A physician failed to include in the medical records a warning that the plaintiff had been diagnosed with a potentially deadly brain aneurism.
A Massachusetts Appeals Court this week upheld a $32.5 million malpractice award for a woman left paralyzed after her primary care physician neglected to include a diagnosis of a brain aneurism in her personal medical file. The health system said it will not challenge the ruling any further.
The plaintiff, Andrea Larkin, a former elementary school teacher and fitness instructor, suffered a brain hemorrhage in 2008, about 12 hours after giving vaginal birth to her daughter using the Valsalva maneuver.
Unbeknownst to Larkin's obstetricians, the woman had been diagnosed with a venous varix in 2004, which was found in an MRI after she had complained of headaches and dizziness.
Larkin's primary care physician, Jehan Johnston, MD, with Dedham Medical–Atrius Health, knew of the diagnosis, but failed to include it in Larkin's medical records.
As a result of the hemorrhage, Larkin is paralyzed and bedridden and is expected to remain so for the rest of her life, which her attorneys estimated at trial to be about 47 years. Larkin was awarded $32.5 million in 2015 following a two-week jury trial in a state court.
During that trial, the jury heard expert medical testimony that the vaginal birth had triggered the brain hemorrhage, which could have been avoided with a Caesarian section.
Marci Sindell, senior vice president for external affairs at Atrius Health, said the health system has no plans to appeal the ruling
"First and foremost, we continue to extend our heartfelt sympathies to Andrea Larkin and her family," Sindell said in an email to HealthLeaders Media.
"We are disappointed with the judge's decision, which does not reflect our physicians' dedication to the well-being of their patients and our organization's commitment to outstanding care," Sindell said.
The three-judge Appeals Court unanimously rejected Dedham Medical's demands for a new trial, which included an argument that the trial court failed to consider the health system's "charitable status" as a not-for-profit provider protected by a $20,000 liability cap under Massachusetts law.
The panel agreed with the trial judge that Dedham Medical's charitable status claim came too late in the proceedings, and only after four years of litigation and a two-week trial.
"Such a prolonged delay, the judge found, caused 'manifest' prejudice to the plaintiffs, and made amendment … inappropriate. We agree," the Appeals Court ruled.
The appeals court also rejected Dedham Medical's claims that a neurosurgeon called as an expert witness for the plaintiffs "testified beyond the anticipated testimony" laid out in a pretrial memorandum.
The appeals court said the pretrial disclosure of the expert witness's anticipated testimony "was sufficient" to provide Dedham Medical with notice that the testimony would detail "the nature and causes of the risk of undertaking the Valsalva maneuver in light of the venous varix in Andrea's brain."
A large-scale study shows the benefits for pediatric patients of sepsis protocols that were mandated by New York State in 2013.
More than one in 10 children hospitalized with sepsis die. When clinical protocols mandated by New York State are followed within an hour of detection, however, the odds of death fall 40%.
Study senior author Christopher W. Seymour, MD, a researcher and associate professor at UPMC, spoke with HealthLeaders Media about the study findings.
The following is an edited transcript.
HLM: Why did you do this study?
Seymour: The New York State Department of Health mandated protocols in sepsis care for all patients in New York State in 2013, but there's been no large-scale studies investigating the outcomes of particularized sepsis care for pediatric patients. We felt this would be a valuable contribution to public policy and also for sepsis care for pediatric patients.
HLM: Did you find that some hospitals are not following the protocol?
Seymour: Prior to the protocol in New York State, there were, was and are practice variations among hospitals. Once Rory’s Regulations were put into place, compliance with the bundle of care did improve over a quarter, but it takes time for a community hospital that primarily see adult patients to figure out the logistics of how to implement the blood culture, the antibiotics, the fluids bundle of a pediatric patient within 60 minutes.
I work in a children's hospital so that is all we see and do, but for some community hospitals they may see pediatric patient with sepsis every few years. there is definitely a learning curve for hospitals.
HLM: What's the biggest roadblock to more comprehensive utilization?
