The White House’s plan to lower federal drug payments and stop incentivizing doctors to use the most expensive drugs is a long-overdue, commonsense move to control our nation’s health care costs. And its implementation should be a top priority.
Spending for health care is unsustainable, representing about 17 percent of U.S. gross domestic product. In fact, it’s outpacing GDP growth by 1 percent annually.
By 2026, Medicare will become insolvent. And soon, our health care costs will disallow any federal spending on the environment, education or other discretionary federal programs.
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Our system incentivizes doctors to use expensive drugs and perform unnecessary procedures and tests. It allows drug companies to hide drug prices and charge Americans much more than citizens of other countries.
It encourages new, expensive drugs with only marginal benefits. It discourages new procedures, alternatives and products, which not only cost less, but require fewer doctor visits and easier treatment options.
Consider two of the costliest drugs the federal government now spends billions of dollars on each year. Eylea and Lucentis — drugs used to treat diabetic eye disease and macular degeneration — are expensive, costing $2,000 per injection. A nearly $50 injection of the generic Avastin is equally effective.
Yet, most doctors can’t resist the more generous federal reimbursement that comes from using the more expensive drug — a 6 percent add-on based upon the average sales price. Plus, doctors get cash kickbacks from drug companies and sometimes charge these expenses to credit cards, racking up further incentives. In 2013, The Washington Post reported that in this case, the more expensive drug, Lucentis, costs Medicare an extra $1 billion annually.
When The New York Times reported on this in 2014 and the Senate Select Committee on Aging held a hearing in 2007, senators from both parties were clearly horrified, yet no action was taken. Today, most retina doctors enjoy the financial benefits of using the more expensive alternatives.
I am proud that my wife, a retina specialist, and her four partners use Avastin as the first line of treatment. They have saved federal taxpayers a significant amount of money over the past 10 years by choosing this ethical approach — and have forgone extra money for themselves. The good news is the Trump administration’s proposal in its fact sheet alludes to an “eye medication,” and if finalized could change the financial dynamic so doctors will be paid the same no matter which drug they use.
My wife and her colleague have also been working on alternative treatments for macular edema, a common malady that, if untreated, leads to blindness. Today’s standard of care is a $2,000 injection every four months. Her “Slurry Kenalog” alternative costs $29 over two years, and each treatment occurs every eight months. This results in huge savings, and patients and caregivers need only visit the doctor half as often as they would otherwise.
Doctors in the developing world welcome the treatment, since the expensive alternative often results in patients too poor to pay for the treatment going blind. U.S. doctors now have a perverse incentive to use the more expensive treatment — even though it requires patients to get double the number of treatments.
But drug pricing is only part of the answer. There is an opportunity to use treatment options that cost less and are better for patients. Here are a few examples.
Many of these people became addicted because they were in pain. Yet our health care system is not incentivized to embrace technology as an alternative to drugs.
For example, Oska Pulse offers a Food and Drug Administration-approved device that has been proven to reduce pain in most users. Similarly, Tivic Health’s ClearUP is a product that targets sinus pain. If we start with innovative devices such as these as treatment options, we could avoid many people’s need for drugs in the first place.
Another alternative is focused ultrasound technology. I attended the International Symposium on Focused Ultrasound and heard how patients with scores of maladies are being successfully treated with electronic waves to kill cancers and fix problems such as tremors.
Compare the two-hour focused ultrasound outpatient procedure with the standard of care of radiation therapy or chemotherapy, and it’s clear that patients benefit. Yet while the FDA has approved several ultrasound treatments and is on the way to approving more, American doctors have been slow to adopt the treatment.
Simply put, our system is not designed to pay doctors for less-intrusive procedures — and even gives existing doctor groups a right to veto new treatment codes.
And if we are serious about our cost of health care, we need to adjust not only our payment codes but also our thinking about how data can be used to keep us healthy and ensure we know when to see a doctor. Many of us wear devices to monitor our vital signs — and these devices have data that can be aggregated and used to predict when we need treatment.
With artificial intelligence, these devices will increasingly be our health monitors and our link to our doctors. But we need to make sure our doctors get paid for their work, so these devices can be effectively used.
The Trump administration’s action on drug pricing reimbursements is encouraging. It is part of the right approach, as cost becomes a factor in our health care system and the choices we make. We also need to create incentives for patients and doctors to make choices that not only weigh effectiveness of drugs, but also consider other treatment options that may be less costly, less intrusive and less frequent.
Everyone — doctors, patients and regulators — has a role to play in bringing down health care costs. The days of patient oblivion to prices, doctors focusing on maximizing income and drug companies burdening Americans must end.
Gary Shapiro is president and CEO of the Consumer Technology Association, the U.S. trade association representing more than 2,200 consumer technology companies, and a New York Times best-selling author, and his new book, “Ninja Future: Secrets to Success in the New World of Innovation,” is available now.
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