Mark Zdechlik, Minnesota Public Radio, Author at ��ϳԹ�� News

Patients Turn To GoFundMe When Money And Hope Run Out

Mark Zdechlik, Minnesota Public Radio — Wed, 16 Jan 2019 10:00:43 +0000

Tammy Fox wanted to help after a friend took ill with a rare and difficult-to-diagnose autoimmune disorder that required many trips to the Mayo Clinic.

Although Fox couldn’t do anything medically, she knew there was a way to ease some of the burden of medical bills and costs associated with doctor visits. She turned to the website GoFundMe and set up a site for her friend.

“You’ve got meals; you’ve got hotel stays,” she said. “And gas. So that all needed to be covered.”

Contributions came in from strangers, noted Fox, who lives in suburban Minneapolis. “It’s crazy cool how awesome people are and what they’re willing to give. People, when they come together, can just move mountains — and I think that’s awesome to see.”

GoFundMe, the largest online, crowdsourced fundraising platform, says contributors have raised more than $5 billion, all told, from 50 million donations in the eight years it has been in business.

Setting up a GoFundMe page has also become a go-to way for people in need of help to pay their doctors and other health providers. Medical fundraisers now account for 1 in 3 of the website’s campaigns, and they bring in more money than any other GoFundMe category, said GoFundMe CEO .

“In the old paradigm you would give $20 to somebody who needed help,” Solomon said. “In the new paradigm, you’ll give $20, you’ll share that and that could turn into 10, 20, 50 or 100 people doing that. So, the $20 could turn into hundreds, if not thousands, of dollars.”

Stories of tragic illness and financial hardship — all of them with pictures of those suffering — are easy to find in GoFundMe’s medical section.

One such case is Carolyn Deal, from Marshall, N.C., who lost nearly all her hearing after a traumatic brain injury. Deal for alternative treatments and procedures she would like to try that her health insurance won’t cover.

Americans’ confidence that they can afford health care is slipping, said , an economist at the Commonwealth Fund who studies American health care concerns. Even for conventional treatments covered under most health plans, the copays and high deductibles have left many people with health insurance they can’t afford to use.

Her organization recently surveyed working-age Americans, asking whether they felt they had the ability to pay an unexpected medical bill of $1,000 in 30 days. Nearly half said no.

“We find that underinsured people are nearly as likely to report problems paying their medical bills as people who don’t have any insurance,” she said. “And they also report not getting needed health care at rates that are nearly as high as those who are uninsured.”

So it shouldn’t be surprising that people are raising funds through crowdsourcing, Collins said. “But it really should be a deep concern for policymakers and providers.”

Solomon acknowledges that the challenges in understanding how health insurance works and the wide-ranging coverage landscape are driving interest in the site.

“There’s just a lot of cost associated with the medical space, and it has become a very important category on GoFundMe,” he said.

Until about a year ago, GoFundMe kept 5 percent of fundraising proceeds in addition to collecting a nearly 3 percent credit card processing fee. It still charges the credit card fee but no longer collects the 5 percent surcharge.

This story is part of a partnership that includes , and Kaiser Health News.

��ϳԹ�� News is a national newsroom that produces in-depth journalism about health issues and is one of the core operating programs at KFF—an independent source of health policy research, polling, and journalism. Learn more about .

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Funding For ACA Sign-Up Campaigns Varies Widely From State To State

Mark Zdechlik, Minnesota Public Radio — Wed, 01 Nov 2017 09:00:55 +0000

If you buy insurance on your own and have been paying attention to the Affordable Care Act, you’ve probably heard that open enrollment for 2018 plans has just started and the government is spending a lot less money this year to get the word out.

That’s true in the 39 states that rely on healthcare.gov. But circumstances are different in some of the that run their own ACA websites and marketplaces.

They’re in charge of their own marketing and enrollment assistance programs, so are somewhat immune from Trump administration actions — and inaction — that critics have warned will undermine 2018 individual market enrollment.

“We’re in a very different position than the federal government,” said , who runs Minnesota’s exchange, MNsure. “I see a lot of action coming out of Washington designed to destabilize the market and to hinder enrollment. I have the exact opposite goal in Minnesota.”

In its first year of managing the sign-ups, the Trump administration most states rely on for the federally run insurance exchange by 90 percent. The open enrollment period is shorter ��Ի��, the federal website, will curb its hours on all Sundays during the sign-up period, except the last one.

A recent analysis by the chief marketing officer of healthcare.gov under President Barack Obama estimated that the marketing cuts alone may by at least 1.1 million people.

In contrast, MNsure is planning another all-out annual enrollment push with ads on TV and social media. It will also pay other organizations to help spread the word; for example, MNSure gave $500,000 to , a nonprofit healthcare navigator group, for outreach.

The money helps a lot.

