Most Americans don’t realize there are silent brokers helping to fix the price of their prescription drugs — or that it’s a $100 billion annual business accounting for half of Big Pharma sales.

They’re called pharmacy benefit managers (PBMs), with CVS Caremark, Express Scripts and Optum RX dominating the market. Their chief function is to develop and maintain a list called the “formulary,” a list of drugs that will be covered by health-care plans. The formulary groups drugs into tiers with different levels of patient cost sharing.

They also pool volume across health plans to negotiate with drug manufacturers and retailers on prescription drug pricing. And PBMs reap rewards from rebates and fees that drug manufacturers pay them, as well as from a ‘pharmacy spread’ where PBMs bill health plans more than they reimburse pharmacies.  

All of this comes at a cost to patients.

“Patients typically only think about what they pay out-of-pocket at the pharmacy counter,” said Alex Chan, a PhD candidate in health economics at Stanford Health Policy. He and Kevin Schulman, a professor of medicine and professor of economics, by courtesy, at the Stanford Graduate School of Business, have just published a paper in JAMA Health Forum that examines these silent and powerful intermediaries.

“As PBMs leverage the formulary design to secure more and more rebates and fees from manufacturers, these drug manufacturers raise the list price in response,” Chan said. “The patients’ out-of-pocket cost at the counter would increase but at a less noticeable rate given that they co-pay are just a percentage of the list prices.”

Unless these rebates are passed along to consumers as reduced premiums, the net effect is an increase in premiums. Furthermore, if formulary design is used to help PBMs secure better rebates, PBMs may prioritize expensive drugs over more cost-effective drugs.

Transparency

These pharmacy benefit managers have come under scrutiny as health policy experts learn more about the scale of prescription drug rebates and other questionable practices used by these intermediaries in the prescription drug market. For example, PBMs can include “gag clauses” that prohibits pharmacists from telling customers about cheaper drug options.

They ask themselves: What is the underlying value of PBMs for both payers and patients?

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“They create value by providing information on the quality and value of products and services and by providing negotiation leverage as they amass scale by aggregating smaller buyers (or sellers),” they write. “Consumers can be sure to share in this value under three conditions: when there is competition among intermediaries, when pricing is transparent, and when it is clearly defined who is negotiating on whose behalf.”

But when these conditions are not met, they add: “We can find that intermediaries can hold a powerful and self-serving position in a market.”

Chan and Schulman found that in the drug prescription market, there are significant concerns about the value of these PBMs:

1. Rather than a market where there is competition among PBMs, consolidation has resulted in a situation in which the three largest PBMs have about 80% of market share. There are significant barriers to competition among PBMs. If a health system wants to switch PBMs, it requires a significant investment in a “request-for-proposal” process.
2. Drug-specific rebates are kept confidential between PBMs and drug manufacturers, and health plans have little ability to clearly assess the cost-savings for their members or to gauge the appropriateness of the rebate passthroughs.
3. Under the rebate model, the role of the PBM has evolved to serving as an agent of both the payer and the manufacturer. The interests of payers and manufacturers are often in conflict, especially with respect to expenditures.

"One of the largest criticisms of PBMs is the lack of transparency surrounding the structure and scale of payments from manufacturers to the PBM,” the authors write. “The current PBM business is shrouded in secrecy.”

Only the PBM knows the actual scope of payments from drug manufacturers, such as rebates and service fees. They note that in 2016, for 13 pharmaceutical companies, payments to PBMs and other intermediaries (such as wholesalers) were $100 billion — or 50% of gross sales.

 “Without transparency, a PBM might develop formularies that maximize payments to the PBM rather than maximize value to patients,” Chan and Schulman write.

Suspicion over just that led health insurance company Anthem to sue Express Scripts for $15 billion in 2016 for overpayments on drug pricing. In the end, Anthem cut ties with Express Scripts to develop its own PBM.

“The PBMs have grown out of sync with what we can reasonably expect to be a value-adding intermediary,” Chan said. “It is hard to really tell how much inefficiencies have been created due to this lack of transparency.”

Legal Solutions

The authors note that Congress has taken steps to shed light on PBMs through the Patient Right to Know Drug Prices Act and the Know the Lowest Price Act, both adopted in 2018. These laws outlaw PBMs gag clauses that forbid pharmacists from telling consumers that their price through a PBM was higher than the as price for the same product.

Chan said these laws are a move toward the direction of providing patients with more transparency about their options.

“An even more promising direction would be for legislation to make a stronger push towards public disclosure of rebates, discounts, and price concessions, along with lower barriers to entry to the PBM market,” he said.

Elderly patients hospitalized with congestive heart failure have a poor prognosis and high risk of death and hospital readmission. So, their post-discharge care can strongly influence their outcomes.

Yet despite data showing that transitional care interventions, such as home visits by nurses, can reduce death rates and hospital readmission by more than 30%, many health systems have not implemented such programs. Health policy experts say this is due in part to cost concerns and doubts about the effectiveness of these delivery services.

 Now, a team of Stanford Medicine and Veterans Affairs researchers has sought to assess whether transitional care interventions provide good value and better outcomes, as there are 5 million people living with congestive heart failure in the United States and 500,000 new cases diagnosed each year. CHF is the stage of chronic heart disease in which fluids build up around the heart, causing it to pump inefficiently.

The researchers updated a 2017 study on the impact of transitional care intervention with four years of additional data. They then used it to compare standard post-discharge management with three post-discharge regimes for patients 75 or older that they found to be most effective: disease management clinics, nurse home visits and nurse case management.

All three transitional care interventions delivered appreciable health benefits to the patient population, said Jeremy Goldhaber-Fiebert, PhD, associate professor of medicine at the Stanford School of Medicine and core faculty member of Stanford Health Policy.

