Government – artdiamondblog.com

To Kill a Dam, Environmentalist “Scientists” Lied About the Existence of the So-Called “Snail Darter”

In the 1970s the building of a dam in Tennessee was delayed because environmentalists claimed that its construction would threaten the extinction of a small fish they called the “snail darter.” Now fish biologists have established that there is no snail darter. The fish previously identified as a “snail darter” has the DNA of a small fish called a “stargazing darter” which was not, and is not, endangered.

A co-author of a new study says that this was no innocent mistake.

Dr. Near, . . . a professor who leads a fish biology lab at Yale, and his colleagues report in the journal Current Biology that the snail darter, Percina tanasi, is neither a distinct species nor a subspecies. Rather, it is an eastern population of Percina uranidea, known also as the stargazing darter, which is not considered endangered.

Dr. Near contends that early researchers “squinted their eyes a bit” when describing the fish, because it represented a way to fight the Tennessee Valley Authority’s plan to build the Tellico Dam on the Little Tennessee River, about 20 miles southwest of Knoxville.

“I feel it was the first and probably the most famous example of what I would call the ‘conservation species concept,’ where people are going to decide a species should be distinct because it will have a downstream conservation implication,” Dr. Near said.

In other words environmentalist “scientists” deliberately lied in order to promote their political agenda of cutting energy production.

The New York Times article quoted above is:

Jason Nark. “How a Mistaken Identity Halted a Dam’s Construction.” The New York Times (Sat., Jan. 4, 2025): A13.

(Note: ellipsis added.)

(Note: the online version of The New York Times article was updated Jan. 4, 2025, and has the title “This Tiny Fish’s Mistaken Identity Halted a Dam’s Construction.”)

The academic paper co-authored by Near, that Nark summarizes in The New York Times article mentioned and cited above is:

Ghezelayagh, Ava, Jeffrey W. Simmons, Julia E. Wood, Tsunemi Yamashita, Matthew R. Thomas, Rebecca E. Blanton, Oliver D. Orr, Daniel J. MacGuigan, Daemin Kim, Edgar Benavides, Benjamin P. Keck, Richard C. Harrington, and Thomas J. Near. “Comparative Species Delimitation of a Biological Conservation Icon.” Current Biology. Published online on Jan. 3, 2025.

In 2023, Costs of Medical Care Rose 40% Faster Than Overall Inflation

If rising healthcare costs were clearly due to improving health outcomes, few would be angry. The anger arises from rising fraud, inefficiency, and inertia. Many healthcare workers are paper pushers and the paper pushed is often inaccurate and opaque. Other healthcare workers enforce protocols that slow innovation. And of course mandated regulations, most notably Phase 3 clinical trials, enormously increase costs.

(p. A3) The killing of a health insurance executive in New York City prompted a furious outpouring of anger over the industry and healthcare prices. So just how much have healthcare costs and spending been going up?

The short answer: a lot. National healthcare spending increased 7.5% year over year in 2023 to $4.867 trillion, or $14,570 per person, according to data released Wednesday by the Centers for Medicare and Medicaid Services.

. . .

The 7.5% rise represented a much faster pace of growth than the 4.6% increase in 2022.

. . .

Over the past couple of decades, the price index for what the Labor Department classifies as medical care—which includes visits to doctors, hospital stays, prescription drugs and medical equipment—has risen roughly 40% faster than the overall pace of inflation. Healthcare tends to rise more quickly than overall inflation because of high labor costs in the sector, as well as advancements leading to new and more expensive drugs and treatments. Demand for healthcare is also increasing as the population ages.

. . .

Hospitals are . . . adding billions of dollars in “facility fees” to medical bills for routine care at outpatient centers, according to reporting by The Wall Street Journal. That means patients are often paying hundreds of additional dollars for standard care like colonoscopies, mammograms and heart screenings.

. . .

Employers are shouldering a lot of those costs. For example, the average worker spent $6,296 in premiums for family coverage in 2024, according to KFF [a healthcare nonprofit]. Employers spent $19,276.

But when a company is paying more for insurance premiums for its workers, that leaves it with less money for giving out raises or reinvesting and expansion.

“It’s ultimately all of us who pay for [healthcare] either in the form of lower wages for people who have employer insurance or in the form of higher taxes to cover Medicare and Medicaid,” said Katherine Baicker, professor of health economics at the University of Chicago.

For the full story see:

Harriet Torry. “Nation’s Healthcare Tab Is Surging Amid Rising Wages, Hospital Fees.” The Wall Street Journal (Friday, Dec. 20, 2024): A3.

