More and more, I’m thinking there’s plenty of money floating around our “health care system” that might be better spent on actually delivering health care:
Three drug makers agreed Tuesday to pay $421 million to settle U.S. claims that they bilked federal health-care programs out of millions by greatly inflating the price of their drugs. According to the Justice Department, Abbott Laboratories Inc., Roxane Laboratories Inc. and B. Braun Medical Inc. reported false prices to the government to get larger Medicare or Medicaid reimbursements for the doctors and pharmacists choosing their drugs. The actual price was often a fraction of the reported price, the government alleged, allowing doctors and pharmacists to pocket the difference. The practice amounted to “a kickback scheme funded by taxpayer dollars,” said Assistant Attorney General Tony West.
Oh, looky here. They had a little inside joke:
“This practice was widespread in the pharmaceutical industry — so widespread in fact that average wholesale price, AWP, it was jokingly said, really stood for ‘Ain’t What’s Paid,’” Tony West, assistant attorney general for the Justice Department’s civil division, said today at a news conference in Washington. “Indeed, the only purchasers who paid the full inflated reported drug price were you, the American taxpayers.”
The difference between the inflated government payments and the price paid by health-care providers for a drug was known as “the spread,” and profits for doctors or pharmacists increased as the spread widened, U.S. officials said.
The cases were originally brought as whistleblower suits by a Florida company called Ven-a-Care of the Florida Keys Inc. The government later joined the suits under the so-called qui tam provisions of the False Claims Act, which allows whistleblowers to share in any proceeds that the government recovers as a result of their information.
Here’s qui tam, if you’re interested (pdf):
The statute, first passed in 1863, includes an ancient legal device called a “qui tam” provision (from a Latin phrase meaning “he who brings a case on behalf of our lord the King, as well as for himself”).
Haven’t you heard? Forcing people to buy insurance from private concerns will fix all our problems.
Man. Qui Tam? I don’t think that’s in the Constitution. Better get that before the Roberts court ASAP. I feel like my freedoms are in jeopardy.
Somebody is doing their job.
So did they talk about Grandma Millie like our other corporate geniuses? Wotta buncha monsters.
Are latin words un-American?
I love the definition. “As well as for himself”.
I can buy a pill from India for fifty cents, the same pill at Walgreens costs $4 a copy. That’s $120 a month for a pill, versus $15 a month. Same drug. And yes, I am quite confident in the quality of the product from India.
I buy a lot of pills for more than one pill taker. I can save about $300 a month buying offshore meds. That is $3600 a year.
This is real simple: US Big Pharma is fucking this country every day with inflated prices and lies about the safety of drugs from offshore, and lies about how only these inflated prices will assure development of newer and better drugs.
@Oscar Leroy: Listen, in a sane world everyone would just pay a “Health Care Tax” and automatically get covered. I totally agree this is ass backwards.
But “forcing people to buy insurance” is another way of legally prohibiting insurance companies from dropping clients. That, combined with administrative cost caps, forces down the price of insurance for everybody. And subsidies keep the price of insurance from soaking the poor.
It’s a needlessly complicated and painfully obtuse way of achieving universal health care, but it’s better than the status quo.
@Zifnab: Qui Tam? Latin? ! darn tootin we don’t want any of those there wetback legalisms and sharia law sneaking into our pure and holy system here!
Yeah…Pfizer spends more on marketing than R&D, probably also the case with the others. All the big pharmas are essentially screwed, they have nothing in their drug pipeline.
Clearly, qui tam is unAmerican and deserves to die. Let’s get on the stick, US Chamber and teh New, Improved House(tm). This oppression will not stand, man.
Sherman, you’re next.
Thank goodness everyone will be able to afford their deductibles/co-pays, etc. That way they’ll be able to use the coverage they can’t be dropped from.
I don’t know…”our lord, the King” sounds vaguely Biblical. So it may pass the Teabagger standard…
I wrote my law review note on the qui tam provisions of the False Claims Act. It’s such an obscure issue I get a big chuckle any time someone actually brings it up (which happens, oh, every three years or so).
But according to libertarianism, a private for-profit company would not, but could not, do this!
Obviously they must be over-regulated somehow or something.