The findings were published in the Annals of International Medicine. Goldhaber-Fiebert is the senior author. The lead authors are Manuel R. Blum, MD, MS in Epidemiology & Clinical Research at Stanford in 2019 and now at the Department of General Internal Medicine at the University Hospital of Bern; Henning Øien, PhD, Norwegian Institute of Public Health, Oslo; and Harris L. Carmichael, MD, a Stanford/Intermountain Fellow in Population Health, Delivery Science, and Primary Care

“Transitional care interventions for older individuals with congestive heart failure — particularly nurse home visits — offer a high-value care alternative that could improve the health and longevity of millions of Americans,” he said.

The researchers said these transitional care services should become the standard of care for post-discharge management of patients with heart failure.

Heart failure causes 1 in 8 deaths nationwide

The prevalence of heart failure is estimated to be 26 million people worldwide and growing. In the United states, heart 5.7 million adults have been diagnosed with HF, with an estimated annual direct cost of $39.2 billion to $60 billion. Total heart failure costs in the United States are expected to exceed $70 billion by 2030, the authors wrote. According to the Centers for Disease Control and Prevention, heart disease costs the United States about $219 billion each year from health-care services, medicines and lost productivity.

Of the 15 million Americans in their mid-70s to 80s today, about 1 million suffer heart failure.

“So population gains from more effective post-discharge care would be hundreds of thousands of life years,” Goldhaber-Fiebert said. “Likewise, tens of thousands of costly rehospitalizations could be prevented each year if these interventions were delivered successfully.”

Heart failure primarily affects older people and is the second-most common inpatient diagnosis billed to Medicare. Yet the authors cite a recent study of 18 million Medicaid charges which found that only 7% of eligible patients at risk of rehospitalization received transitional services.

The standard post-hospital care for those patients includes sending them home with some advice and scheduling follow-up visits for them with cardiologists within 14 days of discharge. The researchers found that patients who received this standard post-hospitalization care with an average age of 75 had an average life expectancy of 2.9 years and 2.9 hospitalizations during their remaining lifetime. In comparison, nurse home visits decreased the number of hospitalizations by 10 readmissions per 100 patients and increased life expectancy by approximately four months, the study found.

“If these interventions were successfully implemented at scale, they could provide important substantial benefits with very good value,” said co-author Douglas Owens, MD, the Henry J. Kaiser Jr. Professor and professor of medicine at Stanford.

Reduced hospitalizations for congestive heart failure, according to the research, produces substantial cost savings that partially offset the costs of delivering the interventions. Though nurse home visits increase lifetime health care costs by $4,622, the substantial health benefits that they deliver justify their costs: $19,570 quality adjusted life years gained, which is considered highly cost-effective.

Hospital and insurance administrators take note

“Our results have important implications for decision-makers in hospital administration as well as in insurance and policy settings,” the authors wrote. They concluded:

• Transitional care services should become the standard of care for post-discharge management of patients with heart failure;
• The increasing reimbursement restrictions and regulations affecting HF hospital readmissions, through such programs as the Centers for Medicare & Medicaid Services Hospital Readmission Reduction Program, makes this research particularly informative to decision-makers;
• Hospital administrators could use the research to determine which transitional services are most cost-effective for its rural population, overall patient base and hospital system.

The other Stanford researcher on the study was Paul Heidenreich, MD, a professor of medicine and health research and policy at the Stanford University School of Medicine and, by courtesy, professor of health research and policy at the Palo Alto Veterans Affairs Health Care System.

Stanford Health Policy researchers, led by Josh Salomon, have been awarded a five-year grant from the Centers for Disease Control and Prevention (CDC) to conduct health and economic modeling to guide national and local policies and programs focusing on some of the most important infectious diseases in the United States.

The CDC grant establishes the Prevention Policy Modeling Lab at Stanford, continuing a multi-institution collaboration that began when Salomon was a professor at Harvard prior to joining Stanford in 2017.

“The overall mission of the Prevention Policy Modeling Lab is to leverage the best available evidence to inform strategic decision-making about major public health problems,” Salomon said. “We do this by combining techniques from decision science, simulation modeling and health economics to estimate and project major patterns and trends in these diseases and to evaluate different clinical and public health strategies to address them.”

The initiative will focus on policy and practice in the areas of tuberculosis, HIV, hepatitis, sexually transmitted infections and adolescent health. The grant from the Centers for Disease Control and Prevention supports a wide range of modeling activities, including those that assess: 

• Projections of future morbidity and mortality
• Burden and costs of diseases
• Costs and cost-effectiveness of interventions
• Population-level program impact
• Optimized resource allocation

Stanford researchers who are involved in the Modeling Lab include Douglas K. Owens, Margaret Brandeau, Eran Bendavid, Jeremy Goldhaber-Fiebert, Jason Andrews, Samuel So and Mehlika Toy. The consortium also includes partners at Harvard, Yale, Michigan, Boston University, Boston Medical Center and the MA Department of Public Health.

“As a multi-institution consortium, on any given problem we’re able to assemble a team that includes both subject matter experts and collaborators who specialize in statistics, epidemiology, data science, economics and decision analysis,” Salomon said. “The policy models that we develop allow us to synthesize a wide array of different types and sources of evidence to shed light on the essence of the problem and to weigh the likely benefits and costs of responding in different ways.”

Prior work from the consortium on the potential impact and cost-effectiveness of expanding testing for hepatitis C virus was cited in the recent decision by the U.S. Preventive Services Task Force to revise their screening recommendations to cover all adults. The Modeling Lab has also examined prospects and strategies for eliminaitng tuberculosis in the United States and policies relevant to the rising threat of antimicrobial-resistant gonococcal infection among other topics.

