HealthCommentary

Exploring Human Potential

Do Majority in My State Support Trumpcare? NO!

Posted on | June 16, 2017 | No Comments

State     Oppose AHCA   Support AHCA

DC                  70%                             16%

MA                  59%                             22%

HI                   59%                              23%

WA                 59%                              25%

VT                   57%                              23%

CT                   57%                               24%

MD                 56%                               24%

OR                  56%                              29%

IL                    55%                              25%

CA                  54%                              26%

NY                  54%                              28%

RI                    54%                              23%

WI                  54%                              29%

CO                  53%                              24%

NV                  53%                              28%

IA                   53%                              27%

VA                  52%                              30%

MN                 52%                              27%

KA                  51%                               31%

NJ                   51%                              30%

OH                  51%                              29%

MT                  50%                             26%

MO                 50%                             32%

NC                  50%                             30%

DE                   49%                              27%

AL                   49%                              29%

TX                   49%                              34%

PA                   49%                              30%

MC                  49%                              27%

NH                  49%                               27%

ME                  49%                               30%

NM                  49%                              29%

UT                   48%                               29%

NB                   48%                               34%

SD                    48%                               33%

FL                    48%                               35%

GA                    48%                              30%

ND                    47%                               31%

SC                     47%                               32%

IN                     47%                                31%

MI                    46%                                30%

LA                  46%                                   28%

WY                 46%                                   34%

AZ:                 45%                                   31%

OK:                45%                                   38%

AL:                 43%                                   33%

ID:                 43%                                   30%

KY:                41%                                    33%

AR:                40%                                   32%

TN:                40%                                   35%

WV:               40%                                   36%

Warren Buffett and Charlie Munger: Employer Health Care Not Taxes Is the Problem.

Posted on | June 14, 2017 | No Comments

Buffett and Munger

Mike Magee

This week the Wall Street Journal editorial page couldn’t help itself. They let loose with a snarky piece titled “California Single-Payer Dreaming” and front-ended their conclusion with the words, “This proves the truism that the liberal solution to every government failure is always more government.” For good measure, they added, “This bill reflects the left’s Platonic ideal, with the promise of free care for everyone for everything.”

The editorial cites a California Senate committee price tag of $400 billion, with a Federal contribution of $200 billion as an offset. But an independent University of  Massachusetts/Amherst study released this week pegged the cost at $331 billion and potential Federal offsets of $225 billion. As important the study predicted that moving to single payer simplicity would cut the state’s health care costs by a whopping 18%, and decrease middle class patients cost 9%, and low-income resident costs 5%.

Just about a month ago, the Oracle of Omaha, Democrat Warren Buffett, and his life long sidekick, Republican Charlie Munger, provided a full-throated financial defense of single-payer. Andrew Ross Sorkin who got the scoop summed it up this way when comparing the value of tax reform legislation compared to health care reform: “As Mr. Buffett pointed out, these chief executives are missing the bigger issue — the one that should be their Holy Grail. As a percentage of our gross domestic product, the cost of maintaining our American health care system — hospitals, H.M.O.s, doctor visits, prescription drugs, medical devices, insurance companies, Medicare, Medicaid — is rising at an alarming rate. And Corporate America pays a big (and growing) chunk of the bill.”

Buffett put numbers to his argument. He said, “If you go back to 1960 or thereabouts, corporate taxes were about 4 percent of G.D.P. I mean, they bounced around some. And now, they’re about 2 percent of G.D.P…health care was 5 percent of G.D.P., and now it’s about 17 percent…When American business talks about strangling our competitiveness, or that sort of thing, they’re talking about something that as a percentage of G.D.P. has gone down, while medical costs, which are borne to a great extent by business” are on a steep rise.  “Medical costs are the tapeworm of American economic competitiveness.”

