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DEMOCRATS: Bill Would Require Medicare Rx Price Negotiations
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House Democrats on Friday plan to introduce a bill that would require the HHS secretary to negotiate directly with pharmaceutical companies on prices for medications under the Medicare prescription drug benefit, CQ HealthBeat reports. A draft version of the legislation circulated this week stated that "notwithstanding any other provision of law, the Secretary shall negotiate with pharmaceutical manufacturers the prices that may be charged for covered Part D drugs for Part D eligible individuals who are enrolled under a prescription drug plan or under" a Medicare Advantage plan. The bill would not authorize the HHS secretary to "establish or require" a formulary for the Medicare prescription drug benefit, although private health insurers that sponsor prescription drug plans could continue to use formularies. According to Democratic aides, the legislation would allow private health insurers that sponsor Medicare prescription drug plans to offer lower prices on medications than the HHS secretary obtains through negotiations with pharmaceutical companies. The House likely will address the bill on Jan. 12.
Comments
A Democratic aide said, "We're not taking away the ability of PDPs to obtain better prices than those negotiated by the secretary." Revisions to the draft version of the bill are "unlikely," according to a Democratic aide. Some analysts maintain that HHS Secretary Mike Leavitt will have limited ability to obtain lower prices on medications through negotiations with pharmaceutical companies without the authority to establish a formulary for the Medicare prescription drug benefit, according to CQ HealthBeat. Consultant Alec Vachon, a former Republican staffer on the Senate Finance Committee, said, "The bill gives Leavitt no new powers to negotiate drug prices." Vachon added, "It's straight out of 'Oliver Twist.' All Mike Leavitt can do is go to drug manufacturers and say, 'Please, Sir, may I have some more discounts?' If Pfizer says 'no,' what does he do then?" Most analysts predict that President Bush will veto the bill, according to CQ HealthBeat. However, Bill Vaughan, a lobbyist for Consumers Union and a former Democratic staffer on the House Ways and Means Committee, said that Bush might sign the legislation. "We are going to need massive savings in Medicare," Vaughan said, adding, "The 75-year unfunded liability for the drug benefit is $10.4 trillion" (Reichard, CQ HealthBeat, 1/4).
Second Year
Pharmacists and patient advocates have reported fewer problems with the Medicare prescription drug benefit in early 2007 than they did in early 2006, when the program began, USA Today reports (Appleby, USA Today, 1/5). Medicare beneficiaries had until Dec. 31, 2006, to enroll in or switch prescription drug plans, and coverage for the 2007 plan year began on Jan. 1 (American Health Line, 1/2). In early 2006, Medicare beneficiaries experienced problems with access to medications because of computer glitches, long waits at pharmacies and other issues, according to USA Today. Deane Beebe of the Medicare Rights Center attributed the decrease in reports of problems with the Medicare prescription drug benefit in part to new rules that require health insurers to provide beneficiaries with a 30-day supply of medications previously covered, regardless of whether the treatments are covered for 2007 (USA Today, 1/5).
Broadcast Coverage
Several broadcast programs on Thursday reported on the health care agenda for the 110th Congress.- NPR's "All Things Considered": The segment includes a report from "All Things Considered" host Robert Siegel on the agenda of House Democrats for the first 100 hours of the 110th Congress. The agenda includes the Medicare prescription drug benefit bill and legislation that would reduce restrictions on federal funding for embryonic stem cell research. The segment includes comments from Siegel and House Speaker Nancy Pelosi (D-Calif.) (Siegel, "All Things Considered," NPR, 1/4). Audio of the segment is available online.
- NPR's "All Things Considered": The segment include a discussion of the agenda between Siegel and House Majority Leader Steny Hoyer (D-Md.) (Siegel, "All Things Considered," NPR, 1/4). Audio of the segment is available online.
