Entries in Riddle, Clive (316)


The Genormous Generic Market

By Clive Riddle, June 11, 2009


“Ginormous” is out. “Genormous” is in, at least if Pfizer is editing the Unabridged Dictionary of Pop Buzz Words, as they continue to go on record that they are pursuing generic growth. This week the Associated Press reported that Pfizer “expects to expand its offerings for generic pharmaceuticals by adding products to the business quoting Dave Simmons, Pfizer President of Established Products. A couple of weeks ago Pfizer licensing agreements with two Indian based companies was reported as a major signal of their strategy to seek growth through generics and emerging markets.


Continued growth in generics would seem a smart recession and health reform based strategy. But generic growth has been sustained through this and the prior decade through good times as well. Let’s have a look at a few of the factors driving these Genormous numbers: 

  • The Average price of generic vs. brand prescriptions: Brand: $119.51 ; Generic: $34.34 [Prescription Drug Trends, September 2008, Kaiser Family Foundation] 
  • Average Rx Copay by Tier: Generic Tier $10; Preferred Tier: $26; Non Preferred Tier: $46; Fourth Tier: $75 [Kaiser Family Foundation Employer Health Benefits 2008 Annual Survey] 
  • Generic Fill Rates: 65% of all prescriptions and 21% of drug sales [Prescription Drug Trends, September 2008, Kaiser Family Foundation] 
  • Generic Fill Rate by $ Differential between Generic/ Preferred Brand Copay: $ 0- 5: 47.6%; $ 6-10: 49.2%; $11-15: 51.6%; $16-20: 52.6%; $21+ : 55.0% [The American Journal of Managed Care, June 2007, “Copayment Differentials and Generic Utilization” ] 
  • Employer Strategies to Reduce Pharmacy Costs: #1 Mentioned response (75%) was "Promote greater use of generic drugs" (2nd highest response - 48%- was "Improve management of specialty drugs" [Mercer Survey] 
  • The 2009 Survey of Health Care Consumers found that 3 in 10 consumers switched medications in the past year, with 38% of them switching to save money [Deloitte Center for Health Solutions] 
  • IMS Health reports that "annual U.S. prescription sales growth of 1.3 percent in 2008, to $291 billion. Dispensed prescription volume in the U.S. grew at a 0.9 percent pace. Factors influencing the market’s slower growth in 2008 included higher demand for less-expensive generic drugs, lower new product sales, and reduced consumer demand due to the economic turndown." [IMS Annual U.S. Pharmaceutical Sales Report] 

Wasted Away in Medical Bankruptcyville: Jimmy Buffet meets Warren Buffet

by Clive Riddle, June 5, 2009

Just published this issue in the American Journal of Medicine, by David U. Himmelstein, MD et al, is: Medical Bankruptcy in the United States, 2007: Results of a National Study. Here’s what Harvard’s Doctor Himmelstein has to say about what this study means to you: “unless you're Warren Buffett, your family is just one serious illness away from bankruptcy.”

Now before you go file a legal change of name to Warren Buffet, you should know the paper’s authors are strong advocates of a particular position: a single payer health plan, and their conclusion is that health insurance in its present form will not protect you from medical bankruptcy, only Warren Buffet or a single payer plan will.

The headlines from the press releases regarding the study indicate medical bills cause 62.1% of all bankruptcies. That claim might be open to some interpretation, given 29% of debtors attributed medical bills as the reason for their bankruptcy. Here’s the table from the study that arrives at that figure:

  • 29%: Debtor said medical bills were reason for bankruptcy: 29%
  • Medical bills >$5000 or >10% of annual family income: 34.7%
  • Mortgaged home to pay medical bills 5.7%
  • Medical bill problems (any of above 3) 57.1%
  • Debtor or spouse lost >2 weeks of income due to illness or became completely disabled 38.2%
  • Debtor or spouse lost >2 weeks of income to care for ill family member: 6.8%
  •  Income loss due to illness (either of above 2): 40.3%
  • Debtor said medical problem of self or spouse was reason for bankruptcy: 32.1%
  • Debtor said medical problem of other family member was reason for bankruptcy: 10.8%
  • Respondents listing any of above 62.1%

But quibbling over the above that is not to take away from the seriousness of the findings they present, only to provide some disclosure to those unaware. So without digressing into an argument for or against a single payer health plan, certainly it hard to argue that various health insurance policies exist in the marketplace which leave patients seriously underinsured, and a number of these underinsured patients, in addition to the uninsured, found themselves in bankruptcy.