@Dave: But surely, if Jesus wanted you to be well, you wouldn’t be sick. Illness, earthquakes and hurricanes are evidence of unworthiness: God’s Good Housekeeping Seal of Disapproval, no?
Culture of Truth
our lord the King
Totally OT, but we now live in the era of private spaceflight.
I have no idea why, since my chances of a personal trip to orbit in my lifetime are exactly nil– but it cheered me up a little.
(Not affiliated with SpaceX).
Edit: Better link here.
You should feel that way. After all, we have the Roberts Court. Anyone looking at them should feel their freedoms are in jeopardy.
Until they start putting people in fucking jail we can fully expect shit like this to continue.
I’m sure we’ll be treated soon to another mcmeagan post about the need to appreciate our betters at the pharma companies
One of the most hideously callous things I ever heard of was on a patient forum regarding ALS (Lou Gehrig’s Disease.)
At a pharmaceutical company meeting, someone brought up the cost of their drugs for ALS, pointing out that people suffering from it could not work and required a lot of care. Perhaps they should hold the line on their prices?
And someone else said No: that this was one of those diseases where the person’s friends & relations held garage sales and threw benefits so it really wasn’t necessary.
Apparently this was greeted with a stunned silence. Which was the only good part.
This is what happens when sociopathic behavior is considered good for business.
When it’s really not good for anybody.
Oscar: I know I’m whistling in the wind, but:
Exemptions will be granted for financial hardship, religious objections, American Indians, those without coverage for less than three months,
undocumented immigrants, incarcerated individuals, those for whom the lowest cost plan option
exceeds 8% of an individual’s income, and those with incomes below the tax filing threshold from http://www.kff.org/healthreform/upload/finalhcr.pdf.
You don’t have to like it, but you have to know what’s in it!
There go those damn Latinos again.
Why don’t they just shut up and speak English?
we have the Roberts Court. Anyone looking at them should feel their freedoms are in jeopardy.
“Nobody’s life, liberty or property is safe while the
CongressSupreme Court is in session.”
(Apologies to Mark Twain).
The truth is, Oscar, I followed The Debate closely.
No one wanted to talk about what health care costs. No one. Not liberals, not centrists, not conservatives.
Talking about insurance-a mechanism for payment- (honestly talking, without hyperbole and lies and scare tactics) was like pulling teeth.
We never got to health care.
No one wanted to talk about health care, because it brings up uncomfortable issues of who gets what care, and who gets paid, and how big a part of our economy this whole teetering system is, and how many and varied people work in it, and profit from it.
But we will talk about that, at some point. Because we have to. This was Round One. Round Two will be scarier.
Poor, poor providers, barely able to make ends meet.
Obviously, what they need is a tax cut and tort reform.
Davis X. Machina
Nesciō quā rē vōs omnēs haec verba ‘quī tam’ tam ridicula habēatis. Mihi quidem cotidiana sunt.
How dare you want to confine those selfless, self-sacrificing physicians to buying only one new luxury car for their teenaged daughter every year.
I thought part of the reform plan was that a certain percentage of an insurance company’s money had to be spent on patient care; basically, they could not spend more on ads than claims. So, you might not have a company spending more on ads than R&D anymore, and you might have a company actually spending money on claims because they have to. It seems like a small but important step in bringing costs into line.
Ain’t just the drug companies bilking Medicare. It’s the whole system bilking whoever they can get to pay. Most people don’t see it because they either have an HMO which gets the bills or no insurance at all. As self-employed types, we had a catastrophic policy and had to pay for the first $10K of any procedure. When my hub went to the hospital for surgery we got a bill from the anesthesiologist for $2500 — I called to see if we could work something out, payment-wise, and they said, “oh, you only have to pay $900, the $2500 is what we bill the insurance company.” They were totally upfront about it. I was astounded at the casualness of the looting.
It is, and maybe I’m misunderstanding your comment, but the provision that says an insurance company has to devote X to costs of health care won’t have any impact on drug companies, and R and D. Those two things are entirely different.
So while it’s a good and worthwhile reform that an insurance company has to apply 80% of premiums to health care (versus advertising) but that doesn’t do anything to force drug companies to do anything.
This was easy, because they were actually stealing, complete with kick-backs. This was a racket.
