Shifting Costs Is Not Saving Costs

Today’s Managing Health Care Costs Indicator is $11.54

Today’s Boston Globe brings another depressing headline, “State Will Cut Flu Shots by Over Half.”   The state’s Commissioner of Public Health puts a brave face on this public health blunder, pointing to the high rate of insurance among Massachusetts residents.  He said

We think it’s a good thing for people to use their insurance card when their insurance card will pay for a service.”

But he’s demonstrably wrong.

The state purchases vaccines for $1.44 less per dose than they can be acquired by private purchasers.  While all of us can go to a CVS or a Walgreens to get a flu shot, the injection that would have cost the state under $11 costs our insurer as much as $30. 

Influenza vaccines save lives – and they reduce overall health care claims costs.  They’re a good deal for insurers to cover – even if they pay physicians just about $20 for the vaccine and administration.  But they’re an even better deal for the state to purchase (at a discount).   Vaccination is a classic public good ; when I get vaccinated, not only am I protected, but I’m less likely to infect  everyone I meet.   

State purchase of vaccines has helped Massachusetts lead the nation in childhood vaccination – and these vaccine programs are threatened by budget cuts as well.

So – the federal government will lower state aid, and the state will cut flu shot budgets.  Either health insurance will purchase these vaccines for an even higher price, or people will go without the vaccinations, and suffer from worse health and sometimes die.  Either way, for lack of paying for flu shots, health care will cost more – not less.

While I’m on the topic of cost shifting, Austin Frakt had a post in the Incidental Economist  last week that  mentioned another unpardonable cost shifting proposal, the proposal to raise the Medicare eligibility age.  Raising the age from 65 to 67 would ‘save’ the federal government $5.7 billion. But it would cost those who would have otherwise been eligible for Medicare $3.7 billion, employers $4.5 billion, and would cause other premiums to rise by $2.4 billion due to the influx of older, sicker people into the health insurance exchanges.  

Total “savings”:  $5.7 billion
Total “costs”:      $11.4 billion

This is a terrible deal.  To lower health care costs we have to lower resource inputs – we can’t simply cut spending in one place (the federal government) and ignore how those costs will be borne by others. 

(12-22-11  I corrected an error in earlier version which suggested Frakt was critiquing the Ryan plan.  He's since done a multipart series on Medicare premium support proposals. )

Time Defined Activity Based Costing

I wanted to spend a bit more time talking about a thoughtful piece in the September Harvard Business Review by Robert Kaplan, who originated the Balanced Scorecard, and Michael Porter, business strategy guru, and author of Redefining Health Care.

The cover of HBR points to the article’s debunking of reviews three myths about health care costs
1)     Charges are a good surrogate for actual health care costs
2)     Hospital overhead costs are too complex to allocate accurately
3)     Most health care costs are fixed.

I think the real insight of this article is that it’s hard to get more value out of health care if we don’t know what the real resource cost is.  And let’s be honest – we almost never really know what the resource cost of a service is.   Beth Israel physicians are walking around with a price list – but that’s the price charged –not the cost to deliver the service.  The actual marginal cost to perform an upper airway endoscopy is the physician’s time (less than 10 minutes) and the cost of sterilizing a machine – not the $1000 price tag!

Activity based costing is painfully difficult to implement – essentially someone has to stand around with a stopwatch and do “time and motion” studies.  As you can imagine, physicians aren’t thrilled with that approach, and it isn’t cheap to implement.  Kaplan has developed a wonderfully intuitive short cut – time-driven activity-based costing (TD-ABC) which uses standardized time units. 

The authors give a number of examples of health care providers who have implemented this, and decreased their resource costs while likely improving quality and reliability. The case studies include MD Anderson Cancer Center in Texas, Children’s Hospital and Brigham and Women’s in Boston, and Shon Klinic in Germany.  The examples are generally around procedures more than cognitive services- but this approach should work for cognitive services as well.

The most difficult element of implementing TD-ABC will be that it requires process maps for each activity that will be assessed.   Physicians are notoriously unwilling to standardize processes – and developing a process map requires this.  TC-ABC fits very well with LEAN and Toyota process improvement other techniques seeking to reduce waste- and gives executives a better way to measure waste.

I believe there will be unprecedented pressures over the next years to lower medical costs. Lowering prices alone won’t be sustainable – hospitals and physicians will have to figure out how to actual lower input costs. TD-ABC give hospitals and physicians a powerful accounting tool to be sure that they know where they can cut actual expenses to be able to continue to meet their mission of providing high quality health care. 

TD-ABC is also further evidence of the need to standardize medical care delivery.

Bundled Payment Matters: The Beth Israel Example

Today’s Managing Health Care Costs Indicator is 10

Paul Levy , the former CEO of Beth Israel Deaconess here in Boston, wrote a few days ago  that the “religious” belief among architects of health care reform that we need to move away from  Fee For Service payment was distracting us from other reforms that could genuinely make health care better.  

He writes:

How much damage is being done and how much time is being lost by our society by a religious belief in a payment scheme that has not been proven and that has many inherent difficulties? 

I beg to differ, and I offer his own Beth Israel as an example. 

There was a report two days ago on WBUR  about a new program by the physician organization there to educate physicians about the prices of various tests they order and procedures their patients undergo.   The primary care physicians, it turns out, are enraged that every time an otolaryngologist performs uses a scope to view a patient’s larynx the cost of an office visit goes up by a factor of 10. 

Why do physicians rarely know the prices of what they order?  There are a multitude of reasons – which include our chaotic pricing system where each payer allows a different amount for the same procedure and high margin procedures cross-subsidize lower-margin services.   (Great article in September’s Harvard Business Review by Michael Porter (Redefining Health Care) and Robert Kaplan (Balanced Scorecard) on the issue which illustrates the folly of how we currently account for health care costs; I’ll have more to say on this article in the coming days). 

What has made the BIDMC physician organization decide to tackle the issue?  I’d argue that this is a result of the BIDMC’s participation in the alternative quality contract with BCBSMA – a payment system that includes a total global budget  - capitation by another name.  When a group of doctors are responsible for overall costs, they start caring about the resource costs of care delivery!

The AQC hasn’t saved any money in its first year , and it’s easy to throw stones.  But sensitizing physicians to prices and costs, who order many of the procedures that drive health care costs up, is certainly a good first step.

By the way, for a longer description of the problems of fee for service, see a series of past posts

Cost Sharing Keeps Cancer Patients From Getting Medications

Today’s Managing Health Care Costs Indicator is $1700

That’s what a patient with leukemia has to spend out of pocket each month to get a new medication for a rare kind of leukemia in an employer health plan with a “fourth tier” for specialty drugs, according to an article from Kaiser Health News in yesterday’s USA Today.    In her case, the full cost of the medication is $6800 per month.

Fourth tiers in drug benefits are increasingly common – as employers struggle with the increasing cost of specialty medications, which often cost $50,000 or more per year.  In a fourth tier, patients must pay a percentage of the cost of a medication (coinsurance), rather than a set dollar copayment.   

These specialty drugs usually target chronic diseases like certain cancers, multiple sclerosis, or rheumatoid arthritis – so their cost recurs month after month after month.   Many of these drugs represent the best advances in clinical medicine in my generation.   I’ve written before about Chronic Myelocytic Leukemia, which was once a rapid death sentence.   Patients now take Gleevec ($40-50,000 per year) and often have normal life expectancy. 

Research  suggests that 10% of oral cancer medication prescriptions are abandoned at the pharmacy -  the portion of medicines with over $500 cost share not picked up by patients is over 4 times as large as those medicines with cost sharing of under $100.

There is no “perfect” answer to this problem .  We want drug companies to do research for novel treatments for rare diseases, but the research is of little social value if many Americans can’t afford the resultant treatment. 

Possible approaches:

  1. 1)   Higher member cost sharing for expensive drugs.   This penalizes those who have already lost the “health lottery,” and causes poor medication adherence.  It does put pressure on drug companies to lower prices, since we are all more price sensitive when exposed to more of the bill. 

  2. 2)   Share cost of these medications over a large population (no higher cost share for specialty medications).   There are good insurance reasons for a large population to share the cost of these medications.  However, this doesn’t exert pressure to lower prices.

  3. 3)   Special programs to fund these medicines for those who can’t afford them. Drug companies offer programs for discounted or free medicine for those in poverty, but these programs are difficult to navigate and often lead to missed doses.  They are also an effective form of price discrimination that lessens pressures to make medicines more affordable.

  4. 4)   Price regulation:  This is the European approach to specialty medication cost – and the US is among few industrialized countries that have no price controls on pharmaceuticals.  On the other hand, price regulation could decrease research for drugs to treat rare diseases. Furthermore, well-meaning price controls are why some inexpensive generic cancer drugs are currently in critically short supply in the US.  

  5. 5)   Allow the FDA to consider cost when it is approving new drugs.  Clearly, this has helped the National Institute for Clinical Excellence (NICE) negotiate lower drug prices in the UK.  On the other hand, the public outcry about drug availability has led the UK to restrict NICE’s ability to consider price when approving medications.

  6. 6)   Perform medical management, such as prior authorization, to prevent overuse of these expensive medications.   This can help prevent waste and make patients try less expensive alternatives first.  However, there are rarely good alternatives for these medicines.  Utilization management programs work best where the problem is overutilization, and in this instance the problem is unit cost.

  7. 7)   Include these expensive medicines in bundled payments, to transfer the risk to providers.   This would help only if providers are now overutilizing these medications, and could discourage physicians from caring for patients who have diseases responsive to these expensive drugs.

  8. 8)   Bulk purchasing can yield higher discounts, but these expensive drugs have a single source.  Required Medicaid “most favored” pricing discourages pharmaceutical companies from offering significant discounts to other payers.  

Where no approach on its own seems efficacious, it’s usually wise to consider a hybrid of various approaches.  With the increase in specialty pharmaceutical costs likely to continue, and few of these drugs going off patent any time soon, there will be continued pressure to lower the acquisition costs of these medications.   Expect to hear more of these horror stories in the future.

Pharmacy Medicaid Rebates – and Unintended Consequences

Today’s Managing Health Care Costs Indicator is 237%

Click image to enlarge. Source 

There’s been a lot of tooth-gnashing lately about how Medicaid pays substantially less than Medicare to acquire prescription drugs.  For instance, the graph above is currently on the front page of the New England Journal of Medicine’s Health Policy and Reform website, and shows Medicaid rebates over twice as high as Medicare rebates  

It’s worth going back to the law that granted Medicaid its non-negotiated mandatory high rebates – the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990 for short).  OBRA is part of a long and proud history of passing important health legislation through the reconciliation process, which includes the Patient Protection and Affordable Care Act (2010) and the Consolidated Omnibus Reconciliation Act of 1986, which we all know as COBRA, – which allows departing workers to purchase health insurance for 18 months. 

OBRA 1990 is probably most famous for George HW Bush’s breech of his 1988 election promise, “Read my lips; no new taxes!” OBRA 1990 raised the ceiling on income for Medicare tax and extended taxes on gasoline and telephone service.  Conservatives were pretty angry.  It also implemented PAYGO, whereby legislators passing spending bills would have to identify a source of revenue. 

OBRA also allowed states to establish drug utilization review panels, and mandated that pharmaceutical companies offer a substantial rebate to state Medicaid programs for brand name drugs that were on each state’s preferred drug list.  That rebate would effectively allow the Medicaid program to get the “most favored” pricing.  Therefore, if the pharmaceutical company offered a deeper discount to any purchaser, its rebate to states would be increased.

You might have thought that would be a terrible blow to the pharmaceutical companies – forced against their will to offer big discounts without the ability to negotiate. But that’s not how this played out.   The mandate that Medicaid would get the lowest prices (without needing to negotiate) actually made the pharmas dramatically less likely to offer discounts to others, and indeed the Congressional Budget Office 
found that discounts to other purchasers declined dramatically after the ‘most favored’ pricing for Medicaid became effective.   That’s because the threat of having to offer large rebates to over 50 different state Medicaid agencies helped enforce pharmaceutical pricing discipline – and thus raised the overall acquisition cost for pharmaceutical agents.

I first learned about this in Coopetition (Brandenberg and Nalebuff, 1996) 

Click to enlarge. Source 

There is one more chapter to this saga.  Some of the sickest and neediest patients are dually eligible for both Medicare and Medicaid.  They are often either completely disabled, severely mentally ill, or residents of nursing home. Medicaid paid for all ambulatory medicines for these patients until the introduction of the Medicare prescription drug plan in 2003 – and Medicaid paid with this “most favored” pricing.  Medicare Part D, however, forced these patients to enroll in privately-run Medicare Part D pharmacy programs, which were not able to have the same low acquisition costs.  

This was great for the states, which liked the federal government picking up the entire tab for prescriptions for this sick population; states had previously paid half.  It was perfectly fine for the Medicare Part D plans, which gained more premium revenue.  It was especially fine for the pharmaceutical companies, since they were able to obtain higher prices for a population that used a lot of prescription drugs.  It wasn’t so great for patients, who often had difficulty navigating the confusing world of Medicare Part D plans.

Back to today – there are calls for the pharmaceutical companies to offer higher rebates to Medicare Part D plans.   I can’t say that mandating such rebates would be a windfall to the pharmas like OBRA 1990.  But I can say that mandating rebates for some parties while maintaining negotiated prices for others distorts a market.  We should be careful to “game out” the likely implications of higher mandatory rebates.   A hybrid system with some prices controlled and others unregulated is likely to lead to higher prices for at least some of those getting prescription medications.

Health Care and Jobs

Today’s Managing Health Care Costs Indicator is 430,000

Click image to enlarge.  Source

That’s how  many jobs were created in the health care industry during the recent recession, while 7.5 million jobs were lost in the overall economy.    This was reported on the front page of the business section of last Thursday’s New York Times

I’ve written about this phenomenon before. Earlier this month , I pointed to the increase in health care jobs in July.  In June, I talked about the pain of hospital closings. A year ago I noted the pain of hospital cuts.  .  In late 2009, I talked about the disconnect between growth in health care jobs and controlling health care costs. Health care jobs are good for local economies, although if we have robust growth in health care jobs, we aren’t going to “bend the cost curve.”

This week, the Center for Study of Health System Change released an excellent monograph detailing the reasons for our ambivalence about creating more jobs in health care.   They point out that the costs of some expansions of health care are borne by the local economy (individual and small business  health insurance), while other expansions of health care (like Medicaid and much of Medicare) are funded from outside of the local economy.  The sum of the costs of health care expansions funded from outside of the local economy is between 57-75%.  Hence, even as Washington wants to cut Medicare expenditures, local governments and hospitals push to expand health care, knowing that the bill is being funded by others.  

The Commonhealth blog  has an excellent meditation on capital expenditures at Partners Health Care here in Boston, with a thoughtful interview with CFOPeter Markell .   Bottom line – we all want more capital investments so that we can get the latest and best medical care, which we truly value.  Further, more capital investments in health care, unlike many other industries, have usually been associated with higher employment.  The ugly underbelly of capital investment, though, is that new investments mean higher operating costs and higher debt service that will require higher medical bills in the future.

National Quality Colloquium

Today’s Managing Health Care Cost Indicator is 80%

I cochaired a mini-summit panel on value-based purchasing at the National Quality Colloquium today, and wanted to share a few elements from talks given by my colleagues.

Trent Haywood, the CMO of VHA and a former CMO of CMS, and Teresa Clark, VP of Social Science for VHA, had a pithy explanation of the market failures of American medicine, which I am paraphrasing here.

  1. We link pay to cost instead of value

  2. We link pay to volume instead of value

  3. We have inadequate signals regarding quality

  4. Consumers don’t share meaningful financial risk for the cost of care.

They pointed out that the combination of high deductible health plans and payment reform built into the Affordable Care Act addresses each of these underlying problems.

Francois de Brantes,  the Executive Director of the Health Care Incentive Institute, gave an overview of Prometheus Payment, and said that the federal government is well on the way to developing open-source episode definitions that would cover 80% of all medical expenses.  That would make episode based payment very viable in the market, and very much more likely to lead to change of clinical practice.   

He concluded that the five critical elements to the success of payment reform are
-        Full CEO engagement
-        Commitment by willing plan AND provider
-        Clean and complete claims and eligibility data
-        EMR systems
-        Sense of urgency

Leslie Curry, a researcher at Yale and RWJ, showed how her team used ‘positive deviance’ to identify approaches that the most-effective hospitals used to achieve lower risk adjusted mortality for heart attack.  She highlighted the importance of culture and leadership in creating systems that provided consistently better (and more valuable) patient care.

Many of the presentations for this conference are available at (pull down under "agenda" on the front page).  I especially recommend the presentation by Marc Roberts of Harvard School of Public Health on the political economy of quality improvement in health care.

Penny Wise: Cutting HIV Prevention and Treatment Programs

Today’s Managing Health Care Costs Indicator is $11,388

That’s how much it costs per patient in the AIDS Drug Assistance Program (ADAP) program  -- which purchases HIV medications for those without health insurance.  Much of this is funded through the federal government – although ADAPs are administered through each state.

The Washington Post and NPR reported this spring about growing waiting lists for ADAP –over 8000 people in May.  South Carolina’s preliminary 2011 budget would have eliminated its HIV prevention and treatment programs altogether.  Some states like Virginia were bumping patients off the ADAP program if their T cell count rose.  Florida  has the largest HIV drug waiting list, and is considering decreasing the income threshold for eligibility to under $22,000 per year.

That might seem fair, to restrict access to those who are  poorest or sickest, but it’s a terrible clinical idea.  Intermittent use of anti-HIV medications is more likely to lead to drug resistance. Also, those on effective anti-HIV medication are substantially less likely to transmit the disease. 

The Boston Globe  reported yesterday that a federal cut of $4.3 million, about a quarter of the anti-HIV budget, will lead to discontinuation of condom distribution programs, outreach to gay men, and community case workers who work directly with HIV patients.   The federal government is shifting its investment from prevention and from states with low transmission rates to testing and treatment and states with higher transmission rates.

Cutbacks in HIV prevention are likely to be costly in the future – public health interventions are far more cost-effective than treating preventable cases later.  Cutting back on drug treatment is a special tragedy.    Highly Active Anti-HIV therapy (HAART) is one of the medical miracles witnessed by my generation of physicians.  Patients with HIV once uniformly died 18-36 months from initial diagnosis. They went blind from cytomegalovirus, they were pockmarked with Kaposi’s Sarcoma, and they were breathless from pneumocystis pneumonia.  They spent weeks or months in the hospital, suffering from wasting and from central nervous system lymphomas.  

All that now seems like the Dark Ages.  The dread disease that was a rapid death sentence in 1994 is now a chronic disease – a bad one – but one that is treatable and where patients can live normal lives (and remain working and paying taxes) for decades.  

We should not restrict access to life-saving HIV drugs.

Early Induction of Labor Leads to Bad Outcomes and Excess Costs

Today’s Managing Health Care Costs Indicator is $5.5 Billion

Jane Brody’s New York Times column last week was about the March of Dime’s new campaign to discourage early induction of labor.   She points out that babies delivered early have more lung, liver and infection problems.  She cites a factoid that should discourage all women from early inductions, the fetal brain gets 50% larger between the 35th week and the 39th week of pregnancy. 

Early induction of labor is more likely to lead to Caesarian section – and one in three deliveries in the United States are now by C Section.  C- Sections cost about 50% more than vaginal births, and so the 1.3 million Caesarian sections in the US each year cost in excess of $5.5 billion more than if these deliveries were vaginal.

Avoidable Caesarian sections are especially harmful for those women who will go on to have three or more children.   There was a recent painful case study in the New England Journal  of a woman with placenta accreta (where the placenta adheres to the uterus, leading to life-threatening blood loss) which pointed out that the likelihood of such placental abnormalities goes up dramatically with subsequent Caesarian sections.

The Leapfrog Group recently started reporting on self-reported rates of elective induction prior to 39 weeks, and the National Quality Forum has endorsed an administrative quality measure that identifies low risk first deliveries that are done via caesarian section.  We need more transparency efforts like this, as well as patient education programs like those of the March of Dimes to discourage requesting early deliveries.   We also need payment reform to encourage patience to increase the portion of deliveries performed vaginally. This includes full payment for the services of midwives, who are less likely to refer their patients for surgical delivery.

It’s time for us to stop delivering babies before they are ready!

Generic Cancer Drug Shortage

Today’s Managing Health Care Costs Indicator is 14

Ezekiel Emanuel has a column in this weekend’s NY Times  pointing out that there are currently national shortages of 14 of 34 generic cancer drugs currently on the market.  As a result, oncologists are rationing care, and some with leukemia are unable to receive the standard care.  Here’s a link to a Boston-affiliate public radio interview on the same topic.

The underlying problem here is that the 2003 Medicare Part D act, which limited oncologist payment for chemotherapeutic drugs, also put in place a cap of price increases for these generic drugs.   This cap, while well-meaning, has turned out to be too low to support new generic company capital investments in plants to manufacture generic chemotherapy drugs .

It’s possible that we’ll need some type of price control for branded pharmaceuticals.  Sometimes a branded oncology drug costs as much as $90,000 – and there is no competition for unique medications still under patent.   However, price controls can cause unexpected market distortions – like the problem we’re having now with oncology medications.  European governments extensively regulate drug prices, but their generic cancer drugs prices are higher than ours, and they are not suffering from supply shortages.

I’ve written in the past about apparent drug discounts which can actually raise overall costs.  In many cases a pharmaceutical company offers a discount to patients, which undermines a higher differential cost patient share and eliminates price sensitivity.  This raises the average price paid by all purchasers.

The shortage of generic cancer drugs is another example where the lowest unit price doesn’t lead to the best value in health care purchasing.

Health Care Adds Jobs

Today’s Managing Health Care Costs Indicator is 26.8%

The Bureau of Labor Statistics reported that health care added 31,300 jobs in July – over a quarter of the new jobs added in the US.

The underlying problem is likely that we aren’t adding enough jobs in the rest of the economy.  There are good reasons why we might be adding more jobs in health care than elsewhere – as our population ages. 

Still, this is a great illustration of our mixed emotions about the cost of health care.  As long as health care is adding 26.8%  the new jobs in our economy , the cost of health care will continue to grow at a faster rate than the overall economy.

We can’t celebrate health care job growth at the same time we complain of increasing health care costs.  Earlier post on this topic. 

A brief personal note.  The Pan Mass Challenge was a great ride this past weekend – about 190 miles cycling from Sturbridge to Provincetown, and about $30 million raised for cancer research.   I had three flat tires, and the sky sprinkled us a bit –but the rain held out until after we reached the end of the ride.  A few hundred of the ~5000 riders were cancer survivors, and cancer has touched all of our lives.  I spend a lot of my time most weeks thinking about how to make health care cost a bit less.  From my saddle, I spent this past weekend thinking about how we have to invest more in research so that more people who are afflicted with cancer can live long, normal, healthy lives.  

2011 Health Care Lobbying Intensifies

Today’s Managing Health Care Cost Indicator is $119,267,285

Click to enlarge. Source 

Good article in the Washington Post yesterday about how the debt ceiling bill will pit the health industry lobby against the defense industry lobby.  Both are highly invested in a Congressional settlement to avoid mandatory cuts, which could be devastating for each industry. The number above is the spending so far this year for pharma industry lobbying. There’s also an intriguing article in Bloomberg Business Week analyzing the debt ceiling imbroglio from a game theory perspective. It asserts that the outcome was inevitable given each party’s position. The author considered the Democrats, the Republicans, and the Tea Party separately.

The grid above shows lobbying expenses by industry for early 2011.  It’s from the Center for Responsive Politics, which does a great job of displaying this information in a timely and accessible fashion.  You can drill down at their site to see lobbying expense by industry segment and by company.

I’ll be off blogging for the weekend – cycling my fourteenth Pan Mass Challenge from Sturbridge to Provincetown, Massachusetts.  It’s 192 miles and raises money for cancer research.  I’ll be tweeting the ride @jeffnlinda

Mandatory Coverage of Contraception Could Increase Use of Expensive Agents

Today’s Managing Health Care Costs Indicator is $919.86

Click to enlarge. Source: 

Full coverage of contraception should be a money-saver, as I noted in an earlier post.    However, my reading of HHS’s announcement makes me worried that the requirement for health plans to cover all contraceptives, regardless of cost, could lead to much higher use of less cost-effective birth control options.   

The new regulations require that  long-term contraceptive methods, such as an IUD, be fully covered, even though the woman might well be on a different health insurance plan a short while after receving this.  This is good from a societal point of view.  The long-term contraceptives (IUDs and depo-provera) are more reliable, since they don’t require users to take a pill or insert a device frequently. This increases effectiveness in real-world use, and these long-term agents tend to cost less over their duration than oral contraceptives.

Here's the worry with mandatory access to all contraceptives without patient cost-sharing.  There is a ten-fold difference in price between generic oral contraceptives and newer, heavily-marketed, branded oral contraceptives.   If insurance companies are mandated to cover each with no patient cost sharing, we could see a migration from cost-effective generics to newer drugs which cost far more and are not any more effective.  Further, when physicians prescribe these newer medicines, they don’t know whether broad community use will unearth side effects not recognized during limited pre-marketing testing.

My suggestion – the regulations should be clear that patient cost sharing is not allowed for generic oral contraceptives. Patient cost-sharing does lower utilization, and there are some costly medications which could otherwise increase the cost of health care.  Ideally, regulations should also set a maximum acquisition cost for longer term contraceptives to prevent massive future price increases.