Tagged Cost and Quality

White House Unveils Finalized Health Care Price Transparency Rule

Hospitals will soon have to share price information they have long kept obscured — including how big a discount they offer cash-paying patients and rates negotiated with insurers — under a rule finalized Friday by the Trump administration.

In a companion proposal, the administration announced it is also planning to require health insurers to spell out beforehand for all services just how much patients may owe for out-of-pocket costs for all services. That measure is now open for public comment.

“What is more clear and sensible than Americans knowing what their care is going to cost before going to the doctor?” said Joe Grogan, director of the White House Domestic Policy Council.

The hospital rule is slated to go into effect in January 2021. But it is controversial and likely to face court challenges.

It is part of an effort by the Trump administration to increase price transparency in hopes of lowering health care costs on everything from hospital services to prescription drugs.

When that rule was first proposed in July, hospitals and insurers objected. They argued it would require them to disclose propriety information, could hamper negotiations and could backfire if some medical providers see they are underpriced compared with peers and raise their charges.

Shortly after the final rule’s release, four major hospital organizations said they would challenge it in court.

“This rule will introduce widespread confusion, accelerate anticompetitive behavior among health insurers and stymie innovations,” according a joint statement from these groups, which made clear their intent to soon “file a legal challenge to the rule on the grounds including that it exceeds the administration’s authority.” The statement was signed by the American Hospital Association, the Association of American Medical Colleges, the Children’s Hospital Association and the Federation of American Hospitals.

Insurers also pushed back. “Tthe rules the administration released today will not help consumers better understand what health services will cost them and may not advance the broader goal of lowering health care costs,” said Scott Serota, president and CEO of the Blue Cross Blue Shield Association, in a statement.

Requiring disclosure of negotiated rates, he said, could lead to price increases “as clinicians and medical facilities could see in the negotiated payments a roadmap to bidding up prices rather than lowering rates.” The rule, he added, could confuse consumers.

It’s also a potentially crushing amount of data for a consumer to consider. However, the administration said it hopes the data will also spur researchers, employers or entrepreneurs to find additional ways of making the data accessible and useful.

The amount of information the rule requires to be disclosed will be massive — including gross charges, negotiated rates and cash prices among them — for every one of the thousands of services offered by every hospital, which they will be required to update annually.

In a nod to how hard it might be for a consumer to add up items from such an a la carte list of prices, the rule also requires each hospital to include a list of 300 “shoppable” services, described in plain language, with all the ancillary costs included. So, in effect, a patient could look up the total cost of a knee replacement, hernia repair or other treatment.

Insurers, under the proposed rule, would have to disclose the rates they negotiate with providers like hospitals. They would also be required to create online tools to calculate for individual consumers the amount of their estimated out-of-pocket costs for all services, including any deductible they may owe, and make that information available before the consumer heads to the hospital or doctor.

It would go into effect one year after it is finalized, although it is not known when that will occur.

Although consumer advocates say price information can help patients shop for lower-cost services, they also note that few consumers do, even when provided such information.

Earlier this year, the administration ordered drugmakers to include their prices in advertisements, but the industry sued and won a court ruling blocking the measure. The administration has appealed that ruling.

Nonetheless, Health and Human Services Secretary Alex Azar said the administration is confident.

“We may face litigation, but we feel we are on sound legal footing for what we are asking,” Azar said. “We hope hospitals respect patients’ right to know the prices of services and we’d hate to see them take a page out of Big Pharma’s playbook and oppose transparency.”

He and other officials on a call with reporters admitted they don’t have any estimates on how much the proposal would save in lowered costs because such a broad effort has never been tried in the U.S. before.

Still, “point me to one sector of the American economy where having pricing information actually leads to higher prices,” said Azar.

Azar cited some studies that show that when prices are disclosed, overall spending can go down because patients choose cheaper services. However, such efforts also generally require financial incentives for the patient, such as sharing in the cost savings.

The proposed rule for insurers urges them to create such incentives, said Seema Verma, who oversees the federal government’s Center for Medicare & Medicaid Services.

George Nation, a business professor at Lehigh University in Pennsylvania who studies hospital pricing, called the final rule and the insurer proposal “exactly a move in the right direction.”

Among other things, he said, the price information may prove useful to employers comparing whether their insurer or administrator is doing a good job in bargaining with local providers.

Today, “they just see a bill and a discount. But is it a good discount? This will now all be transparent,” said Nation.

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As Boomers Age Out Of Caring For Adult Disabled Children, Health System Is Unprepared To Take Over In Their Place

‘An Arm And A Leg’: Mom Vs. Texas In A Fight To Get Kids’ Hearing Aids Covered

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When Stephanie Wittels Wachs found out that health insurance in Texas didn’t cover hearing aids for kids, she lobbied to change Texas law. And she won. But the process took more than two years.

“You’re constantly just like bugging everyone you know, like, ‘Please call! Please text! Please call! Please email!’” Wittels Wachs said. “You just become like this broken record.”

It was a grind, but along the way, Wittels Wachs found surprising allies. The bill’s sponsor in the state Senate was Lois Kolkhorst, a deep-red Republican with family members who are deaf.

“You end up getting into bed with people who, you’re like, ‘They’re the worst!’ But you find out they’re not the worst,” Wittels Wachs said.

Season 3’s Episode 1 of “An Arm And A Leg” unveils the moment when Sen. Kolkhorst made an emotional pitch to her fellow lawmakers. It worked. Texas now requires health plans to cover medically necessary hearing aids and cochlear implants for children.

Wittels Wachs has a daughter born hearing-impaired, and she was shocked to learn that the hearing aids her daughter needed would cost $6,000, and not be covered by her health insurance.

But her activism didn’t come from financial need; it came after a personal tragedy. Wittels Wachs’ brother, Harris Wittels — a comic who wrote for TV comedies like “Parks and Recreation” — died of a heroin overdose around the time Wittels Wachs’ daughter turned 1 year old.

“I just needed a place to put a lot of my inability to bring my brother back, my inability to change the fact that my daughter couldn’t hear,” Wittels Wachs said. “All of these things happened at once that I couldn’t fix.”

Wittels Wachs is the host of “Last Day,” a new podcast about the opioid crisis and the author of “Everything Is Horrible and Wonderful,” a memoir about grieving her brother.

Season 3 is a co-production of Kaiser Health News and Public Road Productions.

To keep in touch with “An Arm and a Leg,” subscribe to the newsletter. You can also follow the show on Facebook and Twitter. And if you’ve got stories to tell about the health care system, the producers would love to hear from you.

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Dialysis Patients Panic As Financial ‘Life Raft’ Becomes Unmoored

Russell Desmond received a letter a few weeks ago from the American Kidney Fund that he said felt like “a smack on the face.”

The organization informed Desmond, who has kidney failure and needs dialysis three times a week, that it will no longer help him pay for his private health insurance plan — to the tune of about $800 a month.

“I am depressed about the whole situation,” said the 58-year-old Sacramento resident. “I have no clue what I’m going to do.”

Desmond has Medicare, but it doesn’t cover the entire cost of his care.  So, with assistance from the American Kidney Fund, he pays for a private plan to cover the difference.