Seymour: Part of it is recognition. Sepsis is not like a heart attack, or myocardial infarction, where there are lab tests and an EKG that can make you feel confident that that is what you're diagnosing and seeing in front of you. Being able to promptly recognize sepsis, or a patient who is at risk of developing sepsis, is Part 1. Part 2 is making sure you have the equipment and institutional policies and expertise to be able to execute bundled care within the given timeframe.
HLM: How much does this protocol cost, per patient?
Seymour: That's a great question that I do not have the answer to.
HLM: Why is the protocol effective?
Seymour: There is a biologic and physiologic basis for all three interventions: Blood culture to help guide definitive treatments; antibiotics to treat bacterial infection; and fluid bundles to help reduce shock—and shock is a known cause of worse outcomes.
Also, once a patient is recognized as having sepsis, there may be a greater sense of urgency, or an awareness by the care team and more attention is paid to that patient or more resources are utilized for that patient. That may be additional lab tests or transfer to the ICU or expert consultation. It gets people focused and thinking about the patient in front of them.
HLM: Your study notes that randomized clinical trials to determine the effectiveness of individual components within the protocol bundle would be difficult. Why?
Seymour: For most providers it would be difficult to see a patient who either definitively has sepsis or is suspected of having sepsis and then decide that, for example, this patient is not going to get antibiotics.
It'd be near impossible to get providers to decide "I'll give this patient antibiotics, but this patient doesn't, even though I think they need it." Especially when we're talking about mortality in children. People believe in blood cultures and antibiotics and they are effective. Deciding a patient is not going to get those therapies is really not feasible.
HLM: How can we determine the effectiveness of components within the bundle?
Seymour: As more states adopt bundled care there will be opportunities to do analyses, not for randomized control trials, but more in-depth analyses to understand the separate benefits that are coming from these bundles. Is it the biological benefit? Is it better care being implemented because the bundle is there? There's need for more analysis to prove causality and not just association.
HLM: How do hospitals determine when to begin the protocol?
Seymour: In New York, each hospital designs their own protocol trigger. For some hospitals, it was the patient has two-out-of-four symptoms, and this means our protocol trigger and that is the start of the 60-minute clock. Some hospitals use abnormal lab tests, and that is when the clock starts. Other hospitals may use when the patient is transferred to the ICU.
This is something that hospitals and states would need to decide, because there is no universal consensus about when a patient has sepsis. New York allowed hospitals to determine their own protocols to promote wide adoptions of Rory's Regulations. If a test in the future comes out that helps people know when sepsis is happening, that would be a good starting point. Right now, without a universal definitive test it is up to each hospital and provider to make that determination.
HLM: What's the best use for your study's findings?
Seymour: It's encouraging that we found this association. Expert opinion has been that bundled care would help patients, so it is great to see a study of this size support that. Going forward, hospitals will need to look at their own practices and figure out how they could best provide timely care to pediatric patients with sepsis.
Figuring out what obstacles may be present in terms of getting antibiotics within one hour, establishing IV access, recognizing when a patient has sepsis, this study provides good support for hospitals to figure out best practices.
Hours worked, medical specialty, and productivity can't account for a huge gap in the average compensation between Maryland's male and female physicians.
In Maryland, male physicians earn almost 50% more than their female colleagues, according to a new survey.
The average annual compensation for male physicians in Maryland was $335,000, compared with $224,000 for female physicians, according to the survey of 508 physicians, which was commissioned by the Maryland State Medical Society.
The compensation disparity is consistent across medical specialties, and the survey suggests that the gap cannot be explained simply because male physicians work longer hours, or are more productive.
For example, the survey found that male family medicine physicians in Maryland earn an average of $243,000, compared to $164,000 for female family medicine physicians, a difference of 48%, and male internal medicine physicians working 41 hours a week or more earn more than 37% more than females working 41 hours a week or more.
"Something somewhat inscrutable is going on," says Travis Singleton, executive vice president at physician recruiters Merritt Hawkins, which conducted the survey. "I don't think time at work is the issue."
"When Merritt Hawkins recruits a doctor we virtually never see differences in starting salaries between male and female physicians. Most clients are more than happy to get a female physician, particularly in primary care or OBG, and will come to the table with a competitive offer," he says.