- NPR's "Talk of the Nation": The segment includes a discussion of the health care legislation that the 110th Congress likely will address. The segment includes comments from Julie Rovner, NPR health policy correspondent; Rep. Frank Pallone (D-N.J.), chair of the House Energy and Commerce Subcommittee on Health; and Rep. Dave Camp (R-Mich.) (Simon, "Talk of the Nation," NPR, 1/4). Audio of the segment is available online.
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MEDICARE: Begins To Cover Ultrasounds To Detect Aneurysms
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Medicare on Jan. 1 began to cover ultrasounds to detect abdominal aortic aneurysms in beneficiaries at high risk for the condition, the Charlotte Observer reports. Medicare beneficiaries with a family history of AAAs and male beneficiaries older than age 65 who have smoked more than 100 cigarettes in their lifetimes qualify for the ultrasounds. Medicare beneficiaries who qualify for the ultrasounds must receive them within the first six months after they become eligible for the program (Moore, Charlotte Observer, 12/30/06).
Impact
Medicare coverage of ultrasounds to detect AAAs could lead to increased revenue for Medtronic and other medical device companies that market endovascular stent grafts to treat the condition, according to some analysts and vascular physicians (Snowbeck, St. Paul Pioneer Press, 1/4). Medtronic lobbied for the Medicare coverage, a provision included in a budget reconciliation bill that President Bush signed in February 2006 (Charlotte Observer, 12/30/06). Jan Wald, an analyst at A.G. Edwards, said, "Right now, it's probably a $100 million to $150 million market" for endovascular stent grafts. "It could very easily be a $500 million to $800 million market down the road," Wald said, adding, "Given the way the world is going, endovascular procedures (such as the aneurysm repair) and peripheral procedures are getting more important for (Medtronic's) growth" (St. Paul Pioneer Press, 1/4).
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FDA: Makes 'Suboptimum' Use of Advisory Committees, Group Says
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FDA is "making suboptimum use of its drug advisory committee system," according to a letter from the Health Research Group at Public Citizen published in the current issue of the Lancet, USA Today reports. According to the letter, from 2000 through 2004, FDA followed recommendations from advisory committees 72% of the time, and the closeness of the votes of the committees was unrelated to whether the agency followed the recommendations. The letter also states that advisory committees reviewed about 25% of applications for new medications that resulted in approvals from 2000 through June 30, 2006, compared with 40% in 1998 and about 50% in 1999 (USA Today, 1/4).
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ELI LILLY: Settles 18,000 More Zyprexa Lawsuits
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Eli Lilly on Thursday agreed to pay as much as $500 million to settle 18,000 lawsuits filed by people who claim they developed diabetes or other diseases after taking the antipsychotic Zyprexa, the New York Times reports (Berenson, New York Times, 1/5). The Times reported last month that Lilly over the past 10 years has attempted to conceal the potential side effects of Zyprexa. The report was based on documents provided to the Times by an attorney who represents mentally ill patients in a lawsuit against the company (American Health Line, 12/18/06). In 2005, the Indianapolis-based company agreed to pay about $700 million to resolve more than 8,000 lawsuits concerning Zyprexa (Callahan, AP/Washington Post, 1/5). Many of the plaintiffs involved in the settlement agreement reached Thursday claimed that before Zyprexa's label was changed in 2003, information on the package insert did not adequately display the risk of high blood-sugar levels and diabetes. After September 2003, FDA mandated label changes for Zyprexa that gave additional information about diabetes risks (Russelland/Lee, Indianapolis Star, 1/5). Lilly, which did not disclose the amount of the settlement, in a statement said it would take a fourth-quarter settlement charge not expected to exceed $500 million (AP/Washington Post, 1/5). Including earlier settlements, Lilly now has agreed to pay at least $1.2 billion to 28,500 people who said they were harmed by the drug. The claims settled on Thursday amount to about $27,000 per plaintiff, compared with previous settlements of $90,000 per plaintiff. The lower amounts come "in part because of the FDA label change, which has allowed Lilly to say that it adequately warned doctors of the risks of Zyprexa after 2003," the Times reports.