“Portico Healthnet was able to staff up — so we have more navigators on staff now to prepare ourselves to meet the needs of the open-enrollment demand,” said Meghan Kimmel, president of the organization, which is based in St. Paul. “We are anywhere we can be where we can talk with people about access to coverage.”

�ճ��, which relies on healthcare.gov, the federal exchange. Open enrollment in these states is shaping up to be much different under President Donald Trump than it was under President Obama.

“We’re still enrolling,” said Ginni Tran, who works as an ACA navigator at Mercy Housing & Human Development in Gulfport, Miss., “but we’re not aggressively outreaching and educating” because there isn’t enough money. Her office helps Gulf Coast seafood industry workers find health plans on healthcare.gov. Cuts to federal enrollment assistance translated to a 70 percent smaller budget for Mercy’s open enrollment activities.

Mississippi’s uninsured rate has fallen to 12 percent but remains tied for third-worst in the United States. Republican Gov. Phil Bryant has staunchly opposed the Affordable Care Act ��Ի��.

Kimmel and others said what’s happening in states using healthcare.gov underscores the value of Minnesota having its own exchange.

At least one longtime MNsure critic, however, remains unconvinced. State Rep. Greg Davids, a Republican, dismissed the notion that cutting back on the open-enrollment period and slashing the promotional budget will discourage enrollment. He said he favors having the state turn to healthcare.gov, instead.

“We need to get rid of MNsure,” Davids said. “They’re an unnecessary duplicate layer of government that hasn’t worked.”

This story is part of a partnership that includes , and Kaiser Health News.

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Health Insurers Try Paying More Upfront To Pay Less Later

Mark Zdechlik, Minnesota Public Radio — Mon, 17 Jul 2017 09:00:02 +0000

Michael McBrayer of St. Paul, Minn., needs to pay a lot attention to his health.

“I give myself shots multiple times a day, as well as controlling my diet and exercise,” he said.

Ten years ago, McBrayer learned he has Type 1 diabetes. Now he knows he faces dire consequences if he fails to control his blood sugar.

“Kidney failure, blindness, heart disease — all those things are looming out there,” he said.

McBrayer has health insurance through his wife’s employer, the state of Minnesota. It’s a HealthPartners plan that charges extra to employers — in this case, the state — to cover diabetes care. So for the past several years, McBrayer’s plan has paid for everything he needs to keep his diabetes in check. He doesn’t spend a dime on supplies.

Diabetes, high blood pressure and other chronic conditions account for the vast majority of health spending in the U.S., to the Centers for Disease Control and Prevention. Almost half of American adults have at least one chronic physical or mental health condition, and spending on those adds up to some $2.3 trillion a year.

Some health plans are beginning to offer free maintenance care for people with chronic health problems, hoping that spending a little more early on will save a lot of money in the long run.

“We’ve been trying to change the health care conversation in the United States from how much we spend to how well we spend,” said , head of the University of Michigan’s Center for Value-Based Insurance Design.

He said it makes both medical and economic sense to make properly managing chronic conditions affordable.

“I want the health insurance plan my patients have to charge my patients the least for the services that are going to make them healthier,” he said. “Let’s allow those to be covered on a pre-deductible basis; you’re not leaving the patients paying 100 percent of the cost.”

That may seem like common sense, but health plans have been running hard in the opposite direction. Consumers are on the hook for a rapidly increasing amount of their health costs — in large part to try to curb health costs.

But corporate buyers of health insurance are starting to realize that people may be putting off necessary care, says , who runs the National Alliance of Healthcare Purchaser Coalitions. The organization advises around 12,000 organizations that buy health plans for tens of millions of Americans. He said those who provide insurance need to take a thoughtful look at what they pay for and what consumers should pay for.

“So that people are more prudent on discretionary care but are more compliant with the care they need and certainly the care they need to stay healthy,” Thompson said.

If people have to pay out-of-pocket for care they might not need, they might think twice, but their day-to-day health needs are taken care of.

One major obstacle to this approach, known as “value-based health insurance,” is an IRS rule that does free maintenance care for chronic conditions for the 20 million Americans with health savings account-qualified, high-deductible insurance.

Michael McBrayer tests his blood sugar before eating lunch. He gets supplies he needs to manage diabetes for free as part of a deal between his employer and health insurer. (Evan Frost/MPR News)

The enhanced insurance benefit that pays for all McBrayer’s Type 1 diabetes maintenance is paying off for state taxpayers, according to , his provider.

That program has helped quadruple the number of diabetes patients with optimal care, saving the state about $1 million on medical services since its inception almost 10 years ago, said Dan Rehrauer, a program manager at HealthPartners.

“We’ve shown that we’ve reduced hospitalization and emergency department utilization, which is exactly what we want to see,” Rehrauer said. “You’ve got a healthy employee and that results in not ending up in the hospital [which saves] money.”

