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FDA Commissioner Rolls Back 40 Years of Orthodoxy on Cost-Exposure

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FDA Commissioner Scott Gottlieb

Speaking yesterday at America’s Health Insurance Plans’ (AHIP) National Health Policy Conference, FDA Commissioner Scott Gottlieb railed against patient cost-exposure (e.g., copays).   His prepared speech said:

Patients shouldn’t be penalized by their biology if they need a drug that isn’t on formulary. Patients shouldn’t face exorbitant out of pocket costs, and pay money where the primary purpose is to help subsidize rebates paid to a long list of supply chain intermediaries, or is used to buy down the premium costs for everyone else. After all, what’s the point of a big co-pay on a costly cancer drug? Is a patient really in a position to make an economically-based decision? Is the co-pay going to discourage overutilization? Is someone in this situation voluntary seeking chemo?  Of course not.  Yet the big co-pay or rebate on the costly drug can help offset insurers’ payments to the pharmacy, and reduce average insurance premiums. But sick people aren’t supposed to be subsidizing the healthy.

Wow.  This may seem like common sense to some readers, but it is revolutionary to hear from a senior American government official, and indeed a Republican one no less.

In a new paper, Victor Laurion and I have chronicled the ways in which American politicians at the highest levels have blindly embraced the opposite point of view for half-a-century.  This sort of ideological adherence to simplistic economic reasoning (which James Kwak calls ‘economism‘) is  why U.S. health insurance exposes patients to all sorts of deductibles, copays, and coinsurance.  As a result, even insured Americans find themselves “underinsured” — denied access to care or falling into bankruptcy if they stretch to pay nonetheless. Read More

“Right to Try” Does Not Help Patients

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Co-Blogged by Christopher Robertson and Kelly McBride Folkers (research associate at the Division of Medical Ethics of the NYU School of Medicine)

In 2014, Arizonans overwhelmingly voted in favor of a ballot referendum that claimed to allow terminally ill patients the “right to try” experimental drugs that have not yet been approved by the Food and Drug Administration (FDA). Despite the policy’s broad support, it has yet to help a single patient in Arizona obtain an experimental drug that they couldn’t have gotten before. Thirty-seven other states have also passed right to try bills, but likewise have seen little real impact for patients.

“Right to try” has moved to the federal stage, as the U.S. Senate unanimously passed such a bill last August without even holding a hearing. The House Energy & Commerce Subcommittee on Health considered the bill in an October hearing, but it failed to garner much enthusiasm among committee members. Vice President Mike Pence has advocated for a federal right to try law, and he recently met with FDA Commissioner Scott Gottlieb and House leadership to encourage pass of the bill this year. Read More

Medical Bills are Open-Price Contracts: A Victory for the Little Guy

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This blog has often covered the problem of outrageous medical bills, and explored whether patients have a responsibility to pay the balance on charges that are not covered by insurance.  One common pattern is that the patient agrees to pay “all reasonable charges” when they arrive at the emergency room or other provider, and then months later receives an incomprehensible bill for seemingly outrageous amounts.  The costs of the same healthcare can vary wildly from provider to provider, even in the same locale, and there seems to be little rhyme or reason.  (This is a common refrain of Elizabeth Rosenthal’s 2017 book.)

According to very basic contract law, when the agreement between a buyer and seller does not specify the prices to be charged (aka an “open price contract”), the seller may not demand more than a “reasonable” amount.   Years ago, I was involved in nationwide litigation against non-profit hospitals, raising this theory and alleging that their billing practices contradicted their state and federal “charitable” tax exemptions, since they were driving poor people into bankruptcy and foreclosure.  That litigation had a few notable wins, when several hospital systems agreed to adopt explicit charity care policies and stop some of the more egregious practices, such as putting liens on their patients’ houses.  Some of these reforms became an industry standard and then part of the Affordable Care Act.

Overall, however, this litigation was challenging, because courts tended to hold that the reasonableness of each patient’s medical bills had to be litigated individually – often with expert witnesses and comparable data from the healthcare provider and other competitors.  With only a few thousand dollars at stake for each patient, the courts’ refusal to aggregate the litigation left many consumers without an effective recourse to challenge their unreasonable bills. Contingent-fee attorneys tend to look for larger stakes to make their investment of time and expenses worthwhile. Read More

Special Deals for States?

