10 no-brainer ways to cut healthcare costs without hurting quality

Next year, premiums for health insurance plans sold through HealthCare.gov — a key feature of the Affordable Care Act — will rise by about 22 percent over 2016. Since the exchanges began selling insurance during the fall of 2013, plans on the insurance exchanges have become increasingly less affordable.

{mosads}That’s a big problem President-elect Donald Trump will have to confront when he takes office on Jan. 20. In a post-election interview with Lesley Stahl of CBS’s “60 Minutes,” Trump reiterated his vow to “repeal and replace” Obamacare – the question is, what will he replace it with?

 

With drug prices and treatment costs rising, and Medicare and Medicaid heading toward insolvency, we need to rethink healthcare spending and find a way to control these costs, which are crippling our healthcare system.

Here are 10 simple changes that Trump should embrace that would dramatically reduce healthcare costs, saving the government and taxpayers hundreds of millions of dollars, and opening pathways to medical innovation:

1. Allow the federal government to negotiate drug prices. 

Big buyers of drugs should be able to negotiate prices. Thanks to Medicare, the federal government is the No. 1 purchaser of drugs in the U.S., yet it’s unable by law to negotiate prices with drug manufacturers.

This summer, public outrage erupted over price-gouging for EpiPens, the go-to treatment for severe allergic reactions. Between 2009 and 2016, the price per dose for an EpiPen, produced by pharmaceutical company Mylan, increased from $100 to $600, while the cost, per dose, of the actual drug inside, epinephrine, cost only about $1.

The Kaiser Family Foundation estimates that Medicare spending for the EpiPen spiked 1,151 percent between 2007 and 2014, as the total number of users grew by 164 percent. The idea that a drug company can name its price and buyers must buy it at that price is absurd and amounts to theft from American taxpayers.

Trump spoke often during the campaign about “the system” being “rigged.” This is a prime example of that, and as president, he should submit legislation to Congress to undo this rigging of the prices the feds pay for drugs.

2. Allow Americans to buy drugs and medical devices from Canada. 

Prescription drugs are vastly cheaper in other countries, including Canada. Yet Americans are barred from buying prescription drugs from abroad. Healthy competition would drive down drug and medical-device prices. 

3. Stop incentivizing doctors to use the most expensive drugs on the market. 

Drug companies pay doctors cash bonuses if they use their name-brand drugs. A ProPublica study found that about three-quarters of doctors across five common medical fields received at least one payment from a drug company in 2014.

Genentech, for example, pays doctors $50,000 annually if they sign confidentiality agreements and use large amounts of Lucentis at more than $2,000 per dose, rather than the less-expensive Avastin at $50 per dose. The two drugs — both produced by Genentech — are nearly identical.

Doctors receive higher reimbursements for using more expensive drugs, too. In 2013, The Washington Post reported that in the case of Lucentis versus Avastin, doctors choose the more expensive drug more than 500,000 times a year, charging Medicare an extra $1 billion. My wife, a retina specialist, and her four partners have saved the federal government an estimated $72 million alone over the past few years by making Avastin their first line of treatment.

4. Allow hearing aids to be sold like eyeglasses.

Twenty percent of Americans report some degree of hearing loss, but federal rules mandate expensive hearing aids costing thousands of dollars each, rather than newer tech alternatives that can cost one-tenth as much. If hearing aids could be sold like reading glasses, more Americans would be able to hear, and the costs per hearing device would go down dramatically.

Legislation introduced by Sens. Elizabeth Warren (D-Mass.) and Chuck Grassley (R-Iowa), would strip away current Food and Drug Administration regulations, allowing consumers to buy over-the-counter hearing devices known as Personal Sound Amplification Products (PSAPs). Trump should support this bill as it would lower healthcare costs for people with hearing loss.

5. Encourage use of generics when patents expire.

Generic drugs are copies of brand-name drugs that are both safe and affordable. But drugmakers often go to great lengths to keep generics off the market and keep their own patents in place.

Once patents expire, the FDA role should be minimized to allow the free market to introduce affordable alternatives and generics to patients and doctors.

6. Ban drug advertising.

Other countries, including Canada, ban drug advertising, as consumers respond by seeking inappropriate or overpriced treatments. Even though the patent has expired on the EpiPen device, consumers still ask doctors to prescribe it by name, helping give it 95 percent market share.

7. Limit drug-price increases.

According to a 2015 report from the Kaiser Family Foundation, one-third of patients who take four or more drugs said they did not fill a prescription, cut pills in half and/or skipped doses to save money.

In the wake of the EpiPen fallout, some drug companies are making a greater effort to rein in drug prices. Still, many patients struggle to pay for drugs because Obamacare gives drug companies free rein when setting drug prices.

Trump has an opportunity to stop drug company monopoly price-gouging. He could look to India, for example, where the government has introduced price caps on drugs deemed to be “essential.”

8. Ask Americans to indicate their end-of-life preferences when they register to vote or get their driver’s licenses.

One-quarter of medical costs for Medicare recipients are incurred within the last year of life. Many, if not most, of these decisions are made by families who, in the absence of specific written instructions from their loved ones, require they be kept alive even if they are not sentient and have no possibility of regaining health.

Patients should be given the opportunity at the end of their lives to make the choice about whether to pursue treatment at all costs.

9. Facilitate telemedicine and encourage use of wireless devices to maintain health.

Today’s healthcare system is built around outdated systems. Doctors get paid only if they physically see patients. Phone and internet consultations are discouraged, although Medicare will pay for telemedicine services in rural areas. 

More, use of devices that monitor vital signs and alert healthcare providers to changes are often discouraged because of liability, privacy and reimbursement laws.

It’s time for a holistic approach, changing the law to take advantage of new technologies and require in-patient visits only when necessary.

This will free up valuable doctor time, free patients from having to see a doctor unless necessary, reduce burdens on caregivers who may have to transport patients to doctors and help the environment by cutting down on unnecessary car trips to the doctor.

10. Enact smart and sensible patent law that provides an incentive to innovate.

Unfortunately, in the pharmaceutical sector, patents are too easy to obtain and too difficult to invalidate. Patents are routinely granted for new medicines that are not innovative, or that consist of incremental tweaks to drugs already on the market.

And when valuable drug and medical-device patents expire, the law restricts competition by requiring lengthy and expensive testing for a company trying to enter the market with a competitive product.

Making it easier to overturn weak pharmaceutical patents will bring more competitors into the market, allow consumers to access cheaper generic drugs, and bring downward pressure on abusively high drug prices.

The U.S. government has created the most costly healthcare system in the world.

We need healthcare policies that promote innovation and keep costs low. That is the way of the future. As the antithesis of — and hopefully, the antidote to — the Washington status quo, President Trump will have a unique opportunity to usher in that future by championing these changes. 

Gary Shapiro is president and CEO of the Consumer Technology Association (CTA)™, the U.S. trade association representing more than 2,200 consumer technology companies, and author of the New York Times best-selling books, Ninja Innovation: The Ten Killer Strategies of the World’s Most Successful Businesses and The Comeback: How Innovation Will Restore the American Dream. His views are his own. Connect with him on Twitter: @GaryShapiro