His friend Charlie agrees, pointing out that a corporate tax break won’t change operations in any of the Berkshire Hathaway companies. “We’re not going to change anything at the railroad just for some little tax jiggle.” As for health care politics, Charlie says, “On this issue, both parties hate each other so much that neither one can think rationally, and I don’t think that helps, either.”

Easily lost in the debate are the numerous flaws in employer based health care that were laid out in a Health Affairs article over a decade ago. They include:

1. High administrative costs with 850 health insurance companies selling to millions of employers.

2. These high cost are passed on to employees in rising contributions and lost wages. This burden weighs more heavily on low income employees.

3. Many employees of small firms and the unemployed/underemployed are left out of coverage.

4. Employment based insurance is a major contributor to bankruptcies and poor labor relations. Plus, this system discourages worker mobility and advancement.

5. Many CEO’s know nothing about health care and delegate decisions to consultants and favored local agents who are ripping them off.

Way back in 2006, Stanford’s Alain Enthoven and Victor Fuchs wrote, “In the long term, we think that the likely and most desirable outcome is replacement of job-based insurance with some form of universal health insurance that encompasses choice, competition, and technology assessment to revitalize social insurance while making care more cost-effective.”

Back then then noted the lack of political will to address the status-quo, but also said, “But some external traumatic event…could trigger a political upheaval that would increase support for universal health insurance and force a compromise among alternative proposals.”

Trump may be that event.

How To Defeat Donald Trump in 2018 and 2020.

Posted on | June 7, 2017 | 2 Comments

Mike Magee

It is still early, but I believe Trump may survive immediate impeachment, though a number of his loyal followers may not be so fortunate. This means that those who oppose Trump – both Republicans and Democrats – need to be prepared for elections in 2018 and 2020.

After a recent post on the subject of positive leadership, with Trump as a foil, one of my loyal subscribers commented, Mike, after many years of active involvement in health policy through my professional organizations, I am preparing to take the next step and run for the legislature in my state. Your essay on leadership has provided me with an excellent framework for my campaign platform. I couldn’t agree more that now more than ever we must each choose to lead in whatever way we can.”

If we were to commit from both sides of the aisle to the bipartisan defeat of Trump and his unwavering supporters,  I would suggest that local, state and national leaders embrace and include the following ten points in their election platforms.

1. We have a President who is brazenly and unapologetically regressive.

2. His self-propelled rise advantaged change and magnified fear in a segment of our population.

3. President Trump is a negative leader who embraces fear and uses it as a currency to mobilize and organize populations and achieve short-term regressive goals. 

4. Negative leaders retrench and divide; positive leaders connect across the divide.  Negative leaders segregate; positive leaders aggregate. Negative leaders build walls.  Positive leaders built islands of common stewardship.

5. I am a positive leader. That is why I oppose Donald Trump and his supporters.

6. I believe in pursuing common ground based on openness, inclusiveness, cultural sensitivity, justice, opportunity for all, goodness and fairness.

7. I believe in shared values and a unified vision for the future that includes lifelong learning, new technologies, curiosity, introspection and an active social conscience.

8. As your leader, I will support formative relationships, that is, as I care for you, you will continue to form me as a human being. 

9. I am committed to the success of you, your family, your friends and your community thru cooperative productivity. We will help each other succeed.

10. Together, we will combat Trumpian fear. I commit to:

         a) advancing positive leaders who lead with vision, not fear.

         b) never remaining silent in the face of evil or injustice.

         c) persisting and enduring – I will never give up on you, and hope you will never give up on me.

         d) pursuing balanced success marked by happiness, relationships, and a stubborn adherence to the highest human values.

         e) promoting faith in a higher power, not as a last resort, but as a beacon of goodness, resilience and strength.

How To Expel Trump From The “Island of Common Stewardship”

Posted on | June 5, 2017 | 9 Comments

Mike Magee

In our lifetime, we have witnessed the emergence of the Internet and HIV, of globalization and overnight delivery, of bubbles and bursts in our stock market, of the genomic revolution and the aging revolution.  We have witnessed as well great preparation for war, but little preparation for peace.