Now, the fund, which helps about 3,700 Californians pay their premiums and out-of-pocket costs, is threatening to pull out of California because of a new state law that is expected to cut into the dialysis industry’s profits — leaving patients like Desmond scrambling.

The letter portrayed the fund as helpless. “We are heartbroken at this outcome,” it read. “Ending assistance in California is the last thing we want to do.”

But supporters of the new law are calling the threat a scare tactic. State Assemblyman Jim Wood (D-Healdsburg), the author of AB-290, said there is nothing in the measure that prohibits the fund from continuing to provide financial assistance to patients.

“AKF has simply made a conscious decision, without merit, to leave the state despite the many accommodations I made by amending the bill in the Senate to ensure that it can continue to operate in California,” Wood said in a written statement.

What’s behind this dispute is the tight relationship between the American Kidney Fund and the companies that provide dialysis, which filters the blood of people whose kidneys are no longer doing the job.

People on dialysis usually qualify for Medicare, the federal health insurance program for people 65 and older, and those with kidney failure and certain disabilities. If they’re low income, they may also qualify for Medicaid, which is called Medi-Cal in California.

But dialysis companies can get higher reimbursements from private insurers than from public coverage. And one way to keep dialysis patients on private insurance is by giving them financial assistance from the American Kidney Fund, which helps nearly 75,000 low-income dialysis patients across the country.

The fund gets most of its money from DaVita and Fresenius Medical Care, the two largest dialysis companies in the country. The fund does not disclose its donors, but an audit of its finances reveals that 82% of its funding in 2018 — nearly $250 million — came from two companies.

Insurance plans, consumer advocacy groups and unions have accused the American Kidney Fund of helping dialysis providers steer patients into private insurance plans in exchange for donations from the dialysis industry. Wood said his bill is intended to discourage that practice.

American Kidney Fund CEO LaVarne Burton denied the accusations and said her group plays no role in patients’ coverage choices.

Starting in 2022, the new law will limit the private-insurance reimbursement rate that dialysis companies receive for patients who get assistance from groups such as the American Kidney Fund to the rate that Medicare pays. The rate change won’t apply to patients who are currently receiving assistance as long as they keep the same health plans. The bill will also address a similar dynamic in drug treatment programs.

To determine which patients receive financial aid, the law will require third-party groups to disclose patients’ names to health insurers starting July 1, 2020.

These disclosure requirements are spurring the American Kidney Fund’s decision to leave, Burton said. She argues that they conflict with federal rules and violate patient privacy.

“AKF has no choice but to leave or seek legal relief,” Burton said.

Brian Carroll says he had to move back in with his parents in 2016 after dialysis treatment because it left him too weak to work. Without premium assistance from the American Kidney Fund, he says, he’ll face even more financial strain. (Ana B. Ibarra/California Healthline)

In mid-October, the fund started sending letters to its financial aid recipients in California warning of its departure. And Nov. 1, it joined two dialysis patients in filing suit against the state, asking a U.S. District Court to rule the law unconstitutional.

Gov. Gavin Newsom cautioned against such actions when he signed the bill, and urged “both opponents and supporters to put patients first.”

But as the threats and legal battle play out, patients are caught “squarely in the middle,” said Bonnie Burns, a consultant with California Health Advocates, a Medicare advocacy group.

Their options may be limited, she said. Those who don’t work won’t have access to employer-sponsored coverage to make up the difference. And in California, Medicare recipients under age 65 are not eligible to purchase supplemental insurance known as Medigap.

The state Department of Managed Health Care offers a fact sheet for affected patients, directing them to programs such as Covered California and Medi-Cal.

DaVita and Fresenius said insurance counselors and social workers at their clinics are working with patients to find other options.

“We will continue to treat all patients, regardless of insurance status,” said Paige Hosler, vice president of insurance management at DaVita. Hosler noted that some patients may qualify for DaVita’s charity care program.

Dialysis companies have been at the center of recent legislative and ballot-box battles, and have spent big to defend their bottom lines. Last year, they poured a record-breaking $111 million into a campaign to defeat Proposition 8, a ballot initiative that would have capped their profits. The measure failed.

The industry also spent about $2.5 million in California on lobbying and campaign contributions in the first half of this year to oppose Wood’s measure.

Desmond said he understands why lawmakers targeted the dialysis industry but can’t fathom why they did so at the expense of patients.

Desmond was laid off from his job as a computer programmer in Massachusetts in 2009 and moved to California to join his brother. One year later, he was diagnosed with kidney failure.

He lives off his Social Security Disability Insurance benefits, which come to about $2,000 a month after his Medicare premiums are deducted. Medicare pays for 80% of his care.

He also qualifies for Medi-Cal coverage that comes with high out-of-pocket costs, so he relies instead on a private Aetna insurance plan to cover the remaining 20%. The American Kidney Fund has been paying the premiums for his private plan since 2015.

“What they did is take away our life raft and left us to drown,” he said of lawmakers.

Brian Carroll, 40, of Sacramento, has been on dialysis for five years. He moved back in with his parents in 2016 because, he said, dialysis left him too weak to work.

“I am now completely depending on other people,” Carroll said. The American Kidney Fund pays the $270 monthly premium for his private insurance plan that covers what Medicare doesn’t. “That’s an entire month of groceries and gas for me,” he said.

Carroll said he supported Proposition 8, even though dialysis companies argued it would force them to cut back services and shut down clinics.

In this situation, he’s not sure whom to blame — the lawmakers, who passed the law with no backup plan for patients, or the fund, which is essentially holding patients hostage.

“What I do know is that you can’t just leave dialysis patients like this,” Carroll said. “It’s cruel.”

This KHN story first published on California Healthline, a service of the California Health Care Foundation.

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Warren Says Out-Of-Pocket Health Spending Will Total $11 Trillion In The Next Decade. We Checked Her Math.

Promoting her much-discussed plan to create a single-payer “Medicare for All” health system, Sen. Elizabeth Warren emphasized a striking figure.

“If we make no changes over the next 10 years, Americans will reach into their pockets and pay out about $11 trillion on insurance premiums, copays, deductibles and uncovered medical expenses,” the Democratic presidential candidate said in an Instagram video posted Monday.

The Democratic health care debate has been full of competing analyses and estimates about what Medicare for All might cost, what it might save and who would bear the brunt of paying for it. But this precise number was new to us.

If true, it would be a figure both staggering and significant to the unfolding debate, as Americans try to understand how Warren’s brand of a single-payer health system could affect their pocketbooks. So we decided to dig in.

A Reasonable Estimate

We contacted the Warren campaign, which redirected us to a report from the Urban Institute, a Washington think tank, as well as to federal estimates of household out-of-pocket expenses and premium costs over the next decade.

The Urban report doesn’t include the $11 trillion figure. But economist Linda Blumberg, who authored the paper, told us the statistic is “perfectly consistent” with the analysis.

If anything, she said, the number is a lowball figure. When Blumberg and her team crunched the numbers, they found that, under the existing health care system, Americans can expect to pay $11.7 trillion between out-of-pocket costs — the copays, deductibles and uncovered medical expenses — and premiums over the next decade. That calculation comes from Urban’s model for projecting what individual households might expect to spend, factoring in inflation, on these types of health costs.

