If you want to understand why restraining the growth of medical costs is so difficult — and why the politics of it are so sticky — the story of a relatively new brand-name drug called Makena is a great place to start.
Marketed by K-V Pharmaceuticals, Makena helps to prevent premature births in at-risk pregnancies, allowing the fetus time to grow and develop and avoid many of the health complications from being born too early. But at somewhere between $300 and $690 a shot, and with 20 shots needed over the course of a full pregnancy, Makena is far from cheap. (K-V Pharmaceuticals originally tried to charge $1,500 a shot for the drug, but backed down after public outrage.)
There’s no legitimate reason that Makena should be so costly. In fact, the drug is virtually identical to a well-known compound of drugs that has long been available through many pharmacies at just $20 a shot. That compound, 17P, has been used safely and effectively for years to ward off premature birth, just as Makena is supposed to do.
What happened is this: K-V Pharmaceutical first used existing law and FDA regulations to have 17P declared an orphan drug, meaning no company was producing it under a name brand. It then claimed exclusive right to manufacture and market the drug, allowing it to jack up the pricetag to astronomical heights.
That in itself represents a serious problem, but it gets worse.
Here in Georgia, the state Department of Community Health sensibly refused to put Makena on its list of drugs covered by Medicaid. Noting that an almost identical, safe, effective and much cheaper alternative is already available, DCH refused to force taxpayers to cover the exorbitant additional cost of Makena. And Georgia was not alone. In an attempt to protect their own taxpayers, other states have taken a similar course.
Unfortunately, a federal judge in Atlanta barred that effort in a ruling earlier this month. He not only ordered Georgia to approve Makena for Medicaid reimbursement, he told DCH to cease coverage of the much-cheaper and identical alternative unless the prescribing physician claimed medical necessity for that alternative.
Most Americans, I suspect, would applaud the sensible watchdog role that the DCH has attempted to play — so far unsuccessfully — in the Makena controversy. But if the judge is correct, the agency simply lacks legal authority to make that decision.
Clearly, federal law has to be changed to fix that problem.
But here’s the good news, as well as more bad news. Such a change in the law has already been made, at least in Medicare. The Independent Payment Advisory Board created under ObamaCare was designed precisely to deal with this kind of situation. The 15-member board, comprising doctors, experts in health finance and advocates for consumers and for the elderly, is empowered to study which drugs, treatments and procedures deliver the best results at the lowest cost to taxpayers, and to recommend those treatments over higher-cost alternatives.
if IPAB is a “death panel,” as Republicans like to charge, then DCH was acting as a death panel in trying to bar Makena from its list of approved Medicaid drugs. Like Makena and 17P, IPAB and DCH were performing identical roles. And if IPAB is “rationing” medical care, as Republican leaders also charge, then DCH was also attempting to ration medical care.
The idea that IPAB is going to decide who is worth saving and who should die, or that it’s going to deny needed care to anyone, is groundless. In reality, IPAB is expressly forbidden by federal law from making “any recommendation to ration health care.” The “death panel” and rationing claims have been refuted as lies by every independent fact-check organization in the country (seehere and here and here, among others.
Yet still the lies continue.
“No president should put in jeopardy your benefits,” Mitt Romney said just this week. “And no board of bureaucrats should ever be empowered to make decisions that could deny you the kind of care that you deserve.”
As Politico reports, Paul Ryan is doing the same, arguing that “Obama “puts this new board of 15 unelected, unaccountable bureaucrats that he’s about to appoint, who are required to cut Medicare every year in ways that will clearly lead to denied care for current seniors.”
Such rhetoric is ridiculous and cynical in the extreme. We cannot hope to curtail the growth of medical expenditures if we are barred by law from seeking the most cost-effective means of doing so. In the end, it protects the ripoff artists and forbids government from even trying to protect the best interests of both taxpayers and beneficiaries.
But it’s damn good politics.
– Jay Bookman