Ambulances are Monopolies — and They Should Be Regulated Accordingly

By Shailin Thomas

You go to your local urgent care with a headache and a fever, and the doctor suggests a trip to the hospital for further evaluation — just to make sure there isn’t anything serious causing your symptoms. She offers an ambulance, and you accept. You could probably walk or Uber, but you’re not feeling well, and the doctor has offered to arrange the ride. Why not?

This was the story of Joanne Freedman. She didn’t think too much about it, until she received a $900 bill for the two-block ambulance ride she took to the hospital. While Joanne’s experience was particularly egregious, it is not wholly uncommon. Ambulance pricing is one of the most variable and least transparent components of health care costs, with rides ranging from tens to thousands of dollars. This is in part because there are many ambulance providers, and they all have different relationships with different insurance companies. It’s also in part because ambulance rates are generally set according to the services the ambulance is equipped to provide, not necessarily the services actually provided. Some ambulance companies have contracts with municipalities that make them the only game in town, while others are in more diverse markets with multiple providers competing for patients. All this combines to create an incredibly complex industry with very little consistency from ambulance to ambulance.

But is this disjointed, free-market system the best way to structure emergency transportation? The arguments underlying the justification of a free, unregulated market hinge on the ability of consumers to police the industry through choice. If the seller of a good sets the price too high, consumers will buy from a different seller until she brings the price down to what consumers are willing to pay.  This is, in theory, what allows markets to find the right prices for goods and services more efficiently than any government agency or regulator ever could. Continue reading

Drug Pricing, Shame, and Shortages

By Nicholson Price

Drug prices have been making waves in the news recently.  The most recent case is the huge price hikes of the EpiPen, which provides potentially life-saving automatic epinephrine injections to those with severe allergies.  Mylan, which makes the EpiPen, has raised its price some 450% over the last several years.  The EpiPen is a particularly problematic—and media-friendly—story because the emblematic use case is the kid in school who can’t breathe because she came into contact with peanuts.  Jacking up the price on something that’s not optional—for parents and for schools—seems heartless.  Thoughtful pieces have pointed out how the EpiPen price increases demonstrate problems with our health care system and drug/device approval system in general.

Other big recent cases that have hit the news include huge increases in the price of insulin, and, of course, Turing Pharmaceuticals’/Martin Shkreli’s ~5000% price hike on the drug Daraprim.  The EpiPen and Daraprim are especially notable because patents mostly aren’t involved—the effective monopoly appears to come from the delay or challenge in getting generic products approved by FDA (although the EpiPen itself also seems tough to make).  And, of course, drug prices aren’t regulated in the US the way they are in much of the world.

These stories seem crazy, cruel, and fascinating.  And they raise (for me, anyway) the question: what’s changed?  This seems like a relatively new phenomenon.  But FDA’s had a backlog for a while, and drug prices have long been unregulated. Continue reading

Can the United States Use Mortgage-Like Loans to Pay for High Cost Drugs?

By Elizabeth Guo

Pharmaceutical companies are making breakthrough drugs to cure diseases, but no one knows how to pay for them. In 2013 and 2014, FDA approved Solvaldi and Harmoni, which can cure hepatitis C in more than 90% of patients. Solvaldi and Harmoni cost $84,000 and $95,000, respectively, for a standard course of treatment. Government payers and health plans, without a good solution for providing Solvaldi and Harmoni to patients who need them, have restricted coverage of the drug to only those patients with advanced hepatitis C. Last year, Germany approved Glybera, a gene therapy that enables patients with lipoprotein lipase deficiency to produce the deficient enzyme. Glybera is expected to cost $1 million, and it is doubtful whether any payer could shoulder such a price.

Last week, MIT professor Andrew Lo proposed a new way of paying for these high-priced therapies: securitized consumer healthcare loans (HCLs). HCLs would function as mortgages for large healthcare expenses. Because the benefits of some therapies occur upfront, HCLs would allow consumers to pay for the value of their therapies over time, instead of in one upfront payment. The paper proposed two frameworks to govern HCLs. The first is a consumer-funded loan, where the patient borrows a loan to pay the upfront costs of the drug, and pays back the loan over time. The second framework operates similarly to the consumer-funded loan, except that private payers and government agencies assume the debt. Under this model, insurance companies could take the debt associated with the patient’s treatment then shift the debt onto the next payer if the patient changes insurance companies. Continue reading

NHPC 2016: Provider Engagement Can Unify Diverse Payment Reform Efforts

By Cornelia Hall, Master of Public Policy Candidate, Harvard Kennedy School, Class of 2017

This is the first entry in a three-part series on the AcademyHealth National Health Policy Conference, held in Washington, DC, on February 1-2, 2016. 