That changes, he said, "once the physician is off salary and on straight production, or is practicing in an independent setting, some sort of divergence is taking place between male and female doctor comp."
Merritt Hawkins' 2016 survey for The Physicians Foundation found that male physicians work about 4% more hours than female physicians—not a big difference.
The 2016 survey also showed that female physicians see 9% fewer patients on average than male physicians. "That’s a little more significant but not enough to account for the pronounced pay disparities noted in the Maryland survey," Singleton says.
Singleton says the differences in compensation "may boil down to practice characteristics."
"It may be possible that women see poorer, less well-paying patients than male physicians, that they bill and code less aggressively than male physicians, are less outspoken in asking for raises, and are less likely to be in private practice, where doctors typically earn more than in employed settings—combined with working fewer hours, seeing fewer patients and perhaps some level of discrimination," he says.
"We remain puzzled by these numbers, however, which are reflected in other physician comp surveys," Singleton says. "This shouldn’t be happening to the extent it is, particularly given the receptive market for female physicians, but the reality is female physician compensation does not stack up to what male doctors earn."
The survey also shows that:
Maryland physicians' earnings trail the national average. Of medical specialists tracked, 14 earn less in total compensation than the national starting salary in their specialties as tracked by Merritt Hawkins.
Only 41% of Maryland physicians surveyed said they participate in the Medicare Access and CHIP Reauthorization Act. More than one-quarter said they do not participate, and one-third are unsure.
78% of Maryland physicians said quality accounts for 20% of their compensation or less.
Compensation per relative value unit was higher than average, but 2017 was the first year in more than a decade that physician compensation increased by less than 2%.
Physician compensation and productivity were listless in 2017, bucking a decade-long trend that saw annual increases between 2% and 3% in both metrics, a survey shows.
The findings by AMGA Consulting showed median physician productivity declined by a weighted average of 1.63%, while compensation increased only 0.89%.
Compensation per relative value unit was higher than average, but 2017 was the first year physician compensation increased by less than 2% in more than a decade, the survey showed.
"Given the marketplace dynamics, there are several factors that we believe are contributing to this year’s results, including continued effects of EHR's, the aging provider workforce and the continued shift in the marketplace from volume to value," AMGA Consulting President Fred Horton, and COO Wayne Hartley said in an email exchange with HealthLeaders Media.
The weighted average change in median compensation in all medical specialties during 2017 was +1.2%. Weighted average change in median work RVUs was -1.5%, and compensation per work RVU was +3.3%.
For primary care, the weighted average change in median compensation in 2017 was +0.8%. The weighted average change in median work RVUs for primary care was -0.2%, and the weighted average change in compensation per work RVU was +2.3%.
Horton and Hartley say compensation is declining because of productivity declines.
"While compensation plans are shifting to include non-productivity metrics, the vast majority of production-based specialties still have a significant portion of compensation tied to their production (85% typically)," they said.
Horton and Hartley said productivity declines to not appear to be linked to the growth of the employed physician model.
"We have analyzed past years' data related to productivity and compensation levels of independent vs integrated groups. In general, there is relatively the same level of production and similar levels of compensation," they said.
It's not clear if the survey findings are a one-year anomaly or the start of a new trend.
"We believe it is too early to tell, however, regardless, it is a signal that operational efficiencies must be addressed," Horton and Hartley said. "The detail of the survey leads to a conclusion that compensation is flat or declining, production is flat or declining and compensation per unit of production is increasing."
"In this situation, a healthcare organization will pay an increased rate of compensation for each unit of production, however there are fewer units available to cover expenses and since each unit is paid at an increased rate, there is also less margin on those units as in the past. Less throughput and lower margin for that throughput, equate to worse financial performance, unless operational efficiencies can be created to make up for the margin decline. It is a significant wake up call to address operations and focus on execution of the creation of efficiencies," they said.
Squeezing the Turnip
Travis Singleton, executive vice president at physician recruiters Merritt Hawkins, and who did not participate in the survey, says the AMGA findings are not surprising.
"This is in part a case of getting the behaviors you reward," Singleton says. "If you reward documentation and process, rather than number of patients seen or volume of patient care delivered as measured by RVUs, that's what you will get."
