Wednesday, February 20, 2019

If You Call Me a "Provider", I Will Assume You are a Nazi.

As a physician, I am proud of the degree I earned. Upon graduation from medical school, my diploma conferred the title of physician and medical doctor, it did not say “provider.” The word “doctor” originates from the Latin “docere”, meaning to teach. I value highly my role as a teacher to patients, students, residents and colleagues. Physicians should accept nothing less than the title we worked hard to obtain through a great deal of personal and professional sacrifice.  It was a small price to pay to join that sacred society of men and women who have devoted their lives to healing.

The source of any argument can often be found by looking at the language used to frame it. The use of the term “provider” devalues physicians and is a professional insult, no different from that of discrimination based on my race, ethnicity, religion, or gender. 

“Provider” was first utilized by The Third Reich, who embraced this moniker to degrade Jewish physicians as medical professionals.  The historic root and use of the word “provider” deserves our attention and reflection because if we forget the tragic mistakes of history, we may be doomed to repeat them. While the more recent movement to disrespect the education and training of physicians was the brainchild of the federal government and corporatized medicine, this disdain for medical expertise has occurred before–to Jewish physicians living in Germany in 1937, before World War II. 

As a matter of Nazi law, in Germany, a person was identified as being “Jewish” if they had three Jewish grandparents.  In 1933, 15% of all physicians in Germany were identified as being Jewish. Many were pediatricians, in fact, out of 1253 pediatricians practicing within the borders of the German Reich, 47% were of Jewish descent. 

Among those pediatricians were many influential scientists who left a lasting impact on the pediatric field.  Eduard Heinrich Henoch –famous for identifying a condition called Henoch-Schonlein Purpura – which can be serious and even life-threatening for children.  Abraham Jacobi was a pioneer in pediatrics, opening the very first clinic to exclusively treat children in the United States. 

In 1933, the German Society of Pediatrics asked pediatricians who were Jewish to voluntarily resign or be removed from the membership roster. Surprisingly, an organization that should have been committed to the preservation of all humanity, wholeheartedly embraced Nazi policy, holding their first Aryan National Pediatric meeting in 1934.

According to Dr. Saenger, who wrote Jewish Pediatricians in Nazi Germany:  Victims of Persecution, “the 1937 issue of the Reichs Medizinal Kalender, a directory of doctors, the remaining Jewish doctors in Germany were stigmatized by a colon placed before their names. Their medical licenses were revoked in 1938.  They could no longer call themselves “Arzt” or “doctor.”  They were degraded to the term “Behandler” or freely translated, “provider.”  The Jewish doctors had lost their government approbation.  They could no longer hang out their shingle and even their prescription pads had to reflect the new law restricting their patients to other Jews.” 

These acts, perpetrated by the Nazi regime, were intended for the purposes of systematic humiliation and denigration of those who had earned the title of doctor through education and training. Following these regulatory measures, a mass exodus of 750 pediatricians from Germany, Austria and Prague ensued.  In all, about 50 pediatricians were deported to concentration camps in Eastern Europe, seven of whom survived by the war end.  Those pediatricians who were deported took responsibility for the care of the children who were with them and a few brave pediatricians accompanied the children into the gas chambers. 

Insulting any person on the basis of their race, ethnicity or gender is morally wrong. Using the word “provider” to describe a physician is and will always be insulting, personally and professionally; it is demeaning and devalues the education and degree conferred upon every physician. Why are physicians forced to suffer repeated use of this derogatory professional insult? And why have physicians as one professional body not risen up in anger at this injustice?

Because physicians are a conduit for insurance companies, hospitals, and even the government, to maintain the flow of money from patients in the healthcare marketplace.  The word “provider” also encourages us to consider health care as a commodity and the physician-patient encounter as more business transaction than relationship, which must be grounded in trust and mutual respect. Physicians must not surrender professionalism to commercialism.

One only has to look at the emergence of electronic health record mandates, which facilitate billing for third-parties, and prior-authorizations, which restrict the clinical decision making by physicians to understand how fundamentally irrelevant our profession has become.  Federal law has made it illegal to provide pro-bono care to Medicaid or Medicare patients. These and other “innovations” have insidiously dismantled health care delivery.  I do not know when physicians accepted being called “providers,” but I do know that we must stop tolerating it. That time is now. 