“Talking about the amount of money we expect households to be spending over time is a very important part of trying to educate people on what single-payer would do, and what the tradeoffs are for them,” said Blumberg, who previously advised the Clinton White House on health policy. On the numbers, “they’re roughly in the right neighborhood,” she added.

We consulted other analysts, too, and as far as we can tell, no one else has done a similar calculation.

Experts told us that Urban’s estimate — and the Warren campaign’s use of it — checks out, based on what we know about American health care spending.

Cynthia Cox, a vice president at the Kaiser Family Foundation and expert on the Affordable Care Act, pointed to what a typical American family currently spends on health care: about $5,000 per year, when you look at out-of-pocket costs and premiums combined. Extrapolating from there, she said, Warren’s claim seems reasonable. (Kaiser Health News is an editorially independent program of the foundation.)

“Over the course of 10 years, when you add it up — that sounds about right,” Cox said. “The reality is, people do spend a lot on health care out of their pockets, and there’s a lot spent on their behalf by employers or taxpayer-funded programs that they never see.”

Under Warren’s health care plan, Americans would pay nothing directly out-of-pocket — no premiums, copays or deductibles — for health care. So that $11 trillion would disappear from the cost side of the ledger.

The figure Warren sited also tracks with national health expenditure projections for out-of-pocket health costs and health premium growth.

The Bigger Picture

Still, there are serious questions about the financing such a shift would require.

And Warren’s Medicare for All plan has been under intense scrutiny since she unveiled it earlier this month, with many critics suggesting it’s too optimistic in its estimates of how much money a single-payer system would cost.

Warren suggests the federal government would need to come up with $20.5 trillion — well below Urban’s estimate of $34 trillion. The difference comes largely from assumptions about how much the government could save, as well as decisions about how much to pay doctors and hospitals.

Warren’s financing structure includes cracking down on tax evasion, new taxes on financial institutions and the wealthiest Americans, and maintaining what many employers currently pay into the system. Critics say that could yield its own inefficiencies.

For instance, the way employer payments are structured could disproportionately harm small businesses, or lower-wage workers, noted Paul Ginsburg, who directs the USC-Brookings Schaeffer Initiative for Health Policy. He also argued that doctors and hospitals —represented by powerful lobbying organizations in Washington — could successfully battle any effort to pay them less, driving up what the government needs to spend.

Still, those disputes are separate from the question of this particular statistic. Here, Warren’s on firm ground.

Analysts also said the $11 trillion number gets at a larger point. Americans currently pay a lot out-of-pocket on health care. Certainly, some might see a tax hike under Warren’s proposed reform, or see downward pressure on their salaries.

Still, others could experience major pocketbook relief.

To be sure, Medicare for All is not the only approach to ameliorating what families pay for health care. Other, more incremental proposals — such as building on the ACA’s coverage expansions or pursuing a “Medicare for all who want it” approach touted by former Vice President Joe Biden and Pete Buttigieg, the South Bend, Ind., mayor — would cut into the $11 trillion as well, Cox said.

While it wouldn’t eliminate that household cost burden, it would require less in taxes to finance.

“There’s a lot of ways to bring down what people spend on health care,” Cox said. “Any expansion of the role of public programs is likely to bring down individuals’ costs. It’s just a question of how much taxes have to go up to pay for that.”

Our Rating

In her explanation of how she would structure and finance Medicare for All, Warren highlighted what Americans currently pay for “insurance premiums, copays, deductibles and uncovered medical expenses.”

The $11 trillion figure is staggering — and it checks out. Whether and how to address that issue is fiercely controversial, but on this particular stat, Warren’s statement is accurate. We rate it True.

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Must-Reads Of The Week From Brianna Labuskes

Happy Friday! Tis the season of getting wretched colds, and I blame daylight savings as any reasonable person would. So, we’re going to make this short and sweet as I clutch my tissues and tea. Buckle up!

Election results in Kentucky (and Virginia, really) added to the ever-deepening narrative that health care can be a big political winner for Dems and an Achilles’ heel for Republicans these days. Although the GOP talking point is that Gov. Matt Bevin (who technically hasn’t conceded yet) was extremely unpopular, it’s hard to miss that Medicaid expansion was a top issue in the race. Andy Beshear, who claimed victory on Tuesday, has vowed to rescind all of Bevin’s plans for Medicaid work requirements when he takes office.

In Virginia, many lawmakers ran on health care as well (like promising to protect preexisting conditions coverage and tackling gun control regulations), helping the Dems secure the Legislature for the first time in decades.

But health care isn’t always enough to boost Dems to a win, it seems. Democrat Jim Hood failed to upset Lt. Gov. Tate Reeves, a Republican, despite Hood’s promises to expand Medicaid to about 300,000 of the state’s most needy residents.

Curiously, attacks over abortion did not seem to hurt Democrats in either Virginia or Kentucky, even though the issue loomed large in both states.

CNN: Kentucky, Virginia And Mississippi Elections: 3 Takeaways

Politico: Why Democrats Keep Winning On Health Care

In a quick sidenote on Medicaid in the Deep South: Georgia’s governor has released a long-awaited health care plan that includes a limited Medicaid expansion with work requirements. As the requirements falter elsewhere, it will be interesting to test case to watch.

The Associated Press: Georgia Governor Unveils Medicaid Plan With Work Requirement

Now over to the presidential primary race: As predicted, lots of pundits, rivals, and others have had lots of thoughts on Massachusetts Sen. Elizabeth Warren’s plan to pay for “Medicare for All,” mostly landing on: It’s just not realistic. For her numbers to add up (which they do), everything pretty much has to fall into place perfectly. Which… in a nation’s capitol known more for its bitter partisan gridlock and deference to deep-pocketed lobby interests than for its smooth roads and sunny skies, well… no one is holding their breath that this would pass.

The Washington Post Fact Checker: Warren’s Plan To Pay For Medicare-For-All: Does It Add Up?

The New York Times: Elizabeth Warren’s ‘Medicare For All’ Math

Elsewhere on the election trail, Sen. Bernie Sanders (I-Vt.) released an ambitious plan to tack the immigration crisis. Among other things, he would scrap President Donald Trump’s “public charge” rule and ensure that anyone in the country regardless of immigration status was covered by his health system.

Boston Globe: Bernie Sanders Unveils Ambitious Immigration Plan That Offer A Path For Citizenship And Dismantles ICE

Tension over patents came to a head this week as the Trump administration sued Gilead over its HIV prevention drug, the development of which relied heavily on taxpayer-funded research. This fight has been bubbling up because Gilead has been raking in billions from the drug and yet hasn’t paid the CDC any royalties.

The Washington Post: U.S. Sues Drugmaker Gilead Sciences Over Patent On Truvada For HIV Prevention

And in case you’re interested in the background of it all (you should be! It’s a fascinating case), the Post did a deep-dive back in March.

The Washington Post: An HIV Treatment Cost Taxpayers Millions. The Government Patented It. But A Pharma Giant Is Making Billions.

Speaking of news from the administration, there was so much of it this week!