Singleton says a growing number of productivity bonuses feature value-based metrics, which include quality documentation, adherence to treatment protocols, etc., while de-emphasizing number of patients seen and RVUs.
"Last year, 43% of contracts we saw with production bonuses featured a valued-based component, up from 7% in 2011," he says. "Value is harder to measure than volume and this may be reducing comp based on what now is considered "productivity.' It's no longer see more patients, rack up more RVUs, get more pay."
Singleton said some studies suggest that physician productivity may be close to topping out. He said a 2016 survey Merritt Hawkins conducted for The Physicians Foundation found that 80% of doctors are either at full capacity or are overextended, and only about 20% said they had the time to see additional patients.
"You can only squeeze so much juice out of the turnip," he says.
Horton and Hartley say the stagnant compensation and productivity metrics for physicians reflect a "very unsettled environment" as the healthcare sector transitions to value.
"Organizations must prepare for the shift by putting in place new systems and support to prepare for the shift. So, you have an unsettled operating environment and some degree of confusion on if the focus should be volume or value," they said.
"The degree integration has occurred over the past 5-10 years is significant," they said. "There are organizations with multiple EHRs, specialties that consist of several previously competitive practices and so on. More emphasis on operational capabilities, than on acquisition and growth, will likely be the next required phase."
The not-for-profit health system says it will 'transition' out of acute care services by the end of 2018 and focus on population health, outpatient services, and removing barriers to care access.
Providence Health System will close its money-losing 283-bed hospital in the District of Columbia by the end of this year, and realign itself toward outpatient and population health services, the health system announced this week.
"We know that 15% of a person's life is spent in actual healthcare, which means the remaining 85% is spent in other areas that either positively or negatively impact their overall well-being," Providence CEO Keith Vander Kolk said in a media release.
"That is where the greatest opportunity to make meaningful change lies, and we must put our focus and energy on advancing a model of transformation that will serve the District in new and lasting ways," he said.
Not-for-profit Providence, which is owned by St. Louis-based Ascension, said its "new community-focused perspective" will look to enhance care coordination, telehealth/virtual care, primary and urgent care, home care, community-based behavioral healthcare, and senior care.
The closure of the Northeast D.C. hospital comes nearly a year after Providence announced plans to create an integrated "Health Village to encompass more than traditional healthcare services" and follows a national care delivery trend that focuses on access and preventive measures.
"While the acute-care mission of Providence has been so important and appreciated for over a century, Providence has also been known for adapting to the changing health needs of the community," said Sister Carol Keehan, DC, CEO of the Catholic Health Association of the United States.
"Changing its focus to providing preventive health and wellness in collaboration with the community marks a new phase in its commitment," Keehan said.
The joint venture with WellTower is being hailed as a 'first-of-its-kind partnership' and it gives not-for-profit ProMedica immediate scale in the fast-growing home health and post-acute care markets.
ProMedica Health System this week finalized its acquisition of bankrupt HCR ManorCare in a $3.3 billion deal that makes the 13-hospital, Toledo-based health system one of the largest in the nation by revenue.
The joint venture with real estate investment trust WellTower was hailed as a "first-of-its-kind partnership" when it was announced this spring,and it gives not-for-profit ProMedica immediate scale in the fast-growing home health and post-acute care markets.
"I hate to say we are in uncharted waters here, but it seems to be a unique, first-of-its-kind partnership. A nonprofit health system, a large post-acute provider and a real estate investment trust as partners is unique," ProMedica CEO and President Randy Oostra said in an interview with HealthLeaders Media this spring.
"We are in a non-growth market. How do we grow as a system? How do we begin to diversify? We have a health plan, we have hospitals, we have a physician group. Being more diversified in this space made sense," he said.
Toledo-based HCR ManorCare is the nation's second-largest provider of post-acute and long-term care. The company filed for bankruptcy protection in March with $7.1 billion in debts, owing largely to declining Medicaid and Medicare reimbursements. Its real estate assets were held by its landlord, Quality Care Properties.
S&P Global Ratings notes that HCR has annual operating revenues of about $3.7 billion, which doubles ProMedica's overall revenue base.