Comments
In a statement, Lilly said Zyprexa is an effective treatment for mental illness (New York Times, 1/5). Lilly spokesperson Sidney Taurel said, "While we remain confident that these claims are without merit, ... we wanted to reduce significant uncertainties involved in litigating such complex cases." John Lechleiter, Lilly president and CEO, said, "We know some physicians have been concerned about the lawsuits and about being dragged into them. This is not to say we were under pressure by the medical community (to settle), but it was a factor in our consideration" (Indianapolis Star, 1/5). Lechleiter added that the settlement is "in the best interest of Lilly, and physicians and patients." Zyprexa was Lilly's best-selling drug in 2005, with $4.2 billion in revenue. Melvyn Weiss, chair of the plaintiffs' steering committee, said, "Zyprexa is taken by people who are seriously ill with complicating diseases and trying these cases can be a daunting task, but I am confident there are cases that are triable" (Wall Street Journal, 1/5).
Pending Litigation
Lilly still faces separate lawsuits filed by the attorneys general of Alaska, Louisiana, Mississippi, New Mexico and West Virginia. The cases allege that Lilly marketed Zyprexa for unapproved uses or hid the risks of weight gain and diabetes, according to Lilly spokesperson Carole Witsken Puls (AP/Washington Post, 1/5). In addition, at least 1,200 suits filed by patients who took Zyprexa still are pending, the company said (New York Times, 1/5).
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CAREMARK Rx: Shareholders Asked To Vote Against CVS Offer
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Pharmacy benefit manager Express Scripts on Thursday sent a letter to shareholders of PBM Caremark Rx to request that they vote against an acquisition offer from CVS, the AP/South Florida Sun-Sentinel reports (Rucker, AP/South Florida Sun-Sentinel, 1/5). CVS in November 2006 made an offer to acquire Caremark for about $21.3 billion. Under the offer, which has received approval from the Federal Trade Commission, Caremark shareholders would receive 1.67 shares of CVS stock for each Caremark share. CVS shareholders would own 54.5% of the combined company -- CVS/Caremark -- and Caremark shareholders would own 45.5%. Express Scripts in December 2006 made a rival offer to acquire Caremark for about $26 billion. Under the offer, Caremark shareholders would receive $29.25 in cash and 0.426 shares of Express Scripts stock for each Caremark share. Caremark shareholders would own about 57% of the combined company, and Express Scripts shareholders would own about 43% (American Health Line, 12/22/06). The letter -- signed by Express Scripts Chair, CEO and President George Paz -- states, "Express Scripts believes that the proposed acquisition of Caremark by CVS will have a lasting negative impact on your investment in Caremark." The letter adds, "Before voting your shares, carefully consider whether a combination of CVS and Caremark is really in your best near- and long-term financial interests as a Caremark shareholder." According to the AP/Sun-Sentinel, analysts "say Caremark managers prefer the CVS offer, while shareholders like the Express Scripts deal better." Caremark and CVS officials on Thursday said they remain committed to their agreement (AP/South Florida Sun-Sentinel, 1/5). CVS officials also said that antitrust concerns likely would delay the acquisition of Caremark by Express Scripts (Bloomberg/New York Post, 1/5).
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ELUSYS THERAPEUTICS: Announces Research Agreement With Pfizer
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Officials for Elusys Therapeutics on Thursday announced a research and licensing agreement with Pfizer to develop medications to treat infections, the AP/Bergen Record reports. The agreement initially will involve a medication developed by Elusys to treat methicillin-resistant Staphylococcus aureus infections. Under the agreement, Pfizer will make an undisclosed initial cash payment to Elusys and will fund several research positions involved in the development of the medication. The medication, which has proven effective in clinical trials that involved mice, uses two chemically coupled antibodies that each bind with an MRSA bacterium and a red blood cell and move to the liver for destruction. Elusys hopes to begin human trials of the medication by late 2008, with regulatory approval unlikely before 2012, according to company President and CEO Elizabeth Posillico. She added, "If all sales and clinical development milestones are met, this deal exceeds $200 million in value" (Johnson, AP/Bergen Record, 1/5).