At AcademyHealth’s 2016 National Health Policy Conference earlier this month, payment reform was a pervasive theme.  Its prominence was not surprising.  Indeed, in early 2015, HHS Secretary Sylvia Burwell announced the agency’s goal to have 30% of traditional, fee-for-service Medicare payments tied to quality or value through alternative payment models by the end of 2016, and 50% by the end of 2018.  As the current sea change in health care moves the system towards these goals, the conference’s panelists explored various aspects of the transition to value-based payment. Speakers who discussed the issue included leaders in government, clinical practice, and private insurance.  They sent an overarching message that payment reform efforts will continue to take a variety of forms — on parallel tracks with cross-cutting themes — rather than a single approach.  Representatives from provider organizations particularly stressed the necessary groundwork for these efforts to be effective.

The Center for Medicare and Medicaid Innovation (CMMI) under the federal Centers for Medicare & Medicaid Services (CMS) is operating dozens of payment- and quality-focused models and demonstrations across the country.  The breadth of payment models and their varying degrees of success represent different approaches to health care reform, such as population- and episode-based payment.  On his panel, CMMI Deputy Director Dr. Rahul Rajkumar noted that this breadth is designed to appeal to diverse providers that differ in type and readiness for payment reform.  Indeed, a health care system that has operated for decades with multiple payers, little care coordination, fragmented use of technology, and inconsistent definitions of quality care is undergoing monumental transformation.  The transition from fee-for-service to value-based payment thus involves some experimentation to identify the most effective approach. Continue reading

Consolidation vs. Competition

By Michael Anne Kyle

This summer, four of the five largest national health insurance companies proposed mergers – with each other. The acquisition of Cigna by Anthem and Humana by Aetna would reduce the “big five” to three. Provider groups, including the American Hospital Association and American Medical Association are alarmed, citing the potentially anticompetitive nature of these mergers.

It is true that many aspects of the health insurance market are already highly concentrated. In 2013, there were states where the individual and small group markets were dominated by companies with upwards of 70, 80, and even 90 percent market share. The Affordable Care Act introduced health insurance exchanges in an effort to stimulate competition – and it seems to be working. On the Medicare side, a new report by the Commonwealth Fund found that only one (!) of the nation’s 2,933 counties had a competitive Medicare Advantage market. Medicaid has so much going on that it is the subject for another post entirely – but worth noting here that Medicaid managed care is on the rise and projected to cover more than 75 percent of enrollees within the coming year, so the role of private insurers in Medicaid is growing rapidly.

The insurance companies argue that the upside of consolidation is increased bargaining power with providers, enabling them to negotiate better rates and value-based contracts. It’s important at this point to note that while some provider groups are decrying insurance mergers as anticompetitive, there is a tremendous amount of consolidation underway on the provider side, too. A recent analysis finds that half (150/306) of hospital referral regions (HRR) are highly concentrated, and none are highly competitive. There is evidence that concentrated markets reduce price competition, and may also have implications for quality.

Continue reading

Medical Device Tax: Back in the News Post-King

By Gregory Curfman

Just when the Affordable Care Act (ACA) has won a second major Supreme Court victory in King v. Burwell, conservative critics of the ACA are back on the attack, this time directing their ire towards the medical device tax. Having lost the battle on subsidies, they are now focusing on the device tax as the prime target in their attempt to overturn parts of the ACA. This 2.3% excise tax levied on the medical device industry is stipulated as one of the tax provisions in the ACA. The rationale is that since the ACA provides coverage for many more people, thus bringing more business to the industry, it is reasonable to ask the industry to pay something back to support the programmatic mission of the ACA.

From the beginning, the medical device industry has strongly objected to the excise tax, claiming it will stifle innovation by taking away funds that would otherwise be used for new product research and development. For example, Dr. Thomas Stossel of Harvard Medical School, a conservative voice on health issues, recently wrote: “A 2.3 percent tax on sales can easily mean the difference between commercial success and bankruptcy: borderline profits become losses and investors flee to less risky ventures. Brute force taxes destabilize the fragile innovation ecosystem.” Continue reading

King v. Burwell And The Importance Of State Politics

David K. Jones of the Boston University School of Public Health and a speaker at the Petrie-Flom Center’s “King v. Burwell and the Future of the Affordable Care Act” conference on April 1, has a new piece up at the Health Affairs Blog discussing the Supreme Court’s decision. From the piece: 

The Supreme Court’s decision in King v. Burwell brings an important chapter of the Affordable Care Act’s (ACA) implementation to a close. The fight about health reform is not over, with Republican presidential candidates promising to repeal the law while supporters of the law push for Medicaid expansion and the development of Accountable Care Organizations.