This story is part of a partnership that includes , and Kaiser Health News.

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Pseudoscience Fuels Fear Behind Minnesota Measles Outbreak

Mark Zdechlik, Minnesota Public Radio — Thu, 04 May 2017 09:00:29 +0000

Health officials in Minnesota are scrambling to contain a measles outbreak that has sickened primarily Somali-American children. Officials have identified as of Wednesday, and they’re worried there will be more.

In Minnesota, the vast majority of children under age 2 get vaccinated against measles. But state health officials said most Somali-American 2-year-olds have not had the vaccine, about 6 out of 10. As the outbreak spreads, that statistic worries health officials, including , the director of the University of Minnesota’s Center for Infectious Disease Research and Policy.

“It is a highly concentrated number of unvaccinated people,” he said. “It is a potential kind of gas-and-match situation.”

is a highly contagious respiratory disease that causes a rash and fever. It can be deadly, but the federal Centers for Disease Control and Prevention says two doses of vaccine are about 97 percent effective at heading off the disease.

The Minnesota Department of Health said the outbreak began in Hennepin County, home to Minneapolis and the heart of the nation’s Somali-American community.

The hub for that population is the Cedar-Riverside neighborhood, adjacent to downtown Minneapolis. There are numerous Somali businesses, including more than a dozen jammed open-air-style into a worn-looking building called the Riverside Mall.

Sprawling from stall to stall are brightly colored clothes and other textiles, along with small home furnishings. Most of the Somali-Americans shopping here recently wanted nothing to do with a reporter’s questions. But Khadra Abdulle offered thoughts.

“I heard it, but I haven’t seen it. I don’t know anybody who has that problem right now,” she said.

She was quick to name the fear that’s working against the measles vaccine among Somali-Americans. “They believe it causes autism,” Abdulle said.

Somali community leaders are in lockstep with the Minnesota Department of Health, trying to knock down the pseudoscience behind the myth that vaccines can lead to autism. But others are not, even as the outbreak spreads.

A weekend meeting in Minneapolis organized by anti-vaccine groups attracted dozens of Somali-Americans. Some shouted down physicians, including pediatrician , who showed up to try to convince them vaccinations are critical to their community.

“We know if there’s less than a certain rate of vaccine, the virus is much more likely to spread,” she said. “That’s a scientific fact.”

, the infectious-disease division director at the Minnesota Department of Health, described the Minnesota measles outbreak as a “public health nightmare” — a lot of unvaccinated people living in densely populated neighborhoods, mixed with a tremendously contagious disease.

Ehresmann said she’s beyond frustrated with forces working against efforts to contain the outbreak: “I’ll be honest. It makes me very angry.”

But Ehresmann said the desire to get the truth out is mobilizing public health officials.

“We’ve had people on Somali TV, Somali radio. We’ve participated in chatrooms. The commissioner met with imams to talk to them about how we can work with the faith community to do outreach,” she said.

In 2000, the U.S. declared it had eliminated measles from the country because of a strong vaccination program. So, measles is no longer native to the U.S. But as vaccination rates have eroded in some areas, it can spread quickly if a sick traveler brings it in.

In 2014, there were , including a large outbreak among Amish communities in Ohio. In 2015, there were 188 cases, including some linked to California’s . Vaccination is critical to keep people from contracting the virus if they are exposed to it.

Almost 30 years ago, measles sickened 460 people in Minnesota and three children died in that outbreak. University of Minnesota’s Osterholm served as the state epidemiologist at the time, and he said those deaths still haunt him. He’s worried it could happen again.

“I think we could surely see a major increase in the number of cases beyond what we have now,” he said. “With that comes the increasing likelihood someone will die.”

This story is part of a partnership that includes , and Kaiser Health News.

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Drowning In A ‘High-Risk Insurance Pool’ — At $18,000 A Year

Mark Zdechlik, Minnesota Public Radio — Mon, 27 Feb 2017 10:00:58 +0000

Some Republicans looking to scrap the Affordable Care Act say monthly health insurance premiums need to be lower for the individuals who have to buy insurance on their own. One way to do that, GOP leaders say, would be to return to the use of what are called , for people who have health problems.

But critics say even some of that operated before the advent of Obamacare were very expensive for patients enrolled in the plans, and for the people who subsidized them — which included state taxpayers and people with employer-based health insurance.

Craig Britton of Plymouth, Minn., once had a plan through Minnesota’s high-risk pool. It cost him $18,000 a year in premiums.

Britton was forced to buy the expensive coverage because of a pancreatitis diagnosis. He called the idea that high-risk pools are good for consumers “a lot of baloney.”

“That is catastrophic cost,” Britton said. “You have to have a good living just to pay for insurance.”