It’s amazing how you can look at a story about pharmacy companies cheating Medicare and think that the problem will somehow be magically solved if we’re all on government insurance. There’s no way they would continue cheating the government if we’re all on government insurance because puppies and rainbows!
Hint: unless you expect the government to also take over the development and manufacture of all drugs, we will still have to deal with private drug companies even if we have single payer healthcare.
hah! Doctor-bashing. The problem with that is, the single biggest employer in my terminally depressed county is….the hospital.
Lots and lots and lots of jobs depend on our huge, inequitable, bloated system. Not just high-paying jobs, either. The kind of jobs you get when you’re laid off at the factory, and you “retrain” at the local community college for a career in “health care!”.
It’s a sixth of the economy. It’s not just doctors.
@kay: Yep. When health care figures are discussed, they are done so in odd and confusing ways. Somerby has been documenting that for years. Not preparing in advance to address that blind spot in policy discussions and public information before tackling health care reform made it very easy to ignore that the issue is both access and cost, and if we don’t soon tackle cost, we will soon be a nation that primarily consumes medicine and builds cruise missiles.
@Nylund: It’s the FDA and all those anticompetitive regulations about safety, purity, efficacy and stuff like that.
Similar boat. We’ve got a $15,000.00 deductible, so we wind up paying for everything we have done in addition to paying several thousand dollars annually for a policy that pays for nothing.
My youngest showed some atypical cells on a birthmark at the age of 15, so not only did we get to pay about $4,000.00 early this year to remove the thing in stages, she’s also at risk of shitty underwriting for the remainder of her life if health care reform never takes place. She’ll be severely constrained in career choice if that happens, even before she starts her working life.
Most recently, she injured her foot while on point during ballet rehearsal (her foot folded in under her for an ugly top sprain). The bill for 45 minutes in an exam room, a quick glance, two tylenol, an X-ray and an ace bandage was over $1200.00.
Best health care in the world, indeed.
Ah, then I really have misunderstood this. I thought drug companies were under the same umbrella as insurance companies, because drug companies seemed to be parallel-coverage. I think I’m mixing up my programs.
Thanks for the clarification.
@ Davis X Machina,
that’s a lot of latin. Makes me think the middle name really is X, for Xavier. How did you escape the Francis that usually precedes the X?
These are great posts. Keep it up. We need to get over the latest filthy deal and keep our eyes on the prize.
Haha, proof that the government system is corrupt! This is why we need to get rid of Medicare, so private companies will stop stealing money from seniors /sarcasm.
But seriously, I guarantee that if Fox News talks about this it will be as if this were caused by the gov’t rather than greedy corporations.
My sympathies. But at least it’s several thousand. Ours went to $10K/year premium for $10K deductible per person per year in the family. Which is when we went to regular HMO… and then moved to Canada. Can’t afford to live in the US anymore.
@kay: Yes, this is exactly it.
Health care costs are where the big waste is. Oscar can’t tell the difference between care and insurance.
Care is paid for largely by three groups:
1) The federal government (Medicare, Medicaid, and the VA to a lesser degree because they provide a lot of their own care)
Health care costs will only be contained by these three groups. The last group has power in the marketplace for care that can be opted out of. But if you can’t go without, consumers lose virtually all of their ability to shape the market. You can influence the cost of botox but not of an appendectomy.
The feds can do a lot to contain costs, and they have already, but they really only hit the senior market. Medicaid is not a sufficiently large and cohesive program to affect care costs for things like neonatal. Further, they cannot contain costs that shift from outside of Medicare to inside – treatments that are deferred from age 64 to age 65, when they may become more expensive because they were neglected.
Ultimately, to contain costs – even costs for Medicare to a large degree – you need whoever is paying for care for 0-64 year-olds on your side. And the good news is, insurers want more than anything else to contain the same costs as the Feds – those high care costs cut into their profits and into their ability to keep customers.
An aside: anyone who argues that the insurers like dropping policies is an idiot – no business can flourish by systematically eliminating customers. They do it because they feel they need to – you only eliminate customers as a survival tactic. They’d much rather take those premiums and reduce what they pay out for care if it achieved the same goals. Further, it completely ignores and contradicts the dynamics that caused the health insurance market to develop in the first place.