Let’s start with the court decision to block its expanded “conscience rule” for health care personnel who don’t want to participate in certain care due to moral reasons. The judge denounced the rule, saying it was arbitrary and unconstitutionally coercive. He also wrote that the “stated justification for undertaking rule making in the first place — a purported ‘significant increase’ in civilian complaints relating to the conscience provisions — was factually untrue.”

The New York Times: Judge Voids Trump-Backed ‘Conscience Rule’ For Health Workers

That wasn’t the only legal blow the administration suffered: elsewhere, a judge placed a temporary restraining order on a Trump rule that would have required visa-seekers to prove they can pay for health coverage before they’re allowed to live in the country.

The Associated Press: US Judge Blocks Trump’s Health Insurance Rule For Immigrants

In a separate court decision, a federal judge ruled that the U.S. government must provide mental health services to migrant families who may have been traumatized by being separated under the zero tolerance policy. The judge referred to previous federal cases that found that governments can be held liable when with “deliberate indifference” they place people in dangerous situations. This bit from The New York Times is interesting: In the past, the “state-created danger” doctrine has been applied when a police officer ejected a person from a bar late at night in very cold weather, or when a public employer failed to address toxic mold that caused workers to fall ill.

The New York Times: U.S. Must Provide Mental Health Services To Families Separated At Border

From news outside the courts, HHS is seeking to roll back Obama-era protections that keep foster care and adoption services from discriminating against LGBTQ families.

The New York Times: Adoption Groups Could Turn Away L.G.B.T. Families Under Proposed Rule

And in the midst of several public health crises, Trump has picked his choice to head the FDA: Dr. Stephen Hahn of the MD Anderson Cancer Center in Texas. If confirmed, Hahn will almost immediately have his hands full with the vaping epidemic, as well as continued fallout from the opioid crisis, not to mention public outrage over the high cost of drugs.

The Associated Press: Trump Picks Cancer Specialist From Texas Hospital To Run FDA

In case you missed it: Stat did one of the more interesting profiles on Hahn a bit ago, if you want to read up on his background.

Stat: Frontrunner To Lead FDA, Dogged By Controversies, Has Developed Knack For Confronting Them

On the topic of FDA, a look at how a controversy over a chemical that sterilizes medical equipment became a prime example of just how wrong things can go when agencies operate as silo-ed bureaucracies.

Politico: How The FDA And EPA’s Failure To Communicate Could Put Patients In Danger

Ahead of an anticipated federal ban on e-cigarettes, Juul has announced that it will end the sale of mint flavored pods. A study came out this week that found that the mint flavored ones have become more and more popular among young vapers.

The New York Times: Juul Ends E-Cigarette Sales Of Mint-Flavored Pods

Often times, when studying a disease it can be the people who don’t get it that hold the answers. That might be true with one woman who should have gotten early onset Alzheimer’s but didn’t start showing symptoms until decades later. Researchers say a mutation that the woman had protected her from the devastating disease. Learning how it did that could help scientists replicate the process for those who don’t have the mutation.

The New York Times: Why Didn’t She Get Alzheimer’s? The Answer Could Hold A Key To Fighting The Disease

It’s not always the memory that goes first. For those with frontotemporal dementia, it’s often the areas of the brain that control personality that are affected first. The resulting behavior changes can be heartbreaking.

The New York Times: The Loneliness Of Frontotemporal Dementia

And in the miscellaneous file for the week:

  • Documents show how Walgreens was in a unique position to raise giant red flags about the opioid epidemic at its height. But the company failed to do so.

The Washington Post: At Height Of Crisis, Walgreens Handled One In Five Of The Most Addictive Opioids

  • When one woman’s baby was born three months prematurely, she’d thought she’d taken care of everything that was needed to get her daughter covered under her insurance. Turns out, that wasn’t the case, and by the time she got the $898,984 bill, it was too late to fix it.

ProPublica: How One Employer Stuck A New Mom With A $898,984 Bill For Her Premature Baby

  • We often think of breath tests as being infallible ways to prevent drunken driving. But many of the machines that are stocked in police stations across the country are calibrated incorrectly. For some, that can change the whole course of their future.

The New York Times: These Machines Can Put You In Jail. Don’t Trust Them.

That’s it from me! Everyone stay healthy and don’t forget to get your flu shot.

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Leapfrog Issues Semi-Annual Hospital Safety Ratings Report

Red States Go Back To The Drawing Board As Roadblocks Derail Medicaid Work Requirements

Listen: How Skimpy Insurance Led To A $21,634 Hospital Bill

Laura Ungar, a Kaiser Health News editor and correspondent, joined Illinois Public Media’s “The 21st” with host Christine Herman and Chicago-area patient Arline Feilen to discuss the challenges that arise when health plans don’t have adequate coverage. Ungar reported on the case of Feilen, who ended up with a $21,634 bill after a mental health crisis put her in the hospital for five nights. “It’s more than a year’s pay, let’s put it that way,” Feilen said.

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KHN’s ‘What The Health?’: Elections Matter

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Big Democratic wins in the 2019 off-year elections could spell big changes for Medicaid and other health policies in Virginia and Kentucky.

Meanwhile, on the campaign trail, Mass. Sen. Elizabeth Warren’s new “Medicare For All” plan is getting hammered from all parts of the political spectrum, including most of her opponents for the Democratic presidential nomination.

And in Georgia, Republican Gov. Brian Kemp wants permission from the federal government to make major changes to both his state’s Medicaid program and the way people purchase individual insurance under the Affordable Care Act.

This week’s panelists are Julie Rovner of Kaiser Health News, Joanne Kenen of Politico, Caitlin Owens of Axios and Kimberly Leonard of the Washington Examiner.

Among the takeaways from this week’s podcast:

  • In Kentucky, the governor’s race featured incumbent Republican Matt Bevin, an opponent of the Affordable Care Act, versus Attorney General Andy Beshear, a supporter. Under Bevin, Kentucky tried to institute a work requirement for Medicaid recipients (currently blocked by federal courts). Beshear said in his victory speech Tuesday night he would withdraw the plan.
  • The Kentucky race is not quite over, however. The margin of victory for Beshear was so small that Bevin is not yet conceding.
  • Meanwhile, in Virginia, Democrats won both houses of the state legislature — giving them complete control of the state capital. Virginia struggled to pass Medicaid expansion and ultimately was able to do so only by including a work requirement to gain some GOP support. It’s not likely that policy will now take effect.
  • A common thread in these elections is that Medicaid has proven to be a popular political issue. Republicans have embraced a strategy in which opposing Medicaid would garner support but this is proving not the case.
  • In Georgia, GOP Gov. Brian Kemp wants to add his own work requirement as a condition for the state to expand Medicaid. He also wants to reconfigure the individual insurance market to allow people to get federal subsidies to purchase cheaper plans with fewer benefits.
  • Democratic presidential candidate Sen. Elizabeth Warren is still getting heat over her proposal to pay for the Medicare For All plan she has been pushing.
  • It’s clear that Warren’s plan — or any Medicare For All plan — would be an enormous lift both politically and financially and would cause significant dislocation in more than just the health care industry.
  • Also still a question is whether putting out so much detail is good for Warren politically. If she wins the nomination, support for such a dramatic change might alienate more moderate voters. On the other hand, candidates frequently moderate their positions between primary and general elections.