But it is important to pause and reflect on what we have learned the last five years. This is uncharted territory for supporters of comprehensive health reform who for so many decades studied why legislation was so difficult to enact rather than how complicated it is to implement. […]

Read the full piece here.

Happy about the Supreme Court’s ACA decision? Thank a law professor

By Rachel Sachs

[Originally published on The Conversation].

The core of the Affordable Care Act (ACA) has now survived its second trip to the Supreme Court.

Chief Justice John Roberts wrote for the majority in King v Burwell, holding that the federal government may provide subsidies for citizens to purchase health insurance on exchanges that were established by the federal government, rather than by their own state.

A ruling for the challengers (the “King” in King v Burwell) would not only have stopped the flow of subsidies to 6.4 million people currently receiving them, but it would also have disrupted the functioning of the individual insurance markets in the 34 states that have not established their own exchanges. Continue reading

Tackling Medicaid In Massachusetts

This new post by Jeffrey Sánchez 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 Affordable Care Act (ACA) provides a number of tools to address longstanding problems in our fragmented health care system. At the national level, the Centers for Medicare and Medicaid Services (CMS) are redefining Medicare through initiatives that promote payment and delivery reform, such as Shared Savings and Value-Based Purchasing. States are also seeking their own opportunities to move away from inefficient systems that reward volume over quality. In particular, state Medicaid programs have the potential to play a major role in these efforts.

Given the number of individuals Medicaid covers, it has the biggest potential impact in improving health care. Medicaid covers more than 1 in 5 Americans, funding more than 16 percent of total personal health spending in the United States. With ACA Medicaid expansion, enrollment increased in 2014 by 8.3 percent and led to an increased overall Medicaid spending growth of 10.2 percent. Total Medicaid spending growth in 2015 is expected to be 14.3 percent with a 13.2 percent enrollment growth. This is not an insignificant portion of both state and federal health care dollars. Thoughtful and concerted reforms to Medicaid have the potential to reduce spending and improve care quality. […]

Read the full article here.

The ACA, The ADA, And Wellness Program Incentives

This new post by Kristen Madison 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.

Wellness programs have been enthusiastically embraced by employers seeking to promote health and hoping to control costs. On April 20, 2015, program proponents received long awaited news: the Equal Employment Opportunity Commission (EEOC) issued a proposed rule clarifying how the Americans with Disabilities Act (ADA) would apply to wellness programs. Many large employers likely breathed a sigh of relief upon reading the rule, but the rule is not final and may reignite a longstanding debate over the appropriate use of wellness incentives.

Wellness programs have become common in the workplace. A 2014 Kaiser Family Foundation survey found that among large employers offering health benefits, just over half offered an opportunity to complete a health risk assessment (HRA), a questionnaire that is often a gateway for the provision of health risk information and other wellness program components (Exhibit 12.8 in the Kaiser survey). A similar fraction offered biometric screenings (Exhibit 12.1), such as tests for cholesterol or blood pressure, or measurement of body mass index. Some screening programs test for cotinine, which is associated with nicotine exposure.

Some wellness programs offer financial incentives such as premium adjustments or gift cards. The 2014 survey found that more than half of large employers using HRAs provide incentives for their completion, and more than a third of these incentives equaled or exceeded $500 (Exhibit 12.10). A federally commissioned report prepared by RAND suggests that incentives are effective in increasing HRA completion. […]

Read the full article here.

Exploring The Significant State-To-State Variation In Marketplace Enrollment

This new post by the Petrie-Flom Center’s Academic Fellow Matthew J. B. Lawrence 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.

What role did geography, advertising, community, Navigators, and the controversy surrounding the Affordable Care Act (ACA) play in consumers’ decisions whether to purchase health insurance in the individual marketplaces? The percentage of potential exchange marketplace enrollees who actually made use of the marketplace to purchase insurance varied widely from state to state for 2014 and 2015.

As of February 22, 2015, for example, there were eight states with enrollment at 50 percent or greater and eight states with enrollment at 25 percent or lower. (Per the Kaiser Family Foundation, the top eight were Vermont, Florida, Maine, DC, Delaware, Pennsylvania, New Hampshire, and North Carolina. The bottom eight were Colorado, Ohio, Alaska, Hawaii, North Dakota, Minnesota, South Dakota, and Iowa).

