By Julia Paris, Caitlin Rowley, Richard G. Frank There is strong evidence that the opioid epidemic has reduced labor force participation in the United States. While use of prescription opioids aimed at pain management for some individuals may enhance their ability to work, the widespread misuse of opioids has resulted in an epidemic of opioid use disorders (OUD), labor supply disruptions, and unprecedented deaths. Opioid misuse can compromise labor supply in a variety of ways, including absenteeism, increased workplace accidents, and withdrawal from the labor force due to disability, incarcera ..read more

By Richard G. Frank, Conrad Milhaupt Introduction and background The health care sector has become increasingly vertically integrated in recent years. The initial waves of integration largely involved mergers and acquisitions between hospitals and physician practices. More recently, the parent companies of large health insurers have been acquiring pharmacy benefit managers (PBMs), specialty pharmacies, physician practices, and other related health care businesses. In 2015, the three largest PBMs in the country (Express Scripts, CVS Caremark, and OptumRx) managed the drug benefits of 78% of the ..read more

By Richard G. Frank, Len M. Nichols New legislation (H.R. 485) that is currently being debated in the House Energy and Commerce Committee and a letter to the Department of Health and Human Services (HHS) from Republican members of the Senate Finance Committee present a threat to Medicare’s new and already limited ability to negotiate over some high-priced prescription drugs. The language in these documents could prevent the HHS secretary from utilizing invaluable comparative metrics in seeking to deliver better value for Medicare beneficiaries. The Inflation Reduction Act (IRA, PL 117-169) req ..read more

By Marta E. Wosińska, Richard G. Frank Generic drugs are essential for bringing price competition to prescription drug markets and providing a moderating force on drug spending.  They make up 92% of prescriptions, but only 16% of invoice-level spending in the US. This price competition relies on a determination by FDA that generic products are therapeutically equivalent to a brand name drug. That determination enables the generic drug to be automatically substituted at the pharmacy counter for the brand-name product. This in turn allows lower priced generics to quickly take market share f ..read more

By Paul Ginsburg, Steven M. Lieberman Medicare pays for physician services on the basis of a fee schedule.  For many years now, payment rates have not been updated for general inflation. This has left Medicare payment policy vulnerable to the sharp increases in general inflation that are now being experienced.  Physicians have already experienced and are likely to continue to face large and permanent declines in inflation-adjusted payment rates in the absence of legislative relief. These sharp current law reductions in effective payment rates could have several undesirable consequenc ..read more

By Matthew Fiedler, Adrianna McIntyre The Inflation Reduction Act included a three-year extension of enhancements to the premium tax credit that were originally enacted in 2021. These enhancements reduced the cost of Marketplace coverage by making the tax credit more generous for people who were already eligible and by extending it to people with incomes that were previously too high to qualify. Consistent with model-based projections that lower premiums would increase coverage, Marketplace enrollment is now around 3 million people (29%) above its 2019 level, which has helped push the national ..read more

By Richard G. Frank, Conrad Milhaupt Introduction There is a great deal of controversy and uncertainty regarding profits in the Medicare Advantage (MA) program. Interest in these issues is growing as the share of beneficiaries grows. The Medicare Payment Advisory Commission, or MedPAC, recently reported that MA enrollment grew 10% from July 2020 to July 2021. This means MA accounted for 46% of all Medicare beneficiaries in 2021, with payments to MA plans totaling $350 billion. A recent visible exchange of facts and interpretations of some data by Berwick and Gilfillan, Halvorson,  Crane ..read more

By Marta E. Wosińska, Richard G. Frank The COVID pandemic has disrupted supply chains across the economy. Disruptions have been particularly acute in the health sphere, with COVID tests, vaccines, and treatments in short supply at various points in the pandemic.  But as the baby formula crisis has reminded us, shortages of critical products impacting health are not just tied to pandemics. In this case, the shortage was caused by a shutdown of a key manufacturing facility, following evidence of bacterial contamination in products made at the facility. This facility produced a large share o ..read more

By Rachel Sachs On Wednesday, June 15, the Senate Committee on Health, Education, Labor and Pensions advanced its version of the must-pass Food and Drug Administration (FDA) user fee reauthorization bill. Previously, I had reviewed several key similarities and differences between the Senate and House bills, with a focus on their impact on reforms to the prescription drug approval process. In this article, I delve deeper into an important aspect of the Senate bill which is not yet present in the House’s version: the Verifying Accurate Leading-edge IVCT Development (VALI ..read more

By Richard G. Frank, Kathleen Hannick At the heart of the policy debate aimed at controlling the price of prescription drugs is a concern that pricing policies, which would reduce revenues for brand name prescription drugs, would result in fewer “new cures.” The logic underlying this concern is as follows: higher prices equate to higher returns to investors that then bring more capital into drug development, which is the lifeblood of innovation. Therefore, the logic goes, reducing prices will reduce returns, which will reduce the capital invested, thus slowing innovation. More colorful version ..read more