By: Brady Bizarro, Esq.
When President Trump nominated Scott Gottlieb to be commissioner of the Food and Drug Administration (“FDA”) in March of 2017, critics were quick to point out his deep ties to the pharmaceutical industry. They had little hope that he would have the wherewithal to overcome perceived conflicts of interest and challenge the industry on important issues facing consumers and payers. Scott Gottlieb, however, proved to be a rarity, seemingly immune to regulatory capture. He received bipartisan praise as one of the administration’s most effective regulators. His departure in April will be a loss for the self-funded industry and for healthcare cost containment as a whole.
Dr. Gottlieb focused his efforts in three key areas: rising drug prices, the opioid epidemic, and the underage use of e-cigarettes. Under his leadership, the FDA worked to strengthen and speed up the review process for generic drugs. In 2018, first-time generic approval grew by 24%. In all, the FDA approved 971 generic drugs in 2018, an all-time high. With respect to the opioid crisis, which has killed some 85,000 people since 2017 and led to an enormous spike in treatment costs to payers, Dr. Gottlieb took a hard stance on opioid prescribing limits and approved a mobile app to help those with substance use disorder recovering through outpatient treatment. Finally, under Gottlieb, the FDA cracked down on teen vaping by announcing rules to restrict the sale of flavored e-cigarettes, supported banning menthol cigarettes, and reduced nicotine levels in cigarettes.
Soon after he announced his departure, the Trump administration named an interim replacement, Dr. Ned Sharpless, who now heads the Cancer Division of the National Institutes of Health (“NIH”). The search for a permanent replacement is still underway.
By: Jon Jablon, Esq.
Employers, TPAs, and brokers primarily choose to utilize reference-based pricing programs to cut costs. Instilling systemic changes in the industry can also be a goal of those utilizing this methodology, but cost-containment is a much more tangible goal.
The reference-based pricing mentality can carry with it the opinion that medical providers are crooks – charging many times the fair market value of services with no meaningful system of checks or balances. While that may sometimes be accurate, it’s still important to remember the law that surrounds reference-based pricing and, more importantly, balance-billing, when deciding whether to “stick it to the man.”
Some employers refuse to negotiate balances with medical providers, even if the health plan offers very few or no options for contracted providers. Aside from the Department of Labor’s not-so-favorable stance on this matter (see https://www.phiagroup.com/Media/Posts/PostId/376/unraveling-faq-part-31), medical providers retain the right to send patients to collections, or even file lawsuits against them. Although there is an increasing amount of litigation in the industry regarding this exact topic, there is not yet any concrete guidance that removes a medical provider’s right to send patients to collections or sue a patient.
It’s sometimes tempting to walk away from the bargaining table in frustration, but remember the ramifications on the member if that’s the route taken. My advice is certainly not to bend to any given provider’s whim when it comes to payment – but keep an open mind, and consider the potential consequences associated with every option.
Whether from unpredictable provider charges, “black box” claims repricing, mysterious PBM rebates, or unobtainable claims data, entities operating in the self-funded space such as employers, TPAs, brokers, and stop-loss carriers have been forced to deal with a systemic lack of transparency.
Join The Phia Group’s legal team as they discuss some emerging and ongoing transparency issues, measures being taken to try to resolve them, and methods you can use to get the data you need in order to lower costs.
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By: Andrew Silverio, Esq.
In recent weeks, we have seen an influx of questions regarding the practice of procuring prescription drugs from abroad, particularly Mexico (Canada has historically been the most popular source). The issue has also been popping up in the news, and a program for public employees in Utah to venture to Tijuana to pick up their prescriptions is now live. The potential for significant savings compared to domestic pricing for (essentially) the same drugs is what is driving the popularity of this trend. We won’t get into the legal standing of this practice – feel free to reach out if you’d like information on that topic – but we wanted to highlight a potential risk that we generally don’t see employers consider when looking at programs like this – not a legal or contractual risk, but a health risk stemming from the drugs themselves.
