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Health Care Reform Memo: February 13, 2012

Deloitte Center for Health Solutions publication

The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: the pharmaceutical industry: a central part of health care's past successes and future promises

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

It’s almost been three months since my knee surgery and a subsequent clotting problem. During this journey, I’ve been a guest in three hospitals, used independent labs to get blood samples in five states, given myself 17 injections to avoid clotting on airplanes and filled a plastic bag with “meds.” As I transition to self-care, the role medication plays is a central theme. Properly prescribed or not, or appropriately used or not—both are a big part of my life these days.

The last thing I do nightly is down a handful of pills that allow me to reduce the risk of clotting, alleviate pain, and simultaneously manage a slight cholesterol problem. And for good measure, I add aspirin and fish oil to round out my regimen.

I am not alone. Pills are a way of life for most of us it seems. 57 percent of U.S. adults take at least one prescription medication daily; 48 percent of them take three or more! And we trust our medicines: 77 percent of us believe the medicines we take work (efficacy), though switching due to costs or the potential for better results is fairly common. (Source: Deloitte Center for Health Solutions, 2011 Survey of Health Care Consumers)

The prescription drug industry in the U.S. is big and complicated: 74 percent of visits to physicians’ offices result in a prescription (Source: National Ambulatory Medical Care Survey). Twenty-four percent of health plans use a four-tier formulary to encourage appropriate use of generics and steer patients or their providers to effective drugs. And burgeoning health research is focused on the right incentives to encourage adherence to medications while the role of information technologies is to reduce drug-related error. Understandably, for most Americans, dealing with prescription drugs far surpasses interactions with doctors and hospitals as our most frequent encounter with our system of care. And not surprisingly, drug spending is becoming a major element in the average household’s discretionary spending.

In Washington, DC, the “official start” of the Fiscal Year (FY) 2013 budgeting process begins today with the President’s budget proposal. Buried in its details will be the U.S. Food and Drug Administration (FDA), one of the 11 operating divisions in the U.S. Department of Health and Human Services (HHS). The sheer magnitude of the FDA’s scope is daunting:

  • Regulatory oversight for eight major commercial sectors: food, drugs, cosmetics, vaccines, blood and biologics, medical devices, animal and veterinary, radiation-emitting products, and tobacco products
  • Services to support consumers and patients, health professionals, scientists and researchers, and industry
  • Primary focus on innovation, transparency, safety and recalls, and commercial pathway approvals

In FY2012, the FDA’s budget appropriation was about $2.5 billion. Its user fees—not counting those paid by tobacco companies—were an additional $814 million. That’s less than 0.2 percent of overall health spending in the U.S. and only slightly above 1 percent of total spending for prescription drugs last year.

As I navigate my medicines, interact with nurses, pharmacists, and physicians, search websites, and pursue alternative paths of care through yoga and lifestyle changes, I am struck by the centrality and enormity of this industry’s impact on our health and happiness. It has come a long way: its “big” advances in the 19th century—the advent of animal studies and the use of microscopes to mark the path of microorganisms—are dwarfed by today’s momentum toward precision medicine and powerful analytics capabilities. And it has a long way to go. But looking ahead, the industry’s storm clouds are darkening: the market is focused on four major issues. And a central role will be played in finding the solution to each:

