Where the Health Care Dollars Go

“US Healthcare is in flux and looking for a better way to take care of our sick. This graph shows the exact percentages of spending. Physician’s services are 15.9 % of the healthcare dollar. A pie chart showing the size of the slices is a part of this particle. It can’t be produced here.  Please use the link to the AMA below for the graphics and complete information. 

Please notice in the sixth paragraph that physician service cost rose 4.1% annually in total between 2004 and 2014. The AMA did not calculate this figure to account for the increase in physicians, PA, Nurse practitioners between 2004 and 2014. I don’t have that figure. Common sense implies the amount of the tax care dollar spent for services by individual providers has decreased a lot.” Bill Chesnut, MD.

 To go back to New Health News: https://billchesnutmd.com/new-health-news

Where the health care dollars go                                         AMA News_3/4/2016   Visit the AMA’s spending in health care Web page for further insight. http://www.ama-assn.org/ama/pub/advocacy/topics/spending-health-care.page

With all the talk about rising health care costs, you may be wondering how those vital dollars are being spent. A new analysis answers this question.

A close look at national health expenditures can offer physicians a clearer vision of the total costs and funding that are required each year to keep the health care system functioning. A new analysis (log in) from the AMA sheds light on health care spending.

In 2014, the last year for which data are available, U.S. health expenditures were more than $3.0 trillion—which breaks down to $9,523 per person. This reflects a growth rate of 5.3 percent over 2013. “In comparison,” the analysis said, “spending grew by 2.9 percent in 2013 and by an average of 4.0 percent per year” from 2007 to 2012.

“Despite the uptick,” the analysis said, “the 5.3 percent growth rate is still low by historical standards.”

“Important factors behind the acceleration in growth include the coverage expansions of the Affordable Care Act (ACA) as well as the introduction of new drug treatments for hepatitis C, cancer and multiple sclerosis,” the analysis said.

Out of that $3.0 trillion, only 15.9 percent went to physician services. Furthermore, physician spending grew by an average of only 4.1 percent per year between 2004 and 2014, which is 1.5 percentage points lower than the average annual growth rate for hospital spending and a full 2 percentage points lower than that for clinical spending, showing physician spending is not the main driver behind rising health care costs.

On the other hand, prescription drug spending rose 12.2 percent in 2014 (9.8%), marking an abrupt departure from growth rates of recent years. “There hadn’t been double-digit growth in this category since 2003,” the analysis said, “and post-2006 growth rates had remained well below 6 percent.” More than one-third of the new drug spending was from new treatments for hepatitis C.

Investigating a longer window of spending

The analysis also investigates the changes in health care spending over both 25 year and 50-year windows to present the patterns that allow analysts to look at short-term changes in a broader context.

The ACA Medicaid expansion’s effect on spending is evident in 2014. Medicaid spending increased by 11 percent—the largest single-year increase since 2001—and its share of spending increased from 15.5 percent to 16.4 percent.

The most dramatic change over the past ten years was in the share of spending paid for by Medicare, which increased from 16.4 percent of spending to 20.4 percent of spending between 2004 and 2014. Changes in the share of spending paid for by Medicare and Medicaid are tied to changes in program expansion and payment policy as well as cyclical economic factors for Medicaid.

Private health insurance has historically been the largest source of funds for health care spending since the 1970s. It continued this trend in 2014 with a 32.7 percent share of the pie, followed by Medicare and Medicaid—these three sources account for the majority of payments in the health care system. The smallest source of funds was out of pocket spending, whose share has continued to trickle downward over the past 50 years from a high of over 40 percent to only 10.9 percent in 2014.

Visit the AMA’s spending in health care Web page for further insight. http://www.ama-assn.org/ama/pub/advocacy/topics/spending-health-care.page


Clinical Practice Guideline for Post-Surgical Pain Management

“Significant gains in surgery pain control are available now. They are the use of long established modalities now used safely together. The importance of the original research is to have the dosage chart for each of the modalities. The term multimodal therapy is used for the general area of surgery pain control. Multimodal therapy improves the quality of recovery, shortens complication rates and readmission rates. It also increases costs. Being aware and having a source may become helpful for someone who is having surgery. They should discuss these facts with their anesthesiologist and their surgeon.” Bill Chesnut, MD

 American Pain Society Publishes Clinical Practice Guideline for Post-Surgical Pain Management                                          February 17, 2016

CHICAGO — February 17, 2016 — The American Pain Society (APS) has released a new evidence-based clinical practice guideline with 32 recommendations to help clinicians achieve optimal pain management following surgery.

According to numerous studies, the majority of surgical patients receive inadequate pain relief, which can heighten the risk for prolonged post-surgical pain, mood disorders, and physical impairment.

“The intent of the guideline is to provide evidence-based recommendations for better management of postoperative pain, and the target audience is all clinicians who manage pain resulting from surgery,” said lead author Roger Chou, MD, Oregon Evidence-based Practice Center.

Dr. Chou said the key recommendation in the guideline, based on high-quality evidence, is wider use of a variety of analgesic medications and techniques.

“The guideline strongly advises use of multimodal anesthesia that target different mechanisms of actions in the peripheral and central nervous systems,” he said. “Randomized trials have shown that multimodal anesthesia involving simultaneous use of combinations of several medications — acting on different pain receptors or administered through different techniques — are associated with superior pain relief and decreased opioid consumption compared with use of a single medication administered by one technique.”

Dr. Chou added that evidence also indicates that non-pharmacological therapies, such as cognitive behavioral therapies and transcutaneous elective nerve stimulation, can be effective adjuncts to pharmacological therapies.

Written by a 23-member expert panel representing anesthesia, pain management, surgery, nursing, and other medical specialties, the APS guideline — published in the Journal of Pain — is based on the panel’s review of more than 6,500 scientific abstracts and primary studies.

The guideline’s 32 recommendations are rated as strong, moderate or weak based on scientific evidence cited as high, moderate or low quality. The recommendations are based on the premise that optimal pain management begins in the preoperative period and should be based on assessment of the patient and development of individual care plans for the surgical procedure involved.

Three other recommendations in the APS guideline are graded strong with high-quality evidence. They are:
• Adults and children can be given acetaminophen and/or non-steroidal anti-inflammatory drugs as part of multimodal analgesia for management of postoperative pain.
• Clinicians should consider surgical site-specific peripheral regional anesthetic techniques with proven efficacy in adults and children for certain procedures.
• Spinal analgesia is appropriate for major thoracic and abdominal procedures, particularly in patients at risk for cardiac and pulmonary complications or prolonged intestinal distress.

The APS Guideline offers 11 other strong recommendations, based on moderate or weak evidence. They include:
• Clinicians should provide patient and family-centered, individually tailored education to patients and caregivers about treatment options for postoperative pain.
• Oral administration of opioids is preferred to intravenous administration for post-operative analgesia.
• Intravenous patient-controlled analgesia (PCA) can be used when parenteral administration of analgesics is required.
• Clinicians should consider giving preoperative doses of celecoxib in appropriate adult patients.
• Gabapentin and pregabalin can be considered for multimodal postoperative analgesia. The medications are associated with lower opioid requirements after surgery.
• Surgical facilities should provide clinicians with access to a pain specialist for patients with inadequately controlled postoperative pain.

The APS postoperative pain management guideline was endorsed by the American Society for Regional Anesthesia.

SOURCE: American Pain Society


Panel Recommends FDA Approval of Remicade Knockoff

“This action is by a regulatory panel, not a court. It raises possibilities of lower drug costs. Bill Chesnut, MD.

 Panel Recommends FDA Approval of Remicade Knockoff

Vote on copy of J&J arthritis drug comes as makers of biotech brands are poised for fierce patent battles

Wall Street Journal subscription edition, By PETER LOFTUS. Updated Feb. 9, 2016 7:06 p.m. ET

A U.S. regulatory panel vote on Tuesday is a win for companies developing lower-cost copies of pricey biotechnology drugs, but it could be a while before patients see them.ENLARGE

A U.S. regulatory panel vote is a win for companies developing lower-cost copies of pricey biotech drugs, such as J&J’s arthritis drug Remicade. PHOTO: MEL EVANS/ASSOCIATED PRESS

An advisory panel to the Food and Drug Administration voted to recommend the agency approve the sale of a knockoff version of Johnson & Johnson’s arthritis drug Remicade, which had U.S. sales of $4.45 billion last year. The copy was developed by Celltrion Inc.and licensed to Pfizer Inc.

