Pharma cash flows to doctors for consultant work despite scrutiny

This article was published on January 6, 2019 on ctmirror.org, written by Sujata Srinivasan.

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Image Source: ctmirror.org

With physicians’ compensation from pharmaceutical and medical device companies under increasing scrutiny, payments to doctors in Connecticut for consultant work rose to $8.5 million in 2017, up from $8 million in 2016.

Payments for meals, travel and gifts also increased from $3.2 million in 2016 to $3.5 million in 2017, data from the Centers for Medicare & Medicaid Services show.

Of the total $27.2 million in payments, $4.37 million – or 16 percent – went to 10 doctors holding licenses in Connecticut.

The highest paid doctor was Dr. Paul Sethi, an orthopedic surgeon in Greenwich, who accepted slightly more than $1 million in 2017 in royalty fees, consulting work, and other services from several companies, including Arthrex Inc., and Pacira Pharmaceuticals Inc., maker of Exparel. The drug, Exparel, is marketed as an alternative to opioid painkillers post-surgery. Sethi frequently takes to Twitter to promote the use of a non-opioid alternative and is listed on the Pacira website in a case study. He did not respond to C-HIT’s request for an interview.

Dr. Robert Alpern, dean of the Yale School of Medicine, received $524,611 for his work as a director on the boards of Abbott Laboratories and AbbVie Inc. Alpern said that he does not provide paid lectures, does not speak for the pharmaceutical companies, does not see patients or write prescriptions, and that his work on the boards is “fully disclosed to Yale University and Yale New Haven Hospital.”

“I recuse myself from any decisions related to either of these companies,” Alpern said.

The financial relationships between pharmaceutical and medical device companies and doctors, as well as teaching hospitals, have been disclosed since 2013, under the Affordable Care Act. The law is intended to provide transparency into the business connections between health care providers and the industry.

The law is also driving some doctors—like infectious diseases specialist Dr. Roger Echols of Easton—to give up their license to practice medicine. “It’s why I did not revive mine last year,” he said, referring to 2016.

Echols was paid $526,881 in 2017 for his work as a consultant primarily for Japan-headquartered Shionogi & Co., best known as the maker of the cholesterol drug Crestor. Echols said he stopped seeing patients and prescribing medication years ago, when he transitioned to the pharmaceutical industry.

Even practicing doctors, Echols said, are now declining payment when they meet with him to discuss drug research. “They’ve gone so far that they won’t even allow us to provide a bagel or a cup of coffee at a meeting because that has to be reported.”

Overall, non-research payments to Connecticut doctors fell 8 percent from $29.7 million in 2016 to $27.2 million in 2017, the data show. Much of the decline occurred in royalty and license fees on sales of drugs and medical devices, charitable contributions, and ownership or investments in companies.

In research payments to Connecticut doctors, pharma and medical device companies paid $901,196 in 2017, down from $1.1 million in 2016, according to the data.

Nationally in 2017, doctors were paid $2.82 billion by 1,525 pharma and medical devices companies. Research payments totaled $4.66 billion.

Dual role of doctors

The dual role of doctors as providers of health care to patients and marketers for drug and medical device companies has been scrutinized for several years and has been the subject of extensive research.

One report, published in a medical cancer journal that examined several studies concluded, “All the money and attention drug representatives shower on doctors has its intended effect: building relationships with doctors and ultimately changing how they prescribe.”

A study published in October 2017 by the U.S. Library of Medicine, National Institutes of Health; found that gifts from pharmaceutical companies result in higher drug costs: “More prescriptions per patient, more costly prescriptions, and a higher proportion of branded prescriptions.”

“There is strong evidence that pharma payments are associated with higher prescribing of the promoted medications, and with higher costs,” said Ellen Andrews, executive director of the Connecticut Health Policy Project.

Dr. Bruce E. Strober, a professor of dermatology at UConn Health, said, “Nearly all my colleagues—anybody who is a specialist in the field—do speak for drug companies, and I am compensated for my time, yes. Unequivocally, it does not alter my prescribing habits.”

Strober received $174,279 in 2017 primarily in consulting fees from Eli Lilly and Co., Bristol-Myers Squibb Co., Sanofi Genzyme, Novartis Pharma AG and Amgen Inc., among others. In 2016, the latest year on record, Strober made out 61 prescriptions for Amgen’s Enbrel amounting to $239,996, according to a C-HIT analysis of Medicare Part D data.  The same year, Amgen paid him $17,000.