The acquisition creates a $7 billion not-for-profit healthcare network with 70,000 employees in 30 states, making ProMedica the 15th largest health system in the nation, as measured by annual revenues, ProMedica said.
Under the deal, Welltower owns 80% of the HCR real estate and ProMedica has a 20% stake, while ProMedica owns 100% of the HCR's operating company. The health system is using $470 million of cash and a $1.15 billion one-year bridge loan with Barclays to pay for the acquisition.
S&P said this week that its "A+" long-term ratings for ProMedica would hold unchanged with the deal's closure, but that could change because the ratings are now on CreditWatch with negative implications.
"While the CreditWatch Negative listing implies there is at least a one-in-two chance of a downgrade, we note a downgrade of more than one notch is possible, given the significant additional debt and cash usage to fund the acquisition," S&P said Friday. "In addition, the transaction involves other risks, including integration, and expansion into a new businesses sector that has faced significant challenges."
On the upside, S&P said the deal would diversify ProMedica into the post-acute care space, improve cash flow, and take advantage of synergies if the health system sells off money-losing HCR assets.
New Jersey's largest health system will invest $100 million initially, and $50 million each year over 20 years to expand education and research, and improve access to healthcare.
RWJBarnabas Health announced this week that it will invest more than $1 billion in a public-private partnership with Rutgers University to create "a world-class integrated academic health system."
"This is a transformational partnership for RWJBarnabas Health and Rutgers University, but, more importantly, for the people of New Jersey and beyond," RWJBarnabas Health President and CEO Barry H. Ostrowsky said Tuesday at a media briefing in New Brunswick.
"Together, we are poised to develop a widely renowned academic health system, driving medical innovations and clinical research to influence outcomes across the nation," he said.
Rutgers Biomedical and Health Sciences Chancellor Brian Strom said the partnership will create a medical group of more than 2,500 employed physicians from RWJBarnabas and Rutgers Health, making it one of the nation's largest medical groups.
"This unparalleled enterprise will further our shared goal to grow research activities and expand clinical trials statewide," Strom said. "Becoming an integrated academic health system will enable us to expand our academic and research mission so we can better train tomorrow's clinical workforce and quicken the pace of discovery for patients."
RWJBarnabas and Rutgers will remain separate organizations, each keeping their own employees and independent boards, which will form a joint committee for strategic planning and oversight of the academic health system.
Clinical services will be led by RWJBarnabas. Academic and research functions will be managed and led by Rutgers.
In addition to the medical group, RWJBarnabas Health will invest $100 million, and then more than $1 billion dollars over 20 years for education and research at the health system, that will include:
The construction of a clinical and research building for the Rutgers Cancer Institute of New Jersey, and a new ambulatory care center, both located in New Brunswick.
Recruiting clinical and academic faculty, including 100 principal investigators by Rutgers over 10 years who will double the university's research capacity;
$10 million for incentives to keep graduating Rutgers medical students in New Jersey;
Expanding residency and fellowship programs across New Jersey;
Expanding inter-professional clinical training for medical, dental, nursing, pharmacy, and other health professional students;
Expanding access to clinical trials of new and promising treatments to New Jersey.
"Through this partnership, we have formed the largest and most comprehensive academic health system in New Jersey and are well positioned to take our place as a national leader in patient care, health science discovery and innovation," Rutgers University President Robert Barchi said.
RWJBarnabus Health, New Jersey's largest health system, was formed in 2016 with the merger of Robert Wood Johnson University Hospital and Barnabus Health. The system includes 11 acute care hospitals, four pediatric hospitals, a 100-bed behavioral health center, and outpatient offices that provide care for more than five million people in a nine-county catchment area.
The health system is also New Jersey's largest public employer, with more than 33,000 employees, 9,000 physicians and 1,000 residents and interns.
Rutgers Biomedical and Health Sciences includes eight schools, a behavioral health network, and six research centers.
The nonprofit healthcare researcher and repository is building a website that will replicate much of the data found on the now-defunct National Guidelines Clearinghouse.