Also this week, Rovner interviews KHN’s Laura Ungar, who wrote the latest KHN-NPR “Bill of the Month” installment about a women who bought a health insurance policy that didn’t cover some services — and then ended up needing those services. If you have an outrageous medical bill you would like to share with us, you can do that here.

Plus, for extra credit, the panelists recommend their favorite health policy stories of the week they think you should read too:

Julie Rovner: Politico’s “Why North Carolina might be the most innovative health care state in America,” by Joanne Kenen

Caitlin Owens: ProPublica’s “How One Employer Stuck a New Mom With a $898,984 Bill for Her Premature Baby,” by Marshall Allen

Joanne Kenen: Politico’s “How the FDA and EPA’s failure to communicate could put patients in danger,” by Sarah Karlin-Smith, Annie Snider and Sarah Owermohle

Kimberly Leonard: Bloomberg Businessweek’s “America’s Largest Health Insurer Is Giving Apartments to Homeless People,” by John Tozzi

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The Air Ambulance Billed More Than His Surgeon Did For A Lung Transplant

THOUSAND OAKS, Calif. — Before his double lung transplant, Tom Saputo thought he had anticipated every possible outcome.

But after the surgery, he wasn’t prepared for the price of the 27-mile air ambulance flight to UCLA Medical Center — which cost more than the lifesaving operation itself.

“When you look at the bills side by side, and you see that the helicopter costs more than the surgeon who does the lung transplant, it’s ridiculous,” said Dana Saputo, Tom’s wife. “I don’t think anybody would believe me if I said that and didn’t show them the evidence.”

“Balance billing,” better known as surprise billing, occurs when a patient receives care from a medical provider outside of his insurance plan’s network, and then the provider bills the patient for the amount insurance didn’t cover. These bills can soar into the tens of thousands of dollars.

Surprise bills hit an estimated 1 in 6 insured Americans after a stay in the hospital. And the air ambulance industry, with its private equity backing, high upfront costs and tendency to remain out-of-network, is among the worst offenders.

Congress is considering legislation aimed at addressing surprise bills and air ambulance charges. And some states, including Wyoming and California, are trying to address the problem even though there are limits to what they can do, since air ambulances are primarily regulated by federal aviation authorities.

That leaves patients vulnerable.

Saputo, 63, was diagnosed in 2016 with idiopathic pulmonary fibrosis, a progressive disease that scars lung tissue and makes it increasingly difficult to breathe.

The retired Thousand Oaks graphic designer got on the list for a double lung transplant at UCLA and started the preapproval process with his insurance company, Anthem Blue Cross, should organs become available.

Tom and Dana Saputo used to wheel out a bar cart for parties. Now the table is a permanent fixture in their kitchen, where Tom keeps more than a dozen bottles of supplements and anti-rejection medications. (Anna Almendrala/KHN)

But before that happened, he suddenly stopped breathing on the evening of July 7, 2018. His wife called 911.

A ground ambulance drove the couple to Los Robles Regional Medical Center, 15 minutes from their house, where Saputo spent four days in the intensive care unit before his doctors sent him to UCLA via air ambulance.

He was on the brink of death, but just in time, the hospital received a pair of donor lungs. They were a perfect match, and two days after arriving at UCLA, Saputo was breathing normally again.

“It was a miracle,” he said.

Saputo’s recovery was difficult, and problems like infections put him back in the hospital for observation. But the most unexpected setback was financial.

When Saputo opened a letter from Anthem, he discovered the helicopter company, which was out of his network, had charged the insurance company $51,282 for the flight, and Saputo was responsible for the portion his insurance didn’t cover: $11,524.79.

By contrast, the charges from the day of his transplant surgery totaled $40,575 — including $31,605 for his surgeon — and were fully covered by Anthem.

Saputo appealed to Anthem twice about the ambulance charges. Meanwhile, the helicopter company, Mercy Air, kept calling him after he left the hospital, asking him to negotiate with his insurance company. It even called his adult daughter in San Francisco to ask how the Saputos planned to pay the bill.

“I have no idea how they even got her name or her number,” Saputo said.

Mercy Air is a subsidiary of Air Methods, which operates in 48 states and is owned by the private equity firm American Securities.

Air Methods acknowledged via email that it had put Saputo through a “long and arduous process.” The company contacted his daughter because it tried every phone number associated with him, said company spokesman Doug Flanders. But Air Methods laid the blame at the feet of his insurer.

Anthem spokeswoman Leslie Porras said the blame doesn’t lie with insurers, but with air ambulance companies that remain out of network so they can charge patients “whatever they choose.”

“The ability to bill the consumer for the balance provides little incentive for some air ambulance providers to contract with us,” Porras said.

(In January, six months after Saputo’s surgery, Anthem entered into a contract with the air ambulance company to make it an in-network provider, she said.)

Air Methods forgave Saputo’s bill in August after ABC’s “Good Morning America,” working with Kaiser Health News, inquired about his case. Air Methods said it was an internal decision to zero out his bill.

The Saputos sit in their backyard with their three dogs, Lindsey, Owen and Beatrice. (Anna Almendrala/KHN)

Other patients usually aren’t as lucky.

The median cost of a helicopter air ambulance flight was $36,400 in 2017, an increase of more than 60% from the median price in 2012, according to a Government Accountability Office analysis. Two-thirds of the flights in 2017 were out-of-network, the report found.

The air ambulance industry justifies these charges by pointing out that the bulk of its business — transporting patients covered by the public insurance programs Medicare and Medicaid — is severely underfunded by the government.

The median cost to transport a Medicare patient by air ambulance is about $10,200, according to an industry study. However, air ambulance companies are reimbursed a median rate of $6,500 per flight.

“The remaining 30% of patients with private health insurance end up paying over 70% of the costs,” said Flanders of Air Methods.

But critics argue the real problem is market saturation. While the number of air ambulance helicopters in the U.S. has increased — rising more than 10% from 2010 to 2014 — the number of flights hasn’t, which means air ambulance companies seek to raise prices on each ride.

“This is a great opportunity to make money because patients don’t ask for the price before they receive the service,” said Ge Bai, an associate professor of accounting and health policy at Johns Hopkins University.

That’s what frustrated the Saputos the most about their air ambulance charge: There was no way they could have shopped around to compare costs beforehand.

“There’s just no possible way that a customer of insurance can navigate that process,” Dana Saputo said.

Bai also criticized the practice of charging privately insured patients exorbitant amounts to make up for losses from Medicaid and Medicare patients and keep the air ambulance industry afloat.

“If they feel that Medicare and Medicaid is paying too little, they should lobby the government to get a higher reimbursement,” Bai said.

In California, Democratic Gov. Gavin Newsom signed a bill in early October that will limit how much some privately insured patients will pay for air ambulance rides. Effective next year, AB-651, by state Assemblyman Tim Grayson (D-Concord), will cap out-of-pocket costs at patients’ in-network amounts, even if the air ambulance company is out of network.