The argument in favor of high-risk pools goes like this: Separate the healthy people, who don’t cost very much to insure, from people who have preexisting medical conditions, such as a past serious illness or a chronic condition. Under GOP proposals, this second group, which insurers expect to use more medical care, would be encouraged to buy health insurance through high-risk insurance pools that are subsidized by states and the federal government.

Republican Speaker of the House Paul Ryan for high-risk pools on public television’s “Charlie Rose” show in January.

“By having taxpayers, I think, step up and focus on, through risk pools, subsidizing care for people with catastrophic illnesses, those losses don’t have to be covered by everybody else [buying insurance], and we stabilize their plans,” Ryan told the TV host.

Minnesota’s newest congressman, Rep. Jason Lewis, a Republican representing Burnsville and Bloomington, recently endorsed high-risk pools on CNN.

“Minnesota had one of the best … high-risk insurance pools in the country,” Lewis said. “And it was undone by the ACA.”

It’s true that the Affordable Care Act banned states’ use of high-risk pools, including the Minnesota Comprehensive Health Association, or MCHA. But that’s because the MCHA , the association’s website explains; the federal health law requires insurers to sell health plans to everybody, regardless of their health status.

Supporters of the MCHA approach tout a return to it as a smart way to bring down the cost of monthly premiums for most healthy people who need to buy insurance on their own. But MCHA had detractors, too.

“It’s not cheap coverage to the individual, and it’s not cheap coverage to the system,” said , an economist with Minnesota’s health department.

MCHA’s monthly premiums cost policyholders 25 percent more than conventional coverage, Gildemeister pointed out, and that left many people uninsured in Minnesota.

“There were people out there who had a chronic disease or had a preexisting condition who couldn’t get a policy,” Gildemeister said.

And for the MCHA, even the higher premiums fell far short of covering the full cost of care for the roughly 25,000 people who were insured by the program. It needed more than $173 million in subsidies in its final year of normal operation.

That money came from fees collected from private insurance plans — which essentially shifted a big chunk of the cost of insuring people in the MCHA program to people who get their health insurance through work.

Gildemeister ran the numbers on what a return to MCHA would cost. Annual high-risk pool coverage for a 40-year-old would cost more than $15,000 a year, he says. The policyholder would pay about $6,000 of that, and subsidies would cover the more than $9,000 remaining.

University of Minnesota health policy professor said there is a better alternative than a return to high-risk pools. It’s called “.” In that approach, insurers pay into a pool that the federal government administers, using the funds to compensate health plans that incur unexpectedly high medical costs. It’s basically an insurance program for insurers.

The big question is whether lawmakers will balk at the cost of keeping premiums down for consumers — whatever the approach, Blewett said.

“The rub is, where that funding is going to come from?” she said. “And is the federal government or the state government willing to put up the funding needed to make some of these fixes?”

The national plan Ryan has proposed would subsidize high-risk pools with of federal money over 10 years. The nonpartisan Commonwealth Fund estimates the approach could cost U.S. taxpayers much more than that — almost a year.

Researchers at the consulting firm McKinsey & Company say reinsurance would likely cost of what the high-risk pool option would.

This story is part of NPR’s reporting partnership with Minnesota Public Radio ��Ի��.

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Could Minnesota Health Reforms Foreshadow Repeal And Replace?

Mark Zdechlik, Minnesota Public Radio — Tue, 07 Feb 2017 10:00:38 +0000

What’s going to happen to the federal health law? The quick answer is no one knows. But in the midst of the uncertainty about the Affordable Care Act, states still must govern their insurance markets. Most have been muddling through with the 2017 status quo, but Minnesota is a special case, taking three unusual actions that are worth a closer look.

Last month, Minnesota:

Passed a one-time bailout for some consumers in the individual insurance market dealing with skyrocketing premiums.
Rejected an attempt to let insurers offer cheaper, bare-bones coverage.
Laid the groundwork for a sort of homegrown “public option” insurance plan.

Here’s more on each item.

The Bailout

Faced with some of the country’s highest hikes on premiums in the individual market — , on average — Minnesota lawmakers passed a bailout for people who earn too much to qualify for the Affordable Care Act’s federal tax credit. The $300 million law will cut monthly 2017 premiums by 25 percent for about 125,000 Minnesotans.

Minnesotans face some of the country’s highest hikes on premiums in the individual market. (Screenshot of MNSure.org)

Democratic Gov. Mark Dayton backed the measure since October when he called the ACA “no longer affordable to increasing numbers of people.” But passage wasn’t assured as both houses of Minnesota’s legislature are controlled by Republicans.

It is thought to be the second time a state has offered up state tax dollars to stabilize an insurance marketplace created by the ACA. (Alaska came up with for insurers in 2016.)

Bare-Bones Coverage

A failed amendment to the Minnesota legislation sought to strip dozens of so-called “essential benefits” from health plans with the expectation that slimmed-down coverage would cost less.