The ECRI Institute will step in to provide critical healthcare data that otherwise became unavailable this week when the federal government's National Guidelines Clearinghouse fell victim to the budget axe.
Karen M. Schoelles, MD, a senior director at ECRI Institute, said the Plymouth Meeting, Pennsylvania-based nonprofit stepped in after the Agency for Healthcare Research and Quality announced that the NGC website would shut down on July 17.
She said ECRI has the opportunity to replicate much of NGC's vast trove of evidence-based medical research and guidelines because it has played an ongoing role in the development and maintenance of the database since its inception in 1998.
"Much of the information will be similar, but our site will not be a replica of the site created for AHRQ," Schoelles said in an email to HealthLeaders Media.
"We are doing this because we believe the work we did for AHRQ was valuable to the healthcare community," she said. "ECRI's mission is to advance evidence-based health care globally, and we see this as a way to support that mission."
Schoelles said ECRI is developing the replacement database "without support or input from AHRQ" but with a plan to "simplify presentation of the information and use more visual means of communication."
"Eventually we will develop tools to help people put evidence-based recommendations into practice," she said.
ECRI is also contacting guideline developers and requesting permission to include their data on the website.
"We know already that some of the organizations whose guidelines were on the AHRQ Clearinghouse website are happy to share their information with us," Schoelles said.
"Once they share their guidelines with us, we will summarize them and evaluate them against the National Academy of Medicine's criteria for trustworthy guidelines," she said.
Budget Cuts
AHRQ spokesperson Alison Hunt said the NGC website was forced to shut down on July 17 after funding was reduced from $2.1 million to $1.2 million. Hunt said it's not clear if the shutdown will be permanent.
"We are exploring options to sustain the NGC and will share more information when it becomes available," Hunt said.
The American Hospital Association this week urged AHRQ to reconsider the NGC shutdown, calling the database "a valuable resource to clinicians and healthcare organizations in the United States and across the world for two decades."
"It provides easy access to evidence-based guidelines for practice, helping busy clinicians develop plans of care for patients, allowing healthcare organizations to create standard protocols for practice, embed decision support for their clinicians, and reduce practice variation to ensure the best outcomes for their patients," AHA said.
AHRQ acknowledged in a statement on its website that the decision to close the NGC, which had been getting about 200,000 hits each month, has "elicited significant feedback from the healthcare field."
"The Agency appreciates the passionate support that users have expressed. AHRQ is exploring options to support the NGC in the future and will continue to do so even while the site remains offline," AHRQ said.
Fees Envisioned
Schoelles said ECRI plans to "charge subscription fees to support the staff required to do this work, building our Website, and paying copyright fees."
"As a nonprofit, we cannot support the work entirely on our own, but we will do our best to keep subscription fees reasonable," she said.
ECRI is building the Website now and developing the content, with an aim to launch the site in early autumn.
"We plan to offer institutional and individual subscriptions, although working out the details for the latter may take a little longer," she said.
Commissioner Scott Gottlieb says the proposal would improve competition, expand access, empower consumers, and provide more affordable options.
The Food & Drug Administration is floating new guidelines that would lift restrictions on some prescription drugs and make them available to consumers over the counter.
"We're very mindful of the time and financial cost to patients and the healthcare system to fill a prescription medicine—particularly one taken repeatedly for chronic conditions," FDA Commissioner Scott Gottlieb, MD, said in a media release.
"Our hope is that the steps we're taking to advance this new, more modern framework will contribute to lower costs for our healthcare system overall and provide greater efficiency and empowerment for consumers by increasing the availability of certain products that would otherwise be available only by prescription," he said.
Gottlieb said the proposed rule "will clarify the requirements for a drug that could be marketed as a nonprescription drug with a requirement that ensures appropriate self-selection by consumers, appropriate actual use, or both, in order to obtain the drug without a prescription."
The over-the-counter access could include cholesterol-lowering drugs, and Naloxone, the opioid effects blocker sold under the brand names Narcan and Evzio.
Digital technologies, such as cell phone apps, could be used to help consumers understand the appropriate use and dosage for the drugs, the potential side effects, and possible interactions with other drugs or alcohol.