A more novel scheme in Wyoming would treat the industry like a public utility, allowing the state’s Medicaid program to cover all of its residents’ air ambulance trips and then bill patients’ health insurance plans. The state would then cap out-of-pocket costs at 2% of the patient’s income or $5,000, whichever is less. Wyoming needs permission from the federal government to proceed.

Ultimately, though, state authority is limited because the federal Airline Deregulation Act of 1978 prohibits states from enacting price laws on air carriers.

Congress is considering several bipartisan bills on surprise billing. One measure by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) would ban balance bills from air ambulance companies. The bill passed committee and is now headed to the Senate floor for a vote, pending approval from Senate Majority Leader Mitch McConnell.

Air Methods said that, in general, it would support federal legislation that would calculate new rates for Medicare reimbursement, as long as they are based on cost data the industry provides.

But there is intense industry opposition to the bill. Combined with the complexity of the legislation (it also includes prescription drug price reform) and competing Senate leadership priorities, the measure faces a rocky path to the president’s desk, said Melissa Lorenzo Williams, manager of health care policy and advocacy at the National Patient Advocate Foundation.

“Despite having bipartisan and bicameral support, I can’t confidently say that this is something that will pass,” Williams said.

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Analysis: Elizabeth Warren Throws Down The Gauntlet

Laying the table for the next Democratic debate, Massachusetts Sen. Elizabeth Warren has issued a plan that explains how she would fund what she calls Medicare for All. She had studiously avoided saying whether it would raise taxes for the middle class, and in her proposal, she says (repeatedly) it will not.

It will instead be financed by a mix of wealth taxes, employer transfers of money they currently spend on health care and reductions of the many inefficiencies in our current byzantine system — among other initiatives.

But now all the candidates need to tell us more of those details about their health care strategies. It’s time for the candidates to stop talking slogans and start talking sense — or dollars and cents — so that voters can know what they mean and choose among them.

Medicare for All, Medicare for All Who Want It, a public option, improving the Affordable Care Act — those are 30,000-foot concepts that, depending on the details, could work (or not) and be popular (or not).

The candidates (including Warren) also need to say more about what they’ll do right now: In one poll, 40 percent of Americans said they had skipped a recommended test or treatment, and 32 percent said they had skipped a medicine, because of cost.

Supporters of Medicare for All want to tie their future to the popularity of the Medicare program. But Warren (and Sen. Bernie Sanders) are offering up Americans a supercharged version of the current government insurance for those over 65.

It promises to eliminate copayments for prescription drugs. (Under current Medicare, many patients contribute thousands of dollars annually.) It includes dental and long-term care — a huge expense that is conspicuously missing from current Medicare.

That ambition would make a health care plan vastly more expensive. The national health systems of Britain and Canada, both single payer systems like the Medicare for All proposal, do not offer comprehensive long-term care coverage. Canada’s system, where benefits vary somewhat by province, doesn’t generally include prescription drug coverage out of the hospital for adults under 65.

Is the financing Warren proposes going to be adequate to support the expanded goals? Economists disagree.

But in releasing her proposal, she has thrown down the gauntlet before the other candidates — who support Medicare for All Who Want It or some other type of public option — to be a whole lot clearer about what they mean.

Joe Biden, Kamala Harris, Pete Buttigieg, et al.: Does your public option — a government insurance policy that anyone may buy — resemble Sanders’s enhanced Medicare, or current Medicare or Medicaid, which is far more bare bones?

Voters need to know.

There’s another obvious reason the candidates have been so close lipped on specifics: To calculate how to pay for any of the plans, the candidates have to say how they intend to bring down prices — for hospital stays, drugs, procedures, devices, doctors’ visits, surgeries. Americans often pay two to 10 times what patients pay for these items in other developed countries.

Those prices will have to come down to make any plan viable without breaking the bank. To really assess any plan, we’ll need that kind of information.

Warren has courageously stepped into that fraught territory, with numbers that have very likely sent shock waves through the health care industry.

For example, to make her financing proposal work, she suggests paying most hospitals on average 110 percent of current Medicare rates. She suggests Americans should pay no more for drugs than 110 percent of the average international market price. That may be eminently reasonable, but is it achievable?

When Montana negotiated rates directly with hospitals for its state employees, it settled on a deal in which the state agreed to pay an average of 234 percent of Medicare rates. And it still saved money.

Setting lower prices is going to bring out strong opposition. Remember, patient (or taxpayer) savings mean loss of income for one of America’s most profitable industries, whose lobbyists spent more than half a billion dollars last year and which is flush with dark money to distribute in Congress.

To get the ACA passed, President Barack Obama gave up on a number of price-lowering ideas to get buy-in from the health care industry and its friends in Congress. These included jettisoning the idea of a public option and allowing Medicare to negotiate drug prices.

The Republicans — whose “plans” have been largely proclamations of better, cheaper health care without any strategy — will be quick to label any of the Democratic plans as a government takeover of health care, or socialism.

Remember, patient (or taxpayer) savings mean loss of income for the United States’ most robust sector in the post-recession economy. In many post-manufacturing cities like Pittsburgh and Cleveland, a single hospital system is the biggest employer. In Boston, hospitals and hospital corporations make up the top six employers. Minnesota and Massachusetts have done well with drug and device manufacturing. And let’s not start on insurers, whose lucrative health business would largely disappear.

Any plan to rein in the United States’ bloated $3.5 trillion health care system will be slow going, requiring not just a footnoted blueprint but also the taming of many opposing forces. It took years for Canada to move from a market-based system to government run health. It endured lengthy debates and doctors’ strikes.

Warren calls her proposal a “long-term plan.” But voters want to know how we get from here to anywhere else. In polls, their top health care issue is affordability — emphasis on now.

They need concrete proposals as well as long-term vision. In the next debate, how about talking about H.R. 3, a bill in Congress to curb prescription drug prices? That plan would allow the health and human services secretary to negotiate a maximum price that could be charged to Medicare for insulin and some of the most expensive medicines in the United States, based on the prices paid for those drugs in other countries.

Days before the last Democratic debate, the Congressional Budget Office said it would save $345 billion over a six-year period (2023-29).

If the bill were to move to the Senate, how would the front-runners vote? What do they have to say about that?

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For Young People With Psychosis, Early Intervention Is Crucial

Andrew Echeguren, 26, had his first psychotic episode when he was 15. He was working as an assistant coach at a summer soccer camp for kids when the lyrics coming out of his iPod suddenly morphed into racist and homophobic slurs, telling him to harm others — and himself.

Echeguren fled the soccer camp and ran home, terrified the police were on his heels.

He tried to explain to his mom what was happening, but the words wouldn’t come out right. His parents rushed him to a children’s crisis center, where an ambulance arrived and transported him to the adolescent psychiatric facility at St. Mary’s Medical Center in San Francisco.

“I thought it was a joke,” Echeguren said. “I didn’t think it was really happening because I didn’t know what was real or not.”

Echeguren received antipsychotic medication, was put in a quiet room and looked after by attentive caregivers who helped stabilize him.

Many young people don’t get the care they need so rapidly after a psychotic episode, if at all. As a result, they can become chronically disabled, and some end up homeless, incarcerated or addicted to drugs.

