Twenty-eleven and 2012 are going to be remembered in the near term as very profitable periods of the generic manufacture of many formerly branded mega-sellers. Of course, the agent getting the most media ink this week is atorvastatin (Lipitor), the ubiquitous cholesterol lowering pill whose miraculous ways even prompted a short-lived lobby to go OTC.

The pharma company Pfizer, it could be reasoned, would still have some skin in the game in spite of generic availability. Specifically, partnerships with pharma benefit managers and insurers would still give the company a stake in orgs that would inhibit generic availability by offering rebates and discounts of branded Lipitor. It is the potential for actions like this which gets the attention of legislators (specifically Democrats) who want fair competition — as opposed to stymied innovations in generic marketing from pocketed profits by PBMs and insurance companies.

Detailed in an NYT piece last month, the prospect for limited availability of generics — specifically for Medicare Part D beneficiaries is a sobering one. Pfizer claims cost equivalencies (with respect to lower co-pays on branded Lipitor) for beneficiaries if the pharma company is able to offer those discounts to third parties. It is an interesting development in what is usually an uneventful and mundane process.

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Is it too early for this sort of news, or is a political agenda afoot? According to a new Gallup survey, the nascent reform law is still leaving a significant amount of uninsured without adequate coverage from employers. Ditto for the elderly and the government.

Some of the main components of the Affordable Care Act, such as tax credits for small businesses that provide health insurance to their employees, and the establishment of a pre-existing condition insurance plan, have done little to boost Americans’ health coverage, the survey found.

This report comes on the heels of a recent appeals court decision reaffirming the constitutionality of the law and its coverage mandates. It’s no secret, however, that the ACA is still struggling to get in the good graces of the majority of stalwart congressional Republicans and some Dems. Still a little early to say if the report will gain traction ahead of the first GOP primaries in less than two months; but, it represents another PR hurdle the law’s proponents must overcome on the road to reclaiming the White House in ’12. | LINK

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On the campaign trail recently, top GOP candidates have been rolling out the talking points with respect to the debate on healthcare policy and politics. That latter point is made quite clearly in the party’s stance on the “solvency”^[1] of the prescription drug benefit under Medicare Part D. Asked whether this rather costly program — arguably one of the most significantly costly from the George W. Bush administration’s passage of MMA in 2003 — should be yanked (as they feel so-called Obamacare should be), you’ll get a resounding “no” on that policy point.

Although the House GOP have led the deficit hawk brigade in response to President Obama’s recent comments on balancing the budget, the party as a whole has been relatively quiet on the Medicare overhaul issue, especially as it pertains to Part D — a program the party structured and passed under Bush eight years ago. It’s no secret politics is in play, especially when monies to support the benefit have to come from the government’s general coffers — competing for earmarks for other priorities, like education funding.

Republicans like to point out that throwing drug coverage under Medicare, in part, to the pharma marketplace has offset initial costs for supporting the program via competition. But, currently, the wide variety (amid the spate of new branded preps) of traditionally cheaper generics probably has to do more with keeping costs low — with respect to beneficiary affordability and the marginal profits on such non-branded offerings by Pharma.

Fast forward to 2011 and the popular Medicare provision is being utilized by over 60 percent of retirees (with the balance coming from former employers’ plans), and it looks safe for now. The big unknown is when the inevitable resurgence in pharma spending increases will occur over the next ten to fifteen years — and how Part D will fare within the reform mix. | LINK

1. There really is no dedicated tax toward funding the Medicare prescription drug benefit.

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Prescription drug premiums under Medicare Part D will not be increasing next year — not exactly surprising, considering the profound availability of generics in the pharma marketplace currently. Still, welcome news to beneficiaries. As a matter of fact, within the next couple of years, many longstanding branded bestsellers are due to flip generic…a bonanza for competition within this space.^[1] Elderly patients are also due rebates and discounts on branded preparations this year as a result of reform. Obama’s provision to shut off of the MMA 2003 stipulation regarding donut hole gaps in coverage under Medicare will continue include more beneficiaries, as a result. | LINK

1. Pfizer plans to pursue OTC status once bestselling Lipitor goes generic.

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The latest news from the Medicare front has nothing to do with the latest Paul Ryan salvo against the entitlement. It’s the overall health of the program that has eyes concerned. Five years sooner than expected — that’s how quickly the feds say that funds are being consumed. According to trustees, the earlier deficit projections are the result of the poor economy, resulting in decreased collections from payroll taxes; continued current rates of Medicare spending without the influence of reform; and fraud.

Don’t let those trustees’ predictions fool you. I, and many others who closely watch developments like these within the realm of health policy, believe that the outlook for Medicare is more grim because those original projections assume cuts in reimbursements to doctors that Congress has usually already applied as a matter of course, and overall cost savings are usually difficult to predict, regardless. As a result, Medicare legislation needs scrutiny — and fast. The longer lawmakers sit on numbers like these, they’ll have to apply emergency stopgaps no one wants — huge tax increases^[1] or program cuts — to save the program. | LINK

1. Medicare, to stay solvent for the next 75 years, would have to immediately raise payroll taxes by 24 percent, or cut current benefit payments by 17 percent.

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Yesterday, CMS released a statement confirming an increase in reimbursements to Medicare Advantage plans. The uptick of 0.4 percent is not as high as the 1.6 percent planned increase the agency announced just two months ago, but reflects “economic changes” in the marketplace — not changes to Medicare policy.