Thursday, February 14, 2019

Are Health Insurance Companies Practicing Medicine Without a License?

It’s no secret that in today’s health care market, insurance companies are calling the shots.  

As a pediatrician in private practice for almost two decades, I’ve seen insurance companies transform into perhaps the single most powerful player in today’s health care landscape—final arbiters whose decisions about which procedures or medications to authorize effectively end up determining the course of patient care. Decisions made by insurers, such as MassHealth, have literally killed patients.  But it was only when I got caught in the crosshairs of an insurance company auditor with a bone to pick that I fully appreciated their power to also destroy physicians’ careers.

My own nightmare began around two years ago, when my late father, also a physician with whom I was in practice, and I opened our Silverdale clinic on a Saturday. It was the start of flu season, and we’d just received 100 doses of that year’s flu shot. Anxiety about the flu was running high following the death of a local girl from a particular virulent strain of the virus a year before, and parents were eager to get their kids immunized as soon as possible.

Under Washington law, adults don’t even need to see their doctors to get flu shots. They can get them at Walgreens, directly from pharmacists. But because children under nine are more susceptible to rare but life-threatening allergic reactions, they must be immunized by a physician. This meant that, for convenience sake, parents often scheduled their kids’ annual checkup on flu shot day, thus allowing them to condense much of their routine care into a single visit.

That particular Saturday went off without a hitch, with my father and I seeing and immunizing around 60 patients between the two of us over a 12-hour day.

Three months later, a representative from Regence insurance company requested to see some of the patient charts from that flu clinic as part of an audit. Aimed at rooting out insurance fraud by cross checking doctors’ records, these audits have become a routine fixture in medical practices today. To incentivize their auditors to ferret out the greatest possible number of irregularities, and thus boost the corporate bottom line, auditors work on commission, being paid a percentage of the funds they recover.

The Regence auditor in charge of my case, Anke Menzer-Wallace, failed to turn up any irregularities in our documentation. But, still, Ms. Menzer-Wallace issued a stern admonition to my father and me, ordering us not to open our clinic on Saturdays to administer flu shots.

This struck me as an outrageous restriction, considering our clinic is a private entity where we set our own hours and schedule accordingly, and so I called Ms. Mezner-Wallace. But instead of backing down, she ratcheted up her rhetoric, saying she was also forbidding me from examining my patients before immunizing them—clearly, a bid to save her employer even more money. I was shocked. Ms. Mezner-Wallace’s directive amounted to practicing medicine without a medical license—which is of course illegal in the state of Washington and many other states across the nation.

I shot back that immunizing infants and small children is a serious undertaking, requiring proper caution and care, informed her there was no way I would be complying with her mandate. Following this brief exchange, Ms. Menzer-Wallace took it upon herself to report me to the Medical Quality Assurance Board–the government-backed body charged with shielding the public from unqualified or unfit doctors. The accusation levied against me? Not following an insurance company mandate—which, in her opinion, amounted to unprofessional conduct.

It didn’t matter that the charges against me were ludicrous. The potential consequences were only too real, and potentially catastrophic. Had the State Medical Board decided against me, I could have lost my license. I hired a lawyer, sinking more than $8,000 into legal fees. I was cleared last month by a unanimous committee vote. But other physicians facing similar situations may not be as lucky.

The 18 months of excruciating stress that followed my altercation with Ms. Menzer-Wallace made it patently clear that insurance companies wield far too much power. Bureaucrats are making life-and-death medical decisions without a single minute of medical training, and their auditors are terrorizing physicians, by coercing state medical boards to act as their henchman. Unfettered by any consequences for enforcing policies that fly in the face of rules protecting patient safety, insurance companies will continue to harm doctors and patients alike if no one can stop them.