“Early intervention preserves the most important pieces of a young person’s life — relationships with family and friends, success at work or school,” said Tara Niendam, executive director of Early Psychosis Programs at the University of California-Davis.

Research corroborates Niendam’s view, and California lawmakers have endorsed it: The California state budget signed earlier this year by Gov. Gavin Newsom provides $20 million to create early intervention programs and expand existing ones.

Only about half of the state’s 58 counties have such a program, and many of those that do struggle to keep them open because of a lack of funding and a limited pool of trained behavioral workers.

Nationally, the median time between the first symptoms of psychosis and the start of treatment is nearly a year and half, according to a study by the National Institute of Mental Health. That is six times longer than the World Health Organization’s recommendation of three months or less.

Each year, an estimated 8,000 adolescents and young adults in California experience their first psychotic episode, according to Thomas Insel, Newsom’s mental health adviser. Insel extrapolated that number from data showing that every year about 100,000 young people nationwide experience their first psychotic episode.

Psychosis refers to a group of mental disorders, such as schizophrenia, that cause people to lose contact with reality. The average life span of people with major mental illnesses is up to 32 years less than for the general population, largely because they are at greater risk for multiple chronic diseases.

“These people don’t live beyond their late 50s,” said Insel, a former director of the National Institute of Mental Health. “It’s not a pretty picture. It’s a sad statement of where we are in the way we treat this illness.”

Mental health experts say the most effective early psychosis treatment is something known as coordinated specialty care, which incorporates medication and psychotherapy with case management, support groups for the patients’ families and assistance securing employment or education.

Experts say there is significant momentum nationally for expanding and improving early psychosis treatment.

The big question is how to implement a strategy across California, said Toby Ewing, executive director of the Mental Health Services Oversight and Accountability Commission, the state agency tasked with ensuring that the early psychosis funding is spent effectively.

It will look to early psychosis models in Oregon and New York, which are ahead of California in statewide coordinated specialty care clinics, Ewing said. California will also partner with the federal government on a strategy for developing coordinated specialty care models nationally, he said.

But there’s a complication: Unlike other states that have centralized mental health care systems, in California it is up to each county to decide whether to provide early psychosis services or not. Patients who live in counties without such services often must drive long distances to find a clinic that provides the specialized care they need.

Another barrier to access is insurance. “We have a disjointed financial system that impacts an individual’s ability just to walk in the door of a program,” said Niendam, who operates two early psychosis clinics in Northern California. One of them accepts private insurance and self-pay; the other is for patients who are uninsured or on Medi-Cal, the state’s Medicaid program.

Niendam said she can bill Medi-Cal for a greater number of services than she can private insurers, including at-home support for patients who are too sick to come to the clinic; family and patient advocacy; and education and employment support.

Echeguren, who was able to get adequate care on his parents’ relatively generous health plan, said that after several days in the St. Mary’s psych unit, the frightening auditory hallucinations that had sent him running from the soccer camp began to fade. “It felt good,” he said. “I felt like I had narrowly escaped disaster.”

After he left the hospital, Echeguren saw a psychiatrist and enrolled in a program called Prevention and Recovery in Early Psychosis, which connected him to a therapist and family groups that he and his parents attended.

Ultimately, Echeguren graduated from high school, and then college. He now works at a public relations firm in San Francisco and lives with his girlfriend.

He knows how lucky he is to have benefited from such rapid intervention.

“If I would have waited a year and a half for treatment, I would be dead,” he said. “I would have done something bad to myself.”

This KHN story first published on California Healthline, a service of the California Health Care Foundation.

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FDA Keeps Brand-Name Drugs On A Fast Path To Market ― Despite Manufacturing Concerns

After unanimously voting to recommend a miraculous hepatitis C drug for approval in 2013, a panel of experts advising the Food and Drug Administration gushed about what they’d accomplished.

“I voted ‘yes’ because, quite simply, this is a game changer,” National Institutes of Health hepatologist Dr. Marc Ghany said of Sovaldi, Gilead Science’s new pill designed to cure most cases of hepatitis C within 12 weeks.

Dr. Lawrence Friedman, a professor at Harvard Medical School, called it his “favorite vote” as an FDA reviewer, according to the transcript.

What the panelists didn’t know was that the FDA’s drug quality inspectors had recommended against approval.

They issued a scathing 15-item disciplinary report after finding multiple violations at Gilead’s main U.S. drug testing laboratory, down the road from its headquarters in Foster City, Calif. Their findings criticized aspects of the quality control process from start to finish: Samples were improperly stored and catalogued; failures were not adequately reviewed; and results were vulnerable to tampering that could hide problems.

Gilead Foster City doesn’t manufacture drugs. Its job is to test samples from drug batches to ensure the pills don’t crumble or contain mold, glass or bacteria, or have too little of an active antiviral ingredient.

Recent news reports have focused public attention on poor quality control and contamination in the manufacturing of cheap generic drugs, particularly those made overseas. But even some of the newest, most expensive brand-name medicines have been plagued by quality and safety concerns during production, a Kaiser Health News analysis shows.

More disturbing, even when FDA inspectors flagged the potential danger and raised red flags internally, those problems were resolved with the agency in secret ― without a follow-up inspection ― and the drugs were approved for sale.

Erin Fox, who purchases medicines for University of Utah Health hospitals, said she was shocked to hear from KHN about manufacturing problems uncovered by authorities at the facilities that make brand-name products. “Either you’re following the rules or you’re not following the rules,” Fox said. “Maybe it’s just as bad for branded drugs.”

The pressure to get innovative drugs like Sovaldi into use is considerable, both because they offer new treatments for desperate patients and because the medicines are highly profitable.

Against that backdrop, the FDA has repeatedly found a way to approve brand-name drugs despite safety concerns at manufacturing facilities that had prompted inspectors to push to reject those drugs’ approval, an ongoing KHN investigation shows. This happened in 2018 with drugs for cancer, migraines, HIV and a rare disease, and 10 other times in recent years, federal records show. In such cases, how these issues were discussed, negotiated and ultimately resolved is not public record.

For example, inspectors found that facilities making immunotherapies and migraine treatments didn’t follow up when drug products showed evidence of bacteria, glass or other contaminants. At a Chinese plant making the new HIV drug Trogarzo, employees dismissed “black residue” found to be “non-dissolvable metal oxides,” assuming it “did not pose a significant risk,” federal records show.

Without a follow-up inspection to confirm drugmakers corrected the problems inspectors found, these medicines eventually were approved for sale, and at list prices as high as $189,000 a month for an average patient, according to health data firm Connecture. The cancer drug Lutathera was initially rejected over manufacturing problems at three plants but was approved a year later without a fresh inspection and was priced at $57,000 per vial.

John Avellanet, a consultant on FDA compliance, said data integrity problems, like those at Gilead’s lab in Foster City, should have sparked further investigation, because they raise the possibility of “deeper issues.”

Dr. Janet Woodcock, the director of the FDA’s Center for Drug Evaluation and Research, said an inspector’s recommendation to withhold approval can be “dealt with” without a follow-up. Woodcock said the agency can’t comment on specifics, and companies are reluctant to discuss them because the details of the resolution are protected as a corporate trade secret.

