I had missed the news that the Massachusetts health care experiment, the prototype for the national reform law, was going down the tubes. So my eyes immediately gravitated to the op-ed in the Wall Street Journal this morning whose headline warned about the coming “train wreck” in the Bay State, soon to be followed by “runaway spending, price controls, even limits on care and medical licensing.”
Senior editorial writer Joseph Rago points out that the insurance commissioner appointed by Gov. Deval Patrick has rejected 235 out of 274 insurance company premium increase requests since reform passed, even as health care costs continued to rocket ahead at an 8 percent per annum clip. Five of the state’s biggest insurers have lost a collective $116 million under the law, with three of them now under administrative oversight for their financial weakness. Moreover, the individual mandate is being systematically gamed, he claims, which led to a 1 percent increase in the individual insurance market, according to a recent study.
The only way out for the state will be to adopt price controls and limit care, and to frogmarch physicians into accepting Medicare and Medicaid patients under threat of losing their licenses.
"Reform was a classic bait and switch,” he writes. “Sell a virtually unrepealable entitlement on utterly unrealistic premises and then the political class will eventually be forced to control spending.” The word he hurls at “Romneycare” and “Obamacare” is “dirigisme,” which I had to look up. It means “state-controlled.”
For my money, state control that leads to lower costs would be far superior to the state control we have now, which drives costs higher. One has to turn to the news pages of the Journal to find the evidence of the dysfunctional health care marketplace that the paper’s editorial writers routinely ignore. It’s a marketplace dominated by providers who aggressively use government power to raise prices.
Take, for instance, this morning’s story that a small pharma company called URL Pharma (What’s their slogan, “We’re more than a website”?) has sent threatening letters to about 150 doctors who dared question their decision to sell the gout drug colchicine, which has been in use for over 200 years, at 50 times its generic price simply because they ran a couple of clinical trials to prove it works to the satisfaction of the Food and Drug Administration.
Colchicine had been grandfathered in as FDA approved under a loophole in the 1962 efficacy testing law that said drugs well-accepted by the medical community and sold as generics didn’t need to submit data proving their worth. The age-old remedy for gout certainly fit that description. A few years ago, though, in an effort to get documentation of efficacy for grandfathered drugs of lesser provenance, Congress gave companies three years marketing exclusivity if they conducted clinical trials to prove grandfathered drugs actually worked. URL took advantage of the program with colchicine.
Another abused government incentive that failed to make much news involved Coartem, Novartis’ combination drug for treating malaria. It had been approved almost everywhere in the world except the U.S. based on clinical trials conducted as long as a decade ago. Yet after Congress passed a law giving a priority review voucher, which can cut the time the FDA may take for new drug reviews in half, to any company that develops a drug for a neglected disease of the developing world, Novartis marched in with their already existing drug and already conducted clinical trials and claimed their voucher, which can be used to give a blockbuster me-too drug an extra six months of market exclusivity and billions of dollars in additional sales.
While we’re talking about loopholes, how about the “pay-for-delay” deals where big pharmaceutical companies can slip generic firms billions of dollars to delay marketing generic versions of their soon-to-lose-patent-protection drugs. The Federal Trade Commission in a report issued earlier this year said these deals will cost taxpayers $32 billion over the next decade by delaying the entry of generics.
By closing this loophole in the generic drug enabling Hatch-Waxman Act of 1984, Congress could raise a portion of the money it will take to restore physician pay, which is slated for a 21 percent cut under a prior cost-control measure. The House last week passed a milquetoast repeal of pay-for-delay, which will only “serve as a deterrent,” not repeal the practice entirely, accoridng to an editorial in this morning’s New York Times. Yet Senate passage is in doubt since the brand-name pharmaceutical companies and the generic companies think the current system is fine and dandy, thank you very much.
When it comes to health care, dirigisme is already de rigueur. The only question on the table now is in whose interest will it be wielded.
Merrill Goozner is an award-winning journalist and author of “The $800 Million Pill: The Truth Behind the Cost of New Drugs” who writes regularly at Gooznews.com.