NAFTA Revision, H.R. 1865, and Biologics (Pharma) Switcheroo
Sigh . . .
If the general public has not caught it, there are some of us who watch the political mechanizations by commercial healthcare to improve their lot in Congress. I know the public has not caught this switcheroo in Congress causing them to look good (and boast of it) in removing new drug exclusivity from NAFTA. What we have missed is it was granted in H.R. 1865 instead and for a longer period of time to boot. Read on to see how this was accomplished.
Addressed to Congresswoman Elissa Slotkin:
The Good:
Yes with the revision of NAFTA, Democrats “removed a provision giving the makers of ultra-expensive biologic drugs 10 years of protection from less expensive knockoffs. This is up from 5 years.
Democrats opposed what they called a giveaway to the industry locking in inflated prices by stifling competition. Top examples of the injected drugs made from living cells include medications to fight cancer and immune disorders such as rheumatoid arthritis. This legislation impacted drugs such as Rituxan, Humira, and Enbrel. Humira and Rituxan being two of the more expensive drugs on the market which have incurred pricing increases exceeding twice Medical CPI. From January 2012 to December 2017, Humira experienced price increases of 124%. Rituxan which I use from time to time is right behind Humira in cost.
The Bad:
Recently finished up an article on the prices/costs of healthcare and the resulting increases in Healthcare Insurance and deductibles whether it be Employer, ACA, or Medicare/Medicaid. House Bill H.R. 1865 was passed in the Senate and one of the few to make it through the Senate. It was the 2020 budget bill coming out of the House, altered by the Senate and altered by the House and finally passed by the Senate.
Besides repealing the Cadillac tax and the Medical Device tax which were never implemented and the Healthcare Insurance tax which was implemented; the bill also included (page 1503) a phrase to include “chemically synthesized polypeptides,” medicines such as Novo Nordisk’s Victoza. While it is only for new drugs and not drugs newly deemed to be Biologics such as Humulin and Humira, it is similar to what was removed from the NAFTA bill, is 12 years long for exclusivity, and it is still a huge and similar give away to Pharmaceutical companies the same as what was in the NAFTA revisionary bill.
And The Ugly:
The reasoning for the designation is to give companies a chance to bring new and cheaper bio-similar drugs to market. Ok fine bringing a drug to market, risk adjusted costs can be recouped in 5 years for the most expensive drug such as Humira and Rituxan as detailed by the recent World Healthcare Organization Technical Report on Cancer Drugs. With anywhere from 50% increases to a doubling of prices over a two year period (JAMA Network Open), Pharma does not need legislative incentives through extended exclusivity to be creative and profitable.
References:
Generic Drug Groups See Giveaway to Brand Names in Spending Bill, Bloomberg Law, Alex Ruoff and Jaquie Lee, December 19, 2019
THE HOUSE AMENDMENT TO THE SENATE AMENDMENT TO H.R. 1865, Appropriations Act, 2020, Page 1503, December 16, 2019
TECHNICAL REPORT Pricing of cancer medicines and its impacts, World Health Organization
run75441 (Bill H)
===Recently finished up an article on the prices/costs of healthcare===
Can you provide a link to the article? Was it one you wrote or read?
Jerry:
All three of the links are there. Just click on them and you will find the sources of my information. Click on ultra-expensive biologic drugs, H.R. 1865, and Technical Report on Cancer Drugs in the text, and you will find the information. I usually add them the end also.
What are you trying to do? I may be able to offer you additional information off of Angry Bear. If you search for “Healthcare” on Angry Bear, you will find quite a few different articles dealing with the costs of healthcare I wrote which includes the links. Pricing transparency does nothing to lower the costs of healthcare or insurance for that matter.
By the way: Welcome to Angry Bear. First time commenters go to moderation to weed out spammers, spam, and advertising.
Run75441,
In response to your “What are you trying to do?” question, I am just trying to get more informed about the healthcare issues in the US. I have been impressed with the work of Uwe Rheinhardt and his focus on the “prices” of healthcare.
As a 60 year old male, I remember when healthcare was very reasonable. What has shocked me over the last 20 years is the growth of the hospital systems/corporations. While I am all for Single Payer, I am skeptical that the major insurers and hospital systems will change. In the Chicago are there are hospitals that look like hotels.
Back in the day Doctors lived on the same block as everyone else. Now many doctors, and specialists live in very affluent areas.
For healthcare costs to go down significantly everyone with skin in the game(doctors, CEO’s, etc) is going to have to get less of the pie and I do not see that happening without a hard battle. Metaphorically, when many in healthcare are used to driving a Mercedes, they will not willing accept driving a Chevy.
Hence my interest in Uwe Reinhardt’s work as he seems to cut to the chase of “It’s the Prices!” or i.e. rent seeking.
