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News December 2014

Washington Watch

Washington Watch Potpourri: Social Security, Medicare and the FDA – Still Waiting, Not Paying, and the Naming Game

By Alan M. Schlein

The backlog problem is not unique to the SSA. Other government agencies have the same problem. According to the Washington Post, the average case at the Social Security appeals office usually takes 422 days to decide, while an appeal at the VA will take 957 days. At the patent office, an application usually waits more than 800 days for a decision.

If You Think the Veteran’s Backlog Was Long…

Last spring the nation was outraged when the enormous backlog of claims at the Veterans Administration was revealed. The number of claims stuck in processing for more than 125 days at that time was 611,000 veterans who were not getting their claims processed. Seven months later, that number, the VA says now, has dropped to 344,000 claims that are still 125 days behind.

While there was bipartisan anger over the VA scandal, a recent Washington Post story reveals a dramatically worse backlog over disability claims at the Social Security Administration (SSA). The Social Security office of judges, who hear appeals for disability benefits, are 990,399 cases behind. And all of these people are waiting on a single office to get help.

Social Security is best known for sending benefits to seniors. But it also pays out disability benefits to people who can’t work because of physical or mental ailments. It also runs an enormous decision-making bureaucracy to figure out who is truly disabled and who is trying to game the system. The backlog is at the office that handles appeals of appeals. In most cases, the applicants have already been turned down twice by lower-level officials who didn’t think the person was disabled enough.

If people appeal to this office, they can plead their case in person before a special kind of
Social Security judge, who is supposed to read the case history and ask questions. There are 1,445 of these judges, which means this in-house legal system is actually larger than the entire federal court system – district and appeals courts and the U.S. Supreme Court put together.

In its recent package of stories, Washington Post reporter David Fahrenthold noted that these judges fell behind when Gerald Ford was president in the 1970s and they never caught back up. Admittedly it is slow, tedious work, made slower by outdated rules and what the newspaper called “oddball procedures,” including an official list of jobs that people qualify for, that includes “telegram messenger” and “horse-and-wagon driver,” from a bygone era.

The problem is that the system is, in effect, what the Washington Post labeled as “too big to fix.” Efforts at reforms were hugely expensive and so logistically complicated that they often stalled, unfinished. “What’s left now is an office that costs taxpayers billions and still forces applicants to wait more than a year – often, without a paycheck – before delivering an answer about their benefits,” the newspaper reported. Fighting this system is frustrating, not only for those filing, but for the judges too. One Miami-based Social Security judge noted that she had two claimants on her docket that died waiting for a hearing.

The backlog problem is not unique to the SSA. Other government agencies have the same problem. According to the Washington Post, the average case at the Social Security appeals office usually takes 422 days to decide, while an appeal at the VA will take 957 days. At the patent office, an application usually waits more than 800 days for a decision.

But what makes this Social Security backlog especially difficult is that most disability applicants have little or no income while they wait. SSA officials told the newspaper that the backlog is mainly caused by factors they cannot control. A surge of new disability applications is a key factor. The judges’ incoming caseload grew from almost 600,000 in 2008 to over 800,000 in fiscal 2014. Social Security officials also say Congress has sent them hundreds of millions of dollars less than they asked for in funding.

Both Congress and the SSA have tried to speed up the appeals process by pushing the judges to work faster. But even that barely makes a dent in the backlog. Lawmakers and SSA officials have also tried to impose system-wide reforms, but they often fizzled because of the logistics of changing something so big. The switch from paper to electronic hearings and the expansion of hearings by video link have helped, dropping the backlog to 705,000 in 2010. The wait time dropped too, eventually falling below a year. But then a problem appeared.

Judges realized that it was simply easier to just say yes to appeals cases and faster than saying no. So suddenly there was a sharp increase in the number of appeals cases that the judges granted disability payments to.

After some careful consideration, Social Security officials backed off the push to get faster decisions, and judges were given a case limit of 720 a year. New checks were also imposed to makes sure the Yes decisions were as thorough as the No decisions. Today, judges approve 44 percent of cases, a marked decline from recent years. Dozens more judges have also been hired to scale back the problem. But a huge backlog still remains.


Medicare Changes Could Limit Patient Access to ALS Communication Tools

Last summer’s viral “ice bucket challenge,” focused attention and helped raise money for ALS – amyotrophic lateral sclerosis – a disease that impairs motor function so people often can’t talk or even move. But while public attention focused people on the disease, Medicare changes already in the works, could now seriously curtail coverage of communication tools that ALS patients need.

Unless it is delayed, beginning December 1, people with ALS could lose access to technological advances that allow them to better communicate, as a result of what Medicare is allowed to cover.  In the past, Medicare has covered 80 percent of the cost for basic speech-generation devices – the machines many ALS patients use – while permitting patients to pay out of pocket for upgrades that allows the devices to connect to the Internet and perform services such as opening doors.

But last February, CMS posted a “coverage reminder” making clear that the program does not cover the cost of upgradable devices based on an earlier national coverage determination.

The policy notice is part of a review of Medicare contractors to make sure devices comply with Medicare and coverage rules. Medicare has “suspended” the review until December, according to a spokesman, to address advocates’ concerns. ALS activists say the change will effectively bar patients from the machines they have been able to get through Medicare for years.

A basic speech-generation device costs about $4,000. But that cost jumps sharply as patients purchase added features, like eye-tracking technology used to help patients who have lost movement in their limbs, with a price tag of $15,000 or more. Typically, Medicare covers about 3,000 devices a year.

Under the new interpretation, ALS patients insured through Medicare can no longer use the program to buy devices that could potentially be connected to the internet – often the only way ALS patients communicate with people not in the room – or that perform basic functions such as turning on room lights, Wildman said. Advocates say that Medicare is already denying claims to cover eye-tracking technology.

Lawmakers on Capitol Hill are extremely interested in this issue. In a rare, bipartisan effort, 200 members of Congress signed onto a letter in September, asking the agency to address these concerns. So far, Medicare has not responded to the lawmakers.


Biologics Vs. Biosimilars: the Naming War

Prescription drug prices are going down soon but only after the Food and Drug Administration makes some key decisions that have billions of dollars on the line.  But first, there is a fight over what to call new drugs, which is front and center on the FDA’s agenda.

Already available in Europe, a new wave of cheaper versions of biologic drugs are coming to the U.S., more than four years after the Affordable Care Act cleared a pathway for this new drug classification. But the big fight is over what names these copy-cat versions of biologic drugs should go by.

Biologics are drugs that are not made from chemicals, like most current drugs. Instead they are made from the proteins of living organisms. They are used to treat serious diseases like cancer and multiple sclerosis, and are usually more expensive than conventional drugs. They are also usually harder to make.

But because they come from live plants and other things, they are impossible to exactly duplicate. So “copy cat” biosimilars are near replicas of these drugs. They have been selling at a discount of 20-30 percent lower than the biologics prices in Europe.

But so far, these biosimilars are awaiting FDA approval before they will be allowed in the American market. Big money is involved. Some estimate that the U. S. market will grow from virtually nothing to $36 billion by 2020. Fast adaptation of biosimilars could save hundreds of billions of dollars for the health care system, Express Scripts, the pharmacy benefits manager estimates. Thomson Reuters BioWorld reports that there are already 700 follow-on biologics therapies moving through pipelines and more than 245 companies developing these biologics. Biosimilars are expected to be about 25 percent of those.

But savings of hundreds of billions of dollars depends on policies that are still being decided – like the naming issue. Here’s the key question: should these biosimilars be allowed to share the same name as the biologics they are substituting for. This is somewhat similar to the question of how generic drugs share identification with the brand-name product they substitute for.

If they are allowed to share a name, it will help determine how widely accepted biosimilars will be used in the United States. The decision rests in the hands of the FDA. Generic drugmakers have urged the government agency to allow biologics and the copy-cat biosimilars to share a name, pointing to practices in other countries where these drugs are already available.

They make a straightforward case: “Patients, prescribers and dispensers of these drugs need to be able to easily identify which drugs bear a relation to one another in order to maximize the potential savings from the biosimilar approval pathway," a group of proponents wrote the FDA recently. This coalition included CVS, Walgreens, and several health groups and unions.

But another large coalition of doctors, many of whom regularly dispense biologic drugs, disagree, arguing that the FDA needs to require unique names for biosimilars. They say that naming the drugs uniquely will help doctors know that each product, while safe and effective, may differ slightly. They argue patient safety is at stake.

There is also strong opposition to biosimilars from many of the biologic manufacturers who see their huge potential profits disappearing, along the same way as how the generic industry has changed pharmaceuticals. In Europe, they have a regulatory regime that is considerably more difficult than the U.S.’s and biosimilars have been in place there since 2006, leading to lower drug prices across the continent.

Lawmakers on Capitol Hill have taken interest in the issue as well, and the FDA has already received applications for biosimilars from Novartis AG, among others.


[Also contributing to this story were BioWorld, Forbes, the New York Times, the Washington
Post and Kaiser Health News.]


Alan Schlein is the author of "Find It Online," and an internet consultant. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

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