“Show Me the Money:” GI/Liver Expenditures Update

AF Peery et al. Gastroenterol 2022: 162: 621-644. Burden and Cost of Gastrointestinal, Liver, and Pancreatic Diseases in the United States: Update 2021

Using several national surveys (2016-2018), the authors provide data on GI diagnoses and expenditures for adults and children

Key findings:

  • Gastrointestinal health care expenditures totaled $119.6 billion in 2018.
  • Annually, there were more than 36.8 million ambulatory visits for gastrointestinal symptoms and 43.4 million ambulatory visits with a primary gastrointestinal diagnosis
  • A total of 22.2 million gastrointestinal endoscopies were performed, and 284,844 new gastrointestinal cancers were diagnosed
  • Gastrointestinal diseases and cancers caused 255,407 deaths

This article is loaded with statistical details

  • Abdominal pain, reflux, and constipation are the leading GI diagnoses
  • GI bleeding, cholelithiasis, pancreatitis and liver disease are the most common diagnoses associated with admission to the hospital
  • In the pediatric age group, appendicitis, intestinal infection and inflammatory bowel disease are the principal diagnosis associated with GI admissions
  • Trends in GI cancer frequency over the last three decades are shown (including ethnicity)
  • Among non-malignancy, alcohol-associated liver disease followed by cirrhosis and GI bleeding were most common causes of death in GI/Liver categories
  • Data on the frequency of colonoscopies and transplants is provided

Insurance and Medicine: Underinsurance of Children and Medicaid Coverage of DAAs

J Yu et al. Pediatrics: 2022 Jan 1;149(1):e2021050353. doi: 10.1542/peds.2021-050353. Open Access: Underinsurance Among Children in the United States

Methods: Secondary analysis of US children in the National Survey of Children’s Health combined 2016–2019 dataset who had continuous and adequate health insurance

Key findings:

  • The proportion of US children experiencing underinsurance rose from 30.6% to 34.0% (+3.4%; 95% CI, +1.9% to +4.9%), an additional 2.4 million children
  • The estimate of children lacking continuous insurance coverage rose from 8.1% to 8.7%

My take: The U.S. healthcare system is messed up. Economic incentives nudge/force families to neglect high value care frequently (& getting worse). At the same, the U.S. expends a ton of resources on low value care.

NA Wahid et al. Liver Transplantation 2021; 27: 1723-1732. Medicaid Expansion Association With End-Stage Liver Disease Mortality Depends on Leniency of Medicaid Hepatitis C Virus Coverage

Key finding:  Improvements in ESLD mortality and LDRs (listing-to-death ratios) were associated with both Medicaid expansion and leniency of HCV coverage under Medicaid. In patients living in states with nonexpansion/restrictive cohort, deaths continued to increase throughout study period.

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Insulin: “Poster Child For Everything That’s Wrong” with U.S Drug Costs

Fortune Dec 2021-Jan 2022: Insulin’s Deadly Cost Thanks to Stan Cohen for sharing article.

Some excerpts/key points:

  • “Insulin in the U.S. costs on average some 800% more than in other developed economies. And yes, people die for lack of it, sometimes within days or even hours of missing their dose. No one knows how many; data suggests that in the U.S. it’s at least a few every day. Far more may suffer other ravages of diabetes—blindness, heart attacks, loss of limbs.” In addition, 40% of Americans who have died from COVID-19 were diabetics.
  • “Manufacturer’s compete not by cutting prices but by raising them.” This is often due to pharmacy benefit managers (PBMs), the middleman between manufacturer’s and insurers. PBMs negotiate drug prices and establish formularies. PBMs make more money if they able to discount higher rebates on the list cost; hence, to influence PBMs to choose their products, manufacturer’s are incentivized to raise drug costs, even if the average price is unchanged. Higher list prices affect those least able to cover the costs, namely those without insurance as well as many with high deductibles.
  • List price for Humalog (Eli Lilly) more than doubled from 2013 to 2018, Lantus (Sanofi) more than quadrupled from 2005 to 2016
  • Some patients have obtained insulin in Canada where costs for a vial could be more than 10-fold less (though this is illegal). There are also more than 12,000 GoFundMe.com listings with “insulin” in the title.
  • For the insulin market, some recent changes include the emergence of GLP-1 analogs for Type 2 diabetes (~90% of diabetes in U.S.). Trulicity is now Eli Lilly’s bestselling medication. In addition, the FDA recently approved Semglee, an interchangeable biosimilar for Lantus which is reducing costs.