  1. Sustainability of its business model: given a tepid 1.9 percent growth in the sector’s revenues in 2010, uncertainty about U.S. fiscal matters, losses of patents, and downward pressure in the supply chain, is the biopharma business model adaptive to change? Is growth in the U.S. market possible without radical changes in core processes of the industry? In the U.S., might a company’s future be better suited to diversification into diagnostics, over-the counter products, or health services versus plowing through science to discover the next therapeutic solution? And how to channel new strategies—will online pharmacy, integrated delivery systems, private contract research organizations, and e-prescribing led provider networks impact company solvency and liquidity long term? And how do patent laws change as the days of the blockbuster are past?
  2. Embracing consumerism: 100,000,000 Americans spend $28 billion annually on supplements—the 55,000 vitamins, herbals, amino acids, minerals sold in the U.S. market today. Eight percent of consumers prefer natural remedies to “chemicals.” And consumers want information at their fingertips: what works, what doesn’t, and how genetics impact results. They’re embracing pharmacists as primary care providers and technologies that equip them to know which drugs work best and which don’t. How should the industry transition to a consumer market wherein individuals have significant “skin in the game” and business relationships between pharmacy benefit managers (PBMs), group purchasing organizations (GPOs), investigators, and academics are transparent to all?
  3. Streamlining the commercial pathway: Safety, efficacy, and effectiveness are the trifecta for the industry’s measures of readiness for the market, but the path to verify is cumbersome and, with the cost at $1 billion per compound, increasingly prohibitive. Innovation in scientific validation via Bayesian analytics and adaptive clinical trials only go so far. The day-to-day operations of the FDA require creative re-engineering in collaboration with manufacturers. How might the agency transform itself to improve throughout without compromising public safety?
  4. Demonstrating value: Private equity sees it: three of the top ten mergers or acquisitions in the health care industry in 2010 and 2011 were biopharma (Source: Irving Levin Associates). Global health officials see it: the 120 different vaccines created by this industry are responsible for 15,000,000 lives saved globally last year (Source: World Health Organization). And consumers fighting cancers, congenital defects, or even clotting see it. But in the flurry of budgets, do policy-makers in the U.S. see it?

Medications are part of my life. They allow me to work when otherwise I might be limited. But they are far from perfect as is the industry from which they come and its regulatory overseer, the FDA. Nonetheless, both are central to the health industry and relevant to those of us dependent on their performance.

As the FY2013 budget is firmed up, I’ll pay more attention to the FDA appropriation than perhaps I did before. Though a spec in the overall $3.5 trillion U.S. budget, it’s a central part of the health system’s past success and future promise.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

Implementation update

HHS releases final rules to help consumers understand coverage policies

Thursday, HHS released the final rule and recommended templates health insurance companies must use to explain policies to enrollees. The new explanations, available September 23, 2012, are targeted to the 150 million individuals covered by private health insurance plans.

The rules require consumers to have access to (1) a brief Summary of Benefits and Coverage (SBC) available during enrollment and renewal; and (2) a uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-payment.”

A key feature of the SBC is a standardized plan comparison called “coverage examples,” illustrating medical situations and describing how much coverage the plan would provide in an event such as having a baby (normal delivery) or managing Type II diabetes (routine maintenance, well-controlled). These examples will help consumers understand and compare what they would have to pay under each plan they are considering.

Note: America’s Health Insurance Plans (AHIP) president Karen Ignagni responded, “The final rule requires an almost complete overhaul and redesign of how information must be provided to consumers. The short time frame in which to implement this new requirement creates significant administrative challenges that will increase costs and result in duplication because many plans are already developing materials for employers whose policies take effect October 1, 2012.”

House Dems challenge plan to give states flexibility in defining EHBs

Last week, several House Democrats sent a letter to HHS challenging to its plan to allow states flexibility in defining “essential health benefits” (EHBs) per its Bulletin last month. Under the HHS proposal, EHBs will be defined by states and allow insurers to substitute services in the ten areas of required coverage. “While we understand the goal of balancing comprehensiveness and affordability, and ensuring an appropriate role for state input, we would reiterate that one of the primary goals of the Affordable Care Act was to create a consistent and comprehensive level of coverage for people across the country…Without very careful protections, we have serious concerns about delegating the decision for the EHB to the States and providing even further discretion for insurers.”

Constitutional challenge update: DOJ brief argues Medicaid eligibility threshold mandate within rights of federal government

Citing 43 cases, the U.S. Department of Justice (DOJ) filed a brief Friday arguing that there is ample precedent for the standardization of the Medicaid eligibility threshold at 133 percent of the federal poverty level (FPL) for Medicaid coverage—a central feature in the Affordable Care Act (ACA) estimated to add 16 million enrollees to the federal-state program.

Background: The Medicaid Act, enacted in 1965, established a federal-state program to fund health care for needy individuals wherein “states are not required to participate.” States that participate are obligated to comply with requirements set by the Social Security Act of 1965 and by the Secretary of HHS. At issue in the constitutional challenge is whether the federal government can mandate states to use the 133 percent FPL, given that the federal government is obligated to pay 90 percent of new enrollee costs after 2019, thus imposing a liability on states.

White House compromise on contraceptive coverage proposed, then rejected by Catholic bishops

At issue: whether the requirement that contraceptive services for women that is included as part of ACA’s “preventive health” package per Section 2713 (wherein a co-pay is disallowed) is applicable to religious organizations and their affiliates. Religious organizations led by the United States Conference of Catholic Bishops (USCCB) object to the requirement as a violation of its teachings.

Friday, the White House released a final rule that exempted religious organizations such as churches and other places of worship from covering contraception due to their religious objections and creates a one-year transition period for religious organizations. The plan also requires insurance companies to cover contraception if the non-exempted religious organization does not offer coverage (i.e. religiously affiliated charities, hospitals, and universities). Under the compromise, nonprofit organizations affiliated with religious institutions that do not cover contraception based on their beliefs will not have to provide coverage. The new policy requires insurance companies to act as the intermediary to inform women about the coverage and to pay for it, offering the employees separate insurance policy “riders” that include the coverage at no additional cost.

Late Friday, USCCB rejected the compromise issuing the following statement:

“First, we objected to the rule forcing private health plans—nationwide, by the stroke of a bureaucrat's pen—to cover sterilization and contraception, including drugs that may cause abortion. All the other mandated "preventive services" prevent disease, and pregnancy is not a disease. Moreover, forcing plans to cover abortifacients violates existing federal conscience laws. Therefore, we called for the rescission of the mandate altogether.

Second, we explained that the mandate would impose a burden of unprecedented reach and severity on the consciences of those who consider such "services" immoral: insurers forced to write policies including this coverage; employers and schools forced to sponsor and subsidize the coverage; and individual employees and students forced to pay premiums for the coverage. We therefore urged HHS, if it insisted on keeping the mandate, to provide a conscience exemption for all of these stakeholders—not just the extremely small subset of "religious employers" that HHS proposed to exempt initially.”

Note: HHS has received 200,000 comments since its release of the interim final rule in August 2011. Most notably, media attention was focused on the Roman Catholic Church with its complaints voiced by Arch Bishop Dolan. The Catholic Health Association represents 629 hospitals in 56 systems. Per the American Hospital Association (AHA) and Catholic Health Association, Catholic hospitals employ 766,000 full and part time employees. The hospitals are 12.6 percent of total hospitals in the U.S., 14.9 percent of acute beds, 15.6 percent of admissions, 16.6 percent of Medicare discharges, and 13.6 percent of Medicaid discharges. Catholic hospitals account for 20 percent of admissions in 22 states and the District of Columbia. There are no Catholic hospitals in Hawaii, North Carolina, Utah, Vermont, or Wyoming and 30 percent or more in six states: Washington, Oregon, Alabama, Michigan, Iowa, and South Dakota. (Sources: 2010 American Hospital Association Annual, Catholic Health Association, January 2012)

HHS awards $40 million in ACA funding for prenatal care

Wednesday, HHS announced $40 million for the “Strong Start” prenatal care program coordinated by the Center for Medicare and Medicaid Innovation (CMMI) under ACA Section 3021. CMMI will award grants to health care providers, coalitions, and institutions who provide care to women enrolled in Medicaid to test ways to reduce early elective deliveries.

Note: per HHS, Over half a million infants are born prematurely in the U.S. annually, a rate 36 percent higher than 20 years ago. A preterm infant covered under Medicaid costs Medicaid about $20,000 compared to a full-term infant’s expected cost of $2,100. A 10 percent reduction in deliveries occurring prior to 39 weeks would lead to$75 million in annual Medicaid savings.

Legislative update

President’s FY2013 budget released today

Late this morning, the White House is expected to unveil its budget for FY2013—a document that in many ways will resemble a deficit reduction package outlined by the Administration to the now-defunct “supercommittee” last September. According to a fact sheet released by the Administration on February 10, the budget is expected to call for about $4 trillion in deficit reduction over ten years, including nearly $1 trillion in savings from the statutory caps placed on discretionary spending by last summer’s Budget Control Act. Proposed tax increases of $1.5 trillion would come from allowing certain tax cuts for families earning more than $250,000 to expire as scheduled after 2012, paring back other tax breaks for upper income taxpayers and, more generally, observing the “Buffett Rule” (i.e., a White House principle stipulating that households earning more than $1 million a year should not have an effective tax rate lower than 30 percent). Proposed spending cuts are expected to include more than $360 billion over 10 years from Medicare, Medicaid, and other health programs. Notably, no major changes to Social Security are expected to be proposed by the President.

Note: the President’s budget proposal is a non-binding document that represents the first of many steps in the federal budget process. During the Spring, the House and Senate traditionally develop their own budget proposals, with input from outside advisors and economists. Deloitte will host a Dbrief webcast in April to update industry watchers about the budget and economic indicators. For more information, please visit the Dbrief website.

Joint Conference Committee considers options to avoid physician pay cuts

Last week, the 20 member Joint Conference Committee tasked with finding a “fix” to the Medicare Sustainable Growth Rate (SGR) payment formula discussed funding offsets. One proposal would allow Medicare to collect three years of hospital payments associated with “misaligned diagnosis coding.”

A proposal by Representative Dave Camp (R-MI) included a two-year temporary fix to SGR funded through reducing Medicare subsidies to higher-income Medicare enrollees ($31 billion), freezing pay for non-military federal employees and Congressional members ($26.2 billion), and recouping additional subsidies overpaid in health insurance exchanges (HIX) ($13.4 billion over ten years). The White House proposal is a full fix to the SGR costing $300 billion funded through a surtax on individuals with annual incomes over $1 million. The 20 member conference panel has until the end of the month to reach a deal on the SGR before it reduces Medicare payments for doctors by 27.4 percent.

Note: in 2011, it delayed a full fix by passing five temporary fixes.

State update

Kaiser: most states on track with Medicaid budget

Thursday, the Kaiser Family Foundation released findings that for FY2012, the majority of states are experiencing Medicaid spending and enrollment growth equal to or below original growth projections. However, ten states are making efforts to close budget gaps by restricting additional benefits and expanding provider rates. Maine and Washington will consider broad and significant means to close their budget gaps. Other highlights:

  • Medicaid directors expressed support and enthusiasm for programs that integrate care for those eligible for both Medicare and Medicaid (dual eligibles) available to states by the Medicare-Medicaid Coordination Office created under the ACA. Some directors commented that a short timeline would make it difficult to ensure a smooth transition for enrollees.
  • 38 states plan to take advantage of new enhanced federal matching funds for eligibility systems. 28 states have qualified for Exchange Establishment grants and 18 states have either passed legislation to establish an HIX or plan to do so. (Source: Kaiser Family Foundation, “A Mid-Year State Medicaid Budget Update for FY 2012 and A Look Forward to FY 2013,” February 2012)

State round-up

HHS extended its review up to 30 days of North Carolina’s and Wisconsin’s waiver requests regarding minimum medical loss ratio (MLR) requirements per ACA Section 1001 (80 percent for small and individual group markets, 85 percent for large group markets). North Carolina is requesting an MLR of 72 percent, 74 percent, and 76 percent for 2011, 2012, and 2013 and Wisconsin wants its MLR set at 71 percent, 74 percent, and 77 percent for 2011, 2012, and 2013. Note: These are the last two states awaiting MLR waiver approvals from HHS.

The Centers for Medicare and Medicaid Services (CMS) denied California’s Medicaid Section 1115 Demonstration request to institute a $5 co-pay for Medicaid enrollees’ doctor appointments, $50 for emergency room visits, and $100 for each hospital day. The co-pays are estimated to have saved the state over $500 million.

Connecticut Governor Dannel P. Malloy (D) plans to recommend expanding the role of home health aides to increase access to home-based care. Under state law, only nurses can help individuals take their medicine, while home health aides are prohibited from doing so. Malloy’s proposal plans to expand home-based services by allowing home health aides to provide medication administration. The plan is projected to save the state over $28 million through reduced nursing home use.

Iowa’s Governor Terry Branstad (R) asked state legislators to require elected officials to pay 20 percent of their health care costs. State lawmakers previously proposed legislation asking state employees to pay $200 a month towards their coverage.

Maine’s Governor Paul LePage (R) recommended eliminating Medicaid coverage for 65,000 adults and 2,000 seniors in group homes to close the state’s $220 million projected budget shortfall over the next two years. LePage also recommended eliminating Medicaid coverage for optional benefits including dental care, physical therapy and chiropractic services. Also, the state’s HealthInfoNet received a $600,000 grant funded by the Substance Abuse and Mental Health Services Administration (SAMHSA) and the Health Resources and Services Administration (HRSA) to support the sharing of health records through a health information exchange (HIE) between 25 behavioral health care organizations and 200 individual medical providers.

New Jersey legislators voted to establish a state-based HIX, providing a one-stop online marketplace for individuals and small businesses to purchase health insurance coverage.

New Mexico is projecting a $250 million budget surplus; Governor Susana Martinez (R) proposes to use about 20 percent ($45 million) of the savings on Medicaid.

Vermont Governor Peter Shumlin (D) and several state legislators want to allow the state’s small businesses to provide lower premium health insurance plans until the state implements its single payer health care system. Also, mid-sized businesses (50+ employees) will be allowed to provide coverage outside of the state’s HIX until 2016.

Health Affairs examines health exchanges: February 2012 issue

Health Affairs’ February issue includes nine articles assessing the intersection of HIXs and employers, especially small groups. Example: A study based on the Urban Institute’s Health Insurance Policy Simulation Model concluded that merging the individual and small group programs in HIXs would decrease individual premiums 10 percent, leaving small-group premiums “largely unchanged.” Spending on premium subsidies declined from $33 billion to $29 billion because insurance in the individual market was more affordable after the risk-pools were combined. (Source: Blavin et al, Health Affairs, “How Choices In Exchange Design For States Could Affect Insurance Premiums And Levels Of Coverage,” February 2012)

Note: Health Affairs is a must read for students of health reform. It is widely respected among policy-makers and health services researchers.

Industry update

Key ACA provisions related to biotech, pharmaceutical sectors

Effective year Provision
  • Sec. 7101: 340B drug discount program eligibility expansion
  • Sec. 6301: establishes the Patient Centered Outcomes Research Institute (PCORI)
  • Sec. 2501: increases minimum Medicaid rebate for brand drugs to 23.1% of average manufacturer price (AMP), 13% for generics; Medicaid drug rebate extended to Medicaid managed care plans
  • Sec. 2503: sets federal upper limit (FUL) for multiple source drugs to at least 175% of the weighted average AMP for products nationally available at commercial pharmacies
  • Sec. 3301: establishes the Medicare Part D Coverage Gap discount program
  • Sec.9003: prohibits tax-free reimbursement through flexible spending accounts (FSAs), health reimbursement accounts (HRAs), health savings accounts (HSAs), or Archer medical savings accounts (MSAs) for non-prescription over-the-counter drugs
  • Sec. 9008: imposes annual fees on brand-name pharmaceutical manufacturers and importers of: $2.5 billion in 2011, $2.8 billion in years 2012-2013, $3.0 billion in 2014-2016, $4.0 billion in 2017, $4.1 billion in 2018 and $2.8 billion in 2019+
  • Sec. 7001-7003: per the Biologics Price Competition and Innovation (BPCI) Act of 2009, allows FDA to approve generic versions of biologic drugs and grants biologic manufacturers 12 years of exclusivity before generic development, pathway effective October 1
  • Sec. 9005: limits FSA annual contributions to $2,500
  • Sec. 6002: requires life science manufactures to disclose transfers of value to providers
  • Sec. 1302: EHBs defined
  • Sec. 2502: removes smoking cessation drugs, barbiturates, and benzodiazepines from Medicaid‘s excluded drug list

FDA releases guidance on biosimilar premarket approval pathway

Thursday, the FDA released draft guidance for the biosimilar premarket approval pathway per BPCI Act of 2009, included in ACA Sections 7001-7003. BCPI established an abbreviated approval pathway for biological products shown to be biosimilar to, or interchangeable with, an FDA-licensed biological reference product. Highlights of the guidance:

  • Quality considerations in demonstrating biosimilarity to a reference protein product: FDA plans to use a risk-based “totality-of-the-evidence” approach to evaluate the data and information to evaluate biosimilarity between the proposed product and the reference product when manufacturers submit a 351(k) application. FDA recommends a stepwise approach in the development of biosimilar products. (Source: FDA, “Scientific Considerations in Demonstrating Biosimilarity to a Reference Product,” February 2012)
  • Scientific considerations in demonstrating biosimilarity to a reference product: FDA plans to use analytical factors including physico-chemical and biological characterizations to evaluate biosimilarity between a proposed therapeutic protein product and a reference product when submitting a 351(k). (Source: FDA, “Quality Considerations in Demonstrating Biosimilarity to a Reference Protein Product”, February 2012)
  • Biosimilars: questions and answers regarding implementation of BPCI: addresses questions such as how to request meetings with the FDA, how to address differences in formulation from the reference product, how to request exclusivity, and other questions related to licensure of proposed biosimilar products. (Source: FDA, “Biosimilars: Questions and Answers Regarding Implementation of the Biologics Price Competition and Innovation Act of 2009,” February 2012)

Note: the industry has expressed concern over how the FDA will define “similar,” as the term is not clearly defined in the law, only specifically that there is “no clinically meaningful differences.” Per the FDA, “A biosimilar is a biological product that is highly similar to an already approved biological product, notwithstanding minor differences in clinically inactive components, and for which there are no clinically meaningful differences between the biosimilar and the approved biological product in terms of the safety, purity, and potency.” Unlike most prescription drugs developed through chemical processes, biological products are usually developed from human and/or animal materials. Biological products include vaccines, blood and blood components, gene therapies, tissues, and proteins. Demand for biologics is strong: the market is expected to reach $100 billion by 2015 (Pharmaceutical Market Research). Seven of the top 20 selling drugs in the U.S. are biologics (Morgan Stanley Research). Patents for biologics associated with $30 billion in U.S. sales are projected to end by 2020 (Bernstein Research).

Medical device trade group announces legislative agenda

Tuesday, the Advanced Medical Technology Association (AdvaMed) released its 2012 legislative agenda focused on four main goals:

  • Providing a level playing field for medical device companies in world markets;
  • Increasing retention and expanding U.S. jobs through tax incentives;
  • Increasing incentives for research and development (R&D) investment; and
  • Making capital available for small and start-up companies.

Its highest immediate priority is repealing the 2.3 percent excise tax on its companies with more than $100 million in revenues: AdvaMed predicts the tax will increase the overall tax burden up to one-third. HHS recently released the rule on taxable medical devices February 3, 2012.

Note: the U.S. medical device sector is composed of 7,000 medical companies and employs 420,000 people: 62 percent with fewer than 20 employees and 2 percent with 500 or more. (U.S. International Trade Commission, 2007). The typical medical device is replaced with an upgrade every 18-24 months (AdvaMed, 2007). The sector spends 20 percent of its revenue on R&D. (Source: U.S. International Trade Commission, 2007)

CMS adds another health care-associated infection to Hospital Compare

Tuesday, CMS announced that Hospital Compare, a web tool that allows consumers to compare quality data of hospitals, will include data on central line-associated bloodstream infections (CLABSIs), a health care-associated infection costing thousands of lives and almost $700 million to the U.S. health care system.

AHIP requests ICD-10 conversion costs be counted in the MLR

Tuesday, the insurance industry commented to HHS on ACA’s MLR requirement that 2011 costs from ICD-10 conversion should be counted towards the calculation of the MLR in addition to costs for 2012 and 2013, and that the 0.3 percent cap should be removed.

Note: America’s Health Insurance Plans (AHIP) predicts that the MLR requirement could cost $200 million to $300 million annually. AHIP also expressed concern that excluding 2011 ICD-10 conversion costs in the MLR penalizes companies that start implementation early-on, and if that if the conversion is delayed the ICD-10 policy should also be revisited.

Study: drug spending related to unit costs, not prescribing patterns

Causes for regional variation in Medicare Part D spending are attributed to three differences: “First, we found that the cost per prescription was more important than the volume of prescriptions filled in explaining regional variation in overall Medicare Part D spending. Second, one cannot generalize entirely from the aggregate regional associations to specific categories. Our third main finding is that at the regional level, the cost per prescription closely paralleled the ratio of branded-drug prescriptions to total prescriptions.” (Source: Julie M. Donohue et al., “Sources of Regional Variation in Medicare Part D Drug Spending,” February 2012)

White House funds $156 million to address Alzheimer’s disease

Tuesday, the White House announced a plan to fund Alzheimer’s disease research, investing $50 million in immediate research funding, and an additional $80 million for research in FY2013 budget and $26 million targeted to programmatic support-- caregiver support, public awareness, education, improvements in data infrastructure. President Obama signed the National Alzheimer’s Project Act in January 2011.

Note: 5,000,000 U.S. patients have been diagnosed with Alzheimer’s disease; many more are not diagnosed. Recent clinical studies have found a possible correlation between memory loss and functions related to glycemic control, leading some investigators to explore the use of drugs used to treat Type II diabetes for early-stage dementia including Alzheimer’s and Parkinson’s diseases.


“While the economy lost 7.5 million positions during the 18 month recession, the health care industry added doctors, nurses, and other hospital personnel. Together with the social assistance category, which includes day care workers, career counselors, and similar positions, the sector will add more than 5.6 million employees and be the biggest job gainer by 2020, according to new projections from the Bureau of Labor Statistics. Manufacturing is forecast to lose 73,000 by then….Registered nursing, which requires at least an associate degree, will have the largest growth of all U.S. occupations, according to the Bureau of Labor Statistics, adding 711,900 jobs between 2010 and 2020, reaching a total of 3.4 million. The number of home health aides, who don’t need a high school diploma but require on-the-job training, will increase by 69 percent, to 1.7 million. Hiring of physicians and surgeons will rise by 24 percent to 859,300….every 10 jobs in health care ultimately generate an additional 12 jobs elsewhere in the economy.”

 —Bloomberg Business Week, “Health Care's Jobs Boom,” February 2, 2012

“Millions of Americans are walking around with artificial joints, pacemakers, stents and other implants. But federal regulators know more about where a pallet of dog food went than a batch of hip replacements. Unlike prescription drugs, or, for that matter, food at the grocery store, medical devices have no uniform labeling system—like a bar code—that would allow a central, computerized database to keep track of them. The result is that when a device is found to have problems, tracking down which hospitals have them, for instance, and in which patients they were implanted, can be extremely slow, labor-intensive, and incomplete. And problems occur. The FDA recalled more than 40 devices last year, including implantable defibrillator leads with the potentially lethal risk of pulling out of a patient’s heart and failing. They were distributed for more than nine years before the flaw was discovered and the recall was issued last November. A solution approved by Congress nearly five years ago is stuck in the federal regulatory maze for reasons that are unclear.”

 —Brett Norman, Politico, “FDA pushes worldwide, uniform device code,” February 6, 2012

Fact file

  • 92 percent of 154 peer-reviewed studies conducted between July 2007 and February 2010 drew positive conclusions on effects of health information technology (health IT) on care delivery and provider and patient satisfaction. (Source: Health Affairs, “The Benefits Of Health Information Technology: A Review Of The Recent Literature Shows Predominantly Positive Results,” March 2012)
  • Medicare total number of observation hours increased from 23 million in 2006 to 36 million in 2009. (Source: Medicare Payment Advisory Commission)
  • 57 percent of low-income families who earn less than $29,726 for a family of four (133 percent of poverty) were uninsured for at least part of 2011; 35 percent were uninsured for two years or more. 36 percent of families of four who earn between $29,726 and $55,875 were uninsured in 2011 and 18 percent were uninsured for two years or more. (Source: Commonwealth Fund, “The Income Divide in Health Care: How the Affordable Care Act Will Help Restore Fairness to the U.S. Health System,” February 2012)
  • Average clinical faculty member compensation at a U.S. medical school: $262,400 in 2010-11 academic year—an increase of 2.9 percent over the prior year. 59,000 U.S. physicians serve as clinical faculty members currently. (Source: Association of Medical Colleges,“Report on Medical School Faculty Salaries, 2010-11,” 2012)
  • Health care peripherals and smartphone processing power will be used in three million networks by 2016. Mobile health care and medical app downloads will reach 44 million in 2012, rising to 142 million in 2016. (Source: Juniper Research, “Mobile Healthcare Opportunities: Smartphone Apps, Monitoring, & mHealth Strategies 2011-2016,” 2011)
  • An average Medicare enrollee sees two primary care physicians and five specialists in four locations in one year. (Source: Pham et al, New England Journal of Medicine, “Care Patterns in Medicare and their Implications in Pay for Performance,” 2007)
  • Global perspective: leadership changes in in 2012: U.S. (November 6), Mexico (July 1), Venezuala (October 7), Kenya (August 14), Egypt, Russia (March 4), Taiwan (January 14), China (November), France (April 22); Expected gross domestic product (GDP) changes in 2012: U.S. 1.3 percent, Japan 2.2 percent, Euro Zone .3 percent, Brazil 3.5 percent, Russia 3.7 percent, India 7.8 percent, China 8.2 percent.
  • One third of U.S. primary care physicians believe ovarian cancer screening is effective and offer it to patients despite evidence to the contrary concluding that the harms of screening exceed the benefits. (Source: Baldwin et al, Annals of Internal Medicine, “Vignette-Based Study of Ovarian Cancer Screening: Do U.S. Physicians Report Adhering to Evidence-Based Recommendations?” February 2012)
  • In 2010, 24 percent of the 2,400 physicians responding to a survey said they plan to drop out of clinical practice in the next one to three years by switching jobs: half said they plan to find a nonclinical job in health care and the other half plan to leave health care. (Source: Shelly M Reese, Medscape Today, “Tired of Being a Doctor? Choices for Opting Out of Medicine,” February 2012)
National health reform: What now?




National health reform: What now?

National health reform is here. The health reform bills (HR3590 and HR4872) are now law and will trigger sweeping changes and disruptions – some rather quickly and some over many years. The industry is asking, “What now?” At Deloitte, we continue to explore and debate the key questions facing the industry, and we look forward to helping our clients find and implement the right answers for their organizations. To learn more, visit today.

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