November 20, 2018

Good morning ... Situational awareness: A shooting at Chicago’s Mercy Hospital left 4 people dead, including an ER doctor. The Chicago Tribune has more details.

1 big thing: PhRMA spread its money around in 2017

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PhRMA, the drug industry's leading trade group, directed tens of millions of dollars toward conservative think tanks, political groups of all stripes and patient advocates in the first year of the Trump administration, my colleagues Bob Herman and Caitlin Owens report, based on a review of PhRMA's tax filings.

By the numbers:

  • Tens of millions in grants were funneled to patient advocacy groups that often stay silent about rising drug prices. Some of the largest PhRMA-funded patient groups were the Addiction Policy Forum, the Leukemia & Lymphoma Society and the AIDS Institute.
  • Federal and state lobbying increased 126% in 2017. Two large law firms, Covington & Burling and Arnold & Porter, combined to collect $8.6 million alone from PhRMA.
  • PhRMA's advertising budget multiplied by almost 10 times. Ad agency Young & Rubicam and PR firm Porter Novelli cumulatively were paid $17 million.

Political spending leaned heavily — but not exclusively — toward Republicans.

  • The biggest recipient was America First Policies, a conservative nonprofit that promotes President Trump's agenda, which received $2.5 million. 
  • Other political beneficiaries included both the Republican ($325,000) and Democratic ($305,000) Governors Associations.

Go deeper.

2. FDA’s hands-off approach to digital health

The Food and Drug Administration is in no rush to regulate apps and similar digital tools that sometimes accompany prescription drugs and medical devices.

Details: The FDA rolled out a proposed framework yesterday that would treat most digital add-ons as part of a drug’s marketing, rather than as a fully regulated part of the product itself.

  • These are tools that, for example, track whether patients are taking their drugs and if they experience symptoms or side effects (potentially transmitting that information to doctors).
  • They can also gather safety and efficacy information that could help inform the FDA’s regulation of products that are already on the market.

The light touch is an effort to not stand in the way of a relatively new field that could ultimately help patients.

  • Digital tools “can promote compliance, promote collection of information that can be used to inform and engage with physicians, and promote the collection of real-world data that can be used to help inform follow-on drug development,” FDA Commissioner Scott Gottlieb said in an interview with BioCentury.
  • “The technology is ubiquitous, and I think this industry’s been slow to leverage it in large measure because of the regulatory uncertainty,” he told them.

3. Sloan Kettering’s drug expenses explode

The amount Memorial Sloan Kettering spent on pharmaceuticals in the first 9 months of this year jumped 28% from the same time last year — hitting a total of $655 million, according to new financial documents that Bob reviewed.

  • That was a big reason why the New York City cancer hospital’s surplus fell.

Driving the news: A spokesperson for MSK said the higher drug spending was mostly a result of the hospital’s patients using more drugs — more people got chemotherapy treatments, and new outpatient centers meant new drug expenses.

The bottom line: MSK is somewhat of an outlier. But other major hospital systems like Providence St. Joseph Health, Hackensack Meridian Health, Bon Secours Mercy Health and Vanderbilt University Medical Center recently have reported similar trends of drugs eating up more of their expenses.

4. Hospitals up their advertising

We spend a lot of time talking about direct-to-consumer advertising for drugs — and that is the bulk of health care advertising — but hospitals are spending a lot more trying to reach consumers directly, Kaiser Health News reports.

Hospitals spent more than $450 million last year on advertising, accounting for about 25% of all health care ads, per KHN.

  • A lot of those ads highlight one particular speciality, like organ transplants or orthopedic surgery.
  • That specialization helps build the hospitals' reputations, and that in turn keeps them in high demand when it comes time to negotiate with insurers.
  • "They want Hospital A in their network even more, which means Hospital A can extract more from insurers — mainly in the form of higher prices,” Carnegie Mellon health care economist Martin Gaynor told KHN.

5. 1 🏥 thing: $63 olive oil

The Philadelphia Inquirer has another entry for the annals of unusually large hospital prices: $63 for about an ounce of sweet oil (a derivative of olive oil) used as lubricant to help rotate a baby in its mother’s stomach, to avoid a breech delivery or a C-section.

Between the lines: It's not clear how much this couple's insurance plan actually paid for the olive oil — it was eventually lumped in with the rest of the delivery when they saw the insurer's negotiated rates.

  • But, of course, list prices are the starting point for those negotiations.