Thus the threat of medical bankruptcy does indeed loom over more than the uninsured population. In this recession and season of health reform, it is a very key issue. So here’s some of the other highlights from the study conducted by Doctor Himmelstein and friends from Harvard Medical School, Harvard Law School, and Ohio University and funded by the Robert Wood Johnson Foundation:

  •  Demographically: 60.3% of medical bankruptcies had attended college, 66.4% had owned a home and 20% included a military veteran or active duty soldier.
  • While many of the demographics are very similar, there are a few notable differences in the demographics of those experiencing medical bankruptcies vs. non-medical bankruptcies: Employment (75.5% medical vs. 85.0% non medical); market value of home ($141k vs. $159k); and a lpase in health coverage occuring sometime in the two years before bankruptcy (40% medical vs. 34% non medical)
  • Primary causes of medical bankruptcies: Hospital bills 48%; drug costs (19%); doctors' bills (15%) and insurance premiums (4%). Also, for 38% of cases, lost income due to illness was a factor.
  •  Out-of-pocket medical costs for the bankrupting illness averaged $17,943.
  • In 1981, using the same methodologies, medically-caused bankruptcies were 8% of total bankruptcies. In 2001, the figure was 46.2%
  • 92% of these medical debtors had medical debts over $5,000 or 10% of pretax family income
  • More than 75% of bankrupt families had some form of health insurance

The Fast and The Furious: Health Care Reform Headlines

By Clive Riddle, May 20, 2009
While it remains to be seen if actual health care reform prodded by the Obama Administration and Congress should be described as a fast moving car, or as “The Slow and The Serene,” but at least the rate of headlines spewing out on health reform can be considered, as in the movie title, “The Fast and The Furious.”
Just during this week, we’ve been bombarded with developments. Here’s a sampling of what’s come out, under the category of “Who’s going to pay for this mess?”
Sodas a Tempting Tax Target
New York Times, May 20, 2009
Healthcare Overhaul Could Add Financial Burdens To State
Boston Globe, May 19, 2009
New Taxes Loom to Pay for Health-Care Overhaul
Wall Street Journal, May 19, 2009
Congress has little appetite for health care taxes
Associated Press/Google, May 18, 2009
Senate proposes alcohol, soda tax to fund health care plan
Politico.com May 18, 2009
Turning to the policy front here’s a sampling of headlines under the category of standing on soapboxes:
Baucus Message to Industry Lobbyists: 'Let the Process Work'
The Washington Post, May 20, 2009
The GOP's Health-Care Alternative
Wall Street Journal, May 20, 2009
Republicans To Introduce Health Reform Plan That Would Establish State Health Insurance Exchanges, Provide Tax Credits
Kaiser Daily Health Policy Report, May 20, 2009
Senators Push for Delay of Public Health-Care Option
Bloomberg, May 19, 2009
Senate Finance Committee Releases Policy Paper Describing Options To Pay for Health Overhaul
Kaiser Daily Health Policy Report, May 19, 2009
Dems Unclear Where Baucus Will Side on Health Care Reform
Politico.com May 18, 2009
Finally, here’s a few entries under that category of Newton’s Third Law That Every Action has an Equal and Opposite Reaction:
Physician Practice Interactions with Health Plans Cost $31 Billion A Year, Equaling 6.9 Percent of All Spending For Physician And Clinical Services, New Study Finds
Robert Wood Johnson Foundation Press Release, May 20, 2009
Health Insurers Promise ‘Meat’ to $2 Trillion Savings
[Bloomberg reports that health insurers will propose simpler billing for doctors and rewarding better-performing physicians as part of the industry’s White House pledge last week to help shave $2 trillion from U.S. medical bills over the next decade.]
Bloomberg, May 18, 2009
DOJ Insurers Probe Sought By Health Care Reform Advocates
The Huffington Post, May 20, 2009
Health Plans Support Competition to Benefit Consumers
AHIP Press Release, May 20, 2009



Health Reform: The Start-Up

by Clive Riddle, May 13, 2009

Health Reform, like any start-up, launched a web site ( www.healthreform.gov ) has issued fact sheets and press releases, received another round of angel funding (via the FY2010 budget) and this week announced it has hired a leadership team. Like any start-up, Health Reform has announced Strategic Alliances, this week touting voluntary commitment from six leading health care stakeholder groups to reduce health care costs.

What Health Reform now needs, like any start-up, is customers.