(Note: ellipses added. The first bracketed words were added by me; the second bracketed word was in the original.)

(Note: the online version of the story was updated December 18, 2024, and has the title “Why Are Americans Paying So Much More for Healthcare Than They Used To?” Where there is a slight difference in wording between the print and online versions, the passages I quote above follow the online version.)

The source for some of the data discussed in The New York Times article appears to have been:

“National Health Expenditures 2023 Highlights.” Centers for Medicare & Medicaid Services (CMS), Last modified on Dec. 18, 2024.

During the Covid Pandemic, “Public Health Officials Could Not Be Trusted to Tell the Whole Truth”

From the review quoted below, Rivers’s book is refreshingly open about the downsides of public health actions against epidemics. But in the end, I infer that Rivers still gives pride of place to public health actions in fighting epidemics. She wants public health actions to be reformed but believes that public health officials will be and should be the dominant actors during epidemics. I, to the contrary, believe that innovative medical entrepreneurs will be and should be the dominant actors. I believe that partly because medical entrepreneurship respects human liberty, while public health official commands do not respect human liberty, but also partly because medical entrepreneurship is more effective at ending epidemics.

(p. A15) As recently as 2019, confides Caitlin Rivers, an epidemiologist at Johns Hopkins, “I was confident that we knew how to navigate, if not control, a pandemic.” But within a year “that hubris was laid bare.” Covid-19 “overran us,” leaving in its wake a striking loss of confidence in public health.

“Crisis Averted” is Ms. Rivers’s ambitious and, given its charge, surprisingly successful attempt to reset our relationship with the field of public health. With a judicious blend of candor, hopefulness and pragmatism, she calls out its mistakes, reminds us of its historic accomplishments and emphasizes the need for the discipline to adjust its strategies if its full promise is to be realized.

. . .

. . . for every public-health triumph there are heartbreaking disappointments. In 2010, a lack of clean water and adequate sanitation allowed a cholera epidemic to rampage through Haiti after a catastrophic earthquake; worse, the disease, not endemic in the region, arrived through foreign aid workers. Human error was also responsible for the last recorded smallpox fatality, a medical photographer in the U.K. who died after the virus leaked from a sloppy lab on the floor below.

. . .

Animating much of Ms. Rivers’s narrative and analysis is the Covid-19 pandemic, a crisis that, as she laments, wasn’t averted. . . . She . . . describes early advice from public-health officials claiming that mask use was “not recommended” and “should be avoided” as “odd and brittle assertions that did not hold up to the slightest scrutiny” and left many with the impression that “public health officials could not be trusted to tell the whole truth.”

. . .

After years of relentless insistence that we “follow the science,” it’s refreshing to hear an expert illuminate all that remains unknown—from the vagaries of the common cold to the vexing challenge of coaxing healthy behavior change. Most epidemics of the past century, Ms. Rivers points out, “took forms that were slightly off-center from what epidemiologists expected”—the recent pandemic, for example, was caused not by an influenza virus, as anticipated, but rather by a coronavirus. Her advice: Expect a surprise.

For the full review see:

Shaywitz, David A. “Bookshelf; What the Doctors Ordered.” The Wall Street Journal (Wednesday, Oct. 2, 2024): A15.

(Note: ellipses added.)

(Note: the online version of the review has the date October 1, 2024, and has the title “Bookshelf; ‘Crisis Averted’ Review: What the Doctors Ordered.”)

The book under review is:

Rivers, Caitlin. Crisis Averted: The Hidden Science of Fighting Outbreaks. New York: Viking, 2024.

Medicare “Advantage” Health Insurers (Especially UnitedHealth) Pressure Doctors to Recode Patients as Having Bogus, but Lucrative, Health Problems

The “advantage” in Medicare “Advantage” health insurance plans accrues to health insurance companies, not to patients or taxpayers. In an earlier entry I discussed an earlier Wall Street Journal article documenting how health insurers (especially UnitedHealth) sent nurses to patients’ homes for the purpose of harvesting diagnoses that would add to the health insurers’ payments. In an even earlier entry I discussed a Wall Street Journal article documenting how UnitedHealth has used vertical integration to game the system of Medicare “Advantage.”

(p. A1) Like most doctors, Nicholas Jones prefers to diagnose patients after examining them. When he worked for UnitedHealth Group, though, the company frequently prepared him a checklist of potential diagnoses before he ever laid eyes on them.