Gottlieb said the proposed guidelines apply to drugs under the FDA's New Drug Application process "and is intended to extend that NDA pathway to include therapeutic indications that have not, historically, been available for use without a prescription."
If consumer safety requirements can be demonstrated under the new guidelines, Gottlieb said drug makers could apply for nonprescription status.
"We see today's draft guidance as a first step as drug developers begin to study products that might be considered for marketing without a prescription," Gottlieb said. "We intend to continue this effort with proposed rulemaking in the near future and will provide additional information as we move forward."
CVS wants to eliminate 'pay-for-delay agreements' among drug makers, while the pharmaceutical lobby calls for 'delinking supply chain payments from the list price' for PBMs.
CVS Health and PhRMA are blaming each other for high drug prices.
In separate letters this week to Health and Human Services Secretary Alex Azar, the pharmaceutical lobby and one of the nation's largest pharmacy benefit managers offered diametrically opposite explanations—and remedies—for the high drug prices that have left consumers reeling.
"Until drug manufacturers reduce the high price they set for these drugs, we know this problem is not going away," CVS said, in response to a request for information by the Trump administration's blueprint to lower drug prices.
Among its suggestions, CVS urged HHS to improve competition in the pharmaceutical industry by reducing artificial barriers to cheaper generic alternatives.
"More must be done to make generics available, including expanding the use of biosimilars, and eliminating tactics that stall competition," CVS said.
"We believe the Administration should support shortening the exclusivity period for biologics from twelve to seven years, and finalize interchangeability guidance, which is key to expanding adoption of these lower cost alternatives," the letter said.
CVS called for a ban on "pay-for-delay agreements" that it said would limit anticompetitive schemes by drug makers and bring generic equivalents to the market more quickly.
PhRMA's Version
In its letter to Azar, PhRMA pushed for reforms that prevent PBMs and other supply chain middlemen from calculating their compensation as a percentage of the list price of a medicine, instead of a charging a fee based on the value of their services.
PhRMA CEO Stephen J. Ubl said that the way drugs are paid for in this country "has evolved into a complex system of list prices and rebates that move through an opaque supply chain. A medicine's rebate—rather than its actual price—often determines if it is covered or where it sits on a formulary."
Because rebates are based on a percentage of a medicine's list price, Ubl said PBMs have incentives to want higher list prices.
"This creates an unfair system in which patients are often paying higher list prices regardless of the discount their insurer receives," Ubl said. "Reforms to prevent PBMs and others in the supply chain from being paid off the list price of a medicine can fix broken incentives and make the system work better for patients."
PhRMA claims that more than one-third of the list prices that are set by drug companies is rebated back to supply chain middlemen, which it said totaled $150 billion in discounts last year.
Ubl conceded that "delinking supply chain payments from the list price will be disruptive and requires our companies and others to adapt, but it is necessary to improve patient affordability."
"We hope realigning these incentives will result in a greater shift toward value and lower costs for patients," he said.
FTC Weighs In
Federal Trade Commission Chairman Joe Simons, in comments to HHS, complained about "regulatory barriers and abuse of government processes that delay and constrain competition," which he said "lead to higher prices and reduce access to those medicines – all to the detriment of consumers."
The FTC said the Blueprint should focus on the "misuse" by the pharmaceutical industry of Risk Evaluation and Mitigation Strategies programs, using regulatory or legislative action.
"REMS programs can protect the public from pharmaceutical abuse, but they can also be misused to disrupt competition and innovation," FTC said in its remarks to HHS. "Branded manufacturers may abuse REMS programs by refusing to make product samples available to generic manufacturers and by denying access to shared REMS systems, both of which are necessary for generic firms to obtain approval for biosimilars from the U.S. Food & Drug Administration."
The FTC also called for removing barriers to competition for biologics, which the commission said has become the "fastest-growing and one of the most expensive segments of prescription medicine."
"Certain FDA regulations create unnecessary barriers to biosimilar and interchangeable competition," the commission said. "The FTC recommends that the FDA reconsider its naming guidance for biologics and expedite the approval process for interchangeable biosimilars, which likely would increase market acceptance and competition for lower cost biosimilar products."
