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News August 2012

Washington Watch

Senior Issues – Drug Reimportation and Shortages, The Doughnut Hole, and Housing Relocation – Facing Mixed Results

By Alan M. Schlein

The Congressional Budget Office estimated in 2009 that re-importation would save the government $19 billion over 10 years. It was considered in 2010 when the Affordable Care Act was approved, but became collateral damage in negotiations with the pharmaceutical industry as a way to get that industry’s buy-in on the Obama health care legislation.

 

Stopping what could be critical life-saving medication was not what people hoped would happen when patients reached the coverage gap. Medicare and insurance officials hoped seniors would be cost-effective and would look for low-cost alternative options instead of not taking their medicines. But that’s not the case, according to the study. Instead, seniors just stopped taking their essential medicines.

 

The numbers vary sharply by state. Texas and Ohio, for example, have helped thousands of seniors and disabled people find homes in their communities. Others like North Carolina, Missouri and Kentucky, have moved fewer than 500 each. In California, only 827 people have made the jump since 2008, when the state was awarded $41 million during that time.

c_stingerchprmeds1_sIn a rare moment of true bipartisanship, Senate and House Republicans and Democrats recently passed legislation that helps fund the Food and Drug Administration (FDA), giving it new authority to prevent drug shortages and speed reviews of medical devices and lifesaving medicines, including lower-cost generic versions of biotechnology products.

The measure, which has the support of President Obama, consumer groups and the pharmaceutical industry, gives drug manufacturers incentives to make antibiotics for conditions where few treatments exist. The bill passed the House by a 387-5 vote and the Senate by a vote of 96-1. Leaders from both sides must now meet to iron out differences but lawmakers expected to have the measure on the president’s desk in July.

The bill was designed to reauthorize fees from makers of drugs and devices that help speed FDA evaluation of new medical products. These user fees could make up nearly half of the FDA’s proposed $4.5 billion budget next year, according to the agency.

The legislation also gives the FDA the ability to force drug companies to report any supply
disruptions, so the agency can work with other manufacturers to ramp up production and avoid drug shortages. Certain kinds of cancer, anesthetic and nutrition medicines have been in persistent short supply in the past few years because of manufacturing problems.

Despite the bipartisan consensus, lawmakers were not able to muster enough votes to approve a proposal by Sens. John McCain, R-Az., and Sherrod Brown, D-Ohio, to allow the importation of cheaper medicines from Canada, likely saving the U.S. billions of dollars on health care spending.

As a senator, Barack Obama co-sponsored a measure to allow it, and endorsed the re-importation during his 2008 campaign, but as president he has stepped back from that support, arguing that it might compromise drug safety. This time the measure failed this time 43-54.

Shortly before the vote, and anticipating that he didn’t have the votes to get the measure approved, McCain, a long-time proponent of drug re-importation, warned that “What you’re about to see is the reason for the cynicism the American people have about Washington.” The pharmaceutical industry “has proven its influence again at the expense of average, low-income Americans that will again have to choose between (purchasing medications) and eating,” he said.

The Congressional Budget Office estimated in 2009 that re-importation would save the government $19 billion over 10 years. It was considered in 2010 when the Affordable Care Act was approved, but became collateral damage in negotiations with the pharmaceutical industry as a way to get that industry’s buy-in on the Obama health care legislation.

The pharmaceutical industry agreed to contribute $80 billion over 10 years to help pay for the health care bill and re-importation was removed from the overall legislation.

Both House and Senate bills do require more frequent inspection of foreign companies that produce drugs that are imported into the United States.

Still to be worked out between the House of Representatives and the Senate bills are how to put in place a national system for tracking medications in order to minimize the threat of fake or stolen drugs.

The FDA has been pushing for a uniform way to track individual vials of medicine, but drug
companies, distributors and pharmacies warn it may be too expensive. They have proposed an alternative plan that would track much larger “lots” of drugs. They say their plan would pave the way for more stringent rules later. The Senate version of the bill includes room for a law that would require a uniform drug tracing system but it might be cut if lawmakers cannot decide on the details of the plan.

The legislation reauthorizes user fees for brand-name drugs and medical devices and it introduces fees for the review of generic drugs and less expensive versions of certain biotech products known as “biosimilars.”

While many lawmakers said they received pleas from constituents affected by drug shortages, Senate Majority Leader Harry Reid, D-Nevada., said his concern was personal because his wife was being treated for breast cancer. “Through 20 weeks of chemotherapy,” Reid said, “my wife Landra, and I lived with the fear that the medicine she needed every Monday morning wouldn’t be there because there were shortages. Fortunately for us, the drug was always accessible. But many Americans have not been so fortunate. People die as a result of not having these medicines,” Reid noted.

The bill would create expedited procedures for the review of “breakthrough drug therapies” for life-threatening diseases. It would offer incentives for the development of antibiotics to treat infections caused by germs resistant to existing drugs.

