Here we go with our monthly summary of what’s in health research and policy journal Health Affairs. (Aug. HA)
Some of the articles focussed on drugs. The FDA classifies certain drugs as “orphan” ones because address diseases with low population prevalence. These drugs get certain breaks on development costs and timelines and mandated rebates to purchasers. The study found that these drugs recovered their clinical trial and other costs at least as fast as non-orphan ones, leading to questions about why they need “orphan” status to encourage development.
One criticism of drug manufacturers has been that they tend to focus on me-too brand-name compounds and ignore more novel approaches. An article looks at this and finds that in fact novel drugs, those with a new mechanism of action, tended to have higher gross revenues and likely profits than medications which used an existing mechanism of action. Manufacturers therefore have an incentive to develop novel compounds.
A big source of higher health spending is the practice of hospitals and physicians to buy office-administered drugs at a big discount and put a very high markup on them. A study looks at this for one infused cancer medication, Keytruda, and finds that hospitals charged payors 173% more than the drug cost under the 340B program and 78% more for non-340B programs. In contrast the markup, or profit margin, was only 16% in physician practices. Congress has to address this abuse, which is costing the government and private payers tens of billions of dollars annually.
Hospital systems increasingly own or control health plans, including those that offer Medicare Advantage. A study looked at whether the hospitals who offered an MA plan charged the same or different prices to other MA plans. The study found that most hospitals charged similar prices, but among those that didn’t, more was charged to the owned MA plan. This is a tactic used to hide profitability of the MA plan, which is subject to certain limits, unlike provider prices.
An interesting study looked at what happened in five states when retired employees were switched from fee-for-service Medicare and a supplement plan to Medicare Advantage plans. Use of preventative services increased and hospital admissions and nursing home use declined, with no impact on mortality.
Private equity and venture capital firms and some public companies have been active in acquiring various kinds of health care providers, including hospices. Concerns over impact on quality and cost have led to bans in some states. A study looked at the effect of hospice ownership by these groups and found that in general care intensity was reduced, but it wasn’t clear what the impact on health or quality was, which would be hard to detect in any event in a terminally ill population.
With a similar theme, a study looks at corporate ownership of behavioral health firms and finds that in regard to children there were lower screening rates, more use of ER and inpatient care, more drug prescribing and less therapy.
An article on the expanded child tax credit finds that it made little difference in low-income, female headed households. You can’t make people be more responsible by just giving them money.
Another study suggests that any health spending benchmarks set by states need to be adjusted for inflation. My quibble would be that health care inflation is often higher than general inflation and that excess spending is largely caused by high prices so we need benchmarks that put downward pressure on pricing.