When it comes to rooting out wasteful spending in federal entitlement programs, attention has long focused on preventing beneficiaries from gaming the system.

A new Stanford study identifies a fresh cause for concern: the for-profit companies that the U.S. government increasingly tasks with providing benefits to Americans who are often poor, elderly or both.

In a new working paper, Maria Polyakova, an assistant professor of medicine, finds that outsourcing public assistance services to third parties can lead to unanticipated effects on prices as well as on which beneficiaries gain the most from public dollars.

That’s because companies are in the business of making money. And when they know which of their consumers are likely to get certain levels of public support, they will try to use this information to maximize their profits, according to the research published this week by the National Bureau of Economic Research.

Polyakova shows that when companies act in their self-interest, unforeseen inequities and inefficiencies can arise that may hurt some consumers while helping others. At a time when governments in the United States and around the world are increasingly turning to the private sector to provide public benefits — namely in health care and in education — Polyakova says policymakers need to better understand how these intermediaries are affecting welfare programs.

“Policymakers have to be more careful about introducing intermediaries into public services,” says Polyakova, who is a faculty fellow at the Stanford Institute for Economic Policy Research (SIEPR), and teaches at the Stanford School of Medicine. She is also a core faculty member of Stanford Health Policy. “They may want to revisit how they think about outsourcing when research is showing that there are unintended consequences that may be positive or negative.”

Health Insurance Pricing under the Microscope

Intermediaries are central to a number of public services where the U.S. government provides subsidies to consumers, often based on income, age or employment status. Prominent examples include privately-managed Medicare Advantage Plans, drug benefits under Medicare Plan D, and charter schools in secondary education.

According to Polyakova, most research into wasteful spending within government subsidies has focused on consumers and how they try to trick the system by, for example, hiding income to qualify for a tax credit or cash assistance. Governments, though imperfect, have long been seen as benign players.

The increasing involvement of for-profit companies, she says, shows there’s a need to closely examine what’s happening on the supply side of public welfare.

To do that, Polyakova found an ideal setting: the federal health insurance marketplace created by the Affordable Care Act of 2010. Most consumers who shop for coverage through www.healthcare.gov receive a subsidy in the form of a tax credit that covers all or part of their insurance premium. The amount of their tax credit is tied to their household income.

The dollars at stake are significant. The Congressional Budget Office estimates that in 2019 the federal government will pay $560 billion in subsidies for privately-provided health insurance, including the spending on the Affordable Care Act marketplaces as well as other similarly designed programs. That figure is expected to hit $1.2 trillion over the next decade.

The Neighborhood Effect

Polyakova and her co-author — Stephen Ryan of Washington University’s Olin Business School — analyzed data from 2017 covering more than 9 million enrollees across some 2,570 counties around the country. They find that the presence of an intermediary significantly impacts insurance prices and key measures economists use to calculate the effects of a policy beyond a given benefit’s face value.

Specifically, they show that health insurance companies will have an incentive to raise premiums in markets where more consumers receive the higher tax credit because their incomes are low and the government is required to subsidize them.

On the flip side, insurers will charge lower prices in places where such subsidized consumers are less willing to buy coverage if they think it costs too much.

To illustrate the unintended consequences of the insurers’ actions, the researchers point out that, in the first instance where prices increase, consumers with incomes that are slightly higher than other community members will end up paying more for the same coverage. Under the second scenario, consumers who don’t qualify for the tax credit because their incomes are too high benefit from the lower premiums aimed at nearby residents.

“The price you pay for insurance will depend on who your neighbors are,” says Polyakova. “If you live near people who are poorer than you, you will be affected differently than if you live near people who are richer than you.”

Change the subsidy, change the calculation

Like with financial aid, tax credits for insurance coverage are calculated based on consumer income. But there is another type of subsidy that policymakers could use — flat vouchers, in which all members of a market receive the same benefit regardless of income, age or some other characteristic. For their research, Polyakova and Ryan also analyze how flat vouchers that only vary by age, but not by income, would hypothetically alter private health insurance prices in the federal Affordable Care Act marketplace.

Here, too, the scholars find different impacts on different types of consumers whether the subsidy is based on income or delivered as a flat voucher.

The analyses, says Polyakova, drive home the point that policymakers need to understand that there are trade-offs to relying on for-profit companies to provide government services and that the type of subsidy offered can alter how they calculate prices in disparate ways.

“There’s nothing wrong with companies trying to maximize their profits,” says Polyakova. “But sophisticated policymakers need to understand what happens when private markets get involved.”

I always find it hard to believe so many people are living in poverty: some 39.7 million Americans, or 12.3% of the population. It’s such a wealthy country, yet so many are poor.

In a twist that could be interpreted as good news — it doesn’t seem fair to say there is anything positive about living in poverty — I recently learned that older, low-income Americans tend to be healthier if they live in more affluent areas of the country.

Not only are they healthier, but their physical well-being is better across the board with a lower prevalence of dozens of chronic conditions, particularly if they live in rural communities. This, despite their income having less purchasing power in those better-resourced neighborhoods.

This was the key finding in new research published by Stanford Health Policy’s Maria Polyakova in the Annals of Internal Medicine.

While recent studies have reported that low-income adults living in more affluent areas of the United States have longer life expectancies, less has been known about the relationship between the affluence of a geographic area and morbidity of the low-income population.

“I was interested in figuring out whether the same relationship holds for morbidity: Are poorer people less sick in richer areas?” Polyakova told me. “And if so, are there any specific conditions that drive these differences that could be the target for policy-making?”

So Polyakova, a faculty fellow at the Stanford Institute for Economic Policy Research, and her co-author, Lynn M. Hua at the University of Pennsylvania, set out to evaluate the association between chronic conditions among low-income, older adults and the economic affluence of a local area. 

They focused on nearly 6.4 million Medicare beneficiaries in 2015 aged 66 to 100 years old who received low-income support under Medicare Part D, a prescription drug program for Medicare enrollees. They investigated the prevalence of 48 chronic conditions among these patients, including common chronic conditions such as hypertension, depression, diabetes and Alzheimer’s disease. They found the presence of all conditions is highly correlated: places, where the poor tend to have a high prevalence of one disease, are likely to have a high prevalence of all 48 conditions.

“While we cannot ascertain a causal relationship, our results clearly point towards the importance of further understanding why the socioeconomic environment of low-income, older adults is so tightly linked to such a broad measure of health,” the researchers wrote. 

The results, they said, were broadly consistent with the extensive literature on the social determinants of health. But their work takes that literature even further.

“Our study extends this research by providing measures of the prevalence of chronic conditions among low-income, older adults for a large national sample of the U.S. population,” Polyakova said. 

The researchers used clinical, rather than self-reported measures of diagnoses and reported this group’s variation in morbidity across local areas of the country, rather than nationally. 

“Our results raise the bar for researchers who are trying to find out what factors drive health disparities in the U.S.; these factors would have to be able to explain the differences in nearly 50 condition,” Polyakova said.

The study supported by the National Institute on Aging came to three key conclusions:

1. The health of low-income, older adults in the United States varies substantially across local geographic regions, and this variation cannot be attributed to one specific disease or a narrow set of conditions. 
2. Consistent with their original hypothesis, they found that more affluent local areas of the country have a lower prevalence of chronic conditions in the low-income, older adult population.
3. The researchers found that low-income, older adults have better health in rural areas of the country.

I wondered why these poor, older adults do particularly well in rural communities, as those regions often lack easy access to high-quality health care and state-of-the-art hospitals.

“We don’t know the exact answer, but there is a general sense that differences in the social fabric and lifestyle in rural areas — could contribute to this pattern,” Polyakova told me. “It appears that better health in these areas persists, despite challenges of accessing formal care.”

On August 26, Judge Thad Balkman delivered a $572 million judgment against pharmaceutical giant Johnson & Johnson for the company’s role in fueling the opioid epidemic in Oklahoma. In the discussion that follows, Stanford Law Professors Michelle Mello and Nora Freeman Engstrom discuss the decision and how other cases tied to the national opioid crisis are developing.

The Oklahoma decision took many onlookers by surprise. How did the case unfold? And what did Judge Balkman find? On Monday, Cleveland County District Judge Thad Balkman of Oklahoma issued a judgment that capped off a long and closely-scrutinized trial wherein the Oklahoma Attorney General faced off against Johnson & Johnson (J&J), claiming that J&J contributed to the opioid epidemic that has devastated the state of Oklahoma.

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Stanford Law Professors Michelle Mello and Nora Freeman Engstrom

To understand the verdict, a bit of background is helpful. When Oklahoma initially sued, it cast the net broadly, asserting claims against several defendants under several causes of action.  Certain defendants (namely, Purdue and Teva) chose to settle rather than roll the dice at trial. (Purdue, the maker of OxyContin, agreed to pay Oklahoma $270 million and Teva, one of the world’s leading providers of generic drugs, $85 million; neither admitted wrongdoing.)  Further, over time, Oklahoma’s various causes of action got winnowed down to the singular claim that J&J had created a public nuisance by aggressively and deceptively marketing opioid products to Oklahoma’s doctors and patients.  This posture meant that Oklahoma’s victory at trial was far from a foregone conclusion, as public nuisance claims can be very hard to prove, particularly in cases that relate to dangerous products.

With that table set, the trial began on May 28, 2019.  In a crowded courtroom in Cleveland County, it stretched on for nearly seven weeks and featured dozens of witnesses and more than 800 exhibits. The trial was a bench trial, meaning there was no jury, but there was a written opinion explaining the judge’s decision.  Judge Balkman’s 42-page opinion offers a cogent summary of the evidence and governing law and, broadly, vindicates Oklahoma’s litigation strategy. The opinion finds that J&J engaged in a deceptive marketing campaign designed to convince Oklahoma doctors and the public that opioids were safe and effective for the long-term treatment of chronic, non-malignant pain. Further, this “false, misleading, and dangerous marketing” caused “exponentially increasing rates of addiction [and] overdose death,” which ravaged the Sooner State. The picture Judge Balkman draws is stark and, for J&J, devastating.

Are individuals suing drug companies too? Are there class action cases that are relevant?

There are some suits by individuals, but we don’t believe that’s where the big money damages—and the real social impact of the litigation—will be.  More important is the pending federal multi-district litigation (MDL), which consolidates nearly 2,000 individual federal lawsuits brought by cities, counties, municipalities, and tribal governments in a single action before Judge Dan Polster in Cleveland, Ohio. Additionally, 48 states have initiated separate litigation, with a lineup of claims and defendants similar to the MDL.

Does this win for Oklahoma mean these other plaintiffs have an easy road ahead?

Not easy, but potentially easier. The Oklahoma case is what we call a bellwether. Like the ram that leads the other sheep this way or that, the bellwether trial doesn’t control the path of future litigation. But it does go first, and it helps to indicate trends.

As a bellwether, the big verdict here is very reassuring to the many states, counties, municipalities, and tribes suing opioid makers, distributors, and retailers, and it is, correspondingly, very disturbing for those who made and sold opioids to the American public.  The verdict suggests that this litigation has legs, and that judges and juries may be willing to pin blame not just on Purdue, the maker of OxyContin, but on others who played an arguably less central role in fueling this public health crisis.