Republican State Rep. Steve Drazkowski, who offered the amendment, said he was trying to eliminate the current, “government-controlled, one-size-fits-all, dictating set of mandates.

“What we’re doing is trying to create an environment that, if and when the ACA goes away, that Minnesotans will have the freedoms they need in order to start to bring some free-market competition, some free-market ingenuity and innovation into the health insurance market,” he said.

The laundry list of benefits that consumers could choose to have covered or not under Drazkowski’s amendment included maternity care, diabetes treatment and mental health care among many others. Some items on the list are very specific: Lyme disease, prostate cancer screenings, outpatient surgery.

Dayton and other Democrats opposed the amendment and it dropped out of the final legislation.

Still, it caught the eye of Minnesota native Andy Slavitt, who is the former administrator of the Centers for Medicare & Medicaid Services, which oversee the health law marketplaces. Slavitt, who tweeted about the amendment, said it is a cautionary tale about high-deductible catastrophic plans that cover little or no basic care.

Americans are scared & don’t want to go back to pre-existing conditions or “health plans” that look like the new one proposed in MN. 18
— Andy Slavitt 🇺🇦 (@ASlavitt)

There's no replacement plan for ACA in Congress.

But good news is there is one put forward in a state to look at.
— Andy Slavitt (@ASlavitt)

“Telling people, ‘Only buy what you need,’ implies that people know that they’re not going to need the emergency room or that there’s not going to be an addiction problem in their family,” Slavitt said in an interview. “I don’t think we, as a country, want people to not have access to the services they need.”

He did not dispute the notion that the individual market needs help, but he says offering extremely limited plans is ill-conceived, “gotcha” insurance.

“This is the most blatant one I’ve seen,” Slavitt said of the failed amendment.

But other amendments did get passed, including a provision that changes longstanding laws requiring HMOs, insurance plans that will cover only services provided by their network of doctors and other health providers, to be not-for-profit. The new law allows out-of-state, for-profit HMOs to sell health plans in Minnesota.

Dayton said these measures were not well thought out. “I think it is unnecessary and unwise to rush the ‘reforms’ added to this bill, without proper public review or full consideration of their consequences,” he said.

A State-Based Public Option?

Minnesota is offering a so-called basic health plan that can cover lower and moderate income residents. MinnesotaCare provides subsidized health coverage to about 100,000 state residents, capping eligibility for a family of four at $49,000 in earnings per year. Dayton wants to open the plan to all Minnesotans, with higher income residents paying full price for their coverage.

“This public option could offer better benefits than any policies presently on commercial markets, more options for people to keep their doctors and clinics and less expensive than what is available today,” said Dayton during an announcement of his annual budget plan last week.

Dayton said allowing people with higher incomes to buy MinnesotaCare coverage, paying full-freight, would reduce prices and increase competition on the individual market.

Supporters of the “public option” say it could provide better coverage for less cost because the government can leverage its massive buying power to negotiate optimal deals from insurance companies.

Opponents said expanding government’s role in health care is a bad idea. As he campaigned for the presidency, Donald Trump said he because it would drive away private insurers, “leaving Americans with fewer options and eventually no choices but a government-run plan.”

The one-time bailout is just the beginning of what are expected to be broader health insurance reform efforts in Minnesota. Among them is a renewed call for state-sponsored single payer insurance that is not likely to be well-received in the state’s Republican legislature.

This story is part of a partnership that includes , and Kaiser Health News.

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Alleged Scheme To Fix Generic Drug Prices Started At Dinners And ‘Girls Nights Out’

Liz Szabo — Thu, 22 Dec 2016 10:00:35 +0000

The high prices Americans pay for generic drugs may have been cooked up by pharmaceutical salespeople on golf courses, at a New Jersey steakhouse or over martinis at a “Girls Nights Out” in Minnesota.

Details emerging from an ongoing investigation show that drug company employees gathered regularly at such swanky locations and conspired to keep prices and profits high, according to interviews and a complaint filed last week in U.S. District Court by Attorneys General in 20 states.

“The wining and the dining and the dinners and the social repertoire sort of led to an atmosphere in which follow up conversations could occur [and] where price fixing could occur … because they had these relationships,” said Minnesota Attorney General Lori Swanson in an interview. “I think people should be absolutely appalled.”

The lawsuit hits home for many middle-class families who have struggled in recent years to pay for generic medications while prices for some drugs soared more than 8,000 percent. The price for a decades-old antibiotic called doxycycline, for example, jumped from $20 for a bottle of 500 pills in October 2013 to more than $1,800 in April 2014.

That price hike was the result of secret efforts by generic drugmakers to make as much money as possible, the complaint says. Maine Attorney General Janet T. Mills said, “It is unconscionable for anyone to manipulate the system in order to line their pockets at the expense of people who need access to affordable medications in order to remain healthy.”

