An American Sickness: How Healthcare Became Big Business and How You Can Take It Back

by Elisabeth Rosenthal

Dr. Hsiao’s team calculated a work value in a new currency called relative value units (RVUs), based on (1) the work/time spent by a doctor for the visit or intervention, (2) the overhead incurred in rendering the service, (3) the cost of training required to learn to perform the service, and (4) the malpractice expenses involved.

Who won and who lost under the new system was determined as much by figuring out how to exploit the RBRVS for financial gain as by developing medical expertise.

Each specialty has a representative on the RUC who tries to defend and expand its piece of the pie.

But the RUC determines the time it takes to perform a service by polling several dozen specialists who actually do the procedure, which is essentially asking them whether or not they want to be paid more.

Groups of pathologists, anesthesiologists, radiologists, and ER physicians (PARE) followed, creating limited liability companies (professional LLCs) and becoming corporate contractors who sold their “physician services” to their former employers.

By 2014, 65 percent of the nation’s five thousand hospitals had contracted out their emergency department staffing/management function, according to Merritt Hawkins, a physician staffing company.

But for patients, this meant the proliferation of separate bills for these doctors’ services, from companies with mysterious return addresses in distant states.

“The game with the PARE specialists is that they began to refuse to contract with any plan or insurer,”

Physician extender is an umbrella term that refers to the trained ancillary personnel who help doctors and surgeons care for patients, including nurse-practitioners, surgical technicians, physician assistants, and midwives.

Medicare declared that anesthesiologists could not bill for supervising more than four operating rooms at once. It briefly decreased payment for each subsequent room, but lobbying undid the plan.

To pay a nurse near $150k and the ghost doctor another $500k to do the same task is just an example of how the medical community is pilfering.”

Consultants advise doctors and extenders about how to walk the legal line in billing twice.

TAP pleaded guilty to a “nationwide conspiracy” surrounding Lupron sales.

former drug reps for Novartis said that the company gave doctors free samples and secret rebates on an expensive intravenous asthma medicine called Xolair, to induce them to use a niche drug that was not medically indicated in many cases.

Oncologists prospered buying chemotherapy drugs from manufacturers and infusing them in the office, generally with a hefty markup, a practice known as “buy and bill.”

Doctors who used more expensive drugs earned far more. The practice of buy and bill increased dramatically in the late 1990s and into the new century.

Doctors’ offices and hospitals were all buying and billing, and patients generally had little idea about markups, what was reasonable, or what their lifesaving drugs actually cost.

the surgeon should determine the actual charge “taking into account what the local market will accept.”

in response to a lawsuit filed by the Wall Street Journal, Medicare for the first time had released data showing how much it had paid every individual doctor. Thousands of physicians made more than $1 million each from Medicare in 2012 and dozens more than $10 million.

doctors who have not commercialized their practice are today at risk of extinction.

removing it from the market. The patients who must take this lifesaving medicine every day were stuck paying whatever was asked for the “new” branded products, which were not really new or improved.

Adding insult to literal injury, in that very same time period, nearly all of the American manufacturers of mesalamine products figured out ways to move their tax base overseas, using a controversial practice called an inversion that many legal experts regard as tax evasion.

the FDA yardstick for approval did not include any consideration of price or measure of cost-effectiveness—a

who owned the patent for his new polio vaccine, which eliminated a crippling disease, he famously replied, “Well, the people, I would say. There is no patent. Could you patent the sun?”

the Bayh-Dole Act of 1980 permitted scientists, universities, and companies to obtain patents on products that evolved from research funded by the government.

In the past twenty-five years, the long-standing notion of “one drug, one patent” (focusing on the chemical composition) has evaporated.

The goal of Hatch-Waxman was to clarify for pharmaceutical makers the length and extent of their patent protection, as well as to offer makers of generic drugs financial incentives so they would be motivated to bring cheaper versions onto the market the moment that patents expired.

To speed the arrival of generics, the act dictated that applications from makers of copycat drugs to sell their products no longer had to include fresh clinical trials to demonstrate safety and efficacy, but could rely on prior studies done by the makers of the brand drugs.