What is striking is how damning Judge Balkman’s factual conclusions about J&J’s conduct are, and how similar they are to the allegations made against other opioid manufacturers in other cases.  All the things he objected to regarding J&J’s marketing practices are things that others, too, allegedly have done. Some of them are things that multiple companies banded together to do. Plaintiffs’ attorneys should be feeling pretty confident about their chances of persuading other courts that those practices are problematic.

Is Oklahoma free to use the award as it wishes? Will the state share some of the award with the people who died or suffered in the opioid crisis (if the decision is upheld on appeal)?

The damages, in this case, are intended to fund Oklahoma’s “nuisance abatement plan.”  That’s the remedy in a public nuisance case: The defendant has to pay to clean up the mess it made. In this case, Oklahoma provided a detailed plan laying out what would be needed to abate the opioid problem in the state. The costs added up to $572 million for the first year, and that’s what the judge awarded—not the $17 billion Oklahoma sought for a multi-year abatement effort.

The plan specifies that the money will be used for opioid use disorder screening, prevention and treatment ($292 million), housing and other services for those in recovery ($32 million), continuing medical education programs ($108 million), a pain management benefit program ($103 million), treatment of neonatal abstinence syndrome ($21 million), and other services.  Individuals won’t be direct recipients of the funds, though they may receive the services funded.

Legally, what happens next?

J&J has vowed to appeal the “flawed” Oklahoma judgment, and we expect that the judgment will be appealed, first to Oklahoma’s intermediate, and then, likely, to its supreme, court.  More immediately, though, attention will turn from Oklahoma to Ohio.  The first bellwether trial in the MDL, involving claims from Ohio’s Cuyahoga and Summit counties, is scheduled to begin on October 21.

Even as they prepare for trial, however, lawyers for both plaintiffs and defendants are also, no doubt, continuing to work toward reaching a broad and encompassing settlement.  When Judge Polster was first assigned the MDL back in January 2018, he made no bones about his desire to do “something meaningful to abate this crisis”—and to do it quickly.  It hasn’t been easy to execute on that, which isn’t surprising given the unprecedented magnitude and complexity of the litigation.

Still, we expect that, sooner or later, the opioid litigation will settle.  Indeed, even as we write, news is breaking that Purdue and the Sacklers may be in the midst of a negotiation whereby Purdue would declare bankruptcy and the Sacklers would contribute a cash payment of roughly $4.5 billion-plus relinquish ownership of the company, in return for peace with plaintiffs.

But even forging a settlement involving just those two entities is tricky—and forging a broader settlement will be exponentially harder for a number of reasons.  One is that any truly global agreement needs to pass muster with a range of defendants, some of whom have comparatively shallow pockets, and all of whom sold (or made or distributed) different products, at different times, in different quantities, in different states.  And, on the other side of the table, any settlement agreement needs to get buy-in from both those plaintiffs in the MDL and also state attorneys’ general, who have their own distinct set of priorities and interests relating to their separate lawsuits.  Further, because only a small proportion of eligible cities and counties have joined the MDL to date, any global settlement needs to somehow—equitably but firmly—close the courthouse door on those potential future plaintiffs.  None of this will be easy to accomplish.  But whenever new information reduces uncertainty about how courts would resolve a legal dispute, settlement becomes more likely—and, here, the Oklahoma verdict makes a significant contribution.

 

Nora Freeman Engstrom, Professor of Law and Deane F. Johnson Faculty Scholar, is a nationally-recognized expert in tort law, legal ethics, and complex litigation. Her work explores the day-to-day operation of the tort system—particularly its interaction with alternative compensation mechanisms. Michelle Mello, Professor of Law and Professor of Health Research and Policy (School of Medicine), is a leading empirical health scholar and the author of more than 150 book chapters and articles, including “Drug Companies’ Liability for the Opioid Epidemic,” recently published in the New England Journal of Medicine.  

A task force of national health experts has released a draft recommendation to screen all adults 18 to 79 years for the hepatitis C virus (HCV), noting the opioid epidemic has fueled what has become the most common chronic bloodborne pathogen in the United States.

Cases of acute HCV have increased 3.5-fold over the last decade, particularly among young, white, injection drug users who live in rural areas. Women aged 15 to 44 have also been hit hard by the virus that is spread through contaminated blood.

The U.S. Preventive Services Task Force, which makes recommendations followed by primary care clinicians nationwide, has until now recommended that people who are at high risk be tested for hepatitis C, as well as “baby boomers” born between 1945 and 1965.

“Unfortunately, HCV now affects a broader age range than previously with three times as many new infections per year,” said Stanford Health Policy’s Douglas K. Owens, chair of the independent, voluntary panel of national experts in prevention and evidence-based medicine.

The Task Force now recommends that clinicians encourage all their adult patients, even those with no symptoms or known liver disease, get a blood test for the virus. Pregnant women should also be screened; from 2009 to 2014, the prevalence of HCV infection among women giving birth has nearly doubled.

“The explosive growth in HCV has been fueled by the opioid epidemic, with the spread of HCV into younger populations,” said Owens, director of the Center for Health Policy and the Center for Primary Care and Outcomes Research. “HCV now kills more Americans than all other reportable infectious diseases combined, including HIV.”

An estimated 4.1 million people in the United States are carrying HCV antibodies; about 2.4 million are living with the virus, according to the Task Force. The HCV infection becomes chronic in 75% to 85% of cases and some of those people develop symptoms such as chronic fatigue and depression, and liver diseases that can range from cirrhosis to liver cancer.

Approximately one-third of people ages 18 to 30 who inject drugs are infected with the virus; 70% to 90% of older injection-drug users are infected.

There currently is no vaccine for hepatitis C although research in the development of a vaccine is underway. But there are effective oral direct-acting antiviral (DAA) medications that can clear the virus from the body, particularly if caught early.

“The good news is that treatment for HCV is far better, and far better tolerated than in the past, offering a cure to most people,” Owens said. “Early identification of HCV is important to prevent long-term complications of HCV including liver failure, liver cancer, and death.”

The Task Force said in a release that there are several key research gaps that could inform the benefit of screening for HCV infection:

1. ·     Research is needed on the yield of repeat vs. one-time screening for HCV.
2. ·     Research is needed to identify labor management practices and treatment of HCV infection prior to pregnancy to reduce the risk of mother-to-child transmission.
3. ·     Trials and cohort studies that measure effects on quality of life, function, and extrahepatic effects of HCV infection (such as renal function, cardiovascular effects or diabetes) would be helpful for evaluating the impact of DAA regimens on short-term health outcomes.
4. ·     Additional studies are needed to examine the epidemiology of HCV infection and the effectiveness of DAA regimens in adolescents.

Surprise, out-of-network charges billed to privately insured Americans who received inpatient care at in-network hospitals more than doubled between 2010 and 2016, according to a study by researchers at the Stanford University School of Medicine.

Many have heard the stories of patients hit with massive, unexpected medical bills after an emergency-room visit or routine surgery, even if that hospital is in their insurance network. News organizations, including Vox.com, have reported on the problem, and both houses of Congress will continue debating draft legislation to tackle unexpected bills after members return from summer recess.

Yet there has been little data-driven research about the financial consequences of out-of-network billing on patients.

 “Our paper is one of the first to spell out just how big the problem really is,” said Eric Sun, MD, PhD, an assistant professor of anesthesiology.

 he paper was published Aug. 12 by JAMA Internal Medicine. Sun is the lead author. The senior author is Laurence Baker, PhD, professor of health research and policy and core faculty member at Stanford Health Policy.

Co-author Michelle Mello, PhD, JD, professor of law and of health research and policy, said news coverage has tended to focus on the real horror stories: patients who got surprise bills for tens or hundreds of thousands of dollars.

“Our study asked what a typical patient who goes to a hospital they’re supposed to go to can expect,” said Mello, who is also a core faculty member at Stanford Health Policy. “And what we found was that although typical out-of-network bills are lower than the horror stories, they’re still high enough to create enormous stress for families — and they’re also really common.”

The authors pointed to a recent survey that found 4 in 10 Americans would not be able to pay an unexpected expense of $400 without selling something or borrowing money. 

Yet the average amount of balance bills sent to patients in the study exceeded that: $2,040 for inpatient admissions and $628 for emergency visits in 2016. Further, 10% of the patients in the study faced an average of  $4,112 for inpatient admissions and $1,364 for ED visits.

Why is this happening?

Mello said there are two potential explanations behind the significant rise in out-of-network bills: insurers may be excluding more physicians from their provider networks, even when they essentially have no choice but to include the hospital; and hospitals may be increasingly tempted to make use of physician staffing groups that have market power and can resist pressure to come in-network at lower rates. 

Balance billing may also occur because insurers pay doctors too little to practice at one given hospital, so to make ends meet, they bill patients directly for additional amounts, Sun said.

“It certainly may be the case that consolidation among insurers has resulted in reduced payments to physicians, and that out-of-network billing is a way to compensate for this,” he said.

The classic example, Sun said, of how surprise billing works can be found at community hospitals that are not run by a multispecialty organization, such as Stanford Health Care or Kaiser Permanente. In that community hospital, everyone is in business for themselves. So, for example, when a patient comes to the emergency department and needs an operation, even if the patient’s chosen surgeon is in-network, all the specialists helping the patient through the surgery may not be. It is often difficult for patients who are in- or out-of-network to walk away if he or she doesn’t like the arrangement, particularly in emergencies.

“The bottom line is this: In a lot of situations, patients can’t choose the doctor, and the doctors can’t choose the patient,” Sun said. “It’s an especially big problem for hospital-based physicians, such as emergency room physicians, anesthesiologists, and radiologists.”

Even if a patient schedules a procedure, such as knee-replacement surgery or the delivery of a baby, accidents or the unknown often occur.

“What if something goes horribly wrong and you have to go to the ICU?” Sun said. “Now everyone seeing you, from the cardiologist or a neurologist, could be out-of-network.”

Crunching the numbers

The researchers examined 5.5 million inpatient admissions and 13.6 million emergency room admissions between 2010 and 2016, using data from the Clinformatics Data Mart, which comprises private health insurance claims from all 50 states from a large commercial insurer. The individuals in the database represent about 19% of all American who have commercial health insurance.

The researchers found the percentage of emergency department visits resulting in one or more out-of-network bills increased from 32.3% to 42.8% and that the average amount billed nearly tripled from $220 to $628. A whopping 85.6% of ambulance rides to emergency departments resulted in an out-of-network bill..

The proportion of inpatient admissions with out-of-network bills increased by almost 60% over that period, from 26.3% to 42%, with the average out-of-network bill more than doubling from $804 to $2,040.

The study found out-of-network billing was common among ambulance services and hospital-based physicians — such as emergency physicians, radiologists and anesthesiologists — providing care at in-network hospitals. “In some circumstances, patients could easily assume that the entire hospital team is in-network and thus the balance billing may come as a surprise,” the authors wrote. “Further, in these contexts, patients may have limited ability to choose.”