But we have never experienced change like this. We have a President who is brazenly and unapologetically regressive. His self-propelled rise advantaged change and magnified fear in a segment of our population.

Three decades ago, while simultaneously studying change and leadership, I first defined the difference between negative and positive leaders based on their approaches to change.  Negative leaders embraced fear, using it as a currency to mobilize and organize populations and achieve short-term regressive goals.  In contrast, positive leaders were explorers who used a compelling value-centered vision as currency, and through role modeling and the strength of new ideas drew people in as they worked together to shape the environment in the long-term to be consistent with their vision.

Negative leaders retrenched and divided; positive leaders connected across the divide.  Negative leaders segregated; positive leaders aggregated. Negative leaders built walls.  Positive leaders built  “islands of common stewardship.”

On these islands, one consistently found qualities like openness, inclusiveness, cultural sensitivity, justice, opportunity for all, goodness and fairness.

On these islands people spoke a common language grounded in shared values and a unified vision for the future.  They shared as well common tools including lifelong learning, new technologies, curiosity, introspection and an active social conscience.

On these island existed formative relationships, that is, as I care for you, you form me as a human being.  And on these islands there was a rich supply of renewable capital – human capital, financial capital, and social capital – the equity captured between two individuals committed to each other’s success and to the concept of cooperative productivity.

How do we combat Trumpian fear? 

First, we begin by identifying and advancing positive leaders.  That means voting for people who lead with vision rather than fear.

Second, never stay silent in the face of evil or injustice.  Silence forever entraps you and defines you as passive, vulnerable and insecure.  Better to have the courage and take the risk of speaking up and standing out.

Third, persist and endure.  We will face many small and large challenges in our personal and professional lives that create anxiety and fear and seem overwhelming at the time. Find strength in character.

Fourth, pursue balance.  Our skills, aptitude and ambition assure success but not our happiness.  Happiness evolves from a life well spent, from enduring relationships, and from persistent and sometimes stubborn adherence to the highest human values.

Fifth, have faith. When your head hits the pillow, transfer the power to some higher power.  Then take a fresh look in the morning. Things always look better in the morning. We are much stronger than we think.

People are basically good, but they are not perfect.

People are basically kind, but when afraid can act unpredictably.

People are basically loving, but when misled can respond with hatred.

People are people.

America calls. Each of us must now chose to lead.

David Brooks: Remarkable Essay on Positive vs. Negative Leadership.

Posted on | June 3, 2017 | 7 Comments

Mike Magee

For over three decades, I’ve been following and contributing to the literature on leadership – most specifically on the traits that separate positive leaders from negative leaders. This past week, David Brooks wrote an editorial in the New York Times focused on Donald Trump’s leadership, and reacting to a Wall Street Journal editorial by Trump cabinet members H.R. McMaster and Gary Cohn, that is truly remarkable.

It reflects everything I believe in, and creates a much needed sense of hope that goodness will prevail. Here are a few of his words, presented in the hope that they will encourage you to read his remarkable essay:

“the Trump project…asserts that selfishness is the sole driver of human affairs. It grows out of a worldview that life is a competitive struggle for gain. It implies that cooperative communities are hypocritical covers for the selfish jockeying underneath…In this worldview, morality has nothing to do with anything. Altruism, trust, cooperation and virtue are unaffordable luxuries in the struggle of all against all. Everything is about self-interest.”

“The error is that it misunderstands what drives human action. Of course people are driven by selfish motivations — for individual status, wealth and power. But they are also motivated by another set of drives — for solidarity, love and moral fulfillment — that are equally and sometimes more powerful.”

Take a moment now to read David Brook’s “Donald Trump Poisons The World”.

