PharmExec Blog

Less is More: HHS Austerity Care

By Tom Norton

As the US Department of Health and Human Services (HHS) circles around the elements of health care that will actually be included in our new “Essential Health Benefits” (EHB), one aspect of the EHB offering has caused a tremendous stir among dozens of health groups.  Their collective concern is focused on the pharmaceutical care that will be provided under EHB.  In particular, the groups have expressed dissatisfaction over the number of drugs that will be covered in each class.  How many drugs per class you ask?  Based on current HHS information, it appears that the number is one drug per class.

Where, specifically, did this minimalist Rx concept come from?  It first appeared in HHS guidance offered to the public on December 16, 2011.  Here’s a brief discussion of the number of pharmaceuticals to be covered under EHB appeared on p. 13.  It stated:

“If a benchmark plan offers a drug in a certain category or class, all plans must offer at least one drug in that same category or class, even though the specific drugs on the formulary may vary.”

How to decipher that phrase?  Admittedly, I found it a bit hard to understand.  However, 104 disparate patient and health advocacy groups, representing 133 million patients and caregivers, had no trouble at all.   They read it to mean that only one drug per class would be required under the new EHB Rx offerings that will go into effect on January 1, 2014.  Based on this interpretation, a deluge of public letters to HHS was released by these organizations, all voicing strong opposition to this idea.  Here’s an example, released on April 11, 2012, signed by all 104 groups:

“The bulletin (12/16/11) states that EHB plans must only cover one drug per therapeutic category or class covered by a selected state benchmark plan to meet the EHB standard. This is wholly inadequate to meet the complex needs of patients with chronic diseases and disabilities, and runs counter to the government’s existing minimum prescription drug coverage standards, including under the Medicare Part D program.”

In their letter, the groups all pointed to a recent study released by Avalere, and funded by Pfizer, which revealed that the largest federal employees health benefit plans and major small-group plans in California, Colorado, Maryland and New York (similar to those that HHS is supposed to use in modeling EHB drug benefits) are all covering many more drugs in each class (an average of 70% of drugs available in a class) than the one drug concept proposed in the 12/16/11 HHS bulletin.

And to be fair, it is true that under Part D Medicare drug rules only two drugs are required to be provided per class (p. 395).  However, due to the private competition between the insurers in the Part D prescription drug offerings, many more products per class are regularly included.

So, how will all this be reconciled?  It’s hard to say, but there are several considerations to think about, should this one-drug-per-class mandate be implemented for HCR’s EHB. Let’s say, for example, you’re a patient who’s been dealing with hypertension.  Getting hypertension under control often entails trying many prescription drugs and often includes very careful titrating of the one drug that seems to be working.  What happens to you if you lose that one drug that controls your disease?  The lack of Rx options for these patients will only lead to major medical episodes down the road.

Or what if you are a physician dealing with rheumatoid arthritis in hundreds of Medicaid patients?  It’s a tough disease to manage because frequently, one anti-inflammatory may work on a patient for a while, and then inexplicably, it stops working for no logical reason.  Utilizing other anti-inflammatories is the only course of action the doctor has to find new relief from the disease.  Limited to just one drug in the anti-inflammatory category, I really don’t know what doctors will do to manage the 30-40 million new Medicaid patients HCR will bring into their offices, many of whom will have rheumatoid arthritis.

And what if you are the CEO of a prescription pharmaceutical company?  What is your response to this mandate for one drug per class?  If each of the single drugs chosen in each EHB Rx class is likely to be the cheapest generic, where does this leave brand drug makers?   Will branded drugs ever be reimbursed under HCR’s EHB Rx program?  Answer:  No.   And if this 100% generic program is likely to impact 40% to 50% of your total American market, what do you do about future R&D?  Put more succinctly, who will your future customers be?  Who will buy brand name drugs after this EHB Rx rule is put in place?

But all is not gloom and doom in this “one drug per class” EHB scenario.  First of all, by restricting the EHB Rx segment, there will be an obvious decrease in overall medical spending across the county.  As an example, consider hospital formularies and pharmacies.  Huge inventory savings will be realized, since every drug chosen for every category will be a low cost generic.  Also, in the important area of medical errors, the reduction in the actual numbers of available drugs used for each disease will insure the proper use of the proper drug in almost every case.  As a result, the billions of dollars wasted on medical errors and unintended deaths will be virtually eliminated.  And then there is the incredible free enterprise competition that will be unleashed among the generic manufacturers that will compete for the opportunity to provide the one drug for any class.  No doubt, low prices such as we have never seen before, will be realized by HHS.  All and all, then, there is a tremendous national health savings benefit, a very real upside, to be realized when this concept of one drug per class is adopted by the EHB.

Nevertheless, despite all this health savings evidence, it is curious to see that several of the fervent supporters of HCR, groups such as Families USA, NORD, The American Academy of Physician Assistants, and many others listed in the group of 104, have now decided that this “one drug per class” policy is just plain wrong.   As noted earlier, they submit that the EHB one drug concept is unfair and medically unsound policy for their members.

This response by these groups is interesting. By now, over two years into this HCR exercise, you would think that these organizations, and all others who strongly supported HCR, would clearly understand that this is where HCR is headed:  “Less is more, don’t you see?”  That’s because by reducing access, denying options, and limiting medical services, millions of people will now have the opportunity to have one drug per class, rather than none at all.

And so, as this HCR concept continues to take shape, and the nation gradually awakens to this new reality across the broad array of medical services, it truly is amazing just how much more — “less” — really can be. That’s my point of view on HCR’s one-drug-per-class EHB concept.  I’d be interested in your thoughts on this matter.

Tom Norton is principal at NHD Smart Communications. He can be reached at tnorton@nhdcomm.com

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