Jerry:
I gotcha by 10+ years. I took the liberty and sent you an email with the link to the article I was referring to in the other post. If you look at it, there is a myriad of links besides Uwe and it refers to cost inflation. Prices are big leap higher than the actual costs which you will find out if you read that one. I cite Donald Berwick in that article which he the increase in hospital pricing is the prime reason for the increase in healthcare insurance. Berwick suggests healthcare pricing should be no more than 120% of Medicare allowances.
I can show you where more information is if you like. I do not mind sharing info as we old guys absorb it and make it our own.
Bill
Run:
Thanks for the email. In a quick skim, the article you emailed me is very good. I will read it more in depth this weekend. Have you had a chance to read Rheinhardt’s recent book “Priced Out: The Economic and Ethical Costs of American Health Care”?
From one old guy to another it is amazing to me how quickly things have changed in our lifetimes, even probably more so for you. It does not even require going back to our childhood years, the1950’s. Even in the late 1970’s up to the mid 1980’s most things (cars, housing, healthcare, college tuition) were relatively affordable.
Another thing that concerns me is when people of the baby boomers and older generations have gone, there will be no one left who remembers when times were different and much cheaper. Many young people probably think this ( extremely high college costs, extremely high housing costs, extremely high healthcare costs, unstable employment) is normal and it is not.
Jerry:
If you critically read what I wrote and then go to the links, you will see what a bunch of mercenaries these guys are. There are other links of to my posts also. It can be a bit daunting to read; but, I think you will understand it.
Yes things have changed. My arrival on this planet cost $145.00 and was typed on tablet paper from a small community hospital. Tech is advanced o detected disorders and diseases; but, Medicine is not all about treating and curing people anymore. More and more the profit motive has taken hold and has taken over a larger percentage of the motive for treating people. There is little or no concern for what is burdening people after treatment when cured or fixed. The doctors walk away.
There is a “huge” difference between cost and price. Always keep that in mind when talking.
==There is a “huge” difference between cost and price==.
Not sure if this is what you mean: I have always thought it was curious that many people are willing to pay “exchange value” prices as opposed to use value prices which are closer to costs. I think exchange value and use value originated with Marx. For instance an IPhone retails for a lot of money. The actual costs to build the IPhone are much, much less. Over the last 40 years we have gone from an economy based on making a little profit to an economy where making as much of a markup as you can get away along with exorbitant rent seeking behavior. There are probably similar exchange value vs. use value examples in healthcare but none come to mind right now, although drug prices seem to be very much overinflated exchange value.
I think the economist Maria Mazzucato recently came out with a book called The Value of Everything:
https://www.publicaffairsbooks.com/titles/mariana-mazzucato/the-value-of-everything/9781610396752/
https://www.nytimes.com/2019/11/26/business/mariana-mazzucato.html
IMO too many people in the US equate how much they paid for something as a status symbol regardless of the worth of the purchase. The problem of exorbitant inequality is that so many people have a lot of money and they do not care that they are paying exchange value prices for things/services. Unfortunately by foolishly paying exchange value prices they are driving up the prices of healthcare, cars, etc. where the average person cannot afford them.
Enough sermonizing for today!
Thanks for the replies, I have enjoyed our dialogue.
Jerry:
The sermons are good as I can determine how much you know and I can start to relax with you. I did manufacturing throughput analysis for a number of years was successful at it. I worked pharma and healthcare supplies at one time or another. We developed our own costing models for plastics, rubber, and metal components in automotive and were successful in negotiating pricing based upon their accepting our costing techniques. Every year I go back to my alum where I received my Masters and talk to my former Econ Prof’s classes about global travel and how to blend with different cultures. He is a few years older than I. He is fresh water and I am salt water. While I can not talk the theory, he admits I understand the concepts from my classes 40 years ago. We have good dialogue.
If you go to the WHO Technical Paper, there whole segment on value pricing from page 16 to 102. It is thorough and one begins to understand what is going on in Pharma and how quickly they recoup costs for R & D. The ICER evaluated Novartis Kymriah and suggested a price at $1 million for the one dose treatment. Novartis said they would set the price at $400,000 for the same one dose treatment. All based on value brought to the customer and the market. I doubt Novartis is losing money.
The ICER reviewed 100 drugs for value brought to the market, eliminated 23 which did not experience price increases greater than twice Medical CPI. Of the 77 they chose the top nine to look at the price increases which was greater than twice medical CPI. Two drugs the ICER said the companies had supply enough information to support (not justify) a price increase (without addition inquiry). The other 7 drugs, the ICER said the price increases were not justified as there was no additional value resulting from the usage of the drugs to justify a price increase. Of course each company responded.
I do not know what you read which is why I am being a pita and unusually detailed in my responses. By the way, my keyboard or USBs are acting up as sporadically. I am missing letters in my comments. If I go to fast it gets worse. Have good evening. Later.
Bill