My take: “The story of insulin is a poster child for everything that’s wrong with a free-market approach to drug availability,” says Arthur Caplan…”It’s almost inexcusable morally.”

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Is An Unproven Medication Worth More Than the EPA or NASA?

For those who have not followed the FDA’s controversial decision of approving Aducanumab for the treatment of Alzheimer’s disease, the NEJM has two useful commentaries:

Key points -from 1st article:

  • “Biogen…has announced a list price of $56,000 –10 times the evidence-based benchmark recommended by the independent Institute for Clinical and Economic Review…if even 10% of U.S. patients with Alzheimer’s disease were prescribed aducanumab, drug spending for Medicare Part B would increase from $37 billion to $69 billion per year”
  • The authors note that Medicare Part B payments rely on average sales price (ASP) from private insurers rather than a direct negotiated price; thus, the higher the price for private plans (even if poorly covered), the higher the Medicare rate
  • Hospitals and physicians are incentivized at higher prices due to receiving a 4-6% reimbursement price over the acquisition price
  • “The $56,000 price for aducanumab is a rational manufacturer response to an irrational insurance system.”

Key points -from 2nd article:

  • By one estimate, the potential cost will exceed the budgets of agencies such as EPA or NASA
  • “In granting accelerated approval to aducanumab, the FDA concluded that the drug’s ability to reduce amyloid plaques was reasonably likely to translate into clinical benefits. But this claim is hotly contested and was not presented to the FDA’s advisory committee, which voted against recommending approval of the drug because of the lack of a demonstrated clinical benefit”
  • If Medicare refuses to cover medication, this would leave a burden to state budgets. “As a legal matter,…state Medicaid programs are required to cover nearly all FDA-approved drugs.”
  • “Congress could adopt new legislation specifying that state Medicaid programs need not cover aducanumab…Protecting state budgets shouldn’t require Medicare to cover an expensive drug with unproven clinical benefits.”

My take: This type of huge fiscal burden may provide the rationale for Medicare and Medicaid to reexamine whether/how they cover expensive FDA-approved medications.

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Heroes, Villains and ‘Perverse’ Incentives. Story of Big Hospitals vs. Big Pharma


A recent article in Fortune (April/May 2021, pg 94, Big Hospitals vs. Big Pharma: Which industry is most to blame for soaring health care costs?) provides a lot of insight into the costly, complex U.S. healthcare system. Thanks to Stan Cohen for the article.

Key points:

  • U.S. spent 17.7% of GDP on healthcare expenditures in 2019, comparable OECD country averages were 10.7%
  • U.S. per capita costs were $10,966; next closest were Switzerland at $7732 and Germany at $6646
  • Despite are higher costs, U.S. has highest age-adjusted mortality rates (compared to these countries) and higher pregnancy-related deaths.
  • The U.S. has the highest rates of obesity among these countries; however, other countries smoke more and drink more
  • The biggest part of healthcare costs is from hospital care at 33%; medication costs account for ~10% but play a role in hospital costs.
  • The article makes the point that some high-priced medications, including the $2.1 million dollar Zolgensma, are worth it and others are overpriced
  • Recently both the hospitals and pharma have had good press with heroes like frontline healthcare workers and vaccine scientists. Recent villains include Martin Shkreli for excessive price hiking. However, most people are “just businesspeople responding rationally to the incentives they face.”
  • Medical costs for pharmaceuticals are complicated by an ‘insanely complex’ drug distribution system with hidden incentives and rebates. In many situations, “patients can’t get access to the better or more affordable drug because there’s some rebate happening behind the scenes”
  • In the U.S. “a majority of people are almost entirely separated from the market mechanism…Out-of-pocket spending is only 13% of total health care expenditures… most people have little incentive to shop carefully. Economically, the real consumer, the patient, is a bit player in this drama.”