UnitedHealth only did that with the Eugene, Ore., family physician’s Medicare Advantage recipients, he said, and its software wouldn’t let him move on to his next patient until he weighed in on each diagnosis.

The diagnoses were often irrelevant or wrong, Jones said. UnitedHealth sometimes suggested a hormonal condition, secondary hyperaldosteronism, that was so obscure Jones had to turn to Google for help. “I needed to look it up,” he said.

The government’s Medicare Advantage system, which uses private insurers to provide health benefits to seniors and disabled people, pays the companies based on how sick patients are, to cover the higher costs of sicker patients. Medicare calculates sickness scores from information supplied by doctors and submitted by the insurers. In the case of UnitedHealth, many of those doctors work directly for UnitedHealth.

More diagnoses make for higher scores—and larger payments. A Wall Street Journal analysis found sickness scores increased when patients moved from traditional Medicare to Medicare Advantage, leading to billions of dollars in extra government payments to insurers.

Patients examined by doctors working for UnitedHealth, an industry pioneer in directly employing large numbers of physicians, had some of the biggest increases in sickness scores after moving (p. A8) from traditional Medicare to the company’s plans, according to the Journal’s analysis of Medicare data between 2019 and 2022.

Sickness scores for those UnitedHealth patients increased 55%, on average, in their first year in the plans, the analysis showed. That increase was roughly equivalent to every patient getting newly diagnosed with HIV, the virus that causes AIDS, and breast cancer, the analysis showed.

That far outpaced the 7% year-over-year rise in the sickness scores of patients who stayed in traditional Medicare, according to the analysis. Across Medicare Advantage plans run by all insurers, including UnitedHealth, scores for all newly enrolled patients rose by 30% in the first year.

. . .

In a series of articles this year [2024], the Journal has examined the practices of Medicare Advantage companies, including UnitedHealth, the largest. Among other things, the articles showed how diagnoses added by insurers increased payments from the government.

. . .

Jones, the Oregon doctor, said UnitedHealth didn’t suggest diagnoses for patients he treated outside Medicare Advantage, where it doesn’t pay.

Traditional Medicare patients treated by UnitedHealth doctors had much lower sickness scores, the Journal’s analysis showed.

A case of hyperaldosteronism—the obscure hormonal condition that sometimes appeared on Jones’s checklists—could trigger about $2,000 a year in Medicare Advantage payments during the period the Journal studied. The Journal’s analysis showed that doctors who didn’t work for UnitedHealth seldom diagnosed that condition, which involves elevated levels of a hormone linked to high blood pressure.

. . .

“The system is not primarily about taking care of the patient,” said Dr. Emilie Scott, who worked for a UnitedHealth-owned practice in California before leaving in 2016. “It’s, how do you get the money to flow?”

The Journal analysis is based on billions of Medicare records obtained under a research agreement with the federal government. The Journal also examined internal documents from medical practices owned by or under contract with UnitedHealth.

. . .

When Dr. Naysha Isom started working at a UnitedHealth medical group in the Las Vegas area in 2019, she said, she got two days of training on how to record diagnoses. At the training, a UnitedHealth employee suggested that Isom, who had practiced for more than a decade, should consider diagnoses she had never made before.

Isom said she was told that signs of bruising could be recorded as senile purpura, a condition that generated payments in Medicare Advantage but generally didn’t require treatment. Isom saw no point, since the finding didn’t change patients’ care: “OK, wear some sunscreen. Maybe stop bumping the wall.”

After she decided not to diagnose peripheral artery disease, a narrowing of blood vessels, based on a screening test she distrusted, she said, a supervisor pressed her to reconsider. UnitedHealth didn’t require her to make diagnoses, she said.

“You’re just encouraged to, because obviously, if you don’t, they come bothering you,” said Isom, who left UnitedHealth to start her own practice in 2022.

UnitedHealth’s doctors in the Journal’s analysis diagnosed the bruising condition, which triggered extra payments of about $1,900 a year at the time, 28 times more often with patients in UnitedHealth Medicare Advantage plans than those in traditional Medicare.

. . .

Jones, the former UnitedHealth doctor in Oregon, said the suggestions included diagnoses based on scant evidence, such as long-term insulin use for patients who had received the drug only once during a long-ago hospital stay.

. . .

The design of the system, he said, could lead to good-faith errors as doctors clicked through all the boxes. “The system is made to have these happy little accidents that end up resulting in a lot of money from taxpayers,” he said.

. . .

Andy Pasternak, an independent family doctor in Reno, Nev., has lower-than-average sickness scores across his practice, records show. He said he gets a per-patient bonus of $2 a month, or $2,256 annually, for the 94 Medicare Advantage patients covered by his contract with UnitedHealth.

