Category: Daily News

With a backlash brewing over the price of medicines in the United States, drugmakers are pushing back with a new message: Most people don’t pay retail. Top executives from Eli Lilly, Merck and Biogen said in interviews with Reuters this week that the media focus on retail, or “list prices,” for branded medications is misplaced. They stressed that the actual prices paid by prescription benefit managers, insurers and other large purchasers are reduced through negotiated discounts.

A couple of dramatic price hikes in 2015 exposed the whole industry to ongoing scrutiny in Congress and on Wall Street. Turing Pharmaceuticals raised the price of a generic anti-infective drug called Daraprim by 5,000 percent, and the larger Valeant Pharmaceuticals International raised the price on a heart drug Isuprel by more than 200 percent.

The largest drugmakers quickly portrayed those cases as outliers. But the industry practice of raising prices each year for treatments used by millions of people is attracting new attention.

Adam Schechter, Merck’s president of Global Human Health, said the industry needs to better explain the value of drugs and how they can prevent healthcare costs down the line. “We have to explain the difference between the list price and the net price,” he said in an interview.Toward that end, two drugmakers at the JP Morgan Healthcare Conference in San Francisco this week shared with Reuters some limited information on actual pricing.

Eli Lilly said the actual average price increase on Humalog, its injectable insulin used to treat diabetes, has been a modest 1 to 2 percent annually over the last five years. The company declined to provide a list price. Horizon Pharma plc, a small drugmaker, raised list prices across its business about 7 percent for this year, Chief Executive Tim Walbert said in an interview. But he said he expects the company’s actual price increases to be 4 percent or less.

More recently, Pfizer, one of the world’s largest drugmakers, raised U.S. list prices on more than 100 drugs as of Jan. 1, according to data from information services company Wolters Kluwer that was published last week by UBS Securities. The list included a 9.4 percent rise for pain drug Lyrica and a nearly 13 percent increase for erectile dysfunction drug Viagra. Pfizer said in an email the prices don’t reflect “considerable discounts” to many payers, but did not provide examples of net prices.

Drugmakers keep actual pricing details close to guard their position in negotiations with commercial insurers and government health plans like Medicaid. There is no centralized catalog of U.S. list prices or rebates for medicines. That drug executives at the San Francisco conference allowed even a glimpse into their actual pricing strategies reflects the intensity of the new attention being paid to their practices.

The candor of some individual pharmaceutical executives follows earlier messaging by industry advocates. In a November blog post, the industry’s main lobbying group PhRMA, reported that list prices grew 13 percent in 2014, but actual prices increased only 5 percent.

U.S. health insurers say that, even accounting for discounts, drug prices are rising at an unsustainable rate, and they are pressuring drugmakers for cuts. “Whether it’s a gross number, or a net number, it is still astronomical,” said Daniel Hilferty, chief executive of Independence Blue Cross, which operates in Pennsylvania and New Jersey.

A former El Dorado Hills man has pleaded guilty in federal court to using business funds for personal expenses.

Gregory J. Chmielewski, 46, of West Bend, Wisc., operated a business in Roseville and later Sacramento called Management Resources Group California LLC, which also went by the name Independent Management Resources.

The company was supposed to sell and manage workers’ compensation insurance for companies, eventually paying money for valid claims. But Chmielewski spent funds that were supposed to be reserved for claims, and the company couldn’t cover claims. On Friday he pleaded guilty in Sacramento to two counts of mail fraud for transferring business funds to his own personal use.

According to the plea agreement, California workers’ compensation insurance rates rose quickly in early 2003. Some entrepreneurs negotiated agreements with California Indian tribes to collaborate on business ventures to sell alternative insurance plans not subject to the state’s insurance regulations because the ventures operated under the sovereign domestic nation status of the tribe. That’s what Chmielewski did.

Prosecutors say Chmielewski in 2003 set up Management Resources Group California LLC to sell workers’ compensation insurance. Chmielewski then worked with Fort Independence Community of Paiute Indians near Death Valley to create a professional employer organization called Independent Staffing Solutions, managed by his Management Resources Group.

From 2004 through 2007, more than $225 million passed through Independent Staffing Solutions accounts. As part of managing Independent Staffing Solutions, Chmielewski promised to maintain a financial reserve to pay valid claims. But Chmielewski used $7.3 million of the money in reserve accounts for his own personal real estate investments.

Independent Management Resources went out of business in 2010 through a Chapter 7 bankruptcy liquidation, leaving about 117 injured workers with approximately $1.8 million in unpaid claims.

Chmielewski is scheduled to be sentenced on April 1, by U.S. District Judge Garland E. Burrell Jr. Chmielewski faces a maximum statutory penalty of 20 years in prison and a $250,000 fine or up to twice the gain or loss from the offense.

This case was investigated by the U.S. Postal Inspection Service, the IRS and the California Department of Insurance. Assistant U.S. Attorneys Heiko Coppola and Andre Espinosa were prosecutors.