The authors note that the findings support current efforts in Congress and the states to limit balance billing in contexts where surprise is likely to be involved. They also note that patients may succeed in getting out-of-network bills reduced in some circumstances.

Still, Mello added: “This is not the way to run a health-care system. Avoiding outrageous bills shouldn’t require a PhD in health policy.” 

The other co-author of the study is Jasmin Moshfegh, a graduate student in the Health Policy PhD program.

A new study by Stanford economists shows that giving fathers flexibility to take time off work in the months after their children are born improves the postpartum health and mental well-being of mothers.

In the study, slated for release by the National Bureau of Economic Research on June 3, Petra Persson and Maya Rossin-Slater examined the effects of a reform in Sweden that introduced more flexibility into the parental leave system. The 2012 law removed a prior restriction preventing a child’s mother and father from taking paid leave at the same time. And it allowed fathers to use up to 30 days of paid leave on an intermittent basis within a year of their child’s birth while the mothers were still on leave.

The policy change resulted in some clear benefits toward the mother’s health, including reductions in childbirth-related complications and postpartum anxiety, according to their empirical analysis.

“A lot of the discussion around how to support mothers is about mothers being able to take leave, but we often don’t think about the other part of the equation — fathers,” says Rossin-Slater, an assistant professor of health research and policy.

“Our study underscores that the father’s presence in the household shortly after childbirth can have important consequences for the new mother's physical and mental health,” says Persson, an assistant professor of economics.

Rossin-Slater and Persson are both faculty fellows at the Stanford Institute for Economic Policy Research.

Among their main findings of effects following the reform: Mothers are 14 percent less likely to need a specialist or be admitted to a hospital for childbirth-related complications — such as mastitis or other infections — within the first six months of childbirth. And they are 11 percent less likely to get an antibiotic prescription within that first half-year of their baby’s life.

There is also an overall 26 percent drop in the likelihood of any anti-anxiety prescriptions during that six-month postpartum period — with reductions in prescriptions being most pronounced during the first three months after childbirth.

What’s more, the study found that the average new father used paid leave for only a few days following the reform — far less than the maximum 30 days allowed — indicating how strong of a difference a couple of days of extra support for the mother could make.

“The key here is that families are granted the flexibility to decide, on a day-to-day basis, exactly when to have the dad stay home,” said Persson. “If, for example, the mom gets early symptoms of mastitis while breastfeeding, the dad can take one or two days off from work so that the mom can rest, which may avoid complications from the infection or the need for antibiotics.”

These indirect benefits from giving fathers workplace flexibility are not trivial matters when you consider the health issues mothers often face after childbirth and after they get home from the hospital, says Rossin-Slater, who is also a faculty member of Stanford Health Policy.

Infections and childbirth complications lead to one out of 100 women getting readmitted to the hospital within 30 days in the United States, according to the study.

Meanwhile, postpartum depression occurs for about one out of nine women, and maternal mortality has also been a rising trend over the past 25 years in the U.S.

The study comes as a growing number of lawmakers in the United States vocalize support for paid family leave but have failed to pass federal legislation.

Washington, D.C., and six states have adopted various paid family leave laws, but the U.S. remains the only industrialized nation in the world that does not have a national mandate guaranteeing a certain amount of paid parental leave.

Some federal lawmakers are working on family leave measures and have proposed such legislation over the past few years — including The Family Act, The New Parents Act — but none of them have ever gained enough traction to proceed in Congress.

This new study can help broaden the policy discussions, the researchers say.

The larger context around paid family leave policies is often framed today as a way to help narrow the gender wage gap by giving women more workplace flexibility and fewer career setbacks.

This study, however, shines a light on maternal health costs and how a policy on paid family leave — that includes workplace flexibility for the father — offers more benefits than previously thought, Rossin-Slater says.

“It's important to think not only about giving families access to some leave, but also about letting them have agency over how they use it,” she says.

And when it comes to concerns that fathers might use paid parental leave to goof off instead of spending the time as intended, the researchers say their study should assuage those worries.

“It's not like fathers are going to end up using a whole month to just stay home and watch TV. We don't find any evidence of that,” Rossin-Slater says. “Instead they only use a limited number of days precisely when the timing for that seems most beneficial for the family.”

“For all these reasons,” Persson says, “giving households flexibility in how to use paternity leave makes a lot of sense.”

​

Fourteen years ago, Stanford Health Policy’s Douglas K. Owens and colleagues published a cost-effectiveness analysis that would change the face of HIV prevention. Their landmark study in The New England Journal of Medicine showed that expanding HIV screening would increase life expectancy and curb transmission of the disease — and was cost effective in virtually all health-care settings.

Not long after their model-based results were published, their findings became key evidence in the decision to expand screening by the Centers for Disease Control and Prevention. Their work has been used in HIV screening guidelines from the U.S. Preventive Services Task Force — which Owens now chairs — the American College of Physicians and the Department of Veterans Affairs, among others.

Owens and his Stanford colleague Margaret Brandeau, professor of management science and engineering, have led this team of decision scientists who have been at the forefront of developing scientific models for the screening and prevention of HIV for two decades now. This modeling team — which also includes colleagues from UCSF and Yale — has published nearly 250 peer-reviewed studies and is one of the most experienced and respected in the world.

But today, the opioid epidemic is threatening the hard-fought gains in the prevention and control of HIV and hepatitis C virus (HCV). In support of their continued work to address the opioid epidemic, Owens received a highly prestigious MERIT award from the National Institute on Drug Abuse (NIDA),which provides up to 10 years of funding for the team.

“We are extremely grateful to NIDA for this support and to our colleague at NIDA, Dr. Peter Hartsock, who has worked with us for over 20 years to mitigate the harms from HIV and HCV,” said Owens.