Tuesday, February 5, 2019

Being a Woman Physician : The Blank Wall of Social and Professional Antagonism #NWPD2019

February 3rd is designated National Women Physicians Day, in honor of Elizabeth Blackwell, the first woman in the U.S. to earn a medical degree.  Dr. Blackwell said, “a blank wall of social and professional antagonism faces the woman physician.” She was right. Recently, an 85-year old retired surgeon shared that my ‘antagonistic attitude’ is unbecoming; his unsolicited comment reminds me why celebrating this day is important for all women. 
Dr. Mary Edward Walker was a female physician who embodied “antagonism.”  She is the only female recipient of the Congressional Medal of Honor in U.S. history, cited for valor as a surgeon on the Civil War battlefield.  She was also an abolitionist, prisoner of war, suffragist, writer and speaker.  Two years before her death, the Army revoked her award yet she refused to comply.  Her life story is inspiring. 
Mary was raised by progressive, “freethinking” parents, who founded a schoolhouse to ensure their six daughters were as well-educated as their son.  In defiance of convention, her family shared work equally on their farm, encouraged independence and disregarded traditional gender roles.
Mary paid her way through Syracuse Medical College graduating with honors in 1855.  She married Albert Miller, a fellow medical student, yet removed “obey” from her vows and retained her last name, like many female physicians today.  Unfortunately, due to Albert’s philandering – he impregnated two patients – the couple divorced thereafter. 
At the start of the Civil War, she volunteered as a surgeon for the Army, but the Secretary of War refused to commission a woman as anything other than a nurse.  She could have posed as a man, like 400 other women that graced the battlefield, but felt obscuring her gender contradicted her primary goal, which was breaking the gender barrier.
Dr. J.N. Green, the lone surgeon at a temporary infirmary in the U.S. Patent Office, hired her as an assistant surgeon.  After her request for compensation was denied by the U.S Government, she accepted the position without pay.   
Over time, more surgeons began working at the infirmary and Dr. Walker became concerned some were amputating limbs—which was a controversial practice –unnecessarily for practice. The mortality rate for amputations at the knee was 60%, while those done at the hip were more than 80%.  Seeing injustice, Dr. Walker counseled soldiers against amputation when medically appropriate.  Her reputation for being bold, skilled and a friend to the soldiers grew and resulted in families seeking her out to treat their injured sons, brothers and husbands. 
The Army refused to commission Dr. Walker as a surgeon, until Assistant Surgeon General Robert Wood observed her work at the Battle of Chickamauga and broke precedent, offering her a paid position as assistant surgeon with 52nd Ohio Infantry.  She crossed enemy lines as both spy and surgeon until Confederate troops captured her in 1864.  The notorious “female Yankee surgeon” was imprisoned at Castle Thunder, a Richmond prison known for its brutality.  The maltreatment and starvation she endured would haunt her for the rest of her life, but even after her release via prisoner exchange, she continued seeking a ‘retroactive commission’ as a medical officer. 
The Army Judge Advocate General determined that while there was no precedent to commission a female, a "commendatory acknowledgment" could be issued in lieu of the commission.  Generals William T. Sherman and George H. Thomas provided testimonials of her service and President Abraham Lincoln recommended her for the award shortly before his death for “untiring service on the field of duty.”  On November 11, 1865, President Andrew Johnson bestowed the Medal of Honor upon Dr. Mary Walker, citing her valor on the battlefield during the Civil War as worthy of receiving the nation’s highest civilian honor.  
After the war, she became a writer and speaker supporting the women’s suffrage movement.  In 1917, the Army reevaluated eligibility for the Medal of Honor and rescinded her award.  According to folklore, when federal marshals arrived to reclaim her medal, she met them at the door wearing her medal and brandishing a 12-gauge shotgun.  In defiance, Mary Walker continued wearing the medal every day until her death, at 86, on February 21, 1919, just four months before Congress passed the Nineteenth Amendment, granting women the right to vote.   
Fifty years later, Mrs. Anna Walker, a distant relative, lobbied the Army to reconsider the Medal of Honor revocation.  She said, “Dr. Mary lost the medal simply because she was a hundred years ahead of her time and no one could stomach it.”  Upon the Army’s recommendation, President Carter ordered restoration of the Congressional Medal of Honor to Dr. Mary E. Walker on June 19, 1977.  To this day, she remains the only female recipient of this award in U.S. history.  
May Drs. Walker and Blackwell inspire us to embrace antagonism and change the world. 

Tuesday, January 22, 2019

"Say on Pay" Legislation: Giving Patients a Say on CEO Pay

Warren Buffet once described the cost of health insurance mandates as "a hungry tapeworm on the American economy."  He was right.

Health care inflation continues to exceed the base inflation rate.  Health insurer CEO compensation has ballooned out of control --in 2017, Cigna CEO David Cordani took home $43.9 million, Humana CEO Bruce Broussard made $34.2 million, and Aetna CEO Mark Bertolini earned nearly $59 million. That’s approximately $162,000 per day.  Seven years after the Affordable Care Act created an insurance windfall, earnings at the 70 largest U.S. health care companies reached $9.8 billion cumulatively. 

