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Cost Containment

This Company & Family Failed the New York Times Test

By Brian L. Grant MD

The recent fungal meningitis outbreak traced to a Massachusetts-based compound pharmacy is tragic for the many current and potential victims. And it was entirely preventable based upon the reports of major manufacturing breaches.

The New York Times article, “Spotlight Put on Founders of Drug Firm in Outbreak,” illustrates how a company and their family failed the New York Times test.

Years ago I learned the concept of the “New York Times Test”. This imaginary test refers to the importance in business and life of upholding standards of behavior and avoiding adverse actions that might cause one to end up on the cover of that venerable journal.

In other words, when considering an action or omission, one might ask themselves how they would feel if the action or outcome of one’s decision were to land on the cover of the Times. Would one be proud, or running for cover under a cloud of shame and perhaps liability.

This outbreak appears from public accounts to be a failure of leadership by the owners of the company, and a culture internally where good men and women were either unaware of the breach, or if aware (which I suspect must have been the case for at least some), chose to do nothing.

Errors of this magnitude appear systemic and not accidental. And in drug manufacturing and other mission critical endeavors where lives are at stake when there are errors, the results may not be recoverable. One can’t help but wonder what logic permitted these errors and omissions to be practiced.

More facts will undoubtedly develop with future investigations and litigation. And more than one business school lesson will flow from these events.

In the past we at MCN have confronted value breaches in our own industry. These include inconceivably brief exams and routine unnecessary ordering of imaging and other actions that may be expedient and profitable but uncalled for.These and similar acts dishonor the integrity of medicine and the patients who are compelled to attend such examinations.

To our dismay, such behaviors continue in certain settings, lowering the bar of quality and integrity for those involved, and provide cover for those who wish to criticize our industry as a whole.

We at MCN have pledged to not knowingly engage in such actions, call them out when we see them, and walk away from opportunities to follow along. We think it is long overdue for those in health services to remember and hew to their honorable medical roots. A decent living will follow.

It is much easier to act in a way where their integrity is not sacrificed. While short-term profits may take a hit by saying no to short-cuts and actions that don’t reflect the highest values, living and acting based upon such values drives long-term profits, satisfied clients, employees, and shareholders.

Behaving ethically should not be extraordinary or heroic. It should be expected and normal.

CVS to Pay $5 Million for False Drug Pricing Allegations

In one of the first False Claims Act settlements involving Medicare’s Prescription Drug Program, a subsidiary of CVS Caremark Corp., RXAmerica, agreed to pay $5.25 million to settle claims of false prescription drug pricing, according to the Washington Post.

The settlement will resolve two separate lawsuits from 2008-2009 against CVS in Woonsocket, Rhode Island. Federal investigators said RXAmerica had given false data regarding their prices of prescription drugs.

The issue arose when RXAmerica advertised false pricing on Plan Finder, a website where senior citizens can estimate their prescription drug expenses. However, the actual prices offered by the company were significantly higher than indicated on the website.

“Those navigating our Medicare system deserve accurate information so they can make informed choices and obtain the benefits to which they are entitled,” said Loretta Lynch, U.S. Attorney for the Eastern District of New York. Read More…

Similar to the settlement against CVS  earlier this year, this agreement is part of the government’s initiative to combat health care fraud.

 

 

The Need for Transparency in Healthcare

When you’re making a major life decision, like buying a car or house, you will most likely research, compare, and find the best value for your buck.

With thousands of dollars on the line, we assume it is our basic right to have information like price, quality, and safety readily and easily available.

So why is it so different when we are purchasing health care services?

A recent Wired Magazine article, “Peeling Away Health Care’s Sticker Shock,” by Andy Grove, sheds light on our current health care marketplace and how transparency has never been more crucial.

“The health care industry plays a gigantic game of Blind Man’s Bluff, keeping patients in the dark while asking them to make life-and-death decisions. The odds that they will make the best choice are negligible and largely depend on chance. Patients need to have data, including costs and their own medical histories, liberated and made freely available for thorough analysis. What health care needs is a window sticker—a transparent, good-faith effort at making prices clear and setting market forces to work.”

Grove explains that as other marketplaces used to be opaque, most are now transparent and more efficient because of technology. You know what you are getting and what it will cost before you agree to pay out. He continues:

“Consider a recent study of the costs of routine appendectomies performed throughout California. Though the procedures were largely identical, the charges varied more than 100-fold—from $1,529 at the cheapest to $182,955 at the most expensive.”

Nearly 100 people commented on this article, many making valid points. One person commented about a new site called Clear Health Costs that aims “to bring transparency to the health-care marketplace by telling people prices for medical procedures and items. By revealing prices, we are empowering consumers to make informed decisions about the costs of their medical care and coverage.” The site, still in it’s early stages, provides doctor names and prices for specific procedures in different states.

“We are doing our part for transparency over at clearhealthcosts.com — comparing prices of common procedures. (How cost and price and payment became so disconnected is fascinating.) As more and more people have more and more skin in the game, it’s important to show these prices. Then we can have the conversation about quality — and then the conversation about value. But until price comes out of the shadows, patients won’t have enough information to wield the economic power Andy Grove talks about.” Read More…

Ultimately, our health is our most valuable asset. Shouldn’t we have the basic right to know health costs before making life-and-death decisions?

Follow up: Scott’s Story and the Election

By Vanessa Radatus

After last week’s article, “A Possibly Fatal Mistake,” by Nicholas Kristof, a number of responses prompted further discussion on the issue of health reform and our upcoming election.

In a follow-up column, “Scott’s Story and the Election,” Kristof provides two counter arguments acknowledging those who do not agree that it is the government’s (or their) responsibility to take care of the millions who are unable to do so themselves.

His first argument reflects the basic idea that we must accept that imperfection as not only our present reality, but our human destiny. That is why our government has created safety nets in our laws and institutions to prevent and mitigate human error. Kristof states:

“First, a civilized society compensates for the human propensity to screw up. That’s why we have single-payer firefighters and police officers. That’s why we require seat belts. When someone who has been speeding gets in a car accident, the 911 operator doesn’t sneer: “You were irresponsible, so figure out your own way to the hospital” — and hang up.

To err is human, but so is to forgive. Living in a community means being interconnected in myriad ways — including by empathy. To feel undiminished by the deaths of those around us isn’t heroic Ayn Rand individualism. It’s sociopathic. Compassion isn’t a sign of weakness, but of civilization.”

Kritsof’s point should not be neglected. Does not every American citizen feel that our government is somewhat responsible for keeping our nation’s people safe? Why then, do we have government-created agencies like the FDA, the FDIC, and Social Security?

Because we as a nation have learned from our past and humans make mistakes. And if we have these institutions to act as safety nets for our food, medicine, and money, shouldn’t there be something to act as a guard rail to protect our nation’s health?
Kristof’s second argument is that if you don’t believe in universal healthcare because you don’t want to pay for the mistakes of the uninsured, you are already paying for them, only, at a higher rate.

“My second argument is that if you object to Obamacare because you don’t want to pay Scott’s medical bills, you’re a sucker. You’re already paying those bills. Because Scott wasn’t insured and didn’t get basic preventive care, he accumulated $550,000 in bills at Seattle’s Swedish Medical Center, which treated him as a charity case. We’re all paying for that.” Read More…

So as our last presidential debate airs tonight, watch it. Become an informed voter. Try not to be persuaded by a candidates looks or demeanor but rather by his ideologies and how he will try to make our country better for everyone, rich or poor, old and young.

If you would like to learn more or follow Nicholas Kristof, visit him at his blog, On the Ground, or join him on  Facebook and Google+, watch YouTube videos and follow him on Twitter.

Drug Distributors Pressured to Reduce Narcotic Painkiller Shipments

Over the past few months, the DEA has tried a variety of different tactics to battle our painkiller epidemic.

From arresting hundreds of doctors, cracking down on pill mills, and investigating pharmacies, it’s most recent attempt has large drug distributors rattled.

The New York Times reports that after honing in on Florida and Ohio, the DEA is now putting pressure on other pharmaceutical distributors nationwide.

Earlier this year, the agency charged drug distributor Cardinal Health for violating it license to sell controlled drugs. Since then, Cardinal no longer does business with a dozen pharmacies in Arizona, California, Nevada, and Oklahoma and the number is growing.

The article notes that the pressure has pushed distributors to create a nationwide shipment reduction to pharmacies and doctors who order a high volume of narcotic pain killers.

“We had a strong anti-diversion system in place, but no system is perfect,” Cardinal Chairman and Chief Executive told the Times.

Since then, they have strengthened their criteria and  have also  created a committee that evaluates pharmacies that order large amounts of narcotic drugs.

Another major distributor, AmerisourceBergen, recently disclosed that it also faces a federal criminal inquiry into its oversight of painkiller sales.

The DEA’s crackdown on pharmacies and big distributors like Cardinal and AmericsourceBergen have shown that the agency is taking a much more aggressive approach to ending our nations painkiller issue.

However, doctors and pharmacies are critical of the way distributors have abruptly cut them off from their supply. One California pharmacist argued that his pharmacy specializes in pain patients which would explain his high volume orders.

“The drug distribution system is a sprawling one that involves about 800 companies, which range in size from a few giants like Cardinal to hundreds of small firms. For wholesalers, the markup on medications can be small, sometimes a few pennies a pill. But with billions of pills sold annually, the profits can be big. Narcotic painkillers are now the most widely prescribed drugs in the United States, with sales last year of $8.5 billion.”

There is also added incentive to sell Oxycontin and other narcotic painkiller because of their addictive properties and because street value on the black market is as much as $80 per 80-milligram dose.

However, while the DEA is implementing new tactics against distributors for failing to notify the agency of a “suspicious order” from a pharmacy or other customer, it does not share those reports with officials in the state where the pharmacy is based.

After the New York Times had asked for the agency to disclose the number of such reports it received annually, they declined saying, the agency considered such statistics “law enforcement sensitive” information.

In response, the Times has filed a Freedom of Information Act request seeking that data. Read More…

 

Rational Care Includes Economic Analysis of Value

By Brian L. Grant MD

The New York Times article “In Cancer Care, Cost Matters,” is written by oncologists who are attempting to engage in rational discourse about the cost-benefit of chemotherapy drugs. They note:

“Physician guideline-setting organizations likewise focus on whether or not a treatment is effective, and rarely factor in cost in their determinations. Ignoring the cost of care, though, is no longer tenable. Soaring spending has presented the medical community with a new obligation. When choosing treatments for a patient, we have to consider the financial strains they may cause alongside the benefits they might deliver.”

In the case of Medicare beneficiaries, they do share in the cost of medications, but generally insured individuals are frightfully blind to the cost of their care. Thus it falls upon payers and physicians to make rational decisions on behalf of patients, and the cost should be part of the equation. The cost may be relative to doing nothing, or as stated in this article, to an alternative treatment.

To suggest that price should not be part of the decision process in health care is naïve. A life is priceless, but the cost of maintaining life in a world of finite resources must include a realistic assessment of the impact of the intervention and the price associated with it. To do otherwise diverts these resources from other uses, that might include more impactful treatments for individuals and society.

And if and when companies devising such treatments understand that standards and judgment are being imposed, they may modify and adjust the costs of their products to gain more acceptance and access to the market. Read More…

 

The Costly Marketing Budget for Antipsychotic Drugs

By Brian L. Grant, MD

At the American Psychological Association Conference, the pharmaceutical industry has a large marketing presence.

The New York Times article, “A Call for Caution in the Use of Antipsychotic Drugs,” was alarming but not surprising to me as a psychiatrist. The numbers are staggering though. The advertising budget alone, at 2.4 billion dollars for the new antipsychotic drugs equates to about $57,000 per US psychiatrist (about 42,000 total)!

This marketing budget total alone just approximates the entire market for non-Federal IME’s and medical reviews. If spread across the U.S. population evenly, each of us would have consumed about 58 dollars worth of antipsychotic drugs in the past year! The use of such medications is clearly concentrated to a small portion of the population and are prescribed in large amounts by a small portion of psychiatrists and other licensed practitioners.

Anyone who has been to a major psychiatric conference would not be surprised at the massive booths from the drug purveyors manned by sharp men and women hawking the wares, with various enticements to visit their booths. The incentives to over-prescribe is clear, given the money involved.

The fact that a number of medical lightweights fail to understand how they are being used as gatekeepers to these drugs is sad and costly, not only for payers, but for patients who are often given these costly drugs with very real side effects, when less costly alternatives with equal or better outcomes exist. To deny the positive impact of these medications in select patients is wrong. But common sense combined with available science should lead to the obvious conclusion that this is not right.

Label creep, where a good drug is advocated for the wrong reasons, is not unique to psychiatry. Articles like this by Dr. Friedman does little to bring pride to my profession. Similar scrutiny is warranted for so-called ADHD (attention deficit hyperactivity disorder) in adults, fibromyalgia and any other malady that is largely associated with profitable, or abused drugs and often direct to consumer advertising to create a wider market.

U.S. Budget Experts’ Forecast: 6 Million Americans to Pay Healthcare Penalty

By 2016, virtually every American citizen will be required to have health insurance or will be faced with a penalty of about $695 per person.