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VAXGEN: Receives $51.3M for Sale of Celltrion Stocks
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VaxGen -- "rocked by the failures of its high-profile AIDS and anthrax vaccine programs in recent years" -- on Wednesday announced that it received $51.3 million for the sale of its remaining shares in Celltrion -- which operates a manufacturing plant in Inchon, Korea -- the San Francisco Chronicle reports. The sale nearly doubles VaxGen's cash reserves to $96.6 million. In 2003, an experimental AIDS vaccine that VaxGen was developing proved to be ineffective in a large clinical trial. VaxGen then redirected its efforts to creating an anthrax vaccine for the U.S. government, which could have generated as much as $877.5 million in revenue, according to the Chronicle. However, the government cancelled the contract in December 2006 when VaxGen was unable to meet deadlines after a series of delays. VaxGen "may not have many options to keep going," according to John McCamant, editor of the Medical Technology Stock Letter. He added, "At this point, they're 0 for 2" (Tansey, San Francisco Chronicle, 1/4).
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UNITEDHEALTH: Officials Enter Agreement To Reprice Stock Options
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UnitedHealth Group CEO Stephen Hemsley, former CEO William McGuire, and other current and former officials have entered into an agreement with the company to reprice their stock options for tax purposes, according to documents filed on Thursday with the Securities and Exchange Commission, the Minneapolis Star Tribune reports. The agreement allows the UnitedHealth officials to avoid a potential tax surcharge on stock options vested in 2005 and 2006 (Phelps, Minneapolis Star Tribune, 1/4). Other UnitedHealth officials who entered the agreement include Executive Vice Presidents David Wichmann and Lois Quam and division CEOs Tracy Bahl and Robert Sheehy. In addition, former UnitedHealth CFO Patrick Erlandson and former general counsel David Lubben entered the agreement. The documents did not specify the terms of the agreement (Boessenkool, Dow Jones, 1/4). UnitedHealth spokesperson Don Nathan said, "This is standard agreement intended to ensure that options for 2005 and 2006 are aligned with the regulations of the tax code" (Minneapolis Star Tribune, 1/4). Last week, UnitedHealth announced that SEC upgraded an informal investigation into the company stock options program to a formal investigation, and McGuire in October 2006 agreed to resign after an internal investigation found that he likely received backdated stock options (Dow Jones, 1/4).
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DEFIBRILLATORS: One-Third of Patients Obtain Minimal Benefits
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As many as one-third of U.S. patients who receive implantable cardiac defibrillators obtain minimal benefits from the devices, according to a study published in the January issue of the Journal of the American College of Cardiology, the Detroit Free Press reports. For the study, Paul Chan of the University of Michigan Medical Center and colleagues tracked 768 Cincinnati patients who received defibrillators between March 2001 and June 2004. The study recommended the use of the microvolt T-wave alternans, a test similar to a treadmill stress test that provides information of the ability of the heart to pump blood, to determine whether patients should receive defibrillators. MTWA, which costs about $400, is less invasive and more effective than other tests used to determine whether patients should receive defibrillators. According to Chan, researchers must conduct additional studies to confirm the effectiveness of MTWA in the determination of whether patients should receive defibrillators. Medicare has covered MTWA for about one year, but many private health insurers do not cover the test (Anstett, Detroit Free Press, 1/4). An abstract of the study is available online.
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HOSPITAL PROFITS: Unpaid Bills Will Detract From Earnings in 2007
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Analysts predict that unpaid medical bills will continue to "cut deeply" into hospital profits in 2007, the Tennessean reports. Robert Hawkins, an analyst with Stifel Nicolaus, said unpaid bills will continue to be problematic for hospitals because "the uninsured and underinsured population is growing faster than hospitals can boost admissions or raise prices to insurers." The debt is an "across-the-board phenomenon," William Bonello, an analyst with Wachovia Securities, said, adding, "I don't see something happening in the near term ... to make things better." According to the Tennessean, bad debt has affected stock prices of publicly traded hospital companies. "Can hospitals outrun bad debt? The short answer is ... no," Hawkins said in a research note (Pack, Tennessean, 1/4).