My take: Improving the healthcare system is a great challenge. “It’s a lot harder than placing blame.”

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Changing Business of Medicine: Hospital Consolidation of Phycian Practices

As noted in yesterday’s post, in addition to private equity, hospitals have been consolidating medical practices. One incentive has been that hospitals can often charge a “facility fee.”

NPR explains this practice by highlighting a patient with a 10-fold increase in the cost of a steroid injection: Her Doctor’s Office Moved 1 Floor Up. Why Did Her Treatment Cost 10 Times More?

An excerpt: The increasingly controversial charge — basically a room rental fee — comes without warning, as hospitals are not required to inform patients of it ahead of time…

Hospitals say they charge the fee to cover their overhead for providing 24/7 care, when needed. Stamatis also noted the cost of additional regulatory requirements and services “that help drive quality improvement and assurance, but do increase costs.

But facility fees are one reason hospital prices are rising faster than physician prices, according to a 2019 research article in Health Affairs….The Centers for Medicare & Medicaid Services has attempted to curtail facility fees by introducing a site-neutral payment policy. The American Hospital Association sued over the move and plans to take the case to the Supreme Court.

My take: When hospitals own physician practices, there are often hidden costs. NPR recommends: “Ask outright if there will be a facility fee — and how much — even if there has not been one before. If it’s an elective procedure, you can search for a cheaper provider.”

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Changing Business of Medicine: Private Equity

A recent commentary (JM Zhu et al. NEJM 2021; 384: 11: 981-983. Private Equity and Physician Medical Practices — Navigating a Changing Ecosystem) describes the restructuring of medical practices with a major decline in independent practices due to the growth of hospital-affiliated employees and private-equity investment in medical specialties.

Key points:

  • Between July 2016-January 2018, “hospitals and health systems acquired more than 8000 practices…Roughly 14,000 physicians left private practice”
  • Private-equity investment in medical practices has emerged as an alternative source of investment “that allows physicians to continue to hold equity and benefit financially from future transactions.”

Potential consequences of private-equity investment in medical practice:

  • Reduction in competition
  • Leverage market power with insurers & possible higher costs
  • Possible additional pressures on physicians to improve profits and reduction of physician autonomy
  • Possible improvements in value with operational improvements including sharing industry knowledge with smaller practices, adopting technology infrastructure, and helping practices assume risk with value-based payments
  • Possible prioritization of patients with better payer mix and lower complexity

My take: Mergers and acquisitions whether through hospitals or private equity make me worried that physicians will be squeezed between delivering profits and providing the best service for our patients.

Related audio interview with Dr. Jane Zhu on the growth of private equity investment in medical practices

“Socialism” is Already Here & Increasing in U.S. Health Care

The U.S. government now pays for nearly 50% of health care expenditures (Government Now Pays For Nearly 50 Percent Of Health Care Spending, An Increase Driven By Baby Boomers Shifting Into Medicare, Kaiser Health News, 2/21/19). Both in adults and children, the share of public sector spending is increasing. The biggest areas of costs include Medicare, Medicaid, CHIP and Veterans health care. The U.S. government also funds the HHS which includes the FDA, NIH, CDC, and AHRQ.

A recent commentary (JM Perrin et al. NEJM 2020; 383: 2595-2598. Medicaid and Child Health Equity) describes what is happening with Medicaid and the Children’s Health Insurance Program (CHIP).