The ongoing Attorneys General investigation began in 2014, according to the complaint, and has “uncovered evidence of a broad, well-coordinated and long-running series of schemes.”

The companies accused of price fixing include Aurobindo Pharma USA, Citron Pharma, Heritage Pharmaceuticals, Mayne Pharma, Teva Pharmaceuticals USA and Mylan Pharmaceuticals, which has come under fire for an unrelated increase in the cost of its EpiPen, used for severe allergic reactions. The Justice Department also charged two former executives at Heritage with price fixing.

In addition to doxycycline, the companies and executives were charged with fixing the price of an oral diabetes drug called glyburide, which helps control blood sugar.

Spokeswomen for Teva and Mylan denied any wrongdoing. In a statement, Heritage said that it fired the two employees accused of price fixing in August and has filed a separate lawsuit against them, accusing them of embezzlement.

“We are fully cooperating with all aspects of the Department of Justice’s continuing investigation,” Heritage said. Aurobindo, Citron and Mayne did not respond to requests for interviews.

In an interview Friday, Connecticut Attorney General George Jepsen said, “The issues we’re investigating go way beyond the two drugs and the six companies. Way beyond … We’re learning new things every day.”

Generic drugs now account for 80 percent of prescriptions in the U.S., with sales of $74.5 billion in 2015. These drugs saved consumers $193 million in 2011 alone, because their prices are typically a fraction of the cost of brand-name drugs. Both consumers and taxpayers have been hurt by skyrocketing drug costs, according to the complaint. Medicaid plans spent more than $500 million from June 2013 to June 2014 on generic drugs whose prices more than doubled.

Generic drugmakers have explained recent price increases as the result of “a myriad of benign factors, such as industry consolidation, FDA-mandated plant closures or elimination of unprofitable generic drug product lines,” according to the complaint. In truth, the explanation for soaring prices is “much more straightforward and sinister — collusion among generic drug competitors,” the complaint said.

“It’s always suspicious when you see dramatic increases in price in areas where there’s really no market protection, either through patents or something else,” said Dana Goldman, director of the Schaeffer Center for Health Policy and Economics at the University of Southern California.

Executives from Heritage, a New Jersey company described as the “principal architect and ringleader of the conspiracies,” sought out competitors and got them to “agree to raise prices for a large number of generic drugs,” according to the complaint.

A Heritage saleswoman from Minnesota would allegedly organize the Girls Nights Out, Swanson said. The gatherings were sometimes called “women in the industry” meetings, as if the aspiring executives intended to mentor each other on the secrets to getting ahead in a man’s world.

But the cozy cocktail conversation veered far from career advice. Instead, the saleswomen shared sensitive information about their companies’ business plans, according to the complaint.

Male drug industry executives weren’t idle, either. In 2014, at least 13 male CEOs, company presidents and senior vice presidents allegedly met at a steakhouse in Bridgewater, N.J. At these “industry dinners,” one company typically paid for dinner for all of the guests. Executives decided which company would pay based on alphabetical order. Drug company representatives socialized at trade shows, golf outings and conferences, as well, the complaint said.

Executives discussed how to divvy up market share to avoiding competing with each other for business, according to the complaint. Companies either declined to bid for certain customers or offered “cover bids” that they knew would be rejected. Companies knew they were breaking the law and took care to have most of these discussions on cell phones or in person, to avoid leaving a paper trail. Employees destroyed evidence from text messages and emails, the complaint said.

The issues we’re investigating go way beyond the two drugs and the six companies.
Connecticut Attorney General George Jepsen

Heritage and other companies routinely consulted their competitors before selling new medications so that they could avoid competing on prices, the complaint said. The agreement gave the illusion of competition, but kept prices high.

In 2014, for example, Heritage “devised a scheme whereby it would seek out its competitors” and arrange to “raise prices for a large number of generic drugs,” including glyburide, whose price was targeted for a 200 percent increase, according to the complaint. Executives instructed the Heritage sales team to immediately contact competitors to agree on price increases.

Heritage executives destroyed incriminating emails, knowing that the company didn’t have a policy about keeping copies of old messages, according to the complaint. Employees involved in the scheme “deleted all text messages from their company iPhones regarding their illegal communications with competitors.”

“In August 2016, following an internal investigation that revealed a variety of serious misconduct by the individuals charged today, Heritage Pharmaceuticals terminated them,” the statement from Heritage said. “We are deeply disappointed by the misconduct and are committed to ensuring it does not happen again.”

Minnesota’s Swanson noted that some information in the complaint has been blacked out at the request of government officials. Eventually, though, Swanson said she wants all of the allegations’ details made public.

“I’m committed to try to see this through and have an unredacted copy of this complaint eventually get filed so people can see just what’s in all of these text messages an emails and what was occurring,” said Swanson. “I think that’s important.”