To appease the brand manufacturers, Hatch-Waxman provided them with a host of new ways to extend their patents, some beneficial for patients and some not.

the amendment instead ushered in an era in which multimillion-dollar court battles over patents now precede (and delay) each generic entry, driving prices up in the process.

“money managers are in charge and these are pure business decisions.”

In the early 1990s, the agency first allowed what were called “help seeking ads,” in which pharmaceutical manufacturers were permitted to mention the name of either the drug or the disease it was intended to treat but not both. For the sake of greater accountability, the FDA laid out conditions in 1997 under which drugmakers’ advertisements could specify both the condition and the medicine, most notably by including in the ad “a brief summary of all necessary information related to side effects and contraindications.” At first, the industry fought the disclosure on the grounds that requiring a laundry list of scary warnings would prevent direct-to-consumer advertising from taking hold, but eventually it found artful ways to embrace the demand.

The Supreme Court has protected drug advertising under the guise of free speech. We are one of two countries that allow it,

Now that we rely on the profit incentive to motivate drug research, we learn only what the industry deems it profitable for us to find out.

Once a drug is approved for one use, doctors can prescribe it for others, as they see fit. Vanda

The price of paint and hairspray didn’t change much, if at all. But drug manufacturers seized on the opportunity to get new patents for asthma inhalers with new propellants, removing from the market generic inhalers that had long been available.

each new application brought in millions of dollars in application fees. The FDA says the fees, permitted under the 1992 Prescription Drug User Fee Act, allow it to staff up to keep drug reviews moving expeditiously through the approvals system. Critics say the half a billion dollars in fees it collects annually makes the FDA beholden to pharma.)

In 2014, to eke out a little more time with patent protection for Lantus in the United States, Sanofi sued, claiming that the Lilly product violated four patents, which triggered the automatic thirty-month Hatch-Waxman “waiting period.” “So the biggest thing that will affect patients with type 1 diabetes here is being decided legally not medically,”

It conducted research and development to invent a new chewable form of the pill with a new name, Minastrin 24 Fe, and a new patent. Then Warner Chilcott stopped making the old favorite, Loestrin 24 Fe.

The industry name for this maneuver is “product hopping,” and Warner Chilcott was, historically, a master artist.

Since generics must be identical in dosage and form to the brand-name drug for a pharmacist to substitute, each move succeeded in delaying competition from generics for years.

to really bring down prices through market competition, probably four or five generics would need to be on the shelves, and that level of competition was increasingly rare.

had not applied for licensure in the United States because it seemed unlikely to be used enough to offset the high cost of approval the FDA imposes.

That huge, notional number on your bill is the result of serial negotiations by a long list of intermediaries and their business decisions. For a hip implant, the chain includes joint implant manufacturers, joint brokers, joint distributors, joint device salespeople, and the purchasers at the hospital or surgery center.

That’s partly why the idea of including a medical device tax in the ACA was anathema to the industry, shining a spotlight on a dark, highly lucrative corner of medicine that had previously escaped any attempt at cost control or scrutiny.

Many devices are not even tested in animals before they are placed into humans; in fact, there are often no clinical trials at all for devices.

The program allowed companies to keep selling cleared class 2 products even if the “predicate device” to which their device was “substantially equivalent” had been recalled because it had proved harmful.

In 2012, 16,537 U.S. patents for medical devices were issued, surpassing the previous record of 13,699, in what analysts have compared to a gold rush.

When she explained she couldn’t afford it, that she had only $1,778 in her health savings account, the reply was: “We’ll take it!”

an ominous warning about the device in her other hip, the one repaired half a decade before. It read: “The purpose of this letter is to reinforce our recommendation to you for continuing close follow up of you and your hip replacement. . . . Some recent design innovations in hip replacement implants have led to increasing concerns about the potential for adverse reactions.” Ms. Baxter’s Stryker Rejuvenate implant is not mentioned by name. Nor does the letter mention that the Stryker Rejuvenate had been recalled six months earlier, which Ms. Baxter only later discovered on Google. The company was under no legal obligation to notify patients; the letter, she noted, “does not even say ‘we’re sorry.’”