Last Week in Healthcare Reform: May 9th, 2022

A new report shines a light on hospital drug errors; elsewhere, trends point to broad geographic variation in hospital pricing; stakeholders rally to the defense of the critical Medicare Advantage program; and, a look at how Big Pharma exploits the patent system to its own benefit.

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Week in Review

Hospital Rx Errors: A recent investigative report exposed a technological vulnerability that’s quietly persisted in many hospitals across the country.  That vulnerability was surfaced as the result of a medication error that led to a patient being administered a fatal dose of the wrong drug.  The issue stems from the computerized medicine cabinets that have become a near-ubiquitous tool in today’s hospital healthcare delivery model.  Currently, when hospital staff go to fill a prescription, they only need to enter one or two letters to pull up a list of drugs to select from.  This, unfortunately, can lead to the wrong drug being withdrawn and administered.  Alarmingly, hospitals aren’t required to report most of these drug mix-ups, meaning we really have no way of knowing how pervasive the issue has become.  This serves as an important reminder of the critical role that pharmacy benefit managers (PBMs) play in coordinating care for patients to ensure they’re connected to the safe and affordable drugs they depend on.

Hospital Pricing: According to the results of a recent trend analysis, hospital pricing continues to be subject to wild variability across geographies.  Conducted by RAND and appearing in Health Affairs, the study took a look at average hospital prices for commercial plans compared to Medicare rates from 2012 to 2019.  What researchers found was that, while the average commercial-to-Medicare hospital price ratio remained “relatively stable” over that period (ranging from 173 percent in 2012 to 180 percent in 2019), substantial movement was observed in hospital regions at both ends of the spectrum.  What researchers went on to note is that this variation was found to be the most extreme in the regions that already began with the highest ratios.

Medicare Advantage Value: A new review was released late last month questioning the manner in which Medicare Advantage (MA) plans approve or deny requests for coverage of care.  Performed by the Department of Health and Human Services’ (HHS) Office of Inspector General (OIG), the analysis looked at a sample of approximately 250 cases from just one week in June of 2019, determining that 13 percent of them (33 cases to be exact) were improperly denied.  However, what the report fails to note is that the vast majority of coverage requests were approved and that seven of the denied cases that had been flagged were reversed within three months.  Further, the main concern for many of those cases had to do with plans lacking sufficient guidance from the government on the criteria they were required to use to make those coverage determinations.  Finally, and most importantly, none of those remaining cases had an impact on access to care for a patient.  The Medicare Advantage program has established itself as the more popular alternative to traditional fee-for-service Medicare through its focus on enhanced care coordination and supplemental programs designed to better address social drivers of health.  Not only that, recent studies have shown that MA lowers costs for consumers by an average of $1,640 a year.  And, it’s not just consumers who benefit, as further extrapolation of that data equates to $32.5 billion annually in additional benefits to MA enrollees.

Rx Patents: High prescription drug prices continue to impact patients leading to worse health outcomes and driving up healthcare costs for everyone.  From cancer drugs to blood thinners to specialty medicines, there’s no category of drugs that hasn’t been affected by the pharmaceutical industry’s single-minded pursuit of maximizing profits.  Through a combination of exploiting market power and leveraging political influence, drugmakers have managed to not only avoid competition, but raise prices in lockstep, as well.  This has led to an increased focus on how manufacturers are gaming the patent system.  For decades, drugmakers have argued that patents are essential to innovation.  But, a recent investigation by the House Committee on Oversight and Reform found that a dozen of the drugs that the Medicare program spends the most money on are protected by more than 600 patents – many of which, aren’t even for anything new.  Additionally, between 2005 and 2015, nearly 80 percent of the drugs issued new patents were, in fact, not new.

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