The investigation has uncovered a hidden side of the generic pharmaceutical industry, said Michael Carrier, a professor at Rutgers Law School who specializes in antitrust law in the drug industry. “It’s a bombshell,” he said.

The charges should prevent generic drugmakers from dramatically raising prices in the near future, Carrier predicted.

“These sorts of charges can filter out over months if not years,” Carrier said. Based on the complaint, he said, “it’s not just two bad apples acting alone.”

The victims of the alleged price fixing include both consumers and taxpayers, who support government insurance programs, the complaint said.

“Many Mainers rely on lower-cost generic prescription drugs in order to make ends meet,” said Mills.

The price fixing charges have surprised even pharmaceutical industry experts.

“There are some economic experts who have suspected that there is some tacit collusion among brand-name drugmakers not to lower drug prices,” said Dr. Hagop M. Kantarjian, chair of the department of leukemia at the University of Texas MD Anderson Cancer Center, who has analyzed the strategies brand-name drugmakers use to keep their products out of the generic market. “But nobody has thought that possibly the generic companies could be potentially colluding to develop monopolistic prices.”

Kantarjian called for stiff penalties that drugmakers can’t write off as the cost of doing business. “If they’re guilty, they should be penalized in a deterrent fashion,” he said.

Goldman said drugs that have been used for years and cost pennies to make shouldn’t be regarded as ordinary consumer products.

“They should be thought of like electricity or something we all need,” Goldman said. “In electricity, we take the view that there is a safe and steady supply and we provide a fair return to the manufacturers.”

Sen. Bernie Sanders, I-Vt., and Rep. Elijah Cummings, D-Md., had asked Heritage for details about doxycycline’s In a letter to the company released Friday, they noted that Heritage never sent the information. When asked about the drug’s price increase, an attorney for Heritage told Cummings and Sanders that “Heritage has not seen any significant price increases” for doxycycline in the U.S.

In their , Sanders and Cummings said Heritage’s 2014 statement now seems “disingenuous at best” and repeated their request for information about doxycycline’s sales and pricing.

KHN’s coverage of prescription drug development, costs and pricing is supported in part by the .

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Minnesota’s Largest Health Insurer To Drop Individual Plans

Mark Zdechlik, Minnesota Public Radio — Mon, 27 Jun 2016 09:00:30 +0000

Blue Cross and Blue Shield of Minnesota will retreat from the sale of health plans to individuals and families in the state starting next year. The insurer, Minnesota’s largest, said extraordinary financial losses drove the decision.

“Based on current medical claim trends, Blue Cross is projecting a total loss of more than $500 million in the individual [health plan] segment over three years,” the insurer said in an emailed statement.

The Blues reported a loss of $265 million on insurance operations from individual market plans in 2015. The insurer said claims for medical care far exceeded premium revenue for those plans.

“The individual market remains in transition and we look forward to working toward a more stable path with policy leaders here in Minnesota and at the national level,” the company stated. “Shifts and changes in health plan participation and market segments have contributed to a volatile individual market, where costs and prices have been escalating at unprecedented levels.”

The decision will have far-reaching implications.

Blue Cross Blue Shield says the change will affect about “103,000 Minnesotans [who] have purchased Blue Cross coverage on their own, through an agent or broker, or on ,” the state’s insurance exchange.

“We understand and regret the difficulty we know this causes for some of our members,” the insurer wrote. “We will be notifying all of our members individually and work with them to assess and transition to alternative coverage options in 2017.”

Cynthia Cox of the Kaiser Family Foundation, who analyzes individual health insurance markets around the country, says what the Blues are doing in Minnesota is similar to a by UnitedHealth Group, the nation’s largest health insurance company. (KHN is an editorially independent program of the Kaiser Family Foundation.)

“Right now what it seems like is that insurance companies are really trying to reset their strategy,” Cox said. “So they may be pulling out selectively in certain markets to reevaluate their strategy and participation in the exchanges.”

She said the individual markets just aren’t turning out as expected. “The hope was that these markets would encourage exchange competition and [get] more insurers to come in. … I don’t know if we’re at a point where it’s completely worrisome, but I think it does raise some red flags in pointing out that insurance companies need to be able to make a profit or at least cover their costs.”

In response to the development in Minnesota, Gov. Mark Dayton, a Democrat, highlighted gains in enrolling more Minnesotans in health insurance plans since the implementation of the Affordable Care Act. But he also acknowledged the insurer’s departure reflects the instability in the market for individual and family coverage.

“This creates a serious and unintended challenge for the individual market: the Minnesotans who seek coverage there tend to have greater, more expensive health care needs than the general population,” said Dayton. “Blue Cross Blue Shield’s decision to leave the individual market is symptomatic of conditions in the national health insurance marketplace.

University of Minnesota health economist called the Blues’ departure a major blow to Minnesota’s already troubled individual market. “What this says about the individual market is that it is very unstable and it has been disrupted by a number of events, and we still don’t know whether it will recover or not from those disruptions,” he said.