It would be an interesting and challenging task to explain this variation empirically. Generating reliable statistical inferences from inter-state comparisons is notoriously difficult, and the variables at play here range from the easily measured (percent of population eligible for subsidies, navigator grant amounts, number of participating insurers, premiums) to the not-so-easily measured (enthusiasm for Obamacare, efficacy of state or federal outreach efforts, geography, education, availability and usefulness of charity care and emergency Medicaid, functionality of state exchange website, population health, availability of health services). […]

Read the full post here.

Going for gold: behavioral science reveals new biases in ACA exchange shopping

A new New England Journal of Medicine commentary by Peter A. Ubel, M.D., David A. Comerford, Ph.D., and Eric Johnson, Ph.D. highlights significant flaws in the way information is presented to insurance shoppers on state and federal exchange websites. The authors present original survey data to support the argument that subtle aspects of current website designs inappropriately bias decision making. The authors make their case most strongly in an analysis of the well-known gold, silver and bronze labels:

Consider the decision to lump health plans into categories with names such as bronze (for low monthly premiums and high out-of-pocket costs) and gold (for higher monthly premiums and lower out-of-pocket costs). These labels could have unintended effects on people’s attitudes toward which plans are best. After all, gold, silver, and bronze convey best, second best, and third best through association with sporting events, but the best plan for one enrollee will be different from the best plan for another.

To test whether such associations might influence people’s perceptions of insurance plans, two of us recruited a convenience sample of participants from public buses in Durham, North Carolina, and asked them which category of plans they would look at first if they were shopping for health insurance. To half the people, we described the gold plans as having higher monthly premiums and lower out-of-pocket costs — the language used by many exchanges. For the other half, we switched the gold and bronze plans, describing the gold plans as having lower monthly premiums and higher out-of-pocket costs.

Continue reading

The Puzzle Of Antibiotic Innovation

This new post by Kevin Outterson appears on the Health Affairs Blog, as part of 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.

Dame Sally Davies, the Chief Medical Officer of England, warns that we are approaching an antibiotic apocalypse. A former chief economist at Goldman Sachs estimates that unless dramatic action is taken now, antimicrobial resistance could kill 50 million people a year and cause $100 trillion in cumulative economic damages.

In the US, dire warnings have issued from the Centers for Disease Control and Prevention (CDC), the President’s Council of Advisors on Science and Technology, and the President himself through an Executive Order on Combating Antibiotic-Resistant Bacteria in September 2014 (summary here). The President’s new budget asks for $1.2 billion to be spent on antibiotic resistance. […]

Read the full post here.

Tomorrow: Legal and Ethical Issues in Healthcare Start-Ups

vaccines_slideLegal and Ethical Issues in Healthcare Start-Ups

Monday, October 6, 2014 4:00 PM

Harvard Law School
LOCATION CHANGE: Wasserstein Hall, Milstein West AB
1585 Massachusetts Ave.
Cambridge, MA 02138

The full list of panelists is available on our website here.

New healthcare start-ups face a range of legal and ethical challenges as they develop new products and services and solicit financial support from investors. Building on the success of the President’s Challenge at the Harvard Innovation Lab, which invites teams of Harvard students to develop innovative solutions to a range of global issues including healthcare accessibility and affordability, the Petrie-Flom Center will host a discussion of the issues that past winners of the President’s Challenge have faced as they seek to move their ideas out of the lab and into the private sector.

The panel discussion will be followed by the Petrie-Flom Center’s Annual Open House reception. Join us to learn more about our work!

This event is supported by the Oswald DeN. Cammann Fund.

10/6/14: Legal and Ethical Issues in Healthcare Start-Ups

vaccines_slideLegal and Ethical Issues in Healthcare Start-Ups

Monday, October 6, 2014 4:00 PM

Wasserstein Hall, Milstein East B, Harvard Law School, 1585 Massachusetts Ave.

The full list of panelists is available on our website here.

New healthcare start-ups face a range of legal and ethical challenges as they develop new products and services and solicit financial support from investors. Building on the success of the President’s Challenge at the Harvard Innovation Lab, which invites teams of Harvard students to develop innovative solutions to a range of global issues including healthcare accessibility and affordability, the Petrie-Flom Center will host a discussion of the issues that past winners of the President’s Challenge have faced as they seek to move their ideas out of the lab and into the private sector.

The panel discussion will be followed by the Petrie-Flom Center’s Annual Open House reception. Join us to learn more about our work!

This event is supported by the Oswald DeN. Cammann Fund.