“That doesn’t mean that there’s anything wrong with the drug,” Woodcock said.

Dinesh Thakur, a former drug-quality employee turned whistleblower, called the secrecy a “red flag.” A follow-up inspection is critical, he said: “I’ve seen many times paper commitments are made but never followed through.”

What worries Fox is that a faulty drug could get through and nobody would know.

“In general, very few people suspect that their medicine is the problem or their medicine is not working,” Fox said. “Unless you see black shavings or something horrible in the product itself, the drug is almost the last thing that would be suspect.”

The Market Beckons

If the FDA finds problems at preapproval inspections for generics, the agency is likely to deny approval and delay the drug’s launch until the next year’s review cycle, according to industry and agency experts.

In fact, just 12% of generics were approved the first time their sponsors submitted applications from 2015 through 2017.

The calculus appears different for heralded new therapies like Sovaldi. In 2018, 95% of novel drugs ― the newest of the new ― were approved on the first try, the FDA said.

Woodcock said the agency has “the same standards for all drugs,” but she emphasized that many of the manufacturing issues “are somewhat subjective.”

For new brand-name drugs, she said, the FDA “will work very closely with the company to … bring the manufacturing up to snuff.”

The manufacturer submits written responses and commits to resolve quality concerns, but the details are kept confidential.

An estimated 2.4 million Americans have hepatitis C and, before Sovaldi, treatment came with miserable side effects and a strong chance it wouldn’t work. Sovaldi promised up to a 90% cure rate, though it came with an eye-popping $84,000 price tag for a 12-week course, putting it out of reach for most patients and health care systems.

But corporate pressure to get such therapies into the marketplace is also considerable.

Pharmaceutical firms pay hefty fees for FDA review and lobby the agency to speed products to market. For Gilead, time lost is money.

“If approval of sofosbuvir were delayed, our anticipated revenues and our stock price would be adversely affected,” Gilead wrote in an SEC document filed Oct. 31, 2013, using the generic name for Sovaldi.

Since its debut in 2013, Sovaldi has been widely criticized for its price but recognized as a medical breakthrough. Gilead has never recalled it.

However, hundreds of patients who have taken the drug have voluntarily reported cancer or other complications to the FDA’s “adverse event” reporting database, including concerns that the treatment doesn’t always work. One in 5 Sovaldi patients and health care professionals who reported serious problems to federal regulators said the drug didn’t cure the patients’ hepatitis C.

“The FDA approved these products after a rigorous inspection process, and we are confident in the quality/compliance of these products,” Gilead spokeswoman Sonia Choi said.

Problems at Foster City

Gilead’s Foster City facility has been cited for an array of problems over the years. In 2012, FDA inspectors said the facility had failed to properly review how the HIV drugs Truvada and Atripla became contaminated with “blue glass” particles; some of that tainted batch was distributed. The company “made no attempt to recover” the contaminated drugs, according to FDA inspection records.

Gilead had just filed its application for Sovaldi’s approval when FDA inspectors arrived at Foster City for an unrelated inspection in April 2013. Inspectors slapped the facility with nine violations in what’s called a 483 document and said that the reliability of the site’s methods for testing things like purity were unproven and that its records were incomplete and disorganized, according to FDA inspection documents.

As a result, the FDA initially rejected two HIV drugs, Vitekta and Tybost. Gilead had to resubmit those applications, and it would take 18 months before the FDA approved them in late 2014.

On Sept. 19, 2013, FDA officials met to discuss Sovaldi with Woodcock, agency records show. Meeting minutes show inspectors recommended hitting Gilead Foster City with a formal warning letter based on the April inspection. (A warning letter is a disciplinary action from the FDA that typically includes a threat to withhold new approvals or place a foreign facility on import alert and refuse to accept its products for sale in the U.S.)

At the same meeting, FDA inspectors said their recommendation to approve Sovaldi would be “based on” removing an unnamed drug ingredient manufacturer from the application and “a determination that Gilead Foster City has an acceptable cGMP [current good manufacturing practices] status.”

Records show the FDA didn’t issue a warning letter or otherwise delay the approval process when Foster City failed its inspection.

Instead, the Sovaldi preapproval inspection started four days later and lasted two weeks. At the end, inspectors issued Foster City another 483, this time with 15 violations, formally outlining problems and requiring a written plan to fix them. Inspectors said they couldn’t recommend Sovaldi’s approval.

FDA officials gave Gilead two options during an Oct. 29 teleconference: Remove Foster City, a “major testing site” for Sovaldi, from the application, and use a third-party contractor instead; or use Foster City but hire another firm to monitor the site and sign off on its testing work.

Gilead was optimistic. “Based on recent communications with the FDA, we do not expect these [inspection] observations to delay approval of sofosbuvir,” the company said in its Oct. 31 SEC filing.

Gilead chose to replace the Foster City plant with a contract testing site, federal records show. By December, Sovaldi was approved for distribution, and the company soon announced its $1,000-per-pill price tag.

Not Just Generics

Recent media reports, and the ongoing recall of the widely used blood pressure medicine valsartan, have led consumers ― and members of Congress ― to question whether generics are manufactured safely. Valsartan pills made in China and India were found to contain cancer-causing impurities.

Branded-drug quality, in large part, has been spared from congressional scrutiny. But many factories ― overseas and in the U.S. ― make branded and generic drugs.

In January 2018, FDA inspectors hit a Korean manufacturing plant that makes Ajovy, a migraine drug, with a warning letter. With the problems still unresolved in April, an agency reviewer recommended withholding approval. When they returned in July, inspectors wanted to give the plant the worst possible classification: “Official Actions Indicated.” Among other problems, inspectors found that glass vials sometimes broke during the manufacturing process and that the facility lacked protocols to prevent the particles from getting into drug products. The FDA’s Office of Manufacturing Quality eventually downgraded the inspection to just “Voluntary Actions Indicated.”

The drug was approved in September 2018 and priced at $690 a month. FDA records indicate no further disciplinary action was taken. Teva, the maker of Ajovy, did not respond to requests for comment.

Similarly, when FDA inspectors visited a contract manufacturing facility in Indiana used to make Revcovi, which treats an autoimmune disease, they noted that a redacted drug lot had failed a sterility test because the vials tested positive for a bacterium called Delftia acidovorans, which can be detrimental even in people with healthy immune systems, studies show. But the drug-filling machine stayed in use after the contaminant was discovered, the FDA determined. Inspectors recommended withholding approval.

The drug was approved in October 2018 even after another inspection turned up problems, with a list price of $95,000 to $189,000 per month for an average patient, according to health care data firm Connecture.

Revcovi’s manufacturer, Leadiant Biosciences, said through an outside public relations firm that its contract manufacturer’s written responses to the FDA observations were considered “adequate” by two FDA offices, adding, “We do not have any more information to share with you at this time as pharmaceutical manufacturing processes are confidential.”

Problems with drugs can take years to discover ― and then only after patients are injured. So, many health researchers say, more caution is warranted.

“They’re doing so few of these [FDA] inspections pre-market,” said Diana Zuckerman, president of the nonprofit National Center for Health Research. “The least they can do is listen to the ones they’re doing.”

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