Many doctors see their role as merely educating their peers, and being compensated for their time and expertise.

Dr. Mark Milner, an ophthalmologist in Hamden, received $186,125 in 2017 primarily in consulting and speaking fees from pharma companies specializing in dry eye, including Allergan Inc., maker of the blockbuster drug Restasis.

“There is nothing unethical if I am paid for my time. I give a comprehensive dry eye lecture whether I’m sponsored by Allergan, or Shire [North] or Bausch [formerly Valeant],” Milner said.

Dr. Steven Thornquist, a Waterbury-based ophthalmologist and former president of the Connecticut State Medical Society (CSMS), said, “The onus is on the individual physician to be ethical. I don’t think patients should give their doctor the third degree.”

It’s a fine line. Dr. Claudia Gruss, CSMS president, said physicians should decline a cash gift. “At the same time, there are certain physician experts that other physicians look up to, and educational events allow a very frank interchange between physicians in the field. We don’t want to decrease productive collaboration.” In 2017, Gruss received $120.94 in the general category – the category includes food and beverage at medical conferences.

Dr. Niranjan Sankaranarayanan, a nephrologist in Bloomfield, does not accept money for consulting and speaking engagements from pharma companies, though he did earlier in his career. “I was naïve. They invited me to talk about a medication that I was already prescribing, but after one or two talks, I didn’t feel comfortable,” he said. “This is a gray zone. They entice you with more and more, and there is no ceiling to this,” Sankaranarayanan said.  He received $201.60 in general category in 2017.

Medical ethicists say the public must know that their physicians very often have complex interests. “Medicare has databases but more research needs to be done on incentives ad kickbacks,” said Dr. Howard Forman, a Yale professor of diagnostic radiology, economics and public health, who often speaks about medical ethics.

“We have to prove cause-causation rather than correlation. It’s pernicious how the money flows,” said Forman.

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Why The U.S. Remains The Most Expensive Market For ‘Biologic’ Drugs In The World

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This article was published on December 19, 2018 on NPR.org, written by Sarah Jane Tribble. Photo Source: NPR.org.

Europeans have found the secret to making some of the world’s costliest medicines much more affordable, as much as 80 percent cheaper than in the U.S.

Governments in Europe have compelled drugmakers to bend on prices and have thrown open the market for so-called biosimilars, which are cheaper copies of biologic drugs often derived from living organisms.

The brand-name products — ranging from Humira for rheumatoid arthritis to Avastin for cancer — are high-priced drugs that account for 40 percent of U.S. pharmaceutical sales.

European patients can choose from dozens of biosimilars — 50 in all — which have stoked competition and driven prices lower. Europe approved the growth hormone Omnitrope as its first biosimilar in 2006, but the U.S. didn’t follow suit until 2015 with cancer-treatment drug Zarxio.

The U.S. government generally stops short of negotiating prices and drugmakers with brand-name biologics have used a variety of strategies — from special contracting deals to overlapping patents known as “patent thickets”— to block copycat versions of their drugs from entering the U.S. or gaining market share.

As a result, only six biosimilars are available for U.S. consumers.

European countries don’t generally allow price increases after a drug launches and, in some cases, the national health authority requires patients to switch to less expensive biosimilars once the copycat product is proven safe and effective, says Michael Kleinrock, research director for IQVIA Institute for Human Data Science.

If Susie Christoff, a 59-year-old who suffers from debilitating psoriatic arthritis, lived in Italy, the cost of her preferred medicine would be less than quarter of what it is in the U.S., according to data gathered by GlobalData, a research firm.

Christoff tried a series of expensive biologics before discovering a once-a-month injection of Cosentyx, manufactured by Swiss drugmaker Novartis, worked the best.

Without the medicine, Christoff says her fingers can swell to the size of sausages.

“It’s 24/7 constant pain in, like, the ankles and feet,” says Christoff, who lives in Fairfax, Va. “I can’t sleep, [and] I can’t sit still. I cry. I throw pillows. It’s just … awful.”

At first, Christoff’s copay for Cosentyx was just $50 a month. But when a disability led her to switch to a Medicare Advantage plan, her out-of-pocket costs ballooned to nearly $1,300 a month — more than three times her monthly car loan.

Christoff, with the help of her rheumatologist, Dr. Angus Worthing, tried Enbrel, Humira and other drugs before finding Cosentyx, the only drug that provides relief.