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By Christopher R. Robertson

Over at HuffPo, Craig Konnoth has a short-but-smart piece exploring the Constitutionality of the logrolling deals now underway to persuade Alaska Senator Lisa Murkoswki to support the latest effort to repeal Obamacare.  Would other states have a right to object to a deal that showered special benefits on Alaska?  Konnoth explains how an “equal sovereignty” principle has emerged in recent Supreme Court decisions, and suggests that it may provide some grounds for challenging this sort of special treatment.

I am left wondering about the longstanding practices of states requesting and receiving waivers from the Federal government.  For example, Maryland has for decades enjoyed a Medicare waiver, which allows it to regulate prices.  Massachusetts has a $52B waiver to put its Medicaid members in accountable care organizations.   Do these violate equal sovereignty too?

Maybe the answer is that all states are treated equally in their right to apply for such waivers, under several explicit statutory vehicles, which have yielded several hundred such applications.  These are not simply bribes to secure votes in Congress.  On the other hand, some of these waivers were very much the result of politically-charged negotiations between conservative governors (such as Indiana’s Mike Pence) and the Obama administration, who granted these waivers as a way to expand insurance coverage.  Maybe that’s not so different than what Murkowski is demanding?

On related questions, also check out Brian Galle’s piece over at Medium.com.

How the FDA Produces Knowledge (and Is Not So Weird)

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Credit: SalFalko

The Federal government has wrested billions of dollars from the drug and device industry in settlements of claims that the companies broke the law by promoting their products “off-label” for uses not approved by the FDA.  In response, companies have asserted that promotions are a form of speech, protected by the First Amendment. Speech regulations are especially worrisome when motivated by paternalism.  This argument has received some traction in the courts, and is now getting a favorable look by the Trump administration.

I have argued (here, here, and here) that this law is not actually a speech regulation.  Nor is it paternalistic.  Instead, it is simply a vanilla regulation of a behavior (shipment of product in interstate commerce), which depends on various sources of evidence (including speech) as revealing whether the actor has an illicit intent (an unapproved use of the product).  The pre-market approval system, which requires that companies prove safety and efficacy for all intended uses, solves a collective action problem to produce information as a public good.  This is our key social mechanism for producing knowledge about safety and efficacy.  If this law is unconstitutional in the off-label context, the entire pre-market approval system would seem to be as well.

In a new piece out on SSRN, my physician co-author Victor Laurion develops the example of the drug Seroquel XR, to show how a federal prosecution for off-label promotion caused the company to perform scientific research on two new indications (general anxiety disorder and major depression).  A detailed discussion of the regulatory record shows how physician prescribing was improved by this public information, regardless of whether the FDA approved the new indication.  In this way, the FDA protects the liberty of physicians and patients to try drugs for new uses, even while holding companies to the proof of any uses that they actually intend.  The fact that the company’s intention is shown by speech evidence is immaterial. Read More

OPENING: Fellow / VAP — Regulatory Science

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ua_stack_rgbThe University of Arizona seeks to hire an early-career scholar (post-doctoral) to support its innovative Regulatory Science Program, a collaboration between the James E. Rogers College of Law and University of Arizona Health Sciences.  This idea of regulatory science is to “modernize our evaluation and approval processes to ensure that innovative products reach the patients who need them, when they need them.”  This mission includes both the regulation of the scientific process, especially the protection of human subjects and privacy, and the production of science to answer regulatory questions about safety and efficacy, for all FDA-regulated products, including drugs, biologics, devices, and diagnostics.

The Fellow and Visiting Assistant Professor (VAP) position is a two-year academic commitment.  Initially, the VAP will focus on independent and collaborative research, while also teaching in the Regulatory Science Colloquium.  The Fellow/VAP will also teach one or more core classes at the law school. In both years, the Fellow/VAP will be part of the academic community of the College, with scholarly mentoring, opportunities to workshop drafts in progress, and a budget for research assistance and professional development.
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Is it legal for Trump to punish health insurers that do not support repeal of Obamacare?

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By Christopher Robertson

In a recent story about how the health insurance marketplaces are being destabilized by the Trump administration’s vacillation, the LA Times reports:

At one recent meeting, Seema Verma, whom Trump picked to oversee the federal Medicare and Medicaid programs, stunned insurance industry officials by suggesting a bargain: The administration would fund the CSRs if insurers supported the House Republican bill to repeal the Affordable Care Act.

For what its worth, the Trump administration denied that she had done so.  But if she did, is that legal?  Can politicians actually offer to give money from the Federal Treasury to companies in exchange for their political support (or withhold it for lack of that support)?  If Ms. Verma was corruptly offering a “quid pro quo” exchange (as TalkingPointsMemo says), that would fit the statutory definition of the crime of bribery, as I discuss in a 2016 paper, The Appearance and Reality of Quid Pro Quo Corruption. However, this case also implicates the First Amendment rights of the insurance companies to support or oppose the Obamacare repeal. Read More

Conflict of Interests Disclosures Come to PubMed

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By Christopher Robertson

Scholars and policymakers have long been concerned that the biomedical science literature — and thus the practice of medicine — is biased by the companies who fund research on their own products.  Prior research has shown that industry-funded studies tend to produce results favorable to their company sponsors.  One solution is disclosure of industry funding, so that physicians and other consumers of the biomedical literature can weigh scientific findings accordingly.

My prior work with Aaron Kesselheim, Susannah Rose, and others has found that adding such disclosures to biomedical abstracts could make a big difference — physicians understand them and will rely upon them.  Nonetheless, most journals bury the disclosures at the end of articles, which are often hidden behind paywalls and not nearly as salient as the methods and findings displayed in the abstract.  For the Institutional Corruption Lab of the Edmond J. Safra Center, I worked with a team of hackers to create a browser extension that proves the feasibility of adding those disclosures into PubMed, a Federal government database of the scientific literature.

Thankfully, that browser extension is becoming obsolete, as the National Library of Medicine (part of the NIH) has begun implementing such disclosures themselves, right in PubMed.   A search reveals that nearly 80,000 abstracts now have such tags.  While a lot in absolute terms, it is a small minority of the 17 million abstracts covered by PubMed.  Commentators have suggested that as much as 70% of the funding for clinical trials comes from industry, so we should expect millions of abstracts to have such disclosures.

Thus we are still a long way from comprehensive and effective disclosure.  There are two problems. Read More

Another Way to Cut Medical Malpractice Damages?

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By Christopher Robertson

To limit liability and increase predictability, scholars and policymakers have long focused on capping damages awards.  In particular, they have been worried that there are many runaway jury awards for non-economic damages (i.e., pain and suffering).  Because these are not based on tallies of medical bills or lost wages, these are the least predictable component of the jury’s award.   Still, statutory caps on damages effectively nullify the jury’s determination (and the trial judge’s oversight) of how much to compensate a plaintiff for pain and suffering.  The laws substitute an arbitrary maximum instead (which, in many states, has not adjusted with decades of inflation).

There is now a cottage industry of scholarship that tries to understand the effects of these state caps on payouts, the supply of physicians, liability insurance, economic damages awards, and the aggregate cost of medical care (which may decrease or increase).  (See a synthesis of the literature.)

In new work with John Cambpell and Bernard Chao, I study a different way to cabin jury awards for non-economic damages.  Rather than capping runaway awards ex post, some states have tried to prevent them in the first place, by manipulating what a jury hears in closing arguments.   Read More

National Survey Suggests that Off-Label Status is Material to Informed Consent

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By Christopher Robertson

As many readers of this blog know, the FDA requires that, prior to entering the market, companies prove safety and efficacy for each intended use of their products, but physicians are then free to prescribe the products for any other uses.  (Companies are not allowed to promote off-label uses however.)

A recent national survey by Consumer Reports includes two interesting findings:

  1. About two-thirds (63%) of Americans “would not take a doctor prescribed medication that has been approved by the FDA, but not for their specific condition.”
  2. Almost all Americans (94%) “say they have never been told by a physician that a medication they were taking was not approved by the FDA for their condition.”

Patients are right to be skeptical of off-label uses, though they may not appreciate just how common they are.  In fact, most off-label use is unsupported by scientific evidence as to safety and efficacy.  A new report by the FDA illustrates several off-label uses that were subjected to rigorous clinical trials and turned out to be ineffective or dangerous.   For example, Aliskiren is approved for treatment of hypertension and was used off-label for prevention of congestive heart failure (CHF) complications.  A large trial showed that, although it did not significantly improve CHF mortality, it did significantly increase rates of kidney failure for CHF patients.  We do not know how many other off-label uses would fail if similarly tested.   Read More