  About 42,000 adults and 300 children die every year from vaccine-preventable disease.  New vaccines are on the horizon.

Arguably, airlines have market-based and liability-based reasons to begin screening passengers, whether for vaccinations generally or for particular ones during an outbreak.  Although the states have traditionally exercised the plenary power to mandate vaccinations, and have primarily focused on children in schools, the U.S. federal government also has substantial untapped power to regulate in this domain as well.

Recent Developments in Off-Label Promotion

By Chris Robertson

July has been a busy month for those following the controversy around off-label promotion of drugs and devices.  As many on this blog know, federal law requires that prior to marketing any drug or device, companies must prove to the FDA’s satisfaction that it is safe and effective for all intended uses.  If the company reveals that it intends unapproved uses,  sales of the drug or device are illegal.  Nonetheless, physicians can prescribe “off-label,” and companies are free to sell for those known-but-not-intended purposes.

This carefully-wrought policy may seem convoluted, but it serves important epistemic and economic purposes, as I have argued elsewhere.  This month, I have a new draft paper on SSRN, assessing recent assertions of a First Amendment right to promote for uses not approved by the FDA, and consider whether such a right would be equally applicable to drugs that have no FDA-approved label at all. I worry that the entire pre-market approval regime may be at stake. Feedback on that intentionally-provocative analysis is quite welcome.

On Wednesday, two medical device company executives, were convicted of promoting a product “to deliver steroid medications to patients’ sinuses, though it was only approved by the U.S. Food and Drug Administration for keeping sinuses open.”  The prosecutors thought the case was particularly egregious, because the company had intended the broader use to deliver medicine all along, but sought to mislead the FDA, denying it the chance review the safety and efficacy of the real intended use.  The jury instructions and verdict form  are particularly interesting, to see how the government’s trial strategy avoids the holding of a Second Circuit case of Caronia, which overturned a conviction on First Amendment grounds.  I’ll return with some analysis later. Continue reading

NOW AVAILABLE FOR PRE-ORDER! Nudging Health: Health Law and Behavioral Economics

This volume, edited by I. Glenn Cohen, Holly Fernandez Lynch, and Christopher T. Robertson, stems from the Petrie-Flom Center’s 2014 Annual Conference “Behavioral Economics, Law, and Health Policy.” Pre-order your copy today!

Nudging HealthBehavioral nudges are everywhere: calorie counts on menus, automated text reminders to encourage medication adherence, a reminder bell when a driver’s seatbelt isn’t fastened. Designed to help people make better health choices, these reminders have become so commonplace that they often go unnoticed. In Nudging Health, forty-five experts in behavioral science and health policy from across academia, government, and private industry come together to explore whether and how these tools are effective in improving health outcomes.

Behavioral science has swept the fields of economics and law through the study of nudges, cognitive biases, and decisional heuristics—but it has only recently begun to impact the conversation on health care. Nudging Health wrestles with some of the thorny philosophical issues, legal limits, and conceptual questions raised by behavioral science as applied to health law and policy. The volume frames the fundamental issues surrounding health nudges by addressing ethical questions. Does cost-sharing for health expenditures cause patients to make poor decisions? Is it right to make it difficult for people to opt out of having their organs harvested for donation when they die? Are behavioral nudges paternalistic? The contributors examine specific applications of behavioral science, including efforts to address health care costs, improve vaccination rates, and encourage better decision-making by physicians. They wrestle with questions regarding the doctor-patient relationship and defaults in healthcare while engaging with larger, timely questions of healthcare reform.

Nudging Health is the first multi-voiced assessment of behavioral economics and health law to span such a wide array of issues—from the Affordable Care Act to prescription drugs.

Read the introduction on SSRN and pre-order your book now!

Blinding as a Solution to Bias

Blinding Bias

We’re pleased to announce that a new book by Petrie-Flom Center affiliates Christopher Robertson and Aaron Kesselheim will be available this week.  The edited volume — Blinding as a Solution to Bias: Strengthening Biomedical Science, Forensic Science, and Law — grew from a 2013 conference at Harvard co-sponsored by the Petrie-Flom Center.  From the fascinating history of blinding (starting in Ben Franklin’s living room to test the healing powers of Mesmerism) to the sham surgeries being used today, and the future novel uses of blinding in the courts, the book moves the debate forward.  What are the advantages and limitations of blinding compared to other solutions for biases? How can we quantify the biases in unblinded research? Can we develop new ways to blind decision-makers?  What are the ethical problems with withholding information?  Fundamentally, questions about who needs to know what open new doors of inquiry for the design of scientific research studies, regulatory institutions, and courts.  With a foreword by Larry Lessig, the book surveys the theory, practice, and future of blinding, drawing upon leading authors with a diverse range of methodologies and areas of expertise, including medicine, law, forensic sciences, philosophy, economics, psychology, sociology, and statistics.  It is available for pre-order from the publisher and Amazon.com.

Some Commentary on How to Think About Secondary Research with Biospecimens

The public comment period on the NPRM to revise the Common Rule has just closed, and now we wait to see what happens (if anything), and when.  One of the most controversial proposals in the NPRM would require at least broad consent for secondary research with biospecimens (i.e., research on specimens originally collected for another purpose, either clinical care or a different study), regardless of whether those specimens retain identifiers.  This is a substantial change from the status quo, which does not require consent for such research with de-identified specimens.  How should we feel about this status quo, and the proposed change?  My own view is that it’s really not so bad: the risks to individual research participants are quite low, and the current approach facilitates critically important scientific advancement.  There is certainly room for improvement, e.g., to impose punishment on those who would act to re-identify de-identified specimens without permission, to inform the public that such research takes place, and to educate them about its value, perhaps allowing those who still feel very strongly that they prefer not to be included an opportunity to opt-out.  But what has been actually proposed has more problems than what it would replace, and in fact, wouldn’t solve some of those it seems to be a response to.

Rebecca Skloot feels otherwise.  She is the author of a book called The Immortal Life of Henrietta Lacks, which chronicles the origin of one particularly important cell line – HeLa  – derived from cells that had been excised from Ms. Lacks in the course of a 1951 surgery to treat her cancer, and later used for research without her knowledge or permission.  Ms. Lacks was poor, uneducated, and black, and her descendants have also faced more than their fair share of adversity.  Ms. Skloot paints a compelling story of exploitation, but in my opinion, it is much more effective as a narrative about the horrible and enduring legacy of racism in this country than as proof that researchers who conduct secondary research with biospecimens without consent (as permitted under the current regulations, remember) or even without profit-sharing have behaved badly. After all, if individual risks are low and social benefits high – both true – then what’s the problem?  And it is far from clear that specimen sources deserve compensation for no other reason than that their discarded material actually proves valuable to scientists.  Nonetheless, the book has been used as a rallying cry by people from all walks of life who believe that they should be allowed to control whether, and potentially how, their specimens are used for research. Indeed, The Immortal Life of Henrietta Lacks is probably the single most important development that pushed the proposed revisions to the Common Rule forward, for the first time since they were released in 1991.

Continue reading

Bill Sage Webcast on Health Law v. Health Policy

As part of the Regulatory Science series at University of Arizona:
Health Law and Health Policy: A Frictional Account
William M. Sage, MD, JD, University of Texas
Today 12/2 — Noon (AZ Time) / 2pm Eastern / 11am Pacific
The talk will be webcast live, and available as an archive:

https://streaming.biocom.arizona.edu/event/index.cfm?id=26074

Participants in the live webcast will have the opportunity submit questions and comments.  Please do!

Wednesday Webcast: “Gene Patenting, Innovation Incentives, and the Future of Intellectual Property” by Derek Bambauer

By Christopher Robertson

This week, my colleague Derek Bambauer will speak as part of the Regulatory Science series at the University of Arizona.  Free CLE attendance form and readings are available.

Tune in at 12:00pm (Pacific) / 3:00pm (Eastern) on Wed Sept 16.

https://streaming.biocom.arizona.edu/event/?id=26071

The talk will also be archived at the same link.

New DTCA Guidance — Enough to Empower Consumers?

Bill of Health contributor Christopher T. Robertson has a new Op-Ed out in the New England Journal of Medicine:

As one of only two countries that permit direct-to-consumer advertising (DTCA) of pharmaceuticals, the United States tasks the Food and Drug Administration (FDA) with regulating that advertising to ensure that it doesn’t mislead consumers. When a drug maker publishes or broadcasts a claim that its drug has benefits in a particular disease, the FDA requires it to include information on the product’s risks as well. Since it’s not feasible for companies to include all the important information about their products in a television ad, the FDA requires them to refer viewers to more complete information, such as that in a printed magazine ad. Companies have tended to comply with this requirement by supplementing colorful, persuasive ads with one or two pages of dry text providing the required disclosures, often simply using language that the FDA has approved for other purposes, such as package inserts for prescribers. But research shows that most patients who attempt to read these disclosures find them difficult to understand, and many don’t even try to make sense of them.1 Now, the FDA is in the process of adjusting its DTCA rules, aiming to provide greater assurance that patients receive due warning of the most significant risks — but its tweaks probably don’t go far enough to really empower consumers to make smart decisions about the drugs they put into their bodies. […]

Read the full article here.

North, West, and the Direction of FDA Enforcement in the Social Media Age

By Christopher Robertson

Co-blogged with University of Arizona Fellow, Jonathan Loe

Breathlessly, many news outlets reported yesterday that Kim Kardashian West was in trouble with the FDA for misleading social media advertising of the drug Diclegis. For example, the reliably hyperbolic Daily Mail led with “Kim Kardashian slammed by FDA.” 

As followers of this blog may not know, Mrs. Kardashian West is pregnant with her second child.  Following on the disappointing news that the soon-to-be sibling of baby “North West” will not be named South, the celebrity-for-celebrity’s-sake shared a post on Instagram (and Facebook, and linked to from Twitter, naturally).  The post announced for the world that “OMG” her “#morningsickness” had benefited from a prescription of Diclegis—with “no increased risk to the baby.” The FDA issued a warning letter, because the social media post failed to communicate any risk information.

But is the FDA really concerned with people, however famous, commenting on their personal experiences with drugs?

The answer is…

Continue reading

New browser app shines light on conflicts of interest

By: Christine Baugh

A new Google Chrome extension puts the spotlight on conflicts of interest. The browser app, available for free download here, was created at the Hacking iCorruption hackathon event held March 27-29 in Cambridge, MA. The event, co-sponsored by the Edmond J. Safra Center for Ethics at Harvard University and the MIT Center for Civic Media (hosted at the MIT Media Lab) brought together individuals with a variety of backgrounds and skills to work toward the common mission of fighting institutional corruption, in this case by creating practical tools. This project was one of several exciting tools created at the hackathon (information about other projects available here), and it won first prize among the projects.

The Chrome extension, called Unearth, puts funding and conflict of interest information on the abstract page of PubMed research articles. Christopher Robertson, Associate Professor of Law at the University of Arizona James E. Rodgers College of Law and Edmond J. Safra Center Fellow who was a member of the Unearth team, explains the rationale for the browser extension in this Youtube video. In short, conflict of interest and funding disclosures are often placed at the end of a research article and are generally unavailable on the abstract page. This makes it impractical for physicians and other research scientists to pay appropriate attention to this important information. Research from the Cochrane Collaboration has demonstrated that research studies funded by industry generally describe “greater benefits and fewer harmful side effects” than their non-industry funded counterparts. Thus, taking the source of research funding into account when reading a new research study is critical. Although the extension currently only works for open access articles from PubMed Central, this includes several million research articles for which funding and conflict of interest information was previously much more difficult to obtain. Additionally, the developers plan on expanding the breadth of coverage in the coming weeks. Continue reading

Open Payments: Early Impact And The Next Wave Of Reform

This new post by Tony Caldwell and Christopher Robertson appears on the Health Affairs Blog, as part of a series stemming from the Third Annual Health Law Year in P/Review event held at Harvard Law School on Friday, January 30, 2015.

The Physician Payments Sunshine Act, a provision in the Affordable Care Act, seeks to increase the transparency of the financial relationships between medical device and drug manufacturers, physicians, and teaching hospitals. Launched on September 30, 2014 by the Centers for Medicare & Medicaid Services (CMS), the Open Payments database collects information about these financial relationships and makes that information available to the public.

As of early February, the Open Payments database includes documentation of 4.45 million payments valued at nearly $3.7 billion made from medical device and pharmaceutical manufacturers to 546,000 doctors and 1,360 teaching hospitals between August 2013 and December 2013. This included 1.7 million records (totaling $2.2 billion) without the names of physicians or teaching hospitals who received the payments.

These records were intentionally de-identified by CMS because the records had not been available for review and dispute for 45 days, or because the records were not matched by CMS to a single physician or teaching hospital due to missing or inconsistent information within the submitted records. Future reports will be published annually and will include data collections from a full 12 month period. […]

Continue reading here.