Here’s who the President met with this week, with each of the six stakeholders pledging help reduce health care costs by 1.5%:






  • Mr. Dennis Rivera, Chair, SEIU Healthcare, Service Employees International Union

The participants are now having to fend of skeptics of “voluntary” pledges. At least non were wearing any “WIN” buttons, dusted off from Gerald Fords voluntary “Whip Inflation Now” initiative in 1974.

Here’s who has been appointed by HHS Secretary Kathleen Sebelius to serve as key staff members in the new HHS Office of Health Reform:

  • Jeanne Lambrew, Ph.D., Director of the HHS Office of Health Reform, was previously an associate professor at the LBJ School of Public Affairs, senior fellow at the Center for American Progress, and worked on health policy in the Clinton Administration.
  • Michael Hash, Senior Advisor, will run the inter-agency process for developing specific aspects of health reform legislation, and has held senior positions at the Health Care Financing Administration (now CMS) and on the staffs of the House Energy and Commerce Committee as well as a private health policy consulting firm.
  • Neera Tanden, Senior Advisor, will work on developing health care policies for HHS and the Administration, and is the former domestic policy director for the Obama-Biden campaign and policy director for the Hillary Clinton campaign.
  • Linda Douglass, Director of Communications, was a traveling spokesperson for President Obama's 2008 campaign and was chief spokesperson for the Presidential Inaugural Committee 2009, and previously was managing editor for National Journal and prior to that was Chief Capitol Hill Correspondent for ABC News
  • Meena Seshamani, M.D., Ph.D., Director of Policy Analysis, will coordinate the quantitative and qualitative analyses on health reform conducted throughout HHS, and was a resident physician in Otolaryngology-Head and Neck Surgery at Johns Hopkins University.
  •  Caya B. Lewis, M.P.H., Director of Outreach and Public Health Policy, will coordinate HHS outreach and interaction with stakeholders on health reform, and was the Deputy Staff Director for Health for the Senate HELP committee under the chairmanship of Senator Edward M. Kennedy.
  • Jennifer Cannistra, Policy Analyst and Director of Special Projects previously served as the Pennsylvania State Policy Director for the Obama campaign
  • Karen Richardson, Outreach Coordinator, was previously the policy director at the Democratic National Committee (DNC).
  •  Michael Halle, Special Assistant, worked for the Presidential Inaugural Committee and Obama for America

Dual Surge: Ineligible Dependents, and Dependent Eligibility Audits

by Clive Riddle, May 7, 2009

Managed Healthcare Executive Magazine, in its May Issue, quote us in an article by Tracey Walker: “Audit Reviews Keep Costs Down.”

The gist of the article is, that 5% or more of many employer’s covered members involve dependents that do not currently meet their employer’s eligibility criteria, and that eligibility audits are an effective way to reduce employer costs and exposure- directly if they are self-insured, and indirectly if they can improve their experience with their fully insured health plan.. It is noted that in the current economic climate, employer demand for such audits may be on the rise.

Our quote involved regulatory scrutiny of health plan disenrollment of such dependents:

“Employers and health plans do need to be cognizant of regulatory issues as they proceed with dependent eligibility audits. Employers would have ERISA regulatory protections from state regulators, according to Clive Riddle, president and founder of MCOL, a provider of business-to-business managed care resources. ‘But when self-funding is not involved, the health plans covering the dependents flagged in eligibility audits must be cautious in how they handle disenrollment and in particular, rescissions of any claims incurred,’ he says. States such as California have clamped down on rescission activities, and health plans have to follow very strict guidelines in numerous states when dealing with this issue.”

Mercer last month issued a release on this topic: “Mercer sees significant growth in health plan dependent eligibility audits.” Mercer pegs the percentage of ineligible dependents in a range of 3% to 8%, and the average cost of covering a dependent for plan sponsors at $1,900 per year. Thus Mercer calculates a plan sponsor with 10,000 dependents and 5% ineligible could save $950,000 annually through such an audit. It’s certainly easy to see why such audits are increasing in frequency. And of course, due to the impact of the recession with layoffs and unemployment, the number of potentially ineligible dependents continue to rise.

From a public policy standpoint, a surge in employers and health plans dropping coverage of greater numbers of dependents will of course only swell the ranks of the uninsured. One policy solution would be to mandate dependent eligibility be tied to IRS dependent status, at least up to a defined age, as opposed to the current patchwork of employer, plan and state specific criteria, which typically would disallow a 22 year old just graduated college student living at home with their parents while looking for a job.