The U.S. Pharmaceutical Supply Chain – The Gray and Black Market

Posted on | May 30, 2017 | No Comments

 

 

Mike Magee

With the U.S. Pharmaceutical supply chain, what you see is not what you get. As we saw last week there are roughly 4 1/2 billion prescriptions filled each year. Just under 50% of American residents have filled 1 prescription in the past 30 days. The 1st Tier drug supply chain above describes the players who are visible to Americans. But underneath this layer lies an invisible and deeply corrupted 2nd tier. If you think I’m talking about counterfeit drugs from overseas, you are only partly correct.

For nearly two decades, Pfizer and the pharmaceutical industry in its wake, have been waging a pitched battle against reimportation of drugs from Canada and beyond. This effort came naturally to Pfizer since its popular CEO Ed Pratt had fought a decade long battle to protect the companies intellectual property rights which reached fruition in 1994 GATT trade agreements.

Intellectual property rights are a critical cornerstone to the integrity of geographic market based pricing.  Parallel imports, from Canada for example, represent an end-run around US based pricing and the standard 1st tier distribution profit sharing conventions. It’s all about profitability, but since Pfizer couldn’t say that they have hidden behind a very real but marginal issue – drug counterfeiting. This was disingenuous on a number of levels which I’ll return to in a moment.

One small element of the sophisticated public affairs and government relations campaign to prohibit drug reimportation into the US was to sow fear where ever and when ever possible. This opaque process saw the light of day briefly in 2010 when the industry funded American Council on Science and Health penned a Wall Street Op-Ed signed by their Medical Affairs lead, Gilbert Ross MD. In the piece, he inadvertently spills the real truth when he writes, “But there is an even more important reason why importing drugs is dangerous. Importing foreign drugs or reimporting American-made drugs is a back-door way of introducing price controls in America. Many foreign countries, including Canada, impose price controls on drugs, which is why reimporting American-made drugs is cheaper than simply buying drugs that haven’t left the country.”

By then, embargoes against reimportation were well enforced after two terms under Bush and an agreement tied to PhRMA support of Obamacare. Part of the reason they prevailed tracks back to over a decade of hard labor by Pfizer employee, John Theriault, who had joined the company in 1996 straight out of the FBI where he had served for 25 years as a Special Agent in the Bureau’s Senior Executive Service.

Originally focusing on the brazen IP violations of countries like India and Brazil that copied and sold products atom for atom, his work had evolved by 2002 as he headed up an in house drug SWAT team of around forty investigators from the FBI and Homeland Security. Testifying before Congress in 2002, he stated that “Soon after we launched Viagra, we began receiving reports that it was available in markets where it had not yet been approved. We made purchases of the product in those markets and tested for authenticity. In most cases we found authentic product that had been diverted from approved markets. But in one instance, a man in New Delhi complained that the product was not effective. We tested it and found our first counterfeit.”

Around this time John briefed our group in Corporate Affairs on the issue. The first two-thirds of his presentation was familiar to me, and carried no surprises. But he then flashed a slide with the words “gray market”, a term I was unfamiliar with, and my ears perked up. Like many other doctors, I had presumed that the pharmaceuticals I prescribed to my patients had been produced by FDA approved pharmaceutical firms, utilizing highly regulated Good Manufacturing Practices. Those products made their way to the local pharmacy or hospital, I believed, by passing though one of maybe two or three major distributors, who took their commission, and maintained a careful record of each and every product transfer.

What I learned that day was that nothing could be further from the truth. The reality was that there were three major distributors, AmerisourceBergen, Cardinal Health, or McKesson ,who controlled the flow of perhaps 80% of the nation’s drugs between manufacturer and the distribution chain of 60,000 pharmacies. But there were also nearly 1000 other players – small businesses, legally moving product in and out of the system for profit, and no one was able to assure the integrity of the system. As a result, original product was routinely being repackaged, adulterated, forged and counterfeited, within the many cracks of the disintegrated and irrational US health care system.