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The team will now turn its sights on the complex interplay of the opioid epidemic, and HIV and hepatitis C virus (HCV) transmission. The transmission of HCV has been fueled by the opioid epidemic, and HCV now kills more Americans than all other infectious diseases combined.  

“The unfolding opioid epidemic is a defining challenge for the public health and medical systems in the United States,” Owens, the principal investigator of the team, and his colleagues wrote in their grant proposal. “The reversal of life expectancy growth in the demographic groups most affected by the opioid epidemic represents the aggregation of a complex web of harmful public health and population trends, including a rise in overdoses, suicides, mental health afflictions, economic disadvantages, and infectious disease outbreaks.”

Indeed, for the first time since the 1960s, the U.S. life expectancy has contracted for the second year in a row; drug overdoses have been the leading cause of death for Americans under age 50, with an estimated two-thirds of those deaths resulting from opioids.

Since the last renewal of their NIDA-funding grant in 2013, the team has watched the dramatic rise of opioid overuse, injection drug use, and overdose become a national public health crisis, with more than 60,000 drug overdose deaths in the United States reported by the CDC.

“The growing use of needle-based opioids increases the likelihood of accelerating HIV and HCV transmission,” said co-investigator Jeremy Goldhaber-Fiebert, an associate professor of medicine and core faculty at Stanford Health Policy. “Identifying the best combination of approaches to reduce HIV and HCV transmissions stemming from the opioid epidemic is of critical public health importance.”

The other co-investigators on the team of the project, “Making Better Decisions: Policy Modeling for AIDS and Drug Abuse,” are:

1. Eran Bendavid, an infectious diseases physician and associate professor of medicine at Stanford who is another a seasoned HIV modeler and outcomes expert;
2. Keith Humphreys, professor of psychiatry and behavioral sciences at Stanford and a former senior policy advisor in the White House Office of National Drug Control Policy; 
3. David Paltiel, a Yale School of Public Health professor who pioneered policy options for mitigating the impact of HIV in the United States and abroad;
4. Gregg Gonsalves, an assistant professor of epidemiology at Yale and a 2018 MacArthur Foundation Fellow who will focus on developing new algorithms to detect and predict opioid-related outbreaks of HIV and HCV;
5. James Kahn of the Institute for Health Policy Studies at UCSF, professor of epidemiology and biostatistics and an expert on the individual and population impact of prevention and treatment for HIV, HCV and opioid use.

The End of AIDS? 

Toward 2012, a series of scientific advances led to calls for “the end of AIDS.” The two big factors were the cost of the “triple cocktail” of antiretrovirals plunging in developing countries and then huge donations from wealthy countries began pouring in to fight the disease.

Yet the researchers say successes have been too few and that the incidence of HIV remains far too high. About 40 million people were living with HIV around the world in 2017; an estimated 940,000 people died from AIDS-related illnesses that same year.

The year 2015 marked the first time in two decades that the number of HIV diagnoses tied to opioids increased.

"Although it was started by prescription opioid overprescribing, the epidemic has evolved to include significant injection opioid use which is now threatening to significantly increase the spread of infectious diseases like HIV and Hepatitis C,” said Humphreys.

The most visible example of an opioid-related HIV outbreak took place in Scott County, IN, in 2014-2015. A single infection introduced into the community resulted in nearly 200 new HIV cases within six months, largely related to oxymorphone injections. In 2017 and again in March 2018, two additional substantial outbreaks occurred in Scott County, likely linked to both risky sex and needle sharing. 

In addition, the CDC has identified 220 counties in 26 states that are uniquely vulnerable to HIV and HCV outbreaks related to opioid injections.

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“Developing models that forecast high-risk areas for HIV and HCV is essential for aligning surveillance and public health interventions with risk,” said Brandeau, a leader in designing models for the prevention of HIV and hepatitis, especially in drug abuse disorders.

There have also been striking increases in the injection of opioids and heroin that are closely linked to the spread of viral hepatitis. In the demographic areas most affected by opioids, the researchers found, diagnoses of acute hepatitis have more than quadrupled — reversing trends of the previous decade. And in the country as a whole, the number of new HCV cases has nearly tripled since 2010. 

“For any type of contact with an infected source such as a dirty needle, or even cocaine straws, HCV is by far the most rapidly transmissible of the blood-borne infections,” said Bendavid. “One of the challenging issues with hepatitis C is that its major health manifestations do not appear for many years after infection."

What’s the Plan? 

In the next five years, the team intends to evaluate how strategies to prevent and mitigate the harms of opioid use can decrease the spread of HIV and HCV and thereby reduce morbidity and mortality from opioid use. They have four specific goals: 

1. Model the effect of the opioid epidemic on transmission of HIV and HCV.
2. Model the epidemiological and population impacts of individual strategies to prevent and mitigate the harms of opioids and drug injection on HIV and HCV outcomes by evaluating prevention strategies;
3. Model the epidemiologic and population impact of portfoliosof strategies to mitigate the harms of opioid use and drug injection on HIV and HCV outcomes;
4. And model the impact of barriers to implementation of effective strategies to reduce the harms of opioid use on HIV and HCV.

“We will perform novel analyses assessing intervention impacts singly and in combination assessing outcomes for HIV, HCV and opioid use disorder,” the researchers wrote in their grant proposal.

Then, the researcher will model new methods for building complex multi-intervention and multi-disease models and developing adaptive testing algorithms for identifying outbreaks.

Finally, the team intends to assess the barriers and intervention approaches “that more realistically reflect implementation issues than current models and hence identify resource needs for system planning.”

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