So that leaves you with two real approaches:
A) Get the insurers to help you contain costs as a shared goal, by constraining their ability to absorb higher costs from the market and by empowering them to negotiate as a stronger block. This is one downside to the market fragmentation – nobody in the market is really big enough to force prices down. Insurance CEOs will tell you that the single change that they want is lower drug prices. They are powerless against pharma because they are all too small for pharma to care. Pharma is negotiating deals with Canada and France. They just don’t care about your insurance company’s problems because they are powerless to do anything. France can do a lot. Cigna can’t do shit. This was the tactic that Obama sought – partner with the insurers for now, work with them to drive down costs of care and add regulation. The only thing that Obama was giving up was not killing insurers. That was his grand concession. In the hostage metaphor, he was holding a gun to their heads and saying ‘you will lose pre-existing, rescission, profits above a certain line, and be required to do all of this other stuff, and in exchange I will help you reduce your costs and not kill you.’ And they were okay with that. And then Jane showed up with her allies and blew up the arrangement.
2) Eliminate the insurers. Single payer. Ultimately, this is where we’re going to land, or a free-market system so heavily regulated that it might as well be single payer. This is politically impossible, and it’s why Obama rejected it.
The public option plays no meaningful role here. It’s just a proxy for another insurance company, but it doesn’t make this meaningfully more or less easy to achieve, or likely to succeed, unless it grows to such size that it effectively becomes single payer.
But the more successful insurers are at driving down costs – the more the Federal governments costs go down as a result. If insurers can get things to where they only pay out Medicare rates, then the problem of providing incentives to cover Medicare patients goes away, and Medicare saves money. The more money the feds can save and get Medicare balanced, the more likely they can then propose expanding the public insurance options.
For all the complaints about how ACA came about, it ignores the fact that the only fiscally unsustainable health insurance program out there right now is Medicare and Medicaid. The private insurers are sustainable. They’re bad for consumers because of how they achieve their sustainability, but right now, the argument to expand Medicare and Medicaid is a difficult one to defend because they’re going bankrupt. Address that – which means addressing the health care cost structure, and then you have a new landscape in which to look at the role of insurers.
I was curious about the role of the AWP price index in this mess, but the article was not informative on that point:
‘ The Justice Department said that abuse of the so-called Average Wholesale Price, used to set reimbursement rates, was rife within the industry.
“This practice within the pharmaceutical industry was widespread—so much so that instead of Average Wholesale Price, “AWP,” it was jokingly said, really stood for: “Ain’t What’s Paid,” said Mr. West.
The ‘Ain’t What’s Paid’ joke is an old one, and everyone in pharmacy has heard it a hundred times.
There are over a dozen price indices used in pharmacy for setting reimbursement rates, each with its own pros and cons.
HCR has introduced a new price index for setting reimbursements which solves some of the problems of the AWP. But the new index will probably favor the very largest corporate providers and healthcare plans and pharmacy chains.
Thanks for pointing out this story. I am curious about how the drug companies worked the scam.
Uwe Reinhardt, a health economist at Princeton (I think Princeton) has said that much of what we in the US think of healthcare costs is really a transfer of funds from the population to corporations due to cartelization, rent seeking and almost complete lack of transparency in pricing and provider and insurance contract provisions. This is nice illustration of his point.
Yes, there’s lots of extra money in the system. As shown in this chart, we spend almost 2.5 times the OECD average on health care per capita.
Davis X. Machina
@dollared: It’s only a pseud — I am a Latin teacher, though….
I could just as easily I suppose have been Abe Initio or Dee Profundis…
My job largely revolves around medical billing. And people default on their medical bills all the time. But if you walk in the door with an 80/20 copay and a $2000 for a $12,000 procedure, I’ll pick you up long before I touch the guy without a red cent to his name. Getting paid $8k for a $12k procedure is unfortunate, but manageable for a typical practicing physician.
This is also why almost every ER operates at a loss, btw. Doctors can’t check your insurance if they just pulled you out of a car wreck. No one knows if the hospital is getting paid until you come around or an assistant gets in contact with your family. More often than not, these bills would just go to collections.
“exceeds 8% of an individual’s income”
That REGRESSIVE 8% TAX INCREASE that Obama raised on the least of US go directly into predatory Corporations pockets.
Meanwhile, Obama just refused to increase the taxes on BILLIONAIRES.
