Pharma & Healthcare #BeltwayBrief DEC 13, 2017 @ 08:01 AM 1,011 The Little Black Book of Billionaire Secrets Under New Bill, Medical Device Tax Might Vanish, But Only Temporarily

December 14, 2017

A controversial tax on medical device sales under the Affordable Care Act could be suspended again rather than disappear permanently under new legislation emerging in the Republican-led Congress.

The 2.3% tax on medical device sales that is part of the ACA has already been on a temporary hiatus since the beginning of 2016. That suspension is scheduled to expire at the end of the month.

But new legislation emerging in the U.S. House of Representatives would put the medical device tax on another hiatus. Reps Erik Paulsen (R-Minnesota) and Jackie Walorski (R-Indiana) said the proposed legislation would suspend the medical device tax for another five years under a new bill introduced Tuesday.

via Under New Bill, Medical Device Tax Might Vanish, But Only Temporarily


How Protected Classes in Medicare Part D Influence Drug Spending and Utilization: Evidence from the Synthetic Control Method

December 14, 2017

When the Medicare Part D prescription drug benefit was implemented in 2006, six drug classes were designated “protected classes.” Because responsibility for obtaining favorable drug prices depends on private insurers’ abilities to negotiate with pharmaceutical manufacturers using the threat of formulary exclusion, the protected class designation could undermine the insurers’ ability to control spending and utilization of drugs in these six classes. I estimate the effect of the protected class policy on total drug spending and utilization for Medicare beneficiaries. Following Abadie et al. (2010), I employ the synthetic control method on 2001-2011 data from the Medical Expenditure Panel Survey (MEPS). I find that protected status led to a significant increase of approximately $1.02 billion per class per year in overall spending for drugs in protected classes. Results for drug utilization were also positive but not significant. These results are important for informing the recent and ongoing deliberation by the Medicare program over whether to remove several classes from protection.

via How Protected Classes in Medicare Part D Influence Drug Spending and Utilization: Evidence from the Synthetic Control Method by Courtney Yarbrough :: SSRN


Occupational Licensing Reduces Interstate Mobility

December 13, 2017

People working in state-specific licensed occupations move between states at a rate 31 percent lower than those in quasi-national licensed occupations. Some of this effect might be driven by mechanisms outside the scope of the licensing structure, such as having a network of clients in a specific place that might increase the incentive to stay. After accounting for this dynamic, the authors estimate that the relative migration rate for workers in state-specific licensed occupations is 16 percent lower.

In the aggregate, the increase in occupational licensing from 15 percent of the labor force in 1980 to 30 percent in 2015 explains 6 percent of the decline in interstate migration and 2 percent of the decline in job-to-job flows over the period. The effect might not seem substantial at first glance, but the aging of the population explains only 10 percent of the fall in interstate migration and 9 percent of the fall in job-switching between 1998 and 2010.

Reduced geographic mobility and job-switching have deleterious effects on the earnings and career trajectories of individual workers as well. The authors estimate that if licensing reduces interstate migration for licensed workers by about 20 percent, the number of annual interstate migrants falls by 93,600. These would-be migrants do not see the earnings gains that normally flow to job-switchers and their total annual earnings are reduced by $356 million [more than $4,000 per would-be migrant].

via Occupational Licensing Reduces Interstate Mobility | Economics21


Waiting Your Turn: Wait Times for Health Care in Canada, 2017 Report

December 13, 2017

This edition of Waiting Your Turn indicates that, overall, waiting times for medically necessary treatment have in-creased since last year. Specialist physicians surveyed report a median waiting time of 21.2 weeks between referral from a general practitioner and receipt of treatment—longer than the wait of 20.0 weeks reported in 2016. This year’s wait time—the longest ever recorded in this survey’s history—is 128% longer than in 1993, when it was just 9.3 weeks.

via Waiting Your Turn: Wait Times for Health Care in Canada, 2017 Report | Fraser Institute


U.S. 2050 Project

December 12, 2017

What will America look like at mid-century? US 2050 is an initiative of the Peter G. Peterson Foundation and the Ford Foundation to examine and analyze the multiple demographic, socioeconomic, and fiscal trends that will shape the nation in the decades ahead. Engaging leading scholars in multiple disciplines including demographics, poverty studies, labor economics, macroeconomics, political science, and sociology, US 2050 will create a comprehensive view of our economic and fiscal future – and the implications for the social and financial well-being of Americans.

via US 2050


Consolidation and Innovation in the Pharmaceutical Industry: The Role of Mergers and Acquisitions in the Current Innovation Ecosystem

December 12, 2017

Recent changes in the pharmaceutical industry have spurred an unprecedented wave of mergers and acquisitions. Some researchers and agencies have questioned whether pharmaceutical consolidation could impede drug innovation. However, as I explain in this Article, these concerns are largely based on an outdated understanding of the drug innovation ecosystem. Whereas a few decades ago almost all drug discovery took place inside traditional pharmaceutical companies, today most drug innovation is externally-sourced from biotech companies and smaller firms. Internal R&D is no longer the primary source, or even an important source, of drug innovation. As a result, analyses that focus on the impacts of pharmaceutical consolidation on internal drug innovation are incomplete and missing the point. Instead, merger analyses should examine whether consolidation increases demand for externally-sourced innovation and, ultimately, strengthens aggregate drug innovation.

via Consolidation and Innovation in the Pharmaceutical Industry: The Role of Mergers and Acquisitions in the Current Innovation Ecosystem by Joanna Shepherd :: SSRN


High Prices in the U.S. For Life-Saving Drugs: Collective Bargaining Through Tort Law?

December 12, 2017

Sudden exorbitant price hikes to patients who have long taken life-saving drugs are more and more common in today’s pharmaceutical market. The anxiety caused to patients who have been prescribed these drugs by their doctors is predictable and severe. Even when initially covered by insurance or through government programs, patients and their families can soon be made destitute by the high copays or caps on payments. This Essay argues that those who buy up life-saving drugs and decide to raise their prices, despite their knowledge of the consequences to patients, are committing the torts of intentional infliction of emotional distress and negligent infliction of emotional distress.

Despite challenges presented by class certification law, these patients should be allowed to qualify as a class for purposes of pursuing a price reduction in these drugs. Through class action collective bargaining, courts can avoid the pitfalls of waiting for piecemeal legislation for consumers of individual drugs and still receive the advantages of free market principled pricing through collective bargaining. And, in combination with legislation, patterned on statutes designed to address bad faith insurance practices, the courts can most effectively moderate high pricing and curtail pricing practices that may otherwise soon bankrupt our-healthcare system.

via High Prices in the U.S. For Life-Saving Drugs: Collective Bargaining Through Tort Law? by Paul Zwier :: SSRN