The Essential Scan: Top Findings in Health Policy Research | Edition 78

What’s the latest in health policy research? The Essential Scan aims to help keep you informed on the latest research and what it means for policymakers. It is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics. To sign up to receive the Essential Scan straight to your inbox, sign up here

The Association Between Drug Rebates and List Prices

White paper by: Neeraj Sood, Rocio Ribero, Martha Ryan, and Karen Van Nuys

There is a growing divergence between pharmaceutical list and net prices, which has come under more scrutiny as public outcry over drug prices has increased. A new white paper analyzes list and estimated net prices of U.S. branded pharmaceuticals and finds on average a $1 increase in rebates is associated with a $1.17 increase in list prices. The positive relationship between list price and rebate changes also held in sub-sample analyses that considered brand drugs with and without generic substitutes separately. The researchers note the relationship was particularly strong for brand drugs that don’t have generic competitors. This robust positive relationship suggests that rebates do play a role in increasing list prices, and that reducing or eliminating rebates could lower list prices and reduce out of pocket spending for some patients.The researchers write that greater transparency throughout the pharmaceutical distribution system would facilitate efforts to better understand drug pricing dynamics. Full white paper here.

A Substantial Proportion of Operations with In-Network Primary Surgeons and Facilities Associated with Out-of-Network Bills

Study by: Karan R. Chhabra, Kyle H. Sheetz, Ushapoorna Nuliyalu, Mihir S. Dekhne, Andrew M. Ryan, and Justin B. Dimick

When a privately insured patient unintentionally or unavoidably receives care from an out-of-network provider, they are at risk of receiving an out-of-network surprise bill. A new study looks at how often patients receive surprise bills after they have undergone an elective surgery performed by an in-network clinician at in-network hospital. In cases like these, a surprise bill can come from other clinicians who were part of the patient’s care team, such as surgical assistants or anesthesiologists, who were not in the patient’s insurance network. The study uses claims data from a large insurance company that contains information on almost 350,000 patients who received one of seven common elective surgeries between 2012 and 2017. The researchers found that 20.5 percent of these patients received out-of-network bills for their surgeries and the mean potential balance bill was $2,011. Patients whose insurance came from individual market exchange plans were more likely to receive surprise bills (27 percent) than those who were insured with non-exchange plans (20 percent). Anesthesiologists and surgical assistants each accounted for 37 percent of surprise billing episodes. When present, the average potential bill was $1,219 from anesthesiologists and $3,633 from surgical assistants. This research further demonstrates the urgency for enacting policies aimed at mitigating balance billing. Full study here.

New Hampshire’s Experiences with Medicaid Work Requirements

Study by: Ian Hill, Emily Burroughs and Gina Adams

In 2019, New Hampshire was the second state to institute a Medicaid work requirement, following Arkansas in 2018. Despite multiple assurances from state officials that New Hampshire’s program would not lead to wide-scale dis-enrollment like the Arkansas program, data showed that one month in, only about 32 percent of enrollees were in compliance. The Department of Health and Human Services commissioner suspended program implementation for three months, and a few weeks later a federal district court halted the program. New Hampshire’s Governor and CMS have appealed this decision. Researchers at the Urban Institute conducted a case study of the New Hampshire program to understand how it was implemented and why it failed to protect coverage and promote work. They conducted interviews with a range of stakeholders, including state officials, providers, health plan representatives, policy researchers, and child care experts. The interviews highlighted many flaws with the program including inadequate funding to publicize the new rules and significant issues with beneficiaries being able to obtain medical exemptions. In addition, the pilot work support program the state launched had complicated restrictions and only lasted six months. Beneficiaries interviewed explained that their health coverage was critical in keeping them healthy and able to work. Researchers conclude that the results of this research, coupled with their previous work on the Arkansas program indicate that despite the two states’ different approaches, there are numerous problems with implementing Medicaid work requirements, including issues with outreach, work supports, reporting systems, and implications of coverage loss. Full study here.

Abuses of FDA Regulatory Procedures and the Case of Suboxone

Perspective by: Rebecca L. Haffajee and Richard G. Frank

An estimated 2 million Americans have opioid use disorder (OUD), but only about 20 percent of those individuals receive treatment in a given year, and only a fraction of those receive treatment that is evidence-based. There are several evidence-based medications to treat OUD, one of which is buprenorphine. In addition to legal barriers to prescribing buprenorphine for OUD, there are also financial hurdles. In 2017, $2.58 billion was spent on prescription buprenorphine sales, most of which was for Suboxone, a patent-protected drug made by Reckitt Benckiser Pharmaceuticals. A new NEJM Perspective uses Suboxone as a case study on how FDA regulatory procedures can be manipulated for financial gains and provides a series of suggestions for Congress aimed at limiting this abuse in the future. The authors estimate that the introduction of a generic buprenorphine-naloxone film formulation in 2017, which would have competed with Suboxone, could have saved $703 million, with $203 million of those savings specific to Medicaid alone. However, actions taken by Reckitt Brenckiser exploited the FDA’s regulatory protections and prevented this from happening. The authors provide a series of recommendations Congress could undertake to address these problems, including: reforming the Orphan Drug Act to prohibit “grandfathering” of orphan drugs; updating the Hatch-Waxman Act (which provides the framework for FDA regulation of generic drug entry and market exclusivity extensions granted when products are reformulated); and modifying filing procedures for citizen petitions to allow the FDA to penalize sham filings. While the authors acknowledge these policies would not fully solve all problems, they would help to make generic versions of drugs available more quickly and at affordable prices. Full perspective here.

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The Essential Scan is produced by the USC-Brookings Schaeffer Initiative for Health Policy, a collaboration between the Brookings Institution and the USC Schaeffer Center for Health Policy & Economics.