Pasternak said UnitedHealth offered to send nurses to visit those patients to diagnose them more fully. The company would pay him $250 for each patient their nurses examined, he said.

“That’s more than I get paid for treating my own patients,” he said. He said the focus on diagnosing has soured him on Medicare Advantage, and made him grateful when patients younger than 65 come to his office.

One UnitedHealth document reviewed by the Journal projected Pasternak could receive as much as $23,250 a year in such payments. A UnitedHealth executive in his area told him in an email his practice also would benefit from any additional diagnoses made by the nurse.

Valerie O’Meara, a former UnitedHealth nurse practitioner, said she never provided treatment for the patients she saw in doctors’ offices in Washington state. “Your job is finding diagnoses, that was clear as a bell,” she said. “I was like, am I finding all these things that the doctors who are taking care of these people didn’t find?”

She said a Minnesota-based UnitedHealth manager urged her to make new diagnoses beyond what doctors had treated. Patients were often confused, she said, about why she, not their own doctor, was examining them. “They don’t tell the patient, the nurse needs to see you to make sure your high-scoring medical problems are checked off this year.”

Chris Henretta, a UnitedHealth Medicare Advantage plan member who lives in The Villages, a retirement community in central Florida, was suspicious when his primary-care doctor diagnosed him as morbidly obese during his annual exam in October.

He is a lifelong weightlifter, plays water volleyball five times a week and has an athletic build.

“I told her I didn’t think I was obese,” Henretta said. When she recorded morbid obesity anyway, he said, he began to “suspect my doctor may have a financial incentive to portray people as higher risk.”

The diagnosis can trigger payments of about $2,400 a year to Medicare Advantage insurers.

For the full story see:

Christopher Weaver, Anna Wilde Mathews and Tom McGinty. “UnitedHealth’s Army of Doctors Helped It Boost Medicare Payments.” The Wall Street Journal (Tuesday, Dec. 31, 2024): A1 & A8.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date December 29, 2024, and has the title “UnitedHealth’s Army of Doctors Helped It Collect Billions More From Medicare.” In the passages I quote above, I do not include any of the subheadings that appeared in both the online and print versions of the article.)

Price Controls on Drugs Reduce Drug Innovation

Price controls on drugs may reduce some short-term healthcare costs for consumers, but will also reduce the innovation that brings us more cures, less pain, and fewer side effects. If we want to both reduce costs for consumers and increase innovation, we should end government mandates for the Phase 3 clinical trials–the phase of clinical trials that make up most of the cost of gaining regulatory approval.

(p. A19) The Biden White House has proposed requiring Medicare to “negotiate” drug prices.

. . .

Unfortunately, the debate is being informed by erroneous Congressional Budget Office analysis. CBO says . . . the supply of new drugs will only be reduced by 5% from 2021 to 2039, a loss of only two drugs a year.

The CBO minimizes the harmful effects on innovation, but the entire supply chain that funds medical R&D relies on rate-of-return assessments driven by future earnings. An analysis I released this week finds 10 times the effect on R&D, a loss of up to some 340 drugs over the same period.

The White House also claims that price controls won’t hamstring innovation because they only govern top-selling drugs. But the occasional blockbuster funds the roughly 90% of pipeline drugs that never pass Food and Drug Administration review. CBO even acknowledges that only the top 7% of Medicare drugs drive U.S. profits. Targeting financially successful drugs could make large segments of the development portfolio unprofitable, even if such drugs aren’t affected by price controls.

For the full commentary see:

Tomas J. Philipson. “Biden’s Price Controls Will Make Good Health More Expensive.” The Wall Street Journal (Thursday, Sept. 16, 2021 [sic]): A19.

(Note: ellipses added.)

(Note: the online version of the commentary has the date September 15, 2021 [sic], and has the same title as the print version.)

The research brief co-authored by Philipson and mentioned above is:

Philipson, Tomas J., and Troy Durie. “The Evidence Base on the Impact of Price Controls on Medical Innovation.” Issue Brief. Becker Friedman Institute, University of Chicago, Sept. 14, 2021.

Supporting Philipson’s argument is a 2024 working paper showing that Medicare-mandated price cuts in medical equipment has resulted in less innovation in medical equipment:

Ji, Yunan, and Parker Rogers. “The Long-Run Impacts of Regulated Price Cuts: Evidence from Medicare.” NBER Working Paper #33083, Oct. 2024.