A new study summarized in Reuters Health says that U.S. emergency rooms are increasingly running short on medications, including many that are needed for life-threatening conditions. Since 2008, the number of shortages has risen by more than 400 percent, researchers found. Half of all emergency room shortages were for life-saving drugs, and for one in 10 there were no available substitutes, they report in Academic Emergency Medicine. And a bad result in an emergency room can easily result in a higher workers’ compensation claim cost in the long run.

Half of the individual shortage incidents had no explanation, the authors found. The rest had a variety of systemic causes that add up to a U.S. drug supply too low to meet public demand.

“Drug shortages are of particular concern in emergency care settings where providers must rapidly treat ill and injured patients,” said lead author Kristy Hawley of the George Washington University School of Medicine and Health Sciences in Washington, D.C. “For most medications, substitutes exist but may not be as effective and may have more side effects, or providers may not have as much experience with them,” she told Reuters Health by email.

The researchers looked at U.S. data on drug shortages between 2001 and 2014. The information came from hospital doctors’ reports, and it’s possible there were additional unreported shortages, the authors note. The number of shortages declined steadily between 2001 and 2007 but began a sharp, continual rise in 2008. Of the 1,798 shortages reported over the 13-year period, 610, or about one third, were for drugs used in emergency medicine. Over half of these were shortages of drugs used as lifesaving interventions or for high-risk conditions. The average shortage duration for emergency drugs was nine months.

Drugs for treating infections were the most common ones to run low, with 148 shortages. Painkillers and drugs for treating overdoses and poisonings were also among the most common shortages. Hawley noted that a particularly problematic shortage was for nalaxone, the only injectable treatment for opiate overdose.

In nearly half of shortage incidents, the manufacturer did not give a reason for the shortage when contacted. For shortages with a known reason, about a quarter were due to manufacturing problems or delays, around 15 percent were caused by market supply and demand issues and about 4 percent were from problems with raw materials.

In 2013, the U.S. Food and Drug Administration released a plan to combat drug shortages. Last spring, the agency also released a mobile app for doctors and pharmacists to search for information about drug shortages.

U.S. HealthWorks, one of the largest operators of occupational health and urgent care centers in the United States, announced it has acquired Muir/Diablo Occupational Medicine, an affiliate of John Muir Health, effective January 9, 2016. Muir/Diablo Occupational Medicine operates three occupational care centers in the East Bay region of the San Francisco Bay Area.

U.S. HealthWorks currently has 11 centers throughout the San Francisco Bay Area, including two in the East Bay (Oakland and Berkeley). The acquisition of these three centers allows U.S. HealthWorks to better serve the large population in the region and brings the total number of U.S. HealthWorks medical and onsite clinics to 227 nationwide in 20 states.

The acquired centers are located at: 2231 Galaxy Court , Concord, CA 94520, 1981 N. Broadway, Suite 190, Walnut Creek, CA 94596 and 2400 Balfour Road, Suite 230, Brentwood, CA 94513. The facilities will continue to offer a wide range of occupational health services, including injury management, physical exams, corporate medical services and physical rehabilitation.

“The physicians at Muir/Diablo have proven expertise in managing workplace injuries and reducing workplace risk,” said Joseph Mallas, President and Chief Executive Officer of U.S. HealthWorks. “We are pleased to bring these centers into the U.S. HealthWorks family and look forward to the opportunity to expand our service to clients and patients in this key California region.”

“We appreciate the opportunity to become part of the U.S. HealthWorks team in this region,” said John Gunderson, MD, President of Muir/Diablo Occupational Medicine. “U.S. HealthWorks is a leader in the field of occupational care, and with greater resources and an expanded team of experts, we look forward to continuing to provide exceptional patient care.”

The terms of the transactions were not disclosed.

U.S. HealthWorks, a subsidiary of Dignity Health, is one of the country’s largest operators of occupational healthcare centers with 227 medical and worksite clinics in 20 states and more than 3,600 employees, including about 800 medical providers. Its centers collectively serve more than 13,000 patients each day.

The Division of Workers’ Compensation administrative director has adopted an order incorporating the Centers for Medicare and Medicaid Services (CMS) revised ambulance fee schedule rates, ZIP code files and inflation factor for services rendered on or after January 15, 2016.

This order adjusting the ambulance services section of the Official Medical Fee Schedule (OMFS) conforms to changes in the Medicare payment system as required by Labor Code section 5307.1.

Effective for services rendered on or after January 15, 2016, the maximum reasonable fees for Ambulance Fee Schedule shall not exceed 120% of the applicable California fees set forth in the calendar year 2016 ambulance services, contained in the electronic Public Use file.

The Administrative Director incorporates by reference the following CMS files from the CMS website:

1) The CY 2016 Public Use File, as revised December 22, 2015
2) The CMS Zip Code Files as revised November 17, 2015

The adjustment incorporates the 2016 ambulance inflation factor which has been announced by CMS. The ambulance inflation factor for calendar year 2016 is negative 0.40 percent (-0.40%).

The Ambulance Fee Schedule may be accessed on the DWC website.