Christoff’s case is “heartbreaking,” Worthing says. Continue reading

Ben Barnes Unplugged

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This article was published on December 13, 2018 on CT News Junkie, written by Jack Kramer. Photo Source: CT News Junkie.

HARTFORD, CT — Outgoing Office of Policy and Management Secretary Ben Barnes believes two powerful groups — hospitals and municipalities — are the biggest obstacles to Connecticut’s fiscal stability.

Barnes made that statement during a far-ranging discussion Thursday at the Connecticut Voices for Children 18th Annual State Budget Forum.

Barnes joked that he could be so candid because he is resigning his position in a few weeks when Governor-elect Ned Lamont replaces his boss, Dannel P. Malloy.

“It’s the kind of thing you can say when you are two weeks away from the end of service.”

Acute care hospitals, Barnes said, “have used their virtuous status to somehow strengthen their demand for resources that the state cannot afford.”

He said hospitals are a “group that gets what they want virtually all the time.” He said they are the only group he knows of that is able to dedicate all the taxes they pay “right back to their own bottom line.”

He said if the state loses the lawsuit filed against it by most of Connecticut’s hospitals, it will cost the state $4 billion. The lawsuit, which was filed in 2016, challenges the taxing structure the state created for the hospitals. It’s still making its way through the court system and no decisions have been made.

As far as municipalities are concerned, Barnes was just as direct, stating legislators need a change of attitude.

Barnes, who once worked for the Connecticut Conference of Municipalities, the city of Stamford, and the schools in Bridgeport, said he knows that won’t be easy — “I used to work in local government.” But he said until legislators look at the bigger picture of the entire state and not just their own town, Connecticut will have budget problems.

Right now, Barnes said, “no town can ever get less than what they got the year before.”

“We are spending a lot of money on communities that have plenty of money,” he went on.

He cited the Teachers Retirement System as the best example of a system that needs to be fixed.

Currently, the state funds the teacher retirement program. Attempts by the Malloy administration to have the towns pick up some of that cost was met with a huge backlash.

The annual contribution to the Teachers’ Retirement System is about $1.3 billion, but could top $3.25 billion to $6.2 billion by 2032, depending on various experts, because of years of underfunding. Connecticut didn’t start setting aside money to pay for teachers’ retirements until around 1982.

Barnes said the state, sooner or later, has to deal more directly with the fact that more affluent communities such as Greenwich, Weston, and Westport need less state funding than poorer communities such as Hartford, New Haven, and Bridgeport.

“We tried to re-stack the deck to put more resources into neediest communities but it was dead on arrival,” Barnes said. “My parting hope is that majority of legislators will look at this issue again. There is enough money but we are currently spending it on people who don’t need it as much.”

In answer to a question from the audience about the issue of how municipalities could find savings, Barnes said the state needs to get serious about regionalization.

He said the legislature should “compel mergers” perhaps offering incentives to do so. He called that the “kind of big idea” that Connecticut needs to be thinking about, having municipalities with hundreds of thousands instead of a few thousand people with regional police, health, and school districts.

Barnes also talked at length about the issue of state pensions. He said he felt that state workers were unfairly “scapegoated” for the problem.

He said while there are some examples of very high pensions being paid to state employees, the average state pension is about $38,000.

“Local government pensions are way better,” the OPM secretary said. He said those who work in the private sector also retire with much better pensions than the average state worker.

Besides, Barnes said, there is a moral obligation involved.

“The law of the land is that when somebody retires with a pension they have a right to that pension,” Barnes said. “We can’t renege on our deal to employees.”

He said even if there was a legal way found to tear up state pension agreements, “Why on earth would we want to do that? These are folks who are cleaning up after our elderly parents or our grandparents. The idea that we would walk away from that is reprehensible.”

Barnes said while he believes that the budget will be in good hands with Lamont in charge and the newly-elected legislature, he also said he’s worried that the 2019 budget was built with what he termed “one-time sweeps” that will create a $630 million hole that will need to be filled in next year’s budget.

“It’s going to create a huge problem for 2020,” Barnes said.

Barnes did say there was some good news, too.

He said the state has seen a 10 percent increase in the withholding portion of the income tax over the past few months — much higher than has been budgeted.

The state is on track “to see some of the most robust growth” in revenue than it’s seen in the past decade, he said.

Accomplishments over the past eight years that he is particularly proud of include Medicaid and criminal justice reform.

“Crime is down, prison population is down,” Barnes said. He added that the state has also made strides in having greater civil rights and eliminating the death penalty.

Connecticut has also had the best results in the nation when it comes to controlling the per member, per month costs of Medicaid recipients.

“We are a national model,” Barnes said.

He referred to Connecticut as a place “I’m proud to call home.”

Barnes recently landed a new job as chief financial officer for the Connecticut State Colleges and Universities.

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IRS Releases Adjusted PCOR Fee

The Patient-Centered Outcomes Research Trust Fund fee is a fee on issuers of health insurance policies and plan sponsors of self-insured health plans that helps to fund the Patient-Centered Outcomes Research Institute (PCORI), which was established by the Affordable Care Act (ACA). The institute assists, through research, patients, clinicians, purchasers and policy-makers, in making health decisions by advancing the quality of evidence-based medicine. The institute compiles and distributes comparative clinical effectiveness research findings. Under the ACA, all medical plans are responsible for paying the Patient-Centered Outcomes Research fee to the IRS, based on the number of plan participants. If the plan is fully-insured, the insurance carrier pays the fee on behalf of the policyholder. If the plan is self-insured, the employer/plan sponsor must file the Form 720 for the second quarter and pay the fee to the IRS directly.

The IRS recently published its PCOR fee for policy and plan years ending:  January through September 2018 the applicable dollar amount is $2.39, which is multiplied by the number of covered lives determined for the appropriate period. For policy and plan years ending October through December 2018, the applicable dollar amount is $2.45.

All self-insured medical plans, including health FSAs and HRAs must pay the fee unless they are considered an excepted-benefit:

  • A health FSA is an excepted-benefit as long as the employer does not contribute more than $500/year to the accounts and offers another medical plan with non-excepted benefits.
  • An HRA is an excepted-benefit if it only reimburses for excepted-benefits (e.g., limited-scope dental and vision expenses or long-term care coverage) and is not integrated with the group medical plan.

The PCORI fee is calculated off the average number of lives covered during the policy year. That means that all parties enrolled will have to be accounted for such as dependents, spouses, retirees, and COBRA beneficiaries. For HRA and health FSA plans, just count each participating employee as a covered life.

Payment of the PCOR fee for the calendar 2018 plan year — the last year the fee applies — will be due by July 31, 2019 (payments may extend into 2020 for non-calendar-year plans).

Clients who have elected to have Diversified Group assist with the PCOR fee calculation can expect an email in June 2019, which will include a copy of the completed Form 720 and a PCOR calculation worksheet with supporting documentation. Clients will need to file the Form 720 by July 31, 2019.

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MassHealth Reinstates HIRD Reporting for Employer Sponsored Health Plans

The Health Insurance Responsibility Disclosure (HIRD) form is a new state reporting requirement in Massachusetts beginning in 2018. This form differs from the original HIRD form that was passed into law in 2006 and repealed in 2014. The 2018 form is administered by MassHealth and the Department of Revenue (DOR) through the MassTaxConnect (MTC) web portal. The HIRD form is intended to assist MassHealth in identifying its members with access to employer sponsored health insurance who may be eligible for the MassHealth Premium Assistance Program. The HIRD form is required annually beginning in 2018. The reporting period opens on November 1 and must be completed by November 30 of the filing year. 

Any employers with six or more employees in Massachusetts in any month during the past 12 months preceding the due date of the form (November 30th of the reporting year) are required to annually submit a HIRD form. An individual is considered to be an employee if they were included on the employer’s quarterly wage report to the Department of Unemployment Assistance (DUA) during the past 12 months. This includes all employment categories, full-time and part-time.

The HIRD form is reported through MassTaxConnect (MTC) web portal (https://mtc.dor.state.ma.us/mtc/_/#1). The MTC is where employer-taxpayers register to file returns, forms and make tax payments. To file your HIRD form, login to your MTC withholding account and select the “file health insurance responsibility disclosure” hyperlink. If you do not have a MTC account or you forgot your password or username, follow the prompts on the site or call the DOR at 614-466-3940.

INFORMATION REQUIRED FOR HIRD REPORTING

The HIRD Form will collect information about the employer’s insurance offerings, including:

  • Plan Information – plan year, renewal date.
  • Summary of benefits for all available health plans – information regarding in and out of network deductibles and out-of-pocket maximums can be found on the plan’s summary of benefits and coverage.
  • Eligibility criteria for insurance offerings – minimum probationary periods and hours worked per week to be eligible for coverage.  Employment based categories, such as full-time, part-time, hourly, salaried.
  • Total monthly premiums of all available health plans
  • Employer and employee shares of monthly premiums – information on employer and employee monthly contributions toward the cost of medical. Employer cost of coverage is your COBRA rate less 2% and less the employee contribution.