Live Blogging: Post-Trial Responsibilities Conference, Session 2

By Zachary Shapiro

Hello from the Post-Trial Responsibilities conference! I will be live blogging session 2: where speakers will be providing important perspectives on PTA. Barbra Bierer is monitoring the discussion.

We started with Richard Klein calling in from FDA:

Richard is talking about post-trial responsibilities. He points out that there is a justice issue here with ensuring access to health care and up to date interventions. He points out that while the FDA can encourage Post-Trial Access (PTA), it has no authority to require or ensure it. He points to moral authority, rather than legal. Foreign trials, however, are a different story, as the FDA has sway over protocol applications that are submitted in the US. Richard begins highlighting some specific considerations for protocol drafters and IRBs: particularly focusing on determining monitoring plans, as well as figuring out financial responsibilities for the provision of PTA.

He moves on to highlight that there is more of a moral obligation than a legal obligation. FDA is supportive of the provision of PTA. He believes that enthusiasm must be tempered, as there are situations when PTA is not appropriate. These include studies that have significant safety concerns, studies of bio-markers as well as validation studies that do not specifically examine safety and effectiveness. There are also situations where PTA is simply not feasible, particularly if additional drugs do not exist (one thinks of the recent Ebola treatment), if there is insufficient safety data, or if there is no practical capacity or resources to provide safety monitoring. We must also be aware of financial limitations, especially for start-up biotech firms that might not have deep pockets. Continue reading

Sunstein Keynote at Petrie-Flom Annual Conference featured in Harvard Law Today

sunstein-atlanticHarvard Law Today has posted a feature on Cass Sunstein’s keynote address at the 2014 Petrie-Flom Center Annual Conference, “Behavioral Economics, Law, and Health Policy.” Sunstein, who is the Robert Walmsley University Professor at Harvard Law School and the co-author of Nudge: Improving Decisions About Health, Wealth, and Happiness, addressed the opening day of the conference on May 2, 2014, on the subject of “Choosing Not to Choose.”

Full video of the conference will be available soon via the Petrie-Flom Center’s website. In the meantime, you can read about and view Sunstein’s keynote address here.

DUE 6/3: Call for Abstracts: Emerging Issues and New Frontiers for FDA Regulation

            PFC_Logo_300x300                    FDLI_Logo_380

The Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School and the Food and Drug Law Institute are pleased to announce an upcoming collaborative academic symposium:

Emerging Issues and New Frontiers for FDA Regulation

Monday, October 20, 2014 

Washington, DC

We are currently seeking abstracts for academic presentations/papers on the following topics:  Continue reading

Call for Abstracts: Emerging Issues and New Frontiers for FDA Regulation

PFC_Logo_300x300FDLI_logo_pink

 

 

 

The Petrie-Flom Center for Health Law Policy, Biotechnology, and Bioethics at Harvard Law School and the Food and Drug Law Institute are pleased to announce an upcoming collaborative academic symposium:

Emerging Issues and New Frontiers for FDA Regulation

Monday, October 20, 2014 

Washington, DC

We are currently seeking abstracts for academic presentations/papers on the following topics:

  • Stem cell therapies
  • Nanotechnologies
  • Genetic (and biomarker) tests
  • Gene therapies
  • Personalized medicine
  • Comparative efficacy research
  • Drug resistant pathogens
  • Globalized markets
  • Tobacco
  • GMO
  • Bioterrorism countermeasures
  • Mobile health technologies
  • Health IT
  • Drug shortages
  • Other related topics

Abstracts should be no longer than 1 page, and should be emailed to Davina Rosen Marano at dsr@fdli.org by Tuesday, June 3, 2014. Questions should also be directed to Davina Rosen Marano.

We will notify selected participants by the end of June.  Selected participants will present at the symposium, and will be expected to submit a completed article by December 15, 2014 (after the event) to be considered for publication in a 2015 issue of FDLI’s Food and Drug Law Journal (FDLJ).  Publication decisions will be made based on usual FDLJ standards.

#BELHP2014 7: Defaults in Health Care

[Ed. Note: On Friday, May 2 and Saturday, May 3, 2014, the Petrie-Flom Center hosted its 2014 annual conference: “Behavioral Economics, Law, and Health Policy.”  This is an installment in our series of live blog posts from the event; video will be available later in the summer on our website.]

Our esteemed moderator Gregory Kurfman of the New England Journal of Medicine oversaw a session that dug deep into how defaults work and why. The result was a better understanding of the regulatory tool most associated with soft paternalism, but doubt about whether its operation in healthcare is as libertarian or asymmetrically paternalistic as advertised.

Continue reading