Feldman said lawmakers would be wise to pay attention to the unstable individual markets and to shore them up with a carrot and stick approach.

“To get people to sign up in the exchange we need one or both of those,” he said. “The stick could be to raise the penalties on people who don’t buy insurance, and the carrot could be to increase the subsidies for people that do. I think that’s the only way that we’re going to get a decent mix of risks to buy into that exchange.”

Although the main Blue Cross Blue Shield unit is leaving Minnesota’s individual market, its much smaller subsidiary, Blue Plus, will continue to offer plans on the individual market, according to the company statement. Blue Plus, has only about 13,000 members according to his message.

Kaiser’s Cox says that’s typical and leaves insurers a re-entrance option.

MNsure spokesman Shane Delaney said about 20,000 Minnesotans purchased Blue Cross and Blue Shield of Minnesota plans through MNsure. He said the vast majority of them qualified for tax credits to help pay premiums. Delaney said all of the Blue Cross and Blue Shield customers losing their coverage next year should look for other options on MNsure, the only place eligible applicants can secure federal tax credits.

This story is part of a reporting partnership with NPR, Minnesota Public Radio ��Ի��.

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With Special Tax Suspended, Medical Device Firms Reap Big Savings

Mark Zdechlik, Minnesota Public Radio — Thu, 25 Feb 2016 10:00:09 +0000

U.S. manufacturers of medical devices started 2016 with a windfall — a two-year suspension of a on their revenue.

Medical devices include used in medical care, such as tongue depressors, endoscopes and MRI scanners, for example. Manufacturers said the tax on devices hurt their business. The Congressional Research Service companies paid out $2.4 billion in 2014.

“When this tax went into place, it forced us to make cuts and sustain those cuts,” said , chief financial officer of Minnesota-based . His firm takes in more than $1 billion a year for its specialty medical products.

Smiths Medical had paid $10 million a year in medical device taxes, Montague said, “and so now we’re getting that funding back.” He insisted the money will go into building the business.

“We’re making significant investment in our product portfolio — in improving our product portfolio,” Montague said. “And what this enables us to do is accelerate some of that investment.”

The medical technology industry has branded the device tax a , though that claim . Montague said Smiths Medical will now be adding new jobs, but he doesn’t know how many.

Minnesota is home to a concentration of device makers, and , R-Minn., is a leading opponent of the tax. He said suspending it for two years could provide a major boost to Minnesota’s economy.

“There are estimates that because of Minnesota’s high concentration in this sector — essentially the largest in the world in a concentrated environment — that Minnesota would be paying 25 percent of the tax,” Paulsen said. “That’s a big deal to our economy.”

Bob Paulson is CEO of , a small firm in Minnesota that makes devices involved in the treatment of urological conditions. His company had only been paying the device tax since November, he said, when NxThera started selling products in the United States. The tax made it harder to find financing, he said, because investors balked at putting their money into an industry that’s been singled out to pay a tax. Thanks to the tax hiatus, he said, he now plans to enlarge his staff of 43 researchers and sales people.

“It absolutely means additional money that we can invest in both of those areas,” he said.

Still, some industry analysts questioned whether suspending the tax will significantly boost the number of jobs created.

The Congressional Research Service concluded the tax was having on employment, changing payrolls by no more than two-tenths of 1 percent. Still, the same report called the tax difficult to justify and noted that such excise taxes are typically put in place to discourage a particular behavior, such as smoking.

, a senior analyst with Bloomberg Intelligence, said the suspension won’t really change what big companies are doing, but will help their bottom lines. Big, publicly traded firms also might return the money to shareholders by buying up their own shares, he said.

“Smaller companies felt a bigger tax bite than the giants, so they are more likely to put the tax savings back into the business,” McGorman said.

Industry analyst , of Piper Jaffray, said device makers would be smart to reinvest the windfall.

“Politically, they better spend this money on R-and-D,” West said, “or the government can look at this and say, you know, ‘Look, if you just pass this on to the shareholders, we’re going to reimpose the tax.’ “

But Rep. Paulsen said he doubts the tax will return. He’s optimistic the two-year tax suspension will become a permanent repeal.

This story is part of a reporting partnership with , ��Ի��.

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‘Critical Illness’ Insurance Grows As Out-Of-Pocket Health Costs Jump

Mark Zdechlik, Minnesota Public Radio — Tue, 02 Feb 2016 12:54:07 +0000

A relatively obscure category of health insurance — “critical illness” insurance — is catching on because, increasingly, conventional health plans have consumers paying a lot of out-of-pocket costs. Mark Zdechlik of Minnesota Public Radio explains the pros and cons of critical care insurance in this story that aired on NPR’s Morning Edition.

This story is part of a partnership that includes , and Kaiser Health News.

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