January 28, 2019

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1 big thing: We all pay for surprise medical bills

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Surprise medical bills have received a lot of attention recently for the financial distress they cause their recipients. But they can also lead to the rest of us paying more for health care.

  • Emergency room doctors can use the threat of high out-of-network bills to negotiate higher payment rates with insurers, experts say, raising premiums.

Between the lines: If an insurer doesn’t agree to a high enough rate, there’s the option to charge for out-of-network care. This can result in higher emergency room rates across the board.

Details: A Yale study last year, analyzing data from a large insurer, found that when 1 of the 2 largest ER staffing firms, EmCare, entered a hospital, total payments to the insurer increased by 122%.

  • The second firm, TeamHealth, used the threat of leaving a network to get 68% higher in-network rates. Overall, ER doctors' in-network rates were 266% of what Medicare pays, which is higher than most other specialists.
  • Hospitals can also benefit. For example, after EmCare entered a hospital, facility payments increased by 11%, the Yale study found.

Yes, but: "This is a specific niche of providers who have found this unethical, narrow wedge in the system where they can make significant amounts of money off the backs of patients," Yale's Zach Cooper, an author of the study, told my colleague Bob Herman.

2. PhRMA considering Medicare drug price increase caps

PhRMA, the drug industry's leading trade group, is considering a proposal that would commit member companies to limiting increases in the prices of drugs purchased by Medicare, BioCentury reported this weekend.

  • The proposal is aimed at persuading the administration to drop its Part B plan, which includes tying Medicare drug prices to those in other countries. The PhRMA idea is to limit drug price increases from exceeding inflation.
  • The organization hasn't decided whether the proposal would be limited to Part B drugs, or if it would also include Part D, pharma executives involved in the discussion told BioCentury.

Why it matters: Rising brand-name drug costs are due largely to price inflation, a January Health Affairs study found, while generic and specialty drug price increases are driven more by new products entering the market.

What we're watching: whether Health and Human Services Secretary Alex Azar thinks this is a reasonable policy trade if it's pitched to him.

3. Humira would be a huge company

Data: FactSet; Chart: Naema Ahmed/Axios

If Humira, the drug that treats a range of autoimmune conditions, were its own company, it would have almost the same amount of annual sales as Southwest Airlines or Visa and would be more than twice the size of the Hilton global hotel chain, Bob reports.

The big picture: AbbVie has several other drugs, but Humira is its financial bread and butter.

  • Humira's sales likely will decline this year as more biosimilar versions hit European markets, but the drug will still rake in more revenue in the U.S. as its net annual price exceeds $40,000.

4. Gene therapy having big sickle-cell disease results

Researchers are trying to address sickle-cell disease at the genetic level, and it's having drastic results so far among the patients participating in clinical trials, the New York Times reports.

  • The experimental gene therapy treatments are still in their early stages, and it could be at least 3 years before one is approved. But a handful of the enrollees no longer show signs of the disease.
  • Currently, the only way to treat those with sickle-cell is through a bone marrow transplant, which is dangerous, expensive and uncommon.

The bottom line: "This would be the first genetic cure of a common genetic disease,” Dr. Edward Benz, a professor at Harvard Medical School, told the NYT.

5. While you were weekending

  • Pfizer didn't sell any cancer drugs 20 years ago and now sells 17, as cancer treatment is increasingly financially attractive to big pharma companies, the WSJ reported.
  • The New Yorker profiles whistleblowers who have exposed fraud at health insurance companies offering Medicare Advantage plans.
  • Politico writes about what a medical school in Rwanda can teach the U.S.

Have a great week, and please email me tips or feedback at [email protected].