Key points:

  • Over the past 20 years, the proportion of pediatric health care coverage provided by Medicaid and CHIP has been increasing. In 1997, these programs represented about 15% of health care coverage compared to ~35% in 2018. This corresponds to reductions in employer-provided coverage
  • Unlike private insurance, Medicaid is always available as it doesn’t have fixed enrollment periods
  • Medicaid disproportionately covers minority populations
  • State funding of Medicaid creates challenges. “States have routinely used strategies for limiting enrollment”
  • “Medicaid’s low physician payment rates, which average about two-thirds of rates paid by Medicare for the same services, depress physician participation…Lack of access to specialists poses additional problems in many communities”
  • The authors recommend the following:
    • Medicaid should be expanded to cover all children from birth through 21 years of age
    • The federal government should assume full financial responsibility
    • Medicaid payments should parallel national Medicare standards

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Picking the Wrong Health Insurance Policy

NY Times: It’s Not Just You: Picking a Health Insurance Plan Is Really Hard

An excerpt:

Health insurance is a complicated financial product, and study after study has shown that people routinely pick bad plans, even choosing options that leave them worse off financially in every possible scenario…

 Many Americans don’t understand terms like “deductible” or “coinsurance” very well. And few are good at predicting what sort of health care needs they will have in the coming year…

A recent study in the Netherlands, which offers insurance to everyone through an Obamacare-like marketplace, found that only 5 percent of Dutch customers did a better job at choosing an ideal plan than they would have by choosing a plan at random… People with less education and income, who tend to be in worse health, were very likely to choose a plan that cost them more to cover their health care — a situation that might leave them skimping on needed medicine or procedures.

My take: This article is so true. When I choose health insurance, this is always a complicated task despite my familiarity and expertise. I would expect that computer-aided decision-making could be developed and be helpful.

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Why We Are Not Making Progress with Probiotics

A recent commentary A Khoruts et al. Gastroenterol 2020; 159: 409-413. Full text: Probiotics: Promise, Evidence, and Hope

Despite the fact that the probiotic industry has ample money which is projected to reach $70 billion yearly, there is very little high quality research.

Key points:

  • Probiotics are regulated by the Food and Drug Administration (FDA) and the Federal Trade Commission (FTC). The FDA, unlike the FTC, regulates products by category (eg, foods, drugs, dietary supplements, medical devices, and cosmetics)…Foods and dietary supplements, unlike drugs, do not require FDA premarket approval. By law, probiotic foods and dietary supplements must be safe. However, food manufacturers are permitted to make a self-determination of whether their product meets the “generally recognized as safe” (GRAS) designation, typically based on history of prior use”
  • Probiotic food and dietary supplement manufacturers do not have to specify on their product labels the strains they use in probiotic products or specify the number of live microbes of each strain that the product delivers through the end of its shelf life; and, although they are required to have validation of label claims, they are not required to submit it to the FDA
  • Dietary supplements can make structure/function claims, even though they cannot claim to treat any specific disease. These claims can sound very promising and consumers may be hard pressed to distinguish between a statement that a product “improves digestion,” a structure/function claim that is so vague that it is literally untestable
  • Rational selection of donor microbiota should be possible based on microbiome-based diagnostics, as well as in vitro technologies that interrogate the functional potential of complex microbial communities. There are parallel, intensive efforts to develop defined microbial communities. A common theme among these different approaches is deployment of complex assemblages of microorganisms rather than single strains. Such complex consortia are likely to have more consistent and predictable effects.
  • The emergence of microbial therapeutics requires development of a new branch of pharmacology. The challenges of formulation, pharmacokinetics, and pharmacodynamics are very distinct from those of small molecule therapeutics or protein biologics.

My take: “These next-generation probiotics will need to be tested for safety and efficacy in well-designed and properly powered clinical trials.”  Probably the only way that will happen is to empower regulatory agencies to insist that these products are treated like medications.  Given the fact that probiotics are so profitable now with little evidence of efficacy for most strains, I am not optimistic about any changes in the near future.

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