“Medicare’s inability to determine the price it pays for aducanumab is a uniquely American problem compared to health systems in the rest of the developed world. Countries like Australia and the United Kingdom have independent boards that evaluate a new drug’s effectiveness and set a price based on that estimated value. The US pharma industry says the US system is important for encouraging innovation, and companies have made amazing breakthroughs, such as the hepatitis-C drugs that effectively cure that disease.
But, as the standards for approving have sometimes seemed to slip in recent years, the chances of the FDA approving very expensive drugs with only marginal benefits have risen.
“We don’t require prices to reflect the value of treatment, period,” Dusetzina said. “Companies can price their drugs as high as they want. Companies can also get drugs approved with little evidence.”
So Biogen is planning to charge $56,000 annually for aducanumab. ICER, which evaluates the estimated value of new drugs, estimates, based on the clinical evidence, that it’s worth more like $8,000; perhaps as little as $2,500 or as much as $23,100. Regardless, the price announced after Biogen secured FDA approval “far exceeds even this optimistic scenario,” ICER concluded.”
“Researchers at Harvard University and the University of California Berkeley examined what happened when Medicare beneficiaries faced an increase in their out-of-pocket costs for prescription drugs. They found that a 34 percent increase (a $10.40 increase per drug) led to a significant decrease in patients filling their prescriptions — and, eventually, a 33 percent increase in mortality.
The rise in deaths resulted from people indiscriminately cutting back on medications when they had to pay more for them, including drugs for heart disease, hypertension, asthma, and diabetes.
“We find that small increases in cost cause patients to cut back on drugs with large benefits, ultimately causing their death,” the authors — Amitabh Chandra, Evan Flack, and Ziad Obermeyer — wrote. “Cutbacks are widespread, but most striking are those seen in patients with the greatest treatable health risks, in whom they are likely to be particularly destructive.””
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“This finding challenges an important assumption embedded in American health care policy. In the 1970s and ’80s, the RAND Health Insurance Experiment concluded that small copays encouraged patients to use fewer health care services without leading to worse health outcomes. That helped establish a new economic argument for insurers to ask their customers to put more “skin in the game”: it would encourage more efficient use of health care services with no downside.
But that premise presumed people would be rational. For example, if they are being asked to pay more money for prescription drugs, they would cut back on less-valuable medications first. The Harvard/Cal study didn’t detect any such rationality. When costs went up, people just stopped filling their prescriptions for statins — high-value drugs that are effective in preventing heart attacks.
The researchers explained it like this: The way patients behaved when faced with higher out-of-pocket costs would suggest that they placed very little value on their lives. They literally stopped taking high-value drugs because of the price.”
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“If patients can’t make good value judgments, the economic argument for cost-sharing starts to crumble, and it starts to seem like eliminating cost-sharing — increasing the likelihood patients will continue to take the medications they need to stay alive — would be a cheap way to “buy” people more health. As the researchers wrote, “improving the design of prescription drug insurance offers policy makers the opportunity to purchase large gains in health at extremely low cost per life-year.””
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“Eliminating out-of-pocket costs would come with a price: Insurers would likely charge higher premiums to offset the loss of the copays and coinsurance that currently reduce their direct costs. But if the goal is better health outcomes, that is arguably a price worth paying.”
“programs for the poor are only a tiny portion of the U.S. welfare state. In fact, the Congressional Budget Office estimates that more than 60 percent of American households receive more in government benefits than they pay in taxes. To get an idea of just how big the American welfare state has become, consider that those transfer payments from the federal government are equal to 34 percent of all wages and taxes in the U.S.”
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“The largest transfer programs are the middle-class entitlements, Social Security and Medicare. In addition, a large portion of the third biggest entitlement program, Medicaid, actually goes to the middle-class elderly and disabled individuals, not the poor. Those three programs alone now make up more than half of all federal spending.”
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“we need to understand that, in practice, when an individual pays Social Security taxes, none of those taxes are set aside for that individual’s benefits. Rather, they are used to pay benefits to those who are currently retired. Social Security is merely a transfer payment from workers to retirees. In that sense, it operates exactly the same as any other transfer or welfare program.”
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“Many individuals will receive more than taxes paid plus a reasonable amount of interest on those taxes.”
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“according to the Social Security system’s trustees, the program faces a future shortfall of more than $43 trillion7 (measured in discounted present value over an infinite horizon—that is, if the government put away $43 trillion today and earned 3 percent interest on those funds, it would have enough money so that, combined with payroll taxes, it could pay all future benefits). Unfortunately, however, the federal government doesn’t have an extra $43 trillion. As a result, there is simply no way that Social Security can pay future benefits without a massive tax increase.”
“Sanders’ Medicare for All bill calls for no copays and no premiums and effectively outlaws private insurance as we know it. It is substantially more generous than Taiwan’s system, which means it would be substantially more expensive.”