 

Doughnut Hole Problems

Medicare patients who reach the annual gap in coverage for prescription drugs known as the
“doughnut hole” are more likely to stop taking drugs for heart conditions than to go search for cheaper alternatives.

According to a new study, seniors who reach the doughnut hole are 57 percent more likely than those with continuous coverage to stop taking drugs for heart-related conditions like heart disease or high blood pressure. An estimated 3.8 million beneficiaries reach the Medicare Part D coverage gap each year following a period of initial coverage. The Part D coverage resets annually.

Researchers from the Harvard Medical School, Boston’s Brigham and Women’s Hospital and CVS- Caremark, the drug store chain, in a study published recently by the American Heart Association in a journal called Circulation: Cardiovascular Quality and Outcomes, looked at the records of more than 100,000 Medicare patients with heart conditions who had Medicare prescription drug coverage in 2006 and 2007.

They compared those who fell into the doughnut hole – when Medicare stops paying for drugs and patients are required to temporarily cover 100 percent of their costs – with those who had continuing insurance coverage.

Stopping what could be critical life-saving medication was not what people hoped would happen when patients reached the coverage gap. Medicare and insurance officials hoped seniors would be cost-effective and would look for low-cost alternative options instead of not taking their medicines. But that’s not the case, according to the study.

Instead, seniors just stopped taking their essential medicines. But the researchers were surprised to find that those who stopped taking their drugs didn’t seem to experience serious health consequences. They cautioned, however, that their study looked at only a very short time line and the patients who ended up in the study, "experienced a relatively small number of adverse events, limiting our power to detect differences." Even so, the researchers wrote, “it is unclear whether gaps in drug coverage affect the health of beneficiaries with cardiovascular conditions in the long term.”

In 2007 -- the latest year studied by the researchers -- most Medicare Part D enrollees reached the doughnut hole after they had spent $2,400 on drug co-pays and deductibles; they then had to pay 100% of costs until they had spent $3,850.

The researchers also noted that the 2010 Affordable Care Act has been gradually closing the doughnut hole which would alleviate the problem.

This year, seniors get a 50 percent discount on brand-name drugs, once they reach the coverage gap and a 14 percent discount for generic drugs. But those efforts to close the doughnut hole could be eliminated altogether, depending on what the U.S. Supreme Court decides on the constitutionality of the Affordable Care Act.

 

Housing Efforts Failing

A multi-billion dollar federal initiative to move low-income elderly and disabled people from long-term care facilities into the community has fallen far short of its goals, as many states have struggled to cobble together housing and other services.

Launched in 2007, during the Bush administration, the states projected they would place more than 35,000 Medicaid recipients in the first five years of the program. But a company hired by the government to evaluate the project has found that as of March 31, at least 22,500 had made the transition, about 36 percent below the state’s target, Kaiser Health News reported recently.

The numbers vary sharply by state. Texas and Ohio, for example, have helped thousands of seniors and disabled people find homes in their communities. Others like North Carolina, Missouri and Kentucky, have moved fewer than 500 each. In California, only 827 people have made the jump since 2008, when the state was awarded $41 million during that time.

Mathematica Policy Research, a New-Jersey-based consulting firm, hired by the government to evaluate the program, noted that some states have found it especially difficult to move the elderly. While the vast majority of those eligible for the program are seniors, only about one-third of the program’s participants are seniors. Most of the other participants are adults under 65 with physical disabilities living in nursing homes and developmentally disabled people living in institutions.

What stuns advocates who strongly support the program is that Congress authorized $4 billion and more than 900,000 people living in institutions meet the eligibility requirements. Officials from the Centers for Medicare & Medicaid Services, which administers the program, acknowledge that it was tough for many states to get rolling; some states didn’t start until 2008. But they say the pace has picked up – placements have doubled in the last few years.

“We’ve transitioned individuals from nursing homes who have been over 90 years old and have been able to serve them extremely well in the community,” Ron Hendler, CMS’ technical director for the program, told Kaiser Health News. “They have been very complicated transitions, but we’ve been able to do them – and very successfully.”

But long-term care advocates like Kate Ricks, who heads Voices for Quality Care, a multi-state long-term care advocacy group disagrees. “It’s very frustrating to us,” she said. “At the rate they’re getting people out, everyone who is eligible will be dead.”

To participate in the program, a person must express interest in relocating back to their community, and be enrolled in Medicaid, the federal-state program for the poor and disabled. Transition counselors help coordinate their move into houses, apartments, group homes of four or fewer residents, and in some cases, assisted living facilities.


Also contributing to this report were Kaiser Health News, the New York Times, MedPage Today and Reuters.

Alan Schlein has been covering the national Washington beat for Senior Wire News Service for over two decades.

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