The gray market was in fact the American market of choice. These lawful small operators diverted product approaching expiration dates to retailers who couldn’t make ends meet. They also sold high on the market when product supplies became scarce, hoarding them and then jacking up prices an average 650%. They sold back and forth to each other, with some “pharmacies” never serving a single customer, but rather selling only to other middle men. And now, with counterfeited drugs penetrating the supply, these middle men, who lived on the edge of law, were fast at work turning a “grey market” into a “black market”.

That day, two things were made clear to me. First was that nearly every pharmacy in the US was currently vulnerable to selling product that might be harmful. Second, that the argument that reimportation of drugs from Canada would expose Americans to a grave risk by infecting the vaulted US pharmaceutical distribution system was absurd. We had our own intra-US “drug arbitrage” system with an unlimited number of unregulated entry and exit points. The nationalized Canadian system was far more secure than our own. But that was not the conclusion drawn from this internal Pfizer meeting. Rather, it was decided to not raise the issue of the US “gray market” in pharmaceuticals, but instead focus on the problem of worldwide drug counterfeiting.

In 2004, John was back before the government’s Drug Importation Task Force and did raise the gray market issue, but in the process conflated it with the threat of overseas counterfeiters. He said, “In May 2003…with the recall of more than 18,000,000 repackaged ‘Lipitor’ tablets from the legitimate pharmaceutical drug supply in the U.S., the final truth came crashing down, exposing the vulnerabilities of our distribution system…To put that recall into perspective, more than 600,000 U.S. residents, after visiting their local pharmacy, or placing an order with their health plan by phone, mail or internet, may have received a thirty day supply of Lipitor that contained counterfeit tablets.”

These products didn’t originate in China or India but rather in Nebraska by distributor Med-Pro, and in Missouri by distributor, Albers Medical, and in Illinois by distributor Alliance Pharmaceutical. Alliance had received its’ supply from Med-Pro, and had in turn sold it to Prescription Rx, who had already filled over 4000 prescriptions before being caught up in the sting in October, 2003.

To his credit, John did warn the Taskforce that day that the US house was not in order and laid the blame on wholesalers. He said, “The traditional distribution chain, where a manufacturer sells to a wholesaler who sells to retailers, is well understood. However, when products start flowing from wholesaler to wholesaler to wholesaler, or from pharmacy to pharmacy to pharmacy, existing oversight mechanisms lose force. Therefore we believe that the provisions in the Prescription Drug Marketing Act of 1988 requiring wholesalers to provide their customers with a pedigree documenting the sales history of the pharmaceutical products they sell should be implemented immediately. Due to lobbying efforts by wholesalers, the regulations to implement this requirement have not yet been finalized.”

The “pedigree” he refers to is a tracking system, the use of new RFID electronic codes which Pfizer had already tested and found to be effective. The legislation to enforce nationwide pedigree tracking from original source has been rendered ineffective for over a decade by lobbyists for the trade associations representing members of the US drug cartel. PhRMA has remained relatively silent and impotent on the issue, as has the AMA, which has expended limited political capital. Tracking requirements vary state to state and FDA statements in 2016 provide guidance rather than enforcement.

As for Gilbert Ross MD who wrote his Op-Ed in the Wall Street Journal in 2010, he had not revealed his own “pedigree”. His license to practice medicine in New York had been revoked in 1995 for his role in his own pharmaceutical counterfeiting operation. For his part in defrauding the New York Medicaid program of $8 million dollars, he received a 46 month sentence, and lived for a time in Schuykill, Pennsylvania in a prison camp. The crime involved soliciting desperately addicted and homeless New Yorkers to provide their Medicaid numbers and undergo sham testing and treatments in return for prescriptions for drugs that had high resale value on the black and gray market. Ross and his partner received the Medicaid billings, and their “patients” profited by the street trade in diverted pharmaceuticals.

