December 8, 2015 12:13 PM
This Wednesday, the Senate Select Committee on Aging will hold a hearing on “sudden price spikes” among certain off-patent drugs. The most widely publicized of these spikes was the recent price increase of Turing Pharmaceuticals’ toxoplasmosis treatment Daraprim, which jumped in price from $13.50 per dose to $750. The medical consequences of the price increase, obviously of concern to hospitals, doctors, and patients, was, at times, overshadowed by personal attacks leveled at Turing CEO Martin Shkreli, who quickly became a target for complaints about corporate greed.
Shkreli was unfazed, telling the audience at last week’s Forbes Healthcare Summit that he should have raised the price even higher, citing his duty to maximize profits to shareholders. That PR provocation aside, pricing in the drug industry is a complicated and often counterintuitive process that involves maneuvering around domestic and international government policies as much as it does simple matters of supply and demand. As Forbes staff writer Matthew Herper reported in September, even for people who think pharmaceutical companies are charging “unfair” prices for certain life-saving drugs, the question of what would constitute a fair price (and how to enforce such a verdict) can be very tricky.
Richard Evans of Sovereign & Sector, a former Roche executive and longtime industry analyst, says there’s probably nothing in Hillary Clinton’s proposals on drug pricing that would have prevented Shkreli from executing his price increase. Allowing importation of drugs from outside the U.S. might help, but companies can just limit supply, forcing countries to decide between U.S. patients and their own. And Clinton’s plan to limit patients’ out of pocket drug costs to $250 a month? Evans and I agree that would be a dream come true for pharma, losing one of the biggest points of real leverage that insurance companies have.
Even if we simply accept that a company like Turing has the right to charge whatever the market will bear, however, we are left with the question so frequently asked at the time of the Daraprim price hike—if the drug is decades old and no longer covered by its original patent, why doesn’t another company come along and market a cheaper alternative? The answer is that another company is doing exactly that. Express Scripts has already announced a partnership with Imprimis Pharmaceuticals to sell a similar treatment for $1 a dose rather than $750.
September 2, 2015 2:25 PM
If two couples make almost the same amount of money, should one of them be charged $2,000 more in Medicare Part B premiums? Logically, no, but to the federal government, the answer is sometimes “yes.” This problem will get worse in 2016, and much worse by 2018.
Under federal law, an elderly couple can be charged thousands extra annually for Medicare premiums if their income goes up by just a few dollars (which can occur because they saved their money, and thus have more savings account interest or investment income). That’s because Medicare premiums suddenly jump by big amounts at certain income levels, rather than rising gradually the way your taxes do when your income rises.
Now, these arbitrary income cliffs will get even worse due to a quirk in federal law. As the Fiscal Times notes in “Millions Facing a Hefty Increase in Medicare Premiums in 2016,”
Nearly a third of the roughly 50 million elderly Americans who depend on Medicare for their physician care and other health services could see their premiums jump by 52 percent or more next year. That’s because of a quirk in the law that punishes wealthier beneficiaries and others any time the Social Security Administration fails to boost the annual cost of living adjustment. . . .
an estimated 15 million seniors, first-time beneficiaries or those currently claiming dual Medicare and Medicaid coverage will see their premiums jump from $104.90 per month to $159.30 for individuals . . .Higher-income couples would pay multiples of that increase.
As Reuters notes, even before this quirk jacks up rates, the economic punishment for earning a few extra dollars is already slated to increase dramatically due to the recently passed “doc fix” legislation to raise more revenue for Medicaid providers (known as the Medicare Access and CHIP Reauthorization Act of 2015):
Affluent enrollees already pay more for Medicare. Individuals with modified adjusted gross income (MAGI) starting at $85,000 ($170,000 for joint filers) pay a higher share of the government's full cost of coverage in Medicare Part B and Part D for prescription drug coverage. This year, for example, seniors with incomes at or below $85,000 pay $104.90 per month in Part B premiums, but higher income seniors pay between $146.90 and $335.70, depending on their income.
The [“doc fix” law] will shift a higher percentage of costs to higher-income seniors starting in 2018 for those with MAGI between $133,500 and $214,000 (twice that for couples). Seniors with income of $133,000 to $160,000 would pay 65 percent of total premium costs, rather than 50 percent today. Seniors with incomes between $160,000 and $214,000 would pay 80 percent rather than 65 percent, as they do today.
As Valley News notes, this economic punishment for earning a few extra dollars will now rise further due to the ironically named “hold harmless” provision in federal law. “High-income retirees . . .will be hit hard. . . . Affluent seniors already pay more for Medicare Part B and also Part D for prescription-drug coverage. . . . ‘When you combine it all, it's looking pretty ugly,’ says Sharon Carson, a retirement strategist at J.P. Morgan Asset Management.”
May 20, 2015 5:12 PM
Joseph Stromberg at Vox.com has an article up arguing that “commuting alone by car” is “associated with obesity, high blood pressure, sleeplessness, and general unhappiness” relative to other transportation modes. His solution to unhealthy lengthy commutes is to increase carpooling.
Back in 2012, I argued against another now-Voxxer, Matthew Yglesias, on the supposed health harms of auto commuting. The problem, as Census data make clear, is that other than those who walk to work, people commuting by driving alone generally have the shortest commutes. Those using public transit take on average twice as long to make their commuting journeys as those who drive by themselves.
January 14, 2015 9:29 AM
With the start of the 114th Congress comes a fresh opportunity to address the challenges created by a broken government. To kick off this new congressional session, the Competitive Enterprise Institute (CEI) recommends numerous reform proposals to strengthen the U.S. economy, increase transparency, and foster fair and open competition instead of favoring special interests.
CEI’s top policy proposals center on substantive regulatory reforms needed to improve America’s economic health. In 2014 alone, 3,541 new regulations hit the books, and the burden is constantly growing. If federal regulations were a country, their cost would amount to the world’s 10th largest economy.
In addition to reining in burdensome regulations, CEI recommends that Congress continue to conduct fundamental oversight to protect Americans from executive overreach. Over the last six years, federal agencies have sought to usurp power from the legislative branch. Congress has a responsibility to demand honesty and accountability from our leaders and defend the rule of law.
December 9, 2014 11:12 AM
Today, the Centers for Medicare and Medicaid Services Administrator Marilyn Tavenner and MIT economist Jonathan Gruber are testifying before the House Oversight and Government Reform Committee on repeated transparency failures and enrollment issues surrounding the Affordable Care Act. CEI General Counsel Sam Kazman explains what this hearing could mean for ongoing Obamacare litigation efforts.
“Regardless of what happens at the hearing, Jonathan Gruber has already had a major impact on the ongoing Obamacare litigation, as in CEI’s King v. Burwell and Halbig v. Burwell cases. This is due to both the content of his 2012 video, where Gruber refers to the subsidy issue saying if states don’t set up exchanges then citizens won’t get tax credits, and to how the government dropped nearly all mention of Gruber and his three-legged stool analogy from the court briefs following the video’s rise in popularity.
“And according to a recent CEI report by Scot Vorse, we see that Gruber isn’t the only thing the administration flip-flopped on. Based on a trail of government documents, we find that actions taken by the HHS, Treasury, and IRS to implement the law, especially when it comes to developing a tax-credit calculator, show the administration was only focused on providing subsidies on the state exchanges, not the federal exchange.”
>> View CEI report by Scot Vorse: “Beyond Gruber: How HHS Flip-Flopped on Federal Exchange Subsidies”
November 20, 2014 12:40 PM
There’s a fascinating story in The New York Times this week about pharmaceutical companies and the process of discovering new drugs. Fifteen years ago, the Cystic Fibrosis Foundation started investing money in a small biotech company to incentivize research into a cure for cystic fibrosis. Their eventual $150 million investment helped Vertex Pharmaceuticals develop a promising new treatment, Kalydeco, which is excellent news for CF patients. It’s also been good for the financial future of the Foundation. They recently signed a deal selling their future royalties on the drug for a one-time payment of $3.3 billion. That’s 20 times the organization’s annual budget.