25% of Obama’s gifts to the ultra-wealthy go to the top 1%.
and you shall know him by his priorities…
“kay”: “No one wanted to talk about what health care costs. No one. Not liberals, not centrists, not conservatives.”
Only someone not paying attention to the Debate could make that claim.
‘Liberals’ repeatedly referred to the costs of health care, often when comparing how America pays more for worse health care than nearly every other civilized nation on earth.
Cost comparisons were also done when referring to the lower overhead costs of Medicare compared to every single private insurance program (which are ALL more expensive to run than Medicare).
“kay”, here’s a primer for you on health care costs:
Factoid: “In 2008, U.S. health care spending was about $7,681 per resident and accounted for 16.2% of the nation’s Gross Domestic Product (GDP); this is among the highest of all industrialized countries.”
We spend more on health care costs than nearly all other industrialized countries because predatory Corporations loot the system.
It’s really that simple.
@Davis X. Machina:
@Davis X. Machina:
I’m thinking of changing my handle to “Dumb Spiro Spero”.
Kay, I’ve said it before and now I will say it again: you are a great front-pager and commenter.
What you have written (and not just what i quoted above) is exactly right. We (and I do mean WE as in every fucking one of us) MUST start facing the facts about how much end of life care costs in this country (mostly due to pointless procedures) and how limited certain health resources are (dialysis for all those future diabetic renal failures, for example) and how much health-care folks make here (say, compared to Canada, the UK, France, Belgium, Japan).
When people say “give me the public option. i want medicare for all”, they forget that medicare costs are killing us. Until the cost curve is bent, we are hosed.
@News Reference wrote:
No, it isn’t. Look at the between country differences in certain medical procedures for heart diseases. Canada deals with this very differently than the USA. Their system says “No, not going to do bypass surgery on you. Instead, medical therapy.” In the USA that is translated into “death panels”.
I agree that insurance companies inflate costs. As does fee for service models. But ridiculous patients and their families are at fault, too.
So stop pretending it’s just about corporate greed.
“medicare costs” less than ANY private-for-profit Corporate ‘plan’.
So we’ve got “kay” making the false claim: “No one wanted to talk about what health care costs” when that was what anyone who was paying attention was talking about.
And we’ve got “HyperIon” making a false statement about “medicare costs”.
Medicare costs less in overhead than ANY Corporate insurer.
The “cost curve is bent” easily: Just eliminate predatory Corporate profits.
But Obama bent over backwards to protect Corporate profits and eliminate the public option.
“I agree that insurance companies inflate costs.”
Then stop protecting Corporate greed.
It’s killing people. LITERALLY.
“HyperIon”, America spends MORE money on it’s medical industry than countries that have BETTER health care outcomes.
Do you really not know that?
Or do you have a vested interest in protecting predatory Corporate greed?
Well, I disagree. Liberals were obsessively and singularly focused on a public insurance option on the proposed exchanges, a public option that would have potentially affected maybe three million people who were ineligible for Medicaid, but received a subsidy for purchase of insurance.
That’s not health care. It’s a payment mechanism.
Here’s an example that I’ve used before, but I like it, so I’ll use it again.
During the debate, two studies came out. One suggested the risks of yearly mammograms and the costs of yearly mammograms should be revisited, and measured against the value of yearly mammograms.
There was another one on PAP tests.
Some liberals and the mainstream media went completely insane at even the suggestion that we might be over-using these tests. I don’t know if conservatives went insane too. The assumption was someone was denying someone else health care. But that wasn’t it at all. It was just a simple and sensible risk-benefit analysis: how much does the testing cost, what are the risks (false positives, exposure to radiation) and what are the benefits?
That’s how crazy talking about health care makes people. We can’t discuss changing the recommendations for two tests without everyone going berserk.
I really shudder to think of us talking about why we spend so much on extreme medical intervention in the last year of life, in terms of total Medicare expenditures. It may lead to a freaking civil war.
We can’t even discuss these things. People start screaming and crying. Understandable, right? They’re core issues, life, death, health, who gets what. But how long can we avoid it? Another 30 years? I don’t think so.
“kay”, is making more false statements.
A true Public Option would have been available to anyone that wanted to buy into it.
That’s potentially more than 300 hundred million “customers”.
And that’s what terrified the predatory Corporate insurers “kay” is protecting.