Currently PhRMA continues to expend much greater effort in blocking reimportation of drugs from Canada, a country with a much cleaner pharmaceutical distribution system than our own, than in eliminating a 2nd tier supply chain that has rewarded the likes of Martin Shkreli.

The U.S. Pharmaceutical Supply Chain – Seen and Unseen

Posted on | May 25, 2017 | No Comments

Mike Magee

Complexity is the friend of the Medical Industrial Complex. Whether hospital, insurer, organized medicine, pharmaceutical or government agency, profitability, market advantage and career advancement can be found in the cracks of the deliberately Byzantine network.

For those intent on regulating or managing the American system as it is, just understanding and unraveling the opaque morass can be a full time job. A single piece of it can occupy a career. This reality is in part why Americans grudgingly keep coming back to single payer simplicity with the promise to expose supply lines, remarkable waste and fraud, and poor performance.

Consider the case of US pharmaceuticals – at least the visible part of it.

There are roughly 4 1/2 billion prescriptions filled each year with about 90% of them supplying generic drugs. Just under 50% of American residents have filled 1 prescription in the past 30 days, and 10% of the population takes 5 or more different prescription drugs.

Many of the major multi-national pharmaceutical corporations are based in the United States. But most of the raw materials, and much of the drug construction is contracted overseas by a $46 billion dollar manufacturing conclave . Once the company produces an individual drug, it does not go to a pharmacy outlet directly. Instead it is shipped to a U.S. distributor. 85% of all drugs consumed by Americans go through one of three giant distributors – AmerisourceBergen, Cardinal Health, and McKesson. They do not provide their services for free. The bill for distribution of U.S. drugs for these three in 2015 was estimated at $378 billion (85% of $444 billion total.)

Most Americans get their prescriptions filled at one of the 60,000 pharmacies, either in person or by mail order. 38,000 (63%) of the outlets are part of retail chains, and 22,000 (37%) are independents. All told, the retail pharmacies collect about $365 billion in revenue a year.

Chains dominate with just 15 (including CVS, Walgreens, Walmart and Express Scripts) controlling 74% of all retail income. They collect 62% of this in person and 38% by mail order. Independents lag financially garnering just under $50 billion a year of the total retail revenue.

Americans pay for their drugs through a confusing partnership mix and match designed by varied insurance companies. This requires negotiating deductibles, coinsurance and copays. For the total paid out, 42% comes from private plans, 30% from Medicare (Part B and D), 10% from Medicaid, and 14% from individual themselves.

Out-of-pocket average cost for a brand name prescription in 2015 was $44, while the average payment for a generic was $8.

Insurers use a variety of strategies to limit their financial obligations. Most insurers use tiered systems, placing drugs in 3 to 5 buckets, varying the percentage of payment from bucket to bucket. They employ companies called Pharmacy Benefit Managers or PBMs to act as middle-men to negotiate prices with the pharmaceutical companies and to execute a range of strategies designed to encourage consumers to choose lowest cost options.

PBMs are big business and of the biggest three one is owned by the pharmacy chain mega-giant CVS (CVS Caremark), a second by insurer UnitedHealth Group (UnitedHealthOptum), and a third geared toward mail order (Express Scripts). Together these three control 72% of the PBM market.

The top 15 pharmaceutical companies generated more than $500 billion in U.S. sales in 2015. The top five U.S. revenue producers were Gilead Sciences ($28B), J&J ($22B), Merck ($21), Novartis ($20), and Pfizer ($19.6B).

These are the facts and figures of just what is visible. But what if I were to tell you that a Senate Investigative report in 2012 revealed a vibrant and opaque gray market, not from Canada or overseas, but inside the U.S., where trading, and selling and reselling of pharmaceuticals was commonplace, profiteering on a large scale by thousands of small business arbitrageurs, with drugs coming in and out of pharmacy back doors, and everyone taking a piece of the action?

What if I were to tell you that 15% of all the large rig heists in America involve pharmaceuticals each with an average value of $3.7 million?

More on that next week.

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