The Cystic Fibrosis Foundation’s experience with Vertex and Kalydeco will likely prove to be an outlier in terms of ROI, but it does suggest a new option for medical innovation. One longtime model has been for patient advocacy groups to use a significant portion of their budgets to pressure Congress into setting aside more taxpayer money for medical research. This requires them to gamble hard-won donations on the effectiveness of their lobbying strategy and pits them against every other patient and health advocacy group that is angling for their own slice of the federal research budget.
The example of the Cystic Fibrosis Foundation, however, suggests that patient advocacy organizations that invest in R&D directly could not only benefit financially but also see more drugs come on to the market faster. The additional money they end up with could be poured back into more research or used to provide other services to afflicted patients and their families.
Making an end run around the government funding process has another important advantage. Removing the expense of lobbying and the glacial slowness of government bureaucracy brings together the two entities most interested in seeing new treatments become available: the patients who are suffering and the companies that are going to make money by alleviating that suffering.
Patient advocates are in a better position than governmental research funding committees to know what treatment options their members would find most valuable. Being able to negotiate directly with drug companies as investors can give them industry clout and access previous generations would certainly have envied.
One need only look back to the early years of HIV/AIDS activism to be reminded that the political process cannot be relied upon to treat all illnesses or constituent groups equally. To the extent that they can, professionals charged with fighting for the interests of patients should consider going directly to the source for a cure.
November 17, 2014 11:24 AM
The Washington Times points out that Jonathan Gruber, our nation’s most famous sufferer of foot-in-mouth-disease, has profited greatly from the “stupid” American public to whom he felt the need to lie in order to pass his health care reform. In an editorial, the paper details the nearly $300,000 paycheck Gruber received from the Department of Health and Human Services to “sing the praises of the health care scheme.”
And that’s not all. Several states—including Minnesota, Wisconsin, Vermont, West Virginia, Maine, Colorado, and Oregon—used Obamacare grants to pay Gruber millions of dollars for his services.
Outrageous? Yes. But should we really be surprised?
The National Institutes of Health (NIH) routinely pays researchers with certain biases to produce “evidence” for positions NIH wants to push on the American public. Essentially, NIH pays to create propaganda with taxpayer money in order to lobby state and federal governments into changing the law as it wants.
For example, Dr. David Jernigan, an admitted “advocate” at the Johns Hopkins Bloomberg School of Public Health, has received upwards of $8 million from NIH since 2009 to produce studies demonstrating the evils of alcohol consumption and marketing (his research has been highly criticized by other public health academics).
November 14, 2014 3:32 PM
Obamacare supporters say that when deciding King v. Burwell and the related Halbig v. Burwell, challenges to the law that the Competitive Enterprise Institute helped fund and coordinate, there is really no need for courts to narrowly confine themselves to the language of specific provisions. Instead, they should look at the broad purposes of the law, as explained by its key architects. But one problem with this approach is these architects of the law—both in Congress and outside—seem to have selective memories about the structure of the Patient Protection and Affordable Care Act of 2010, aka Obamacare
Until very recently, one of the key sources that Obamacare supporters have relied on to establish that purpose are statements and writings by the key architects of the law. For example, MIT Professor Jonathan Gruber’s writings on Obamacare were extensively cited by the government, and by supporting amici, in the early briefs in these cases. In fact, Gruber’s “three-legged stool” metaphor for Obamacare was expressly incorporated into a central portion of the dissent in Halbig, which argued that the Obamacare rule should be upheld.
Gruber was an outside expert who has advised Congress, the Department of Health and Human Services, and many states on the law and its implementation (and has been paid handsomely by taxpayers for much of this advice). In July of this year, Gruber told Chris Matthews of MSNBC that interpreting the law as barring federal subsidies in states that didn’t set up their was “crazy.”