While the exact number of people affected by this penalty is not certain, a new analysis by the Congressional Budget Office (CBO) estimates nearly 6 million American’s may be subject to the penalty under the Affordable Care Act’s (ACA) individual mandate.

The recent bump – about 2 million more than first estimated in 2010- is due to projection changes about the economy, unemployment and lower income rates,  as well as state opposition to expand Medicaid programs, which is most unpopular in states with Republican governors or Republican-majority legislatures, according to the CBO. Read More…

The analysis report did include the various exemptions for those who will not have to purchase health insurance or pay the penalty due to financial hardship, religious objections and other circumstances.

But it is also important to consider that many people will not have to worry about the penalty since they will already have coverage through a parents plan until they are 26, through an employer, and/or government programs like Medicare and Medicaid. Not to mention those who simply take responsibility and buy a plan.

So which 6 million Americans will this penalty affect?

A TIME magazine article, “Tax Penalty to Hit Nearly Six Million Uninsured,” explains the CBO projection and the political reactions to the announcement.

Romney’s spokeswoman, Andrea Saul says the new report is more evidence that Obama’s law is a “costly disaster.”

The Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.

Erin Shields Britt of the Health and Human Services Department stated:

“This (analysis) doesn’t change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it…We’re no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it.” Read more…

Under the Affordable Care Act, the money raised from the penalty must be used mainly to fund government subsidies to help middle- and low-income people pay for health insurance. In the end, the outcome of  our current health care law depends on what happens in the upcoming presidential election.

DEA Investigates Walgreens for Oxycodone Distribution

In an effort to battle the prescription drug abuse epidemic, the U.S. Drug Enforcement Agency (DEA) is turning it’s focus to drug wholesalers and retail pharmacies. Last Friday, the DEA issued warrants to inspect six Walgreens Florida pharmacies on suspicion that Oxycodone is being diverted to the black market.
The Reuters article “Crackdown on Prescription Painkillers Widens to Walgreens,” provides a breakdown of the DEA’s investigation and why increased sales volume of highly addictive painkillers sparked some red flags. The article stated:

“The purchase of large amounts of Oxycodone by a retail pharmacy is indicative of a pharmacy that fills prescription issued by physicians at pain clinics and/or a pharmacy which services primarily drug seeking individuals that abuse the medication.” Read More…

The death toll from narcotic painkillers now exceeds those of heroin and cocaine combined and DEA agents are determined to stop the illegal distribution of Oxycodone. They have already suspended  CVS Caremark Corp and Cardinal Health Inc’s license to distribute because they believe they “failed to conduct due diligence to insure that all prescription drugs are sent only to legitimate channels.”

All DEA Registrants have an obligation to ensure that medications are getting into the hands of legitimate patients, and when they choose to look the other way, patients suffer and drug dealers prosper,” DEA Special Agent in Charge Mark Trouville said in the email. Read More…

A Global Health Issue: America’s Health Workforce & Countries Without Doctors

By Vanessa Radatus

The New York Times issued an Op-ed article last week that brings both good and bad news about our current healthcare employment dilemma. While jobs in the health care sector have increased by more than 1.2 million this year, there seems to be an imbalance in our medical education model and the number of foreign physicians we import.

The article “America’s Health Worker Mismatch” addresses the fact that despite increased demand for their graduates, medical schools have done little to expand their output and therefore must turn away hundreds of thousands of qualified medical school applicants. What’s more, our medical school tuition costs have increased by 312 percent in the past 20 years and some health specialties have raised the bar for education credentials – meaning more years of school, higher attrition rates, higher debt, higher wage demands and fewer workers from low-income areas.

The author of the op-ed, Kate Tulenko, is the senior director of health system innovation at IntraHealth International and author of “Insourced: How Importing Jobs Impacts the Healthcare Crisis Here and Abroad.” She explains that the United States dependence on foreign-trained health-care workers is creating a mismatch in our health care work force.

“It’s no surprise, then, that the response to this self-made labor shortage has been to recruit inexpensive workers from abroad, including the 57 poor countries defined by the World Health Organization as having significant shortages of their own. Among them is India, America’s largest source of foreign-trained doctors. A special visa program has made hiring these workers even easier… Today about 12 percent of the health work force is foreign-born and trained, including a quarter of all physicians…That’s bad for American workers, but even worse for the foreign workers’ home countries, including some of the world’s poorest and sickest, which could use these professionals at home.” Read More…

This trend is worrisome as most foreign-trained physicians applying to U.S. residency programs come from countries that are suffering a severe health service shortage. It raises the question: Does recruiting an imported physician workforce create more problems than solutions?