Due to the nature of the filing online, employers with employees in Massachusetts will need to complete this reporting themselves. However, Diversified Group may be able to assist you in the gathering of the required information. Please contact us by November 15th  if you need assistance with accumulating data.

Mass.gov has compiled a list of frequently asked questions regarding the HIRD form here.

Economies of Scale for Small Businesses

dgb-embIn late June, the Department of Labor introduced final rules on Association Health Plans (AHP), which will allow bonafide associations to offer healthcare plans to member companies. While we had hoped for a different approach to regulating these plans, association health plans will be regulated by states as MEWAs.

According to the final rules, an association that wants to establish a healthcare plan must already exist for another purpose. In other words, an association cannot be formed for the exclusive purpose of offering healthcare plans to its members. Another stipulation is that new self-funded association health plans cannot be established until April 1, 2019.

Association Health Plans will be exempt from the federal mandate on essential health benefits, but will remain consistent with popular Obamacare rules such as coverage of preexisting conditions and bans on lifetime limits.

While reserve requirements will vary from state to state, we expect that these plans will be quite costly to establish and closely monitored by state regulators. Nonetheless, for large associations with significant cash reserves, we expect this option to make it possible for thousands of small businesses to lower their cost of employee health benefits.

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The end of the health insurance carrier

This article was published on September 27, 2018 on Employee Benefit News, written by Nelson Griswold.

More than six years ago, Aetna CEO Mark Bertolini proclaimed that “the end of insurance companies, the way we’ve run the business in the past, is here.”

At the very least, it’s the beginning of the end for these dinosaurs. The health insurance carriers face slow but steady disintermediation by innovative next generation employers and benefits professionals who are using alternative funding to take control of employer health plans and reduce costs.

Merriam-Webster defines “disintermediation” as “the elimination of an intermediary in a transaction between two parties.” In general, the purpose of disintermediation is the removal of an unnecessary middleman that adds more cost than value to a process.

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Photo Source: Employee Benefit News

In our dysfunctional benefits/healthcare model, the employer delegates to the carrier middleman responsibility for controlling costs by managing the healthcare supply chain, which is all the medical and health-related products and services purchased by employees. The most costly are prescription drugs, hospitalization, outpatient surgery, and physician visits.

The employer wants lower healthcare costs and with a fully insured plan depends on the carrier to control the cost of healthcare by managing this complex supply chain. The carriers, however, consistently have failed to perform this most basic task. Healthcare costs have risen every year since 1960, according to the Centers for Medicare and Medicaid Services. And healthcare costs haven’t just risen but have soared, growing 261% between 1999 and 2016.

The carriers’ spectacular failure is the logical result of grossly misaligned incentives: Carriers financially benefit from rising healthcare costs. From 1999 to 2016, rising healthcare costs drove up health insurance premiums — also known as carrier revenue — by 213%, according to the Kaiser Family Foundation.

As of July, BUCAH stock values had grown an average of more than 255% in the previous five years. We can’t expect carriers to work to reduce healthcare costs and healthcare spending; businesses never work long-term for their customers’ interests against their own financial interests.

The employer that wants to take control of its health plan to reduce costs must disintermediate the carrier and implement some form of self-funding. No, self-funding isn’t new and it isn’t the solution by itself. I’ve written previously that the value in self-funding is control, not cost savings. Self-funding is a means to an end.

With control of the health plan thanks to self-funding, the employer can work with a NextGen benefits professional who knows how to manage the supply chain to both improve the quality and lower the cost of healthcare for the employer and employees.

This does not mean that every employer should disintermediate the carrier and jettison their fully insured plan. Not every employee population is a good fit for a self-funded health plan; some are too sick and need to stay fully insured. But for employers that are a good candidate for self-funding, responsible brokers and advisers have a fiduciary responsibility to their clients to disintermediate the carrier, if possible.

Sounds crazy … extreme? So did today’s $2,000, even $5,000 deductibles, just five years ago.

Benefits professionals and employers today have the power to reduce year-over-year healthcare cost while enhancing benefits and improving medical outcomes. But you can’t do it with a carrier running the show. If the employer can move to self-funding, it’s sheer malpractice not to disintermediate the carrier.

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