Mending Images

It takes a lot for virtually every major newspaper in the country to feature a positive article about an announcement by a pharmaceutical company on drug prices, but that is exactly what happened yesterday.

New York-based Pfizer announced on Wednesday a new initiative to provide its medicines to the uninsured at savings as good or better than they would get if they had a health plan to negotiate discounts for them.

? Families making less than $45,000 ($30,000 for individuals) will see average savings of 37%, and up to 50% off retail.

? Families making more than that will receive average savings of 15% and up to 25% off retail.

The company also is expanding eligibility for its programs providing medicines free or at minimal cost to low-income patients, both the uninsured and seniors on Medicare.

Finally, Pfizer is creating a new 800 number with live operators to help people sort through the programs to find out which one will work best for them.

Sen. Hillary Clinton issued a taped statement of support saying, ?This effort holds the promise of helping people in real need?with access to medicines at significant savings.? And hers was just one of 32 pages of testimonials posted on the company?s website!

I particularly liked Sen. Santorum?s comments: ?Pfizer’s action today is strong evidence that when the innovation of the private sector is brought to bear on complex public policy challenges, very good things can happen.?

And even Ron Pollack of Families USA was positive in USA Today: ?This is a reasonably good thing. Any significant help for the uninsured ? is much appreciated.?

We expect other companies to offer similar programs in the near future.

On the same day, The New York Times ran a story entitled, ?Drug companies seek to mend their image.? The story rightly says that there?s a lot of work to be done, but Pfizer?s new initiative clearly is a good start.

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And speaking of private sector initiatives, perhaps the best example I’ve heard of how Health Savings Accounts can change behavior was offered by a long-time friend from California. My friend going back to high school, Sara Lagier, found that the premiums for her individual health insurance policy were soaring, and she was worried she might not be able to afford to keep her coverage.

When we visited early this year, I told her about HSAs, and she immediately saw the savings potential. She started her search for HSA-compatible insurance in January (even educating some insurance agents about the new products). By March, her new policy was in place.

She sent me an e-mail a few weeks back saying that her knee had been hurting. “In the past,” she said, “I would have gone to the doctor to get a scan to see what was wrong. But then I realized the money would come out of my account. So I went into the closet, got a set of crutches, and used them for a few days. My knee felt a lot better. I think I probably saved about $1,500.”

What a great story to explain to people how HSAs can save money, with virtually the same health outcome.

Grace-Marie Turner

RECENT NEWS, ARTICLES, AND STUDIES FROM THE HEALTH POLICY WORLD:

? Candidates and health care: Same ailment, different prescriptions

? New studies show consumer-directed care reduces costs and improves access

? Employers confront tough decisions on consumer-driven health plans

? The economics of price regulation and innovation

? Saying no to cheap drugs

? A guide to some of the internet?s best ? and most overlooked ? health sites

CANDIDATES AND HEALTH CARE: SAME AILMENT, DIFFERENT PRESCRIPTIONS

Author: David Wessel

Source: The Wall Street Journal, 07/08/04

?President Bush and John Kerry profess similar goals for American heath care,? basically expanded access to high quality, affordable health care, writes columnist David Wessel. ?But the two promise to achieve these goals in strikingly different ways.? Wessel provides a thumbnail sketch of the two candidates? plans, underscoring similarities, such as advocacy of tax credits for health insurance, but also stark differences in philosophy. ?Mr. Bush believes that unleashing the forces of competition ? by making individuals pay more so they shop more shrewdly?is key,? he writes. ?Mr. Kerry isn?t so sure that competition will suffice,? relying much more on government programs and intervention. ?In the cacophony of a presidential campaign, it is sometimes hard to tell when candidates are offering serious, contrasting approaches to pressing problems?If you listen carefully to Mr. Bush and Mr. Kerry talk about health care, though, you can hear just that.?

Full text (requires subscription): http://online.wsj.com/article/0,,SB108924860017258171,00.html

NEW STUDIES SHOW CONSUMER-DIRECTED CARE REDUCES COSTS AND IMPROVES ACCESS

Author: Grace-Marie Turner

Source: Galen Institute, 07/08/04

Grace-Marie Turner reviews new studies and early experience with Health Savings Accounts and other consumer-directed benefit options, reporting that the data disprove critics who say the plans are only for the healthy and wealthy. New studies show that the new options are appealing to those who were previously uninsured, to families, to older Americans, and to workers at all income levels. Assurant Health, which markets HSAs to individuals and very small groups, shows that 70% of purchasers are over age 40, one-third make less than $50,000 a year, and more than 75% are families with children. Aetna, which focuses on mid-size and large companies, says companies implementing Health Reimbursement Arrangements in 2003 saw health costs drop by 11% while the use of preventive services increased by as much as 23%. Turner describes how one company, Logan Aluminum, structured its HRA plan, saving 19% on health costs in one year, with high employee satisfaction rates.

Full text: http://www.galen.org/ccbdocs.asp?docID=660

EMPLOYERS CONFRONT TOUGH DECISIONS ON CONSUMER-DRIVEN HEALTH PLANS

Author: Jill Elswick

Source: Employee Benefit News, July 2004

?Most firms have heard of [consumer-driven health] plans by now and feel compelled to think about offering one to their employees,? writes Jill Elswick, associate editor of Employee Benefit News. ?Barry Barnett, principal with PricewaterhouseCoopers’ human resource services group, figures about 40% to 50% of his clients have or are implementing a consumer-driven health plan – and all of them are at least considering it,? writes Elswick. She describes the different choices made by several companies including Whirlpool Corp., Delta Airlines, and Union Pacific Railroad. Many companies are building in considerable time to educate employees about new consumer-driven plans. “We have a very comprehensive communications plan to explain to employees what’s happening in the health care environment, why costs are going up, why we can’t afford to pay all of those, and why they need to take some ownership of the utilization,” says Jackie Austad, general director, benefits and wellness at Union Pacific.

Full text: http://www.benefitnews.com/detail.cfm?id=6157

THE ECONOMICS OF PRICE REGULATION AND INNOVATION

Author: Robert B. Helms, Ph.D.

Source: Managed Care Supplement, 6/25/04

AEI?s Bob Helms challenges the view that U.S. consumers pay higher costs for prescription drugs because of ?cost shifting,? in which other developed countries don?t pay their fair share of R&D costs because their governments set prices artificially low. ?Cost shifting is logically possible but highly unlikely,? Helms writes in Managed Care. ?The incentive to set prices in one market has nothing to do with the price charged to customers in a different market.? He argues, however, that if the United States were to follow other developed nations and impose price controls ? directly or by importing them from Canada or elsewhere ? it would have a detrimental effect on new R&D activities which ?increasingly are being moved to the United States.? He says price controls would mean pharmaceutical companies would be less likely to pursue riskier (more innovative) research and would focus on (less innovative) products that would have a short-term return.

Full text: http://www.aei.org/docLib/20040625_Helms.pdf

SAYING NO TO CHEAP DRUGS

Author: Robert Goldberg

Source: The Washington Post, 07/03/04

In this Letter to the Editor, Robert Goldberg of the Manhattan Institute disagrees with the contention that Congress should impose price controls to keep down the prices of the newest cancer drugs [Wittes op-ed, June 15]. ?About 75 percent of all new drugs are discovered and used in the United States first?and a greater percentage of the cancer products in the pipeline are U.S. discoveries,? writes Goldberg. He warns that the U.S. government had a failed attempt at price controls in 1992 when the National Institutes of Health required any company or university using federal research money to have the potential product’s price set by the government. This caused the number of joint ventures to drop sharply from 91 in 1992 to 31 in 1994. ?Cancer drugs should prove their cost-effectiveness, and we should reduce the time and cost of developing new medicines to keep prices down,? concludes Goldberg.

Full text: http://www.washingtonpost.com/wp-dyn/articles/A24782-2004Jul2.html

A GUIDE TO SOME OF THE INTERNET?S BEST ? AND MOST OVERLOOKED ? HEALTH SITES

Author: Tara Parker-Pope

Source: The Wall Street Journal, 07/06/04

An Internet monitoring service says that 27% of Internet users clicked on a health site in May, up from 19% a year ago. The most popular websites, WebMd.com, MayoClinic.com, and MedHelp.org, get the most hits and attention. The Journal reviews six others that get high marks, but just aren?t as well known. They include: www.Medlineplus.gov, sponsored by the National Institutes of Health; www.YourDiseaseRisk.Harvard.edu, to conduct your own health appraisal; and www.drgreene.com which, the author says, ?makes me feel like I?m visiting with a real doctor.?

Full text (requires subscription): http://online.wsj.com/article/0,,SB108906821326855572,00.html

UPCOMING EVENTS:

Putting Health Savings Accounts into Practice: New Guidance from the Treasury

American Enterprise Institute Health Policy Discussion

Friday, July 16, 2004, 9:30 ? 11:30 a.m.

Washington, DC

For additional details and registration information, go to: http://www.aei.org/events/eventID.858,filter.all,type.upcoming/event_detail.asp.

Health Care System Crisis: View from the Front Lines

American Enterprise Institute Event

Tuesday, July 20, 2004, 12:00 ? 1:30 p.m.

Washington, DC

For additional details and registration information, go to: http://www.aei.org/events/eventID.859/event_detail.asp.

Health Policy Matters is a weekly newsletter containing commentary on health policy developments, summaries of timely and informative studies and articles on free-market health reform, and notices of upcoming events. It features research and writings by participants in the Health Policy Consensus Group. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about this newsletter and our organization, please visit our website at http://www.galen.org/.

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The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.

Elizabeth Lamirand

Editor, Health Policy Matters

 

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