Yet a couple days later, my Competitive Enterprise Institute colleague Ryan Radia—with props to Volokh Conspiracy commenter Rich Weinstein—unearthed a clip of Gruber relaying an audience in 2012 what was basically the same “crazy” interpretation. “If you're a state and you don’t set up an exchange, that means your citizens don't get their tax credits,” Gruber said.
Gruber responded that this was a “speak-o,” a speaking version of a typo. But since then, many more speak-os of Gruber have surfaced, suggesting that he has a condition that could be called the “Speakola virus.”
November 11, 2014 12:00 AM
It was very good news, delivered in a very surprising way. Shortly after noon last Friday, the Supreme Court announced that it would review our Fourth Circuit Obamacare challenge, King v. Burwell.
Ever since we filed the case with the Supreme Court this past July, we’d been hopeful that the Court would take the case. The likelihood of the Court accepting any case is extremely low, but there were several major factors in our favor.
First, the question involved is extremely important to millions of Americans, be they taxpayers, health insurance policyholders, or workers. (In most cases, they’ll be all three.) The issue is whether Obamacare health insurance subsidies are available nationwide, as the White House claims, or whether they are limited to the minority of states that have set up their own insurance exchanges, as indicated by the language of the statute. Riding on this issue are billions of dollars in taxpayer funds, insurance choices made by millions of individuals and hundreds of thousands of employers, and the huge penalties that such subsidies can trigger for companies in nonparticipating states.
Second, only the Supreme Court could resolve the issue both quickly and definitively. True, the companion case that we had won, Halbig v. Burwell, is now up before the D.C. Circuit for en banc review; the government argued that the Supreme Court should wait for the en banc circuit ruling because it might eliminate the need for any Supreme Court action whatsoever. But even if that court were to overturn the Halbig panel’s ruling, there would still be ongoing challenges in other circuits. Oklahoma’s victory on the issue is now on expedited appeal in the Tenth Circuit, and Indiana just argued its challenge in district court in the Seventh Circuit. In short, while the lack of a split between the D.C. and Fourth Circuits might remove one technical reason for Supreme Court review, it might well do so only temporarily, and Supreme Court inaction at this point would only prolong the uncertainty and multiply the impact of an adverse ruling.
October 9, 2014 8:18 AM
The Obamacare insurance exchange rule is being challenged in four cases, and each one of them has been active over the last two weeks. The IRS rule puts the Obamacare insurance subsidies, and their attendant penalties, into effect nationwide. CEI is involved in two of these cases: King v. Burwell, which we lost in the Fourth Circuit, and Halbig v. Burwell, which we won in a 2-1 D.C. Circuit panel ruling. We argue that this is contrary to the underlying statute, which provides for such subsidies only in states that have chosen to set up their own exchanges—a choice that 34 states have declined.
The King plaintiffs have petitioned the Supreme Court to review the Fourth Circuit’s ruling, which upheld the IRS rule. Last Friday the federal government filed its opposition to that request. Its arguments were relatively predictable, with one exception that we’ll get to later.
In the D.C. Circuit, Halbig is now on en banc review, with argument before the full 13-judge court scheduled for December 17. Our opening en banc brief, together with six supporting amici, was also filed last Friday.
Last Tuesday, September 30, there was a third court ruling—Oklahoma won its own challenge to the IRS rule in the Eastern District of Oklahoma. That court did an excellent critique of the dissent in Halbig, and it was also noteworthy for issuing the first “post-Gruber” ruling—that is, the first court decision to consider the recently-unearthed 2012 video that showed MIT Professor Jonathan Gruber, one of Obamacare’s chief architects, directly contradicting his current attack on our position. The video shows him flatly stating that nonparticipating states would not receive subsidies, in stunning contrast to the more recent claims, by Gruber and others, that our legal position is “crazy.” (CEI, by the way, is proud to have helped launch that video into Internet stardom just two days after the Halbig and King decisions.)