It is true that drugs manufactured for sale abroad can be chemically identical or sometimes even manufactured in the same facilities as their U.S. counterparts. However, this is not always the case, and quality control can be an issue, as can more nefarious problems with counterfeit drugs. Countries designated as “Tier 1” (such as Canada) have comparable safety standards to those in the United States, but the fact remains that the FDA has no authority or ability to oversee drugs manufacturer for sale abroad (even drugs that come off the same conveyor belt as their U.S. counterparts).
Even at home, quality control issues happen. Per a recent CNN article, “there’s no end in sight for one of the largest prescription drug recalls in recent memory.” Numerous different blood pressure medications, from several manufacturers, have been pulled from shelves due to contamination related to “NDMA” (N-nitrosodimethylamine), a chemical which is used to make liquid rocket fuel. This chemical, and another which has been identified called NDEA (N-Nitrosodiethylamine), interfere with DNA replication which can result in cancer, and the issue goes back years, not months. These foreign manufacturers may be taking all the same appropriate corrective action for drugs packaged for sale elsewhere, but the FDA simply doesn’t have the ability or authority to make sure of it.
Finally, in the event a patient visits a foreign country to retrieve their medications and ends up receiving tainted or counterfeit products and having adverse effects (whether due to a lack of FDA oversight or not), that patient will not have the benefit of any domestic laws relating to product safety or medical malpractice. If any recourse against the manufacturer or pharmacy is available at all, they will likely need to return to the source of the drug and operate within an unfamiliar legal system. Of course, if the patient’s health plan actively encouraged the patient to get their drugs from a less reputable foreign source rather than the pharmacy up the street, the plan itself could potentially be liable – and a much more appealing target than a foreign pharmacy.
By: Philip Qualo, J.D.
Each year more and more Americans overdose on prescription opioid drugs. In fact, the Centers for Disease Control and Prevention (CDC) reported that deaths attributed to opioid abuse and addiction now exceed car crashes as the leading cause of unintentional death in the United States. Opioid addiction has grown exponentially in recent years and is now officially the deadliest drug crisis in American history, more than heroin and cocaine combined.
Opioid drugs are routinely prescribed by healthcare providers for its lawful intended purpose, to treat severe pain. As access to healthcare has increasingly become available to all Americans from diverse backgrounds, this specific drug crisis is unique in that it crosses all social, economic and racial boundaries. This broad demographic substantially increases the likelihood that the opioid epidemic will eventually make its way into every employer’s workforce.
Employers sponsoring group health plans can incur significant financial and legal risks when dealing with plan participant opioid abuse, such as an increased use of emergency room services, hospitalizations, related medical costs, and even an increase in workers’ compensation claims. As a result of opioid abuse, the cost per claim continues to grow, as well as the number of painkillers per claim. For example, a 2012 study conducted by The Hopkins-Accident Research Fund Study, found that workers prescribed even one opioid had average total claim costs that were more than three times greater than claimants with similar claims but who were not prescribed any opioids.
Employers who sponsor self-funded health coverage have a particular advantage in combatting the opioid epidemic in their own workforce as they have the flexibility to design their health plans in ways that could potentially discourage opioid abuse among plan participants. For example, allowing for low cost access to, or otherwise incentivizing participation in, popular alternatives to pain management. These alternatives provide plan participants with a variety of options to treat pain without the use of prescription drugs. The most common alternatives to pain management are acupuncture, chiropractic care and physical therapy. Such alternatives are likely far less expensive than the financial and legal risks associated with prescription opioid abuse.
Self-funded health plans also have the ability to ensure that healthcare providers in their networks are following CDC guidelines. These guidelines are intended to improve the way opioids are prescribed to ensure patients have access to safer, more effective chronic pain treatment while reducing the number of people who misuse, abuse, or overdose from these drugs. In the alternative, self-funded health plans could consider implementing a three-day limit on opioid prescriptions for initial pain treatment as the CDC has found that the probability of addiction increases on day four.
Regardless of how employers and/or plan sponsors choose to address the opioid epidemic, it is important that employees and plan participants are educated about opioid abuse and its potential consequences. Employees that are educated about the drug crisis and their healthcare options are more likely to make informed decisions regarding their pain.