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MALPRACTICE: AHL Highlights Recent Developments in Four States
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American Health Line features recent developments related to medical malpractice in four states. Summaries appear below.- Illinois: Illinois medical malpractice insurance premiums have decreased by an average of 5.2% this year and either will remain the same or drop again next year, according to ISMIE Mutual, the state's largest malpractice insurer, the Chicago Sun-Times reports. A 2005 state law required ISMIE, which insures between 60% and 65% of Illinois doctors, to make information on their rates public to encourage competition. One insurer, Medical Protective, said the law was one reason why it expanded its business in Illinois and cut malpractice insurance rates by about 30%. The effect on malpractice insurance rates from a recent tort reform law that was enacted Aug. 25, 2005, is yet to be seen because it typically takes several years for a case to go to trial, according to Bruce Kohen, president-elect of the Illinois Trial Lawyer Association. The law, which is being challenged in court, limits malpractice awards for pain, suffering and disability to $500,000 per doctor and $1 million per hospital (Ritter, Chicago Sun-Times, 12/26/06).
- Maryland: The Medical Mutual Liability Insurance Society of Maryland, the largest malpractice insurer in the state, plans to reduce premium rates for physicians by 8% in 2007, a move that would mark the first reduction since at least 1992, the AP/Washington Times reports. Medical Mutual cited a decreased number of malpractice claims as the reason for the planned reduction in premium rates. Over the previous two years, Medical Mutual increased premium rates by 28% and 33% (AP/Washington Times, 12/18/06).
- Tennessee: More than 83% of malpractice claims that closed in the state in 2005 resulted in no payment of damages to patients or their families, according to a report recently released by the state Department of Commerce and Insurance, the Tennessean reports. The report, required under a law passed by the state Legislature in 2004, examined the 2,827 malpractice claims that closed in 2005. According to the report, 16% of the malpractice claims, or 461 cases, resulted in settlements that totaled more than $119 million in damages. The report also found that five of the malpractice claims resulted in jury verdicts for plaintiffs that totaled more than $6 million (Burke, Tennessean, 12/24/06). The report is available online. Note: You must have Adobe Acrobat Reader to view the report.
- Washington, D.C.: Washington, D.C., physicians, hospitals and other health care providers soon will be required to report "adverse medical events" to a centralized public database created by the district health department in an effort to protect patients and improve care, the Washington Post reports. Under legislation passed by the district Council, doctors will have up to 60 days to report judgments and settlements related to malpractice allegations and any other disciplinary actions imposed by other states. The database must be established by July 1. The health department will analyze the information to identify patterns and trends, help develop corrective plans and publish an annual summary, the Post reports. It is unknown when the information will be available for public use. Critics of the reporting requirement say the general description of an adverse event is too vague, the Post reports. The legislation also includes provisions to regulate some malpractice insurance rates and to require 90-day notification and mediation in malpractice lawsuits (Levine, Washington Post, 12/28/06).
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FOLATE: Blood Levels in Women of Childbearing Age Decreasing
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From 1999 through 2004 there was an 8% to 16% decline in the level of the vitamin folate in the blood of U.S. women of childbearing age, according to a study published in the Jan. 5 issue of CDC's Morbidity and Mortality Weekly Report, the AP/Houston Chronicle reports (Stobbe, AP/Houston Chronicle, 1/4). In 1992, the U.S. Public Health Service recommended that all women of childbearing age consume 400 micrograms of folic acid daily, and FDA in 1996 required all enriched cereals to be fortified with the vitamin. Only one-third of U.S. women of childbearing age consume the recommended amount, Joseph Mulinare, CDC epidemiologist and lead author of the MMWR study, said (Stobbe, AP/Houston Chronicle, 1/4). For the study, Mulinare and colleagues compared data from CDC's National Health and Nutrition Examination Survey to assess trends in serum folate and red blood cell folate levels in U.S. women of childbearing age from 1999 through 2004 (Mulinare et al., MMWR, 1/5). The study involved home interviews, annual physical examinations and blood tests of about 4,500 women ages 15 to 44 (AP/Houston Chronicle, 1/4). According to the study, median serum folate levels declined by 16% from the 1999-2000 testing period and through the 2003-2004 testing period. The median serum folate concentrations declined significantly among non-Hispanic whites, non-Hispanic blacks and Mexican Americans, with the largest decrease -- 16% -- among non-Hispanic whites. The median serum folate concentration was lowest among non-Hispanic blacks in all three survey periods. The study also found that red blood cell folate concentrations dropped by 8% during the two time periods (MMWR, 1/5).
Reasons for Decline
According to the AP/Chronicle, it remains unclear why blood folate levels declined during this period, but some experts said there are several possible explanations, such as an increase an in obesity rates among U.S. women of childbearing age. Nancy Green, medical director for the March of Dimes, said that research has shown that obese people metabolize folate differently than those with healthier weights and that some doctors think overweight women require more folic acid to prevent neural tube defects. An increased popularity of low-carbohydrate diets also might be a reason because women who reduced their carbohydrate intake might also have consumed less folic acid, Mulinare said. He added that vitamins and dietary supplements are the best way to get the recommended daily dose, as well as eating breads, cereals and other products containing enriched flour (AP/Houston Chronicle, 1/4). The MMWR study is available online.
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CAREGIVERS: Children Often Care for Parents With Disabilities
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The Wall Street Journal on Friday examined how young people often serve as caregivers for parents with disabilities and chronic illnesses. According to the Journal, the number of young people caring for parents with debilitating conditions -- such as Lou Gehrig's disease, multiple sclerosis, lupus, cancer and heart disease -- is "large and expected to grow" as advances in medicine and technology allow people with such conditions to live longer. A 2005 study funded by the U.S. Administration on Aging and conducted by the National Alliance for Caregiving and the United Hospital Fund Foundation found that as many as 1.3 million to 1.4 million children in the U.S. ages eight to 18 provide care for a family member with a chronic illness or disability, and more than 400,000 child caregivers are younger than age 12. The study, based on a two-part survey that included a random sampling of 2,000 households and follow-up interviews with children and other family members, found that nearly 60% of child caregivers helped their family members bathe, dress or eat. About 25% of the children had no help with such tasks, and about half said caregiving took a significant amount of their time, the study found. In addition, the study found that about 60% of the children came from households that earned less than $50,000 per year, according to the study. According to the Journal, few of the families can afford in-home health care, which costs about $140 to $180 per day, and most private insurance plans do not cover such services. The Journal reports that the children "often have little choice" in providing care because many "live in single parent homes, with only the infirm parent" and in two-parent homes, the healthy parent might be working. However, "[p]lacing so much responsibility on young people can end up being costly," the Journal reports. Nancy Law of the National Multiple Sclerosis Society said, "If a family breaks apart because the burden becomes too much for a child, you're talking about two institutional placements: The parent in a nursing home and the child in the foster-care system" (Ansberry, Wall Street Journal, 1/5).
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AVIAN FLU: NIH Announces Trial of DNA-Based Vaccine
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NIH on Wednesday announced that it has begun the first human trial of a DNA-based vaccine for the H5N1 avian flu virus, CQ HealthBeat reports. The H5N1 virus does not have the ability to transmit quickly from human to human, but scientists say that if it mutates to develop that capacity, it would take about six months to develop a vaccine to combat the contagious H5N1 flu strain using conventional methods. Use of a DNA-based technique could lead to the development of an effective vaccine within weeks. For the trial, scientists will enroll 45 volunteers between ages 18 and 60. Fifteen of the volunteers will receive placebos and 30 will receive three injections of the DNA vaccine over the course of two months. Researchers will track the volunteers for one year (Reichard, CQ HealthBeat, 1/3).
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CHINA: WSJ Examines Health-Related Issues
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The Wall Street Journal recently published two articles on health-related issues in China. Summaries appear below.- The Journal on Thursday profiled the TEDA International Cardiovascular Hospital, a facility located near Beijing that provides six levels of service for lower- and higher-income patients, although all patients receive the same quality of care. According to the Journal, the 600-bed hospital is "an anomaly" in China, where only "a small slice" of residents has private health insurance and where "the vast majority of people are left to fend for themselves, paying out of their pockets to see doctors and buy medicines." The hospital -- an experimental project begun in 2003 and supported by the Tianjin Economic Development Area, a special industrial zone administered by the Chinese government -- seeks a "balance between the universal access the communist system once promised and higher efficiency a market mechanism can bring," the Journal reports. Chi Chang-gui, former director of the bureau of social welfare in TEDA, said that the hospital "should be the trend in the medical industry." He added, "I believe more hospitals should and will follow this model in the future" (Zamiska, Wall Street Journal, 1/4).
- The Journal on Wednesday examined how the World Health Organization and some public health officials in China have begun to warn about increased rates of smoking-related diseases, which they maintain have become "one of the human costs of the Chinese government's often single-minded focus on economic development," in large part through the tobacco industry. The costs of treatment for smoking-related diseases and lost productivity have increased in China, a trend that "is forcing China's policymakers to weigh the economic and social consequences of promoting cigarettes against the financial benefits," the Journal reports. However, anti-tobacco campaigns in China remain in the early stages and lack the effectiveness of campaigns in the U.S. and Europe (Fairclough, Wall Street Journal, 1/3).
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MEDICARE: Democrats Should Encourage Public-Private Competition
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Universal health care "won't happen until there's a change of management in the White House," but the new Democrat-controlled Congress "can take an important step toward making our health care system less wasteful" by changing the 2003 Medicare law, columnist Paul Krugman writes in a New York Times opinion piece. The 2003 law "increased payments to Medicare-supported HMOs, which were renamed Medicare Advantage plans," even though Medicare's experience with HMOs beginning in the 1990s indicated that they "had higher costs than traditional Medicare and couldn't compete on a financially fair basis," Krugman writes. "The inability of private middlemen to win a fair competition against traditional Medicare was embarrassing to those who sing the praises of privatization," according to Krugman, who adds, "Maybe that's why the Bush administration made sure that there is no [public-private] competition at all in Part D, the drug program." Because of this, Part D is "needlessly expensive" and "highly confusing," Krugman writes. The Democratic majority in Congress likely will require "Medicare to negotiate drug prices on behalf of the private drug plans," but it also should "go further, and force Medicare to offer direct drug coverage that competes on a financially fair basis with the private plans," Krugman writes (Krugman, New York Times, 1/5).
Letter to the Editor
A Krugman column published last month regarding health care reform is "half right," Harvard Medical School professor emeritus Arnold Relman writes in a Times letter to the editor (Relman, New York Times, 1/4). Krugman wrote that proposals to switch the U.S. to universal health care have been flawed because they rely too much on private insurance companies rather than a Medicare-style approach. Krugman added that the resistance persists because "would-be reformers are trying to avoid too strong a backlash from the insurance industry and other players who profit from our current system's irrationality" (American Health Line, 1/2). Relman writes that he supports Krugman's call for "a public, tax-supported insurance system, like Medicare, to replace the hundreds of private, high-overhead insurance companies." However, "that would not control rising costs," Relman says, adding that "Medicare's costs have risen nearly as rapidly as the private sector's" because "economic incentives encourage overuse of expensive medical technology even when it is of unproven or marginal benefit." Relman concludes, "Fee-for-service payments of physicians, investor-owned facilities and a market ideology will have to be replaced by salaried physicians working in prepaid medical groups and by nonprofit ownership. A difficult agenda, but nothing less will do" (New York Times, 1/4).
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