This is meaningful, as a provision of the reform law was to create payment alignment with traditional FFS Medicare. Almost one-quarter of Medicare beneficiaries possess some sort of coverage through private insurers over and above traditional Medicare. Obviously, private plans will have to adjust to this reality, as the cost of MA care delivery to taxpayers is roughly 10 percent greater than the cost of traditional Medicare delivery.

Are Americans utilizing fewer healthcare resources? Certainly projections like this may bear this trend out. But, private insurers — like UnitedHealth here in Minnesota — face major cuts throughout the next decade under reform.The cost of delivering healthcare via the federal government may be greater in the long run for them. Sure, cost of delivery is important, but the ongoing specter of regulation looms large for private insurers which expect significant ROI on care delivery to those who qualify for Medicare.

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The one year anniversary of the ACA is giving many time to reflect on its passage and what it really means for the future of healthcare delivery in the foreseeable future. One thing’s for certain — the controversy surrounding it on all sides will not be going away any time soon. Whereas the public is portrayed in the media as being, at worst, “evenly divided”^[1] on the issue (just like every other manufactured boilerplate lately — take your pick), many supporters are saying that the reform law’s original form and intent will eventually get the full support of the American public.

Detractors, not to be outdone, are more emboldened than ever to make this issue a Campaign ’12 one — and a very potent issue, at that. Although the road to the ACA’s passage was characterized by cogent and passionate debate on most levels, the labels applied by opponents — both Republican and Democratic — seemed to take center stage, almost screaming out to any fence-sitters to give up on lobbying for it. In the end, however, the bill survived threats of “death panels”, Tea Party protests, and GOP-stoked fears that ironically warned of the insolvency of Medicare should the measure become law.

The controversy surrounding the reform law is not over by a long shot. Even as healthcare consumers, states, insurance companies, pharma companies, and the federal government hunker down to to accept their roles in the wake of the law, its current incarnation will only be preserved if sound implementation by 2014 overcomes the political rhetoric on the left and right. If the most salient effects of the law — increasing access via exchanges, eradication of pre-existing condition denials, closure of the Medicare Part D doughnut hole, and eliminating coverage and payment inequities in Medicare Advantage plans — remain intact by mid-decade, perhaps the most beneficial result will be that healthcare consumer will receive high-quality, cost effective healthcare delivery without giving the means to this end even a fleeting second thought.

1. Actually, in comparison to those who want the law expanded or remain as is, only 1 in 5 want some sort of repeal — be it piecemeal, or full. Source here.

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Via National Journal, the current CMS chief Don Berwick, MD, and others discuss the effect of healthcare associated infections on delivery and cost of care. Among the topics discussed in the Q&A are (jump ahead to the times listed to see): political infighting in the healthcare policy arena and role of the public and its perception of health policy @ 34:30; Berwick’s views on “systemic” improvements in care delivery based upon organizational leadership and governance @ 42:00 — and most importantly, his thoughts on the iPod and iPad @ 56:00.

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What does the Congressional Budget Office think that repeal of the ACA would do to the current fed budget? According to the CBO, projecting to 2021, the deficit would increase by over $200B in those first 10 years. [PDF, page 2] Also,

The enacted legislation will increase federal revenues (apart from the effect of provisions related to insurance coverage), mostly by increasing the Hospital Insurance payroll tax and imposing fees on certain manufacturers and insurers. Repealing those provisions would reduce revenues by an estimated $520 billion over the 2012-2021 period.

The report also goes on to note an increase in Medicare and Medicaid spending due to repeal of payment reductions (as provided by the reform law) to hospitals, MA plans, and other services would lead to net increases by at least $57B over the period. GOP lawmakers will probably continue to dispute these findings as they continue to pledge for repeal of at least parts of the law. But does that actually mean the party plans to increase the federal deficit by $210B over the next decade?

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Amid all the fanfare of, say, Super Bowl-like proportions, the Obama administration’s 2012 Budget [PDF] made its debut and, almost as immediately, was roundly criticized by both Democrats and Republicans before the first shipping box was even pried opened at the offices of the Senate Budget Committee. Predictably, the acknowledgement to Medicare funding was expected: in order to fund the so-called recurrent Doc Fixes^[1] the budget plan will begin to attack the effects of fraud, waste, and abuse on taxpayer financed healthcare delivery. It would also decrease fed spending on Medicaid. In order to make this happen, Obama has proposed provisions in the budget totalling approximately $54B.

The immediate effect of this is a siphoning off of matching funds states could use to deliver services covered by Medicaid. Obama’s plan would cut $18.4 billion in federal Medicaid funding by reducing the amount that states could levy on providers to help finance Medicaid. The budget also proposes an increased use of generic pharmaceuticals as a way of decreasing utilization in Part D programs, for example. PhRMA, of course, quickly criticized this action — expressing concerns on its effect on innovation in pharma R&D.

Also, perhaps out of necessity in saving face amid all of this criticism over the budget, Obama has backtracked somewhat on his commitment to full compliance of the electronic health record among Medicare and Medicaid providers by funneling some of those fees (meant to penalize providers which do not convert to full EHR) to cover Part B services under Medicare. All in all, a pretty messy and convoluted scenario to the problem of guaranteeing care for all under reform while cutting Medicare/Medicaid spending and ensuring proper reimbursement for physicians who continue to live out the threat of ongoing SGR inertia-induced cuts in payouts.

1. A provision that would extend current Medicare provider payment rates through December 31, 2011.  Doctors were scheduled to receive a 25 percent reduction in their reimbursement rates on January 1, 2011, owing to rates as determined by the SGR. It requires congressional approval.

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