To End Drug Shortages Make Healthcare a Free Market

Drug shortages are sometimes blamed on the free market. A bum rap. In a free market when supply declines or demand increases, prices rise, and the increase in price incentivizes a greater quantity supplied, eventually ending a short-run period where quantity demanded at the going price exceeds quantity supplied at the going price (in other words, a shortage). But healthcare in America is far from a free market. Every aspect is highly regulated. Prices are negotiated, often by middlemen called (Pharmacy Benefit Managers, aka PBMs), entry is not free, and the demanders (patients) often do not know (or care) about the prices, since they are paid by a third party (insurers, employers, or the government). Perverse incentives abound.

(p. A26) There’s been a bombardment of bad news for drug supplies. The American Society of Health-System Pharmacists found this summer that nearly all of the members it surveyed were experiencing drug shortages, which generally affect half a million Americans. Cancer patients have scrambled as supplies of chemotherapy drugs dwindle. Other shortages include antibiotics for treatable diseases, such as the only drug recommended for use during pregnancy to prevent congenital syphilis (a disease that is 11 times more common today than a decade ago), and A.D.H.D. medications, without which people struggle to function in their day-to-day lives. The toll on Americans is heavy.

Over half of the shortages documented this summer by health consulting firm IQVIA had persisted for more than two years. But even though drug shortages affect millions of Americans, policymakers and industry leaders have provided little to no long-term relief for people in need.

Shortages have occurred regularly since at least the early 2000s, when national tracking began. Hundreds of drugs, in every major therapeutic category, have been unavailable for some period. The average drug shortage lasts about 1.5 years. Even when substitute medications are available, they may be suboptimal (for example, deaths by septic shock rose by 10 percent during a 2011 shortage of the first-line medication, norepinephrine) or have spillover effects (such as possibly increasing the risk of antimicrobial resistance). In addition to harming patients, shortages have cost health systems billions of dollars in increased labor and substitute medications.

. . .

Large hospital chains can readily monitor shortage risks and preemptively place large orders. This panic buying can wipe out inventory, and leave hospitals with fewer resources strapped since they may get notice of a drug shortage only when it’s too late. There is little penalty for over-ordering because unused drugs can often be returned.

. . .

Addressing the underlying fragility of our essential drug supply will take structural change and investments. While all industries must grapple with how to build resilient supply chains, the pharmaceutical industry is unique. The people who are most affected by supply chain vulnerabilities — patients — are also those with least say in the choice to buy from reliable manufacturers. When people buy cars, they may pay more based on company reputation, ratings by outside testers and reviews from other customers. In contrast, patients bear the harm of drug shortages, yet they cannot choose the manufacturers of their essential drugs nor evaluate their reliability.

For the full commentary see:

Emily Tucker. “We’re Stuck in a Constant Cycle of Drug Shortages.” The New York Times (Thursday, December 7, 2023 [sic]): A26.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 6, 2023 [sic], and has the title “America Is Having Yet Another Drug Shortage. Here’s Why It Keeps Happening.”)

F.D.A. Should Allow Physicians and Parents the Freedom to Give Preterm Infants Probiotics

Substantial observational evidence shows that the status of a person’s microbiome can have a large effect on the person’s health. We still have a lot to learn about which bacteria are helpful and the details of how they help. But patients must act under uncertainty, or in the case of the preterm infants discussed in the passages quoted below, physicians and parents must act under uncertainty. Given the current evidence and the uncertainty, the F.D.A. is arrogantly wrong to ban probiotics.

(p. A5) For years, hospitals around the world have tried to protect prematurely born babies from life-threatening gut disease by giving them probiotics. Then . . . [in Oct. 2023], American hospitals stopped.

The Food and Drug Administration had linked an infant’s recent death to one of the products. It warned doctors about using them in preterm infants without getting agency permission first, and pushed Abbott Laboratories and another major manufacturer, Infinant Health, to stop selling them.

. . .

Neonatologists in the U.S. and other developed countries have learned to help smaller and smaller babies stay alive. As they treat tinier babies, the medical challenges mount, including a swift-onset disease known as necrotizing enterocolitis, or NEC.

. . .

To help prevent NEC, nearly all neonatal units in Australia and New Zealand give probiotics, as do a majority in several European countries. About 40% in the U.S. did before the FDA’s actions, according to recent surveys and neonatologists’ estimates.

Nearly all of the products consist of live bacteria intended to help create a healthy community of microbes in the gut. Scientists don’t know exactly how they work, but suspect they prevent harmful bacteria from overwhