Reflections

New Years Eve is a good time to reflect on the past and the future. The Wall Street Journal featured an article in this weekend's paper about advances in medical care that the FEHBlog found very encouraging.

2013 will bring us one short year away from full implementation of the Affordable Care Act. The Internal Revenue Service issued a proposed rule on this shared responsibility or "pay of play" mandate which applies to employers of 50 full time employees (30 or more hours per week) or more.  The IRS's FAQ on this mandate can be found here. Here's a link to a Wall Street Journal article on the rule, which included some surprises.  OPM will have to consider changes to the FEHBP necessary to comply with this mandate and avoid the penalties associated with non-compliance.

Folks interested in health care spending should read the New York Times' article about Questor. Questor manufactures a drug Acthar Gel that first was developed in the 1950s due to Armour packing company's efforts to find uses for pig by-products. Questor's drug is derived from the pituitary glands of that animal. The drug treats an orphan (rare) condition called infantile spasms. Questor acquired the drug about ten years ago. In 2007, a new CEO "repositioned" Acthar as a specialty drug and jacked up the price which rose from $700 per vial in 2007 to $28,000 today.  A health insurer that balked at the price increase but was mau maued into paying. The New York Times explains

Insurers generally pay for Acthar because it is considered the best treatment for infantile spasms. They also tend to pay for other approved uses if cheaper drugs have been tried first. And Questcor has carefully executed the orphan-drug playbook. Patients who cannot pay are given the drug free. The company helps with insurance co-payments, to make sure that a patient’s inability to make a co-payment doesn’t stand in the way of the drug being used and the insurer paying $28,000 a vial.

In other words, Questcor shifts the cost onto insurance companies while staving off consumer protests. It has a staff of 30 people who do nothing but work on insurance reimbursements — about one staff member for each of the roughly 30 prescriptions it gets in a typical day for all uses.  Questcor executives argue that with the free drug program and the ample supply, patients have better access to Acthar now than when it was cheaper and often in short supply.

Wow, that's a lot of chutzpah upon which to reflect.