When people like you and I are paying high insurance premiums, shouldn’t we get some say in how the money is spent?   

Local legislators, Michelle Caldier, a Port Orchard Republican, and Sherry Appleton, a Poulsbo Democrat, joined by Reps. Eileen Cody (D-West Seattle), Laurie Jinkins (D-Tacoma), Shelley Kloba (D-Kirkland), and Nicole Macri (D-Seattle) agree that people should have a voice in this process.  To that end, they have co-sponsored House Bill 1017, which is intended to regulate the salaries of nonprofit health carriers, defined as health maintenance organizations, insurers, health care service contractors, or other entities responsible for the provision of healthcare services. 

“Say on Pay” legislation would require any non-profit insurer to assemble a panel made up of 10 health plan enrollees chosen at random.  The enrollee panel would be tasked with setting the compensation and benefits package of the board of directors’ members and approving the salaries of those executive employees receiving the top five highest levels of pay and benefits.  Each enrollee on the taskforce would serve a one-year term with a two-term maximum.  

Inflated CEO compensation has many negative consequences for the typical American worker. According to the Economic Policy Institute (EPI), a non-profit economic think tank, the gap between CEO compensation and that of workers has never been greater than it is today.  In 1965, the CEO-to-worker compensation ratio was 20-to-1, by 1989, the CEO-to-worker compensation ratio had grown to 58-to-1 and in 2017, the CEO-to-worker compensation ratio is 312-to-1. 

Economists Josh Bivens and Lawrence Mishel, writing for the American Economics Association, found that the substantial income gains at the very top are a significant impediment to increases in the standard of living for low- and moderate-income households.  The Economic Policy Institute endorses reducing incentives for CEO’s and corporate executives to extract economic concessions while preserving the economy overall. 

The two best methods are by increasing taxes on CEO compensation and corporations with higher CEO-to-worker ratios or instituting a “say on pay” policy, allowing shareholders (or beneficiaries) to control compensation and benefits for the CEO and other top executives. 

“Say on Pay” legislation would empower beneficiaries and patients to hold their health carriers accountable for building and maintaining a “patient-centered” health organization more focused on value of the services provided than volume.   Patients would benefit from interventions that would reduce the price of care, limit unnecessary tests or procedures, and prioritize care coordination.  

Annual healthcare spending in the US reached $3.5 trillion last year – 17.9% of the GDP -- almost double per capita spending of other developed nations. According to the Kaiser Family Foundation, most recent growth in health expenditures is due to insurance program spending, both private and public. Private insurance expenditures represent 34% of total costs (up from 21% in 1970), and public insurance --including Medicare, Medicaid, CHIP, and the VA Health Systems – represent 41% of overall health spending in 2017 (up from 22% in 1970).  In comparison, hospital costs account for 33% and physicians’ services are only 8% of health care expenditures.

CEO compensation is closely tied to stock price; therefore, executives prefer focusing on methods to generate higher earnings per share.  Dr. J. Mario Molina, the CEO of Molina Healthcare – a Washington Apple Health Medicaid plan based in California-- was fired in May 2017 due to lackluster company performance, yet still pocketed $17 million that year and received almost $23 million in severance pay.  His brother John C. Molina, former CFO, also fired in May 2017, received $10.7 million in severance.  Despite coughing up $50 million, Molina had enough money to hire Joseph Zubretsky in November 2017 as CEO and pay him $19.7 million for two months’ work. 

Health care expenditures will continue to climb if pay packages for health insurance executives don’t provide incentives to control health care costs.   Health insurers should not be rewarded for higher stock prices and better profit margins.  Supporting HB 1017 will give consumers an opportunity to hold insurers accountable,  improving access to healthcare services for everyone.

Tuesday, January 8, 2019

Medicaid Expansion: Nothing But an Empty Promise for Children

Recently, a child was on a waitlist for five months to get into my practice. For this article, I will call him Tiny Tim.

Tiny Tim, now 5 years old, has a skin condition known as eczema or atopic dermatitis. When we first met, virtuously every area of his body was covered with wounds from constant scratching. Skin that breaks easily and heals poorly can give bacteria access to other parts of the body.  After our first visit his mother complied with all the necessary care and his condition was slowly improving.

But on a weekend day in December Tim was rushed to an urgent care center, with a fever and pain in his ankle. He had no history of injury and the blood work, at first glance, indicated only mild infection.  He was diagnosed with a virus and sent home.  Two days later his fever spiked to 103 degrees and he refused to walk, insisting on being carried everywhere, so his mother brought him to my office.

He looked sick. Here was a usually defiant boy whose expression telegraphed fear and pain. On examination, his ankle was warm and swollen; he nearly jumped off the table when I flexed his joint.  Having eczema increased his risk of developing a joint infection and additional bloodwork supported the presence of a serious bacterial infection. 

Today, despite advances in antibiotics and surgical treatment, significant joint destruction can occur in children if infection is not caught early. It can lead to life-threatening complications and even death.  Within hours, he was admitted to Seattle Children’s Hospital and operated on the following morning. By the end of the month, he was skipping into my office as if nothing ever happened, if not for the IV line in his arm delivering daily antibiotics at home. 

I remember wishing there had been space in my practice earlier than the five-month mark. But Tiny Tim is on the state’s Apple Health plan, which is Washington’s Medicaid option for children, and providers can realistically only accept a certain number of those patients. He faced a delay that points to a serious flaw in the good intentions of the Medicaid expansion for children.

For the first time in a decade, the number of uninsured children in the United States increased in 2018.  Apple Health seemed like the quintessential success story because it expanded Medicaid coverage for children — in Kitsap County alone, the number enrolled grew from 9,000 to over 21,000 in the last 10 years. However, Medicaid reimbursement also decreased by more than 35 percent, after a federal provision that kept Medicaid payments on par with Medicare expired in 2015.  Some states set aside funding to maintain rates equal to those of Medicare, but Washington was not one of them. 

Medicaid reimbursement is set at two-thirds the rate of Medicare, forcing many physicians to limit the number of children they treat on Medicaid to keep their doors open. Physician costs amount to just 8 percent of all healthcare expenditures, a small slice of the healthcare pie. Every day, physicians are retiring early or closing their doors; those who remain on the front lines have more patients than the capacity to manage. 

Sarah Rafton, the executive director of the Washington Chapter American Academy of Pediatrics (WCAAP), calls Medicaid expansion “a hollow promise.”  She told the Columbian newspaper of Vancouver, “This isn’t about doctors who… want to make a lot of money. If half of your potential patients are on Medicaid, it becomes difficult to sustain your practice.” To my dismay, I have to limit the number of Medicaid patients in my own practice. 

Tiny Tim received timely, high quality pediatric primary and specialty care. He deserved nothing less.  Children like him need health care funding parity so primary care physicians can afford to stay in business. But the Washington State Legislature has been loath to fund health care for children on Medicaid. Getting access to high quality healthcare can seem akin to winning the lottery. 

Last year, Rep. Monica Stonier (D-Vancouver) introduced a bill aimed at increasing reimbursement rates for treating children and pregnant women. Local Reps. Sherry Appleton (D) and Michelle Caldier (R) were co-sponsors. The bill got a hearing but died in committee. The “Medicaid parity bill” has been reintroduced for the session that opens this coming week, calling for $80 million in state funding to raise Medicaid reimbursement to that of Medicare, $30 million of which would be designated for pediatric primary care.

When Medicare rates are already considered the “bottom line,” why is Medicaid reimbursement below sustainability? Who will care for children like Tiny Tim if basic medical care for children remains underfunded? As we open a new year, please think about children like Tiny Tim and the 840,000 other children also enrolled in Apple Health of Washington. And then contact your local representatives and encourage them to support legislation to bring reimbursement up to the Medicare equivalent. 

Tuesday, January 1, 2019

Can CEO's Dean and Lofton Perform A Miracle through the CommonSpirit Health Merger?

Last week the community learned that exterior work on the Harrison Medical Center expansion project in Silverdale will slow down for an unspecified period of time and interior work will temporarily be deferred. In the face of reduced revenue due to increasing labor costs coupled with lower insurance reimbursement, CHI Franciscan likely had no other choice. The parent corporation, Colorado-based Catholic Health Initiatives, has made budget adjustments in order to remain financially solvent. 

CHI Franciscan is not alone in their struggle for solvency. Moody's Investors Service recently issued a negative outlook on the nonprofit healthcare and hospital sector for 2019. The change in rating from "stable" to "negative" reflects Moody's prediction that operating cash flow will either remain flat or decline by as much as 1 percent and bad debt will increase this year. Moody’s predicts expenses will outpace revenue due to workforce issues, including the ongoing need for temporary nurses and continued recruitment of employed physicians. 
Nonprofit hospitals, in general, are facing challenging times. And that challenge is going to reverberate through our county, whether that means a major facility on a new construction timeline or further corporate creativity to reduce health care costs.

To that end, a year ago Catholic Health Initiatives and Dignity Health signed a formal agreement to join “ministries” and create a $28 billion health system giant with more than 700 facilities across 28 states. The merger is expected to be finalized by the end of the year. After receiving approval from the Federal Trade Commission and the Vatican, the newly combined organization — which becomes the largest non-profit hospital system in the country — will be known as CommonSpirit Health.

The new moniker reflects both the entity’s faith-based mission and the essence of those providing care to patients. According to CHI CEO Kevin Lofton, “We appreciate how the manifestation of the Spirit is woven into so many messages – God’s gift of compassion, the calling to heal others and the serving the common good. Each comes together and is reflected in just one powerful word, CommonSpirit.” 

While “common” doesn’t seem all that powerful to me, the fundamental question is whether merging two non-profit healthcare giants will boost the financial outlook for the newly combined corporation. 

At one time, Dignity executives had expressed concern over CHI’s financial performance and heavy debt load. But there was little reticence in the remarks of CEO Lloyd Dean, who recently said, “we remain steadfast in the belief that we can deliver a bold new health care enterprise of the future through our alignment with Catholic Healthcare Initiatives.”
His confidence in mergers may be based on financial statements, though revenue and expense isn’t always a safe forecast of what’s coming next. 

For example, acute admissions and outpatient visits declined 5 percent from 2017 to 2018 for CHI, yet the company’s operating loss fell during that time period, from $593 million to $276 million. It stands to reason in the face of reduced revenue, they accomplished this feat by cutting costs, including labor, benefits, supplies and other overhead expenditures. 
Dignity Health, a San Francisco-based system, looks formidable on paper, posting a net income of $988 million in fiscal year 2018, up from $425 million in 2017.  However, these numbers were boosted by a backlog in the California Provider Fees, which generated $447 million for 2018 and an additional $217 million in “catch-up” revenue from 2017. A quirky twist via the U.S. HealthWorks merger, an urgent care and occupational medicine subsidiary, garnered a one-time cash influx of $500 million plus a $120 million bonus on top of that. 
Sounds like a solid financial base for the new company. However, the regulatory burden of hospital consolidation can be costly and can leave open questions like the one Kitsap consumers may rightfully be asking about Harrison’s future. 

The California Attorney General made merger approval contingent on a number of charity care requirements, including creation of a program for homeless healthcare initiative and implementing a 100 percent discount to patients who earn up to 250 percent of the federal poverty level. CommonSpirit Health will invest $20 million over six years toward the homeless healthcare program alone, that will serve 30 communities in California where Dignity Health operates hospitals. How will these financial commitments in California affect future decisions nationwide if expenses must be reduced? 

Loften, the CHI CEO, recently told the Denver Business Journal, “If we do our jobs right, we won’t look like a hospital company. We still will have hospitals, but there will be fewer people in them.” But CommonSpirit Health is a hospital company, at least, for now. 
There’s little doubt Harrison and CHI will retain their footprint in Kitsap, but hospital mergers around the country haven’t always demonstrated that having more facilities under a common name bolsters the bottom line. Who knows what that will mean for a patient’s healthcare options in Kitsap County into the future, and for the health of our lone hospital.


Tuesday, December 11, 2018

What Happens when Big Pharma "Exploits" the Opioid Epidemic for Financial Gain? Kaleo Is Doing It.

The opioid crisis has grown exponentially - ravaging communities and taking an estimated 64,000 lives each year – escalating into a public health epidemic. In response to the increased availability of synthetic opioids like oxycodone and fentanyl, the Surgeon General called for expanded access to the opioid overdose antidote, naloxone, by using the slogan:  Be Prepared. Get Naloxone. Save a life. 

Naloxone is a compound which can literally cheat death, however due to price increases of up to 600%, public agencies are unable to afford to supply their first responders despite a federal mandate to do so.  According to data collected by the FDA, the price of generic naloxone—made by Hospira -- jumped by 50% in January 2014.  Amphastar, the producer of a product that can be used intranasally, doubled their price recently.  And Kaleo, which developed an ingenious “talking” naloxone auto-injector, known as Evzio, increased their price from $575 at market entry to $4500 for a two-pack.

While the government could use existing legal authority to slash prices for the lifesaving naloxone, there is more to reducing drug costs than meets the eye.  Medicare is legally prohibited from negotiating prices with drug companies. By employing a sales force to encourage doctors to sign off on paperwork that Evzio was “medically necessary”, Kaleo forced insurers and the federal government to foot the bill–Medicare shelled out $142 million for Evzio over the last 4 years—due to exorbitant price increases.

Secretary Alex Azar is contemplating removing the “safe harbor” provision, which was added to the anti-kickback statute of the Social Security Act by Congress in 1987.  The provision was designed to support group purchasing organizations, or GPOs, which got their start at the turn of 20th century as hospital cooperatives. GPOs, it was thought, could score better deals by buying medications in bulk, bringing down health care costs by negotiating discounts with drug manufacturers. 

But that’s not what happened.

Instead, the safe harbor provision led to an institutionalized system of “pay-to-play” corruption that would be illegal in any other industry. With only four GPOs supplying virtually all U.S. hospitals, the competition to secure the exclusive right to supply each of those hospitals with any given drug is fierce – and, thanks to the safe harbor provision – dirty. Under the provision, pharmaceutical companies are forced to pay what amounts to kickbacks to GPOs to win coveted supply contracts.

Drug shortages result because there’s little incentive for drug companies to continue producing a particular drug after their competitor wins the lucrative GPO supply contract. Relying on the lone contracted manufacturer then increases the chance of experiencing a dangerous drug shortage.

In 2005, a bipartisan bill to repeal this obscure provision was drafted by Senators Herb Kohl (D-WI) and Mike DeWine (R-OH), but the legislation died in Subcommittee and has not been resurrected.   Congress is well aware of the risk the safe harbor provision poses to the American people, yet have proven loathe to act.  Why?

The answer lies in the power of the pharmaceutical lobby, which spent $171.5 million in 2017 and boasts two lobbyists for every member of Congress. Nine out of 10 members in the House and 97 of 100 U.S. senators accepted campaign contributions from pharmaceutical companies seeking to impact legislation, including both senators from Washington State. (As the ranking member on the Senate’s committee on Health, Education, Labor and Pensions, Sen. Patty Murray has yet to formally weigh in on the issue safe harbor repeal).

Return on investment for big pharma lobbying efforts has resulted in nothing short of a windfall.  By ramping up lobbying in 2008, Mylan –of Epi-Pen autoinjector fame—garnered legislation mandating the placement of epinephrine autoinjectors in every school in America.   By the time President Obama signed the “EpiPen Law” in 2013, known as the School Access to Emergency Epinephrine Act, Mylan secured themselves a market monopoly.

Initially, Kaleo created an Epi-Pen alternative to compete with Mylan, but soon set their sights on a more lucrative, not-yet-exploited niche: the opioid crisis.  Company documents demonstrate the Kaleo business model was restructured to “capitalize on the opportunity” of “opioid overdose at epidemic levels.”  Naloxone --the lone antidote -- costs less than ten cents to produce, yet has become cost-prohibitive to public agencies.

Using the Mylan roadmap, Kaleo successfully lobbied the FDA for approval of their device for consumer use,  then increased the price substantially.  By the time fifty states enacted laws mandating law enforcement and first responders to carry naloxone to treat opioid overdoses, Kaleo secured a market monopoly of their own.   The drug supply landscape is more of a coercive monopoly: the fees “kicked-back” to the GPOs are based on a percentage of the charges; higher prices are in the best interest of the pharmaceutical companies and the GPOs alike. 

The bottom line is opioids are costing too many American lives. Congress has the power to alter the course of the worst public health crisis facing Americans by reigning in the pharmaceutical industry through legislative intervention.  Removing “safe harbor” provision of the Social Security Act could save up to $30 billion annually and save 47 Americans from opioid overdose deaths per day.  We must push lawmakers to close the pharmaceutical industry loophole before it is too late.