But the path to market for copies of Remicade and other top-selling biotech brands could be complicated. Drugmakers including J&J, AbbVie Inc. and Amgen Inc. are attempting to block such copies, known as “biosimilars,” by taking out new U.S. patents to extend their monopolies potentially into the 2020s and ’30s. That could delay the entry of competing knockoffs well beyond when the FDA clears them for sale, and beyond the expirations of the branded drugs’ original patents, which are due in coming months and years.

Many of the newer patents cover drug-manufacturing processes and methods of using the drug to treat certain diseases, rather than the composition of the drug itself, which is covered by the original patents.

AbbVie, which is facing a looming threat of competition for the arthritis treatment Humira, said it has taken out about 70 patents for the drug, one of the largest patent portfolios ever assembled for a single drug. The drug’s primary U.S. patent is due to expire in December, but AbbVie says the additional patents should keep copycat versions of Humira off the U.S. market until at least 2022, and possibly longer.

Most of the later-expiring Humira patents were issued by the U.S. Patent and Trademark Office in the past two to three years, more than a decade after the drug was originally approved for sale in the U.S. in late 2002. AbbVie Chief Executive Richard Gonzalez told analysts on a conference call in late January the patents are based on AbbVie’s innovation in developing Humira, and that the company plans to defend them.ENLARGE

AbbVie is facing a looming threat of competition for the arthritis treatment Humira.

An AbbVie spokesman said the patents represent work by AbbVie scientists dating to the late 1990s, which “continues to evolve.”

The aggressive patent effort reflects the hefty sales and profits at stake for the manufacturers of biotech brands, and could pose a “big barrier” to biosimilars, said Chris Raymond, a biotech analyst with Raymond James. Humira, the top-selling prescription drug in the world by sales, generated $14 billion in global sales last year, more than 60% of AbbVie’s total revenue.

The volume of patents also reflects the complex nature of biotech drugs, which are typically manufactured in living organisms rather than through the chemical synthesis used for regular pills. “It’s just a lot more complicated to make a biologic. That leads to more patents,” said Zachary Silbersher, a patent attorney with Markman Advisors, which provides intellectual-property analysis to investors.

The FDA last year approved the first biosimilar—a version of Amgen’s Neupogen drug for cancer chemotherapy patients—using new criteria arising from a provision of the 2010 Affordable Care Act aimed at supporting a biosimilar market. Now it is considering additional biosimilar applications, including those for some of the biggest-selling biotech brands.

The FDA panel’s vote Tuesday in favor of a biosimilar Remicade bodes well for future biosimilars because it could signal the FDA will use looser criteria for marketing approval than some people expected, analysts say. The panel recommended by a vote of 21-3 that the Celltrion product be approved to treat all of the diseases that brand-name Remicade is approved to treat, even though the safety and efficacy of Celltrion’s product was tested only in patients with two of the diseases.

The FDA isn’t required to follow the votes of its advisory panels, but it often does.A final decision on Celltrion’s product is expected later this year.

But even if the FDA approves the Celltrion biosimilar, it is unclear how soon it could reach the market. Although J&J hasn’t secured as many patents for Remicade as AbbVie has for Humira, it has secured a number of additional Remicade patents that could tie up competitors.

A J&J spokesman said the company has a number of patents related to Remicade and “we will continue to defend intellectual property” for the drug. At Tuesday’s FDA panel meeting, a J&J official urged the agency not to approve Celltrion’s product to treat inflammatory-bowel diseases until results of studies comparing it with Remicade in patients are available.

J&J sued Celltrion in federal court in Massachusetts last year, alleging the Celltrion drug would infringe upon six patents for Remicade, including one that was issued in 2009 and expires in 2027. The patent covering the drug’s composition is due to expire in 2018. Remicade first hit the U.S. market in 1998. Celltrion denied the infringement allegations.

Pfizer, which holds the U.S. marketing rights to the Celltrion biosimilar, said last week it was moving ahead with plans to begin selling the product this year.

Amgen’s Enbrel, an anti-inflammatory drug that competes with Remicade and Humira, was approved for sale in the U.S. in 1998. Originally, it appeared that a patent expiration in 2012 could clear the way for biosimilar competition. But in 2011, Amgen obtained a new patent for Enbrel that expires in 2028, which could complicate matters for competing biosimilars. U.S. sales of Enbrel were $5.1 billion last year.

Novartis AG has applied for FDA approval of a biosimilar, Enbrel. An Amgen spokeswoman said the company holds patents on Enbrel that it “may have to enforce against biosimilars.” The company doesn’t envision biosimilar competition for Enbrel in the U.S. “for the foreseeable future.”

The patent blitz has forced developers of biosimilars to beef up their own intellectual-property capabilities. “I have someone in my office who’s tracking 250 different patents or patent applications for Humira,” Denny Lanfear, chief executive of biosimilar developer Coherus BioSciences Inc., said at an investor conference in January.

Coherus plans to file an application this year to market a biosimilar version of Humira, he said. The company says it has “seen numerous late-filed patents that appear to have no other purpose than delaying the market entry of biosimilars.”

The patent litigation surrounding biosimilars is likely to be costly and complicated. If the typical generic-drug litigation battle revolves around half a dozen patents or fewer, court disputes over biosimilars could involve 20 to 30 patents, says Elaine Blais, an intellectual property litigator at Goodwin Procter in Boston. Litigation costs, meanwhile, can be double or more for biosimilars, compared with traditional generics, Goodwin Procter lawyers say.


Price increases by drug makers exceed inflation

AMA News reports a Wall Street Journal analysis: Price increases by drug makers exceed inflation

 A front-page analysis in the Wall Street Journal (10/6, A1, Walker, Subscription Publication) examines the ability of pharmaceutical companies to boost their revenue by increasing drug prices beyond the rate of inflation regardless of the level of demand for the medicines. The Journal analysis found that US revenue growth from the 30 top-selling drugs sold in pharmacies has exceeded demand for the past five years.

AMA News_ October, 2015.


CMS releases “dashboard” to show Medicare drug spending

“I posted elsewhere here that the costs of drugs requires actions that are effective, legal and will not harm our medical research advances. We pay more for drugs than other developed countries. Studies indicate we are paying for the research that benefits the rest of the world without their contributing. It is complicated. Having this new tool contributing to transparency is beneficial.” Bill Chesnut. MD.

 CMS releases “dashboard” to show Medicare drug spending

The Washington Post (12/22, Goldstein) reports that HHS officials “unveiled an online tool Monday that will allow the public and policymakers to explore the financial burden that scores of high-expense drugs place on the Medicare program and the nation’s seniors.” The interactive “dashboard” shows overall Medicare spending for each drug listed, “along with recent trends in its price and the number of older Americans who rely on it.” The Post says the tool can help show which pharmaceuticals are driving up drug spending. According to the article, Federal officials “portrayed their new analysis as a sequel to a forum on drug prices that the department convened last month.”

The Hill (12/22, Sullivan) reports the Centers for Medicare and Medicaid Services said in a statement, “The data can be used to spur research and public discussion of how these drug products are being used in Medicare and how they are affecting beneficiary costs.”

The Wall Street Journal (12/22, B2, Loftus, Subscription Publication) reports that new data released as part of the dashboard demonstrate that at least five drugs covered by Medicare Part D had their price increase by at least 100 percent from 2013 to 2014. Overall, Medicare spending on prescription drugs rose 19.4 percent in 2014, compared to 9.5 percent growth in the prior year.

AMA newsletter 12.22.15

As drug prices climb, possible reforms face “heavy” opposition

“This post from the American Medical Association I included encouraging discussing the problems of drugs being too expensive for many.  Allowing importation of identical drugs from the developed countries, after the US FDA has approved the methods of the foreign production, has been discussed for many years in the US Senate. I remember watching a debate live on C-Span several years ago. Senator John McCain was one of the two authors of the legislation. I am sure the text is still available from Sen. McCain’s office. “Bill Chesnut, MD

As drug prices climb, possible reforms face “heavy” opposition

The Kaiser Health News (10/20, Appleby) reports that “a jump in the number of new expensive drugs hitting the market” has “helped make prescription drugs the fastest-growing segment of the nation’s health care tab.” Two common proposals for reducing drug prices, allowing Medicare to negotiate drug prices and allowing re-importation of drugs, face “heavy” opposition in Congress and are not “likely to gain much traction.” The article also evaluates other proposals, such as disclosing the costs of drug development, capping consumer copayments, and tying payments to the drug’s result.

AMA WIRE 10.20.15

Drug Price Escalation.

“The Wall Street Journal writes about outrageous drug charges for older drugs no longer patented. This points out the value in knowing “compounding pharmacies” in your state. If the drug is generic, they may be able to make it for you with your physician’s prescription at a more reasonable price. I have worked with a local compounding pharmacy for decades with good results.“ Bill Chesnut, MD

TRENTON, N.J. –  Stepping into the furor over eye-popping price spikes for old generic medicines, a maker of compounded drugs will begin selling $1 doses of Daraprim, whose price recently was jacked up to $750 per pill by Turing Pharmaceuticals.

San Diego-based Imprimis Pharmaceuticals Inc., which mixes approved drug ingredients to fill individual patient prescriptions, said Thursday it will supply capsules containing Daraprim’s active ingredients, pyrimethamine and leucovorin, for $99 for a 100-capsule bottle, via its site: www.imprimiscares.com.

The 3 1/2-year-old drug compounding firm also plans to start making inexpensive versions of other generic drugs whose prices have skyrocketed, Chief Executive Mark Baum told The Associated Press.

“We are looking at all of these cases where the sole-source generic companies are jacking the price way up,” Baum said in an interview. “There’ll be many more of these” compounded drugs coming in the near future.

The high price of prescription medicines in the U.S. — from drugs for cancer and rare diseases that cost hundreds of thousands of dollars a year down to once-cheap generic drugs now costing many times their old price — has become a hot issue in the 2016 presidential race.

News that Turing, Valeant Pharmaceuticals International Inc. and other drugmakers have bought rights to old, cheap medicines that are the only treatment for serious diseases and then hiked prices severalfold has angered patients. It’s triggered government investigations, politicians’ proposals to fight “price gouging,” heavy media scrutiny and a big slump in biotech stock prices.

At the eye of the storm is former hedge fund manager Martin Shkreli, head of Turing Pharmaceuticals, scorned last month for buying rights to and then increasing by more than 5,000 percent the price of Daraprim, a 62-year old drug with no competition. The startup drugmaker paid Impax Laboratories $55 million in August for rights to Daraprim, which treats a rare parasitic infection called toxoplasmosis that mainly strikes pregnant women, cancer patients and AIDS patients.

“This product is now affordable to make. We can make it and turn a profit and we can take some of that profit and put it back into research for this disease,” Shkreli told Fox Business Network’s Maria Bartiromo on Friday, adding that 60 percent of the drug is sold for $1.

“I’m not too worried about our competition. I think our product is superior and patients will choose use our products,” he said of Imprimis Pharmaceuticals’s drug.

Shkreli told Bartiromo that the company received fast track designation for an epilepsy drug this week from the FDA.

When asked about political backlash to the price increase, Shkreli said he believed price caps would destroy the pharmaceutical economy.

“I think by putting price caps on drugs, politicians will inadvertantly, or intentionally, actually limit the interest of innovation, people will go to tech or energy or do something else with their money,” he told Fox News.

Imprimis, which primarily makes compounded drugs to treat cataracts and urological conditions, will work with health insurers and prescription benefit managers in each state to make its new capsules and other compounded generic medicines widely available, Baum said.

“We’re geared up. We’re ready to go as soon as the orders come in,” he said.

Compounded drugs are typically made to fill a doctor’s prescription for an individual patient, sometimes because the mass-produced version is in short supply or completely unavailable and sometimes to allow for customized formulations or dosages. Compounders don’t need Food and Drug Administration approval to do that, unlike drugmakers making huge batches of drugs on complex production lines.

Baum said Imprimis will produce its pyrimethamine/leucovorin capsules, using bulk ingredients from manufacturing plants approved by the FDA, at its own facilities in Allen, Texas; Folcroft, Pennsylvania; Irvine, California, and Randolph, New Jersey.

Turing’s Shkreli, under fire from all sides, said late last month that he would lower the price of Daraprim, but hasn’t so far. A Turing spokesman didn’t respond to a request for comment Thursday but recently noted the company is capping patient copayments at $10.