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FDA new regulations on Pharmaceuticals and Medical Devices

FDA last week issued new rules that aim to ensure medication warning labels provide clear and concise information to consumers, the AP/Denver Post reports. The new rule, which will take effect next month, states that pharmaceutical and medical device companies must rush out safety updates on products only if there is clear evidence of a risk not yet reviewed by FDA. The Pharmaceutical Research and Manufacturers of America supported FDA’s actions, saying the new rules provide clarity about drug warning labels, the AP/Post reports. However, consumer advocacy lawyers said the new rules provide legal protection to companies that withhold information on risks associated with their products. In addition, the American Association of Justice said the new rules require an unnecessary standard of scientific evidence before companies must update their labels (Perrone, AP/Denver Post, 8/24).

Editorial Addresses NEJM Commentary on Pre-Emption
A Las Vegas Sun editorial agrees with the editors of the New England Journal of Medicine “who say that taking away consumers’ right to sue would also take away a strong incentive for the FDA and the pharmaceutical industry to be open about a drug’s potential for causing harm.” According to the editorial, the NEJM editors “state the obvious” that FDA and the pharmaceutical companies “haven’t always been completely open or correct in their labeling, even when the risk of lawsuits has been present.” The editorial concludes, “Preserving the right of consumers to sue will keep federal agencies and manufacturers more honest — and the public more protected” (Las Vegas Sun, 8/23).

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hospitals requiring payment upfront

The South Florida Sun-Sentinel on Tuesday examined how across the U.S., “some insured patients are being asked by hospitals to pay larger portions of their bills upfront — and sometimes hospitals will not do the procedures until they get their copayments.” Although hospitals must provide emergency treatment without receiving upfront payment, elective or scheduled procedures, such as angioplasty or chemotherapy, “can be withheld depending on a patient’s ability to pay,” according to the Sun-Sentinel.

A voluntary survey conducted by the Internal Revenue Service in 2006 found that 14% of 481 not-for-profit hospitals nationwide required an upfront payment or payment plan before a patient was admitted. Hospitals maintain that the slow economy and rising health care costs have resulted in many unpaid medical bills and the practice is needed to offset such costs. However, patient advocates contend that requiring payment before services are delivered can cause stress on already vulnerable patients who might have life-threatening illnesses.

Hospital officials in Florida say that patients are being asked to pay larger amounts upfront as insurance companies require patients to make higher out-of-pocket contributions to their care. David Smith, CFO for Memorial Regional Hospital in Florida, said, “As the economy worsens, employers are having a harder time affording insurance for their employees, they’re increasing the patient portions, and patients’ benefits actually decrease”

increase drug prices

Drug makers increased the average wholesale price of 26 brand-name drugs by 100% or more in a single cost adjustment last year, compared with comparable price increases for 15 drugs in 2004, according to University of Minnesota researchers, USA Today reports. In the first half of 2008, the average wholesale prices of 17 drugs have increased by at least 100%. According to USA Today, many of the prices that are “quietly” being raised are for older products used to treat rare but often serious conditions.

Alan Goldbloom, president of Children’s Hospitals and Clinics in Minnesota, said, “This does drive up the price of health care,” adding, “Hospitals are either eating the cost or passing it along to insurers, so you and I are paying it in increased premiums.”

According to pharmacy benefits manager Express Scripts, the average wholesale prices of 1,344 brand-name drugs increased by an average of 7.4% last year. Stephen Schondelmeyer, director the PRIME Institute at the University of Minnesota, said, “There is no simple explanation” for why certain drugs experienced the larger increase. “Some companies seem to figure no one is watching so they can get away with it,” Schondelmeyer said. “Drug companies say the price hikes cover the costs of keeping the drugs on the market,” USA Today reports.

Sens. Amy Klobuchar (D-Minn.) and Charles Schumer (D-N.Y.) last week asked the Government Accountability Office to investigate cases of large price increases. Klobuchar earlier this year also asked the Federal Trade Commission to investigate a company that had increased the average wholesale prices of four drugs by up to 3,436% in 2006 (Appleby, USA Today, 8/8).

medical blogs not protecting the patient

Physicians and nurses who maintain blogs are not taking sufficient measures to protect the identity of the patients about whom they write, according to a study published last week in the Journal of General Internal Medicine, the Los Angeles Times reports. For the 2006 study, author Tara Lagu — a Robert Wood Johnson Foundation Clinical Scholar and an internal medicine specialist — examined 271 blogs that were maintained by physicians or nurses.

The study found that about 65% of the blogs are written anonymously. The remainder included identifying names of their authors. About 45 blogs, or 17%, “included sufficient information for patients to identify their doctors or themselves,” the study said. About 42% of the blogs contained accounts of private interactions with patients and three blogs displayed photographic images of patients that easily made them recognizable. Despite only a few blogs including conflict of interest disclosures, 11.4% of the blogs contained postings that promoted specific pharmaceutical or medical device products.

According to the Times, some of the physicians and nurses use their blogs “to blow off steam and share their experiences in a profession that most agree has become more trying in recent years,” while others use their blogs to share interesting information, such as medical studies. Lagu said that at least half of the blogs discuss health care policy and other politics-related issues. A few also use blogs as educational tools.

Lagu said that as blogs increasingly become a way for medical personnel to discuss their work and share their frustrations, privacy has become an issue. “It’s time for us to take some responsibility and really think of how we can maintain the integrity of this process,” she said

medicare reimbursement with generic drugs

When a drug goes generic, the price plunges. But the formula Medicare uses to pay for certain drugs is slow to reflect that price drop, which means the program winds up overpaying for months.

Read all about it in this report out today from Health and Human Services’ inspector general.

drug pricesThe report looks at irinotecan, a cancer drug (sold by Pfizer under the brand name Camptosar) that went generic in February of this year. In March, Medicare was paying $126 per dose of the drug. During the same month, the average generic price was $41, the report found. Even factoring in sales of the branded version, the average price during the month was only $52.

Irinotecan is covered by Medicare Part B, which pays for medicines injected at the doctor’s office and oral cancer drugs. The program likely overpays for other new generics, the report found.

The problem is that Part B uses a backward-looking formula to calculate what it should be paying for the drugs. So when new, lower-priced generics hit the market, Medicare is still basing its payment on prices calculated when only the branded drug was available. During the current quarter, Medicare is paying about $75 for irinotecan — way down from what it was paying in March, but still far above the average price.

The report suggests that Medicare figure out a way to “address pricing discrepancies arising from newly available generic drugs.” That may include pushing for a change in the laws that govern what Medicare pays for drugs, the report suggests.

Legislation to make referrals more transparent

Senate Finance Committee ranking member Chuck Grassley (R-Iowa) recently introduced legislation (S 3343) that would require physicians to disclose their financial ties to imaging services ordered under Medicare when making self-referrals, CQ HealthBeat reports.

The legislation is intended to reduce physicians’ incentives for referring patients to imaging providers in which the doctor has a financial stake by requiring them to disclose such ties. The bill would require physicians to provide beneficiaries with a written list of alternative providers when referring imaging services, such as MRIs, CT and PET scans. The measure also would require the list to specify which providers are in proximity to the beneficiary’s home. The legislation is based on recommendations from the Medicare Payment Advisory Commission after the Government Accountability Office found that Medicare imaging spending increased about 200% between 2000 and 2006. The Congressional Budget Office did not score the measure, but a Grassley aide said it could reduce Medicare spending.

Mo Zilly, director of government relations for the Medical Imaging and Technology Alliance, said that MITA would support the measure because it improves transparency. However, she said it does little to reduce overuse of imaging services in Medicare and instead shifts costs from one provider to another.

Grassley had included a similar provision under Medicare legislation on which he worked with Finance Committee Chair Max Baucus (D-Mont.) that failed to receive consideration. Ultimately, the new Medicare law did not include the imaging disclosure provision (Parnass, CQ HealthBeat, 7/29).

telemedicine reimbursement approved

Final Victory for Telemedicine Reimbursement
Congress Overrides Presidential Veto on H.R. 6331

Telemedicine achieved final victory in its quest to add new originating sites for
Medicarereimbursement on July 16 when Congress overrode President Bush’s veto of H.R. 6331.
Under this new law, as of January 1, 2009, skilled nursing facilities, in-hospital dialysis centers and
community mental health centers will be originating sites for Medicare reimbursement.

H.R. 6331, a large Medicare bill that addresses many issues including averting scheduled cuts in physician
fees, has been highly controversial due disagreements over spending cuts necessary to offset new
expenditures in the legislation. The bill originally passed the House on June 24 by a vote of 355 to 59 and
passed the Senate on July 9 by a vote of 69 to 30. On July 15, President Bush vetoed the bill. Later that
day Congress overrode the veto making the bill law. The House vote was 383 to 41, and the Senate vote
was 70 to 26.

NEXT STEPS: The law goes into effect January 1, 2009, but the Center for Medicare and Medicaid
Services (CMS) needs to issue regulations detailing how it will be implemented. ATA will work with
CMS as they develop these regulations, and will keep the membership informed as this process
unfolds.

ATA would again like to thank the many people who contributed to this success. ATA is extremely
grateful to our champions in Congress including Sen. Kent Conrad, ND; Sen. Max Baucus, MT; Sen.
Charles Grassley, IA; Sen. Debbie Stabenow, MI; Sen. John Thune, SD; Rep. Mike Thompson, CA; Rep.
Bart Stupak, MI; Rep. Kenny Hulshof, MO; and Rep. Earl Pomeroy, ND.

ATA also thanks those in the telemedicine community who worked so hard to get us this far. ATA is
grateful to all the members who responded to the ATA Action Alerts. Many ATA members worked hard
to get their senators and representatives to support this legislation, and ATA is grateful to those who made
individual efforts. In addition, many ATA members signed letters at the annual meeting in Seattle, and
many people also made Capitol Hill visits as part of the Telehealth Leadership Conference and on their
own. All these efforts contributed to this success.

ATA is grateful to our longstanding friend and ally, Bob Waters and the Center for Telehealth and e-
Health Law.

ATA is also grateful to other organizations who have worked to advance this legislation including the
National Council for Community Behavioral Healthcare and their representative, Al Guida, who has
worked so hard on the CMHC provision; the American Health Care Association; the National Association
for the Support of Long Term Care; the American Health Information Management Association; the
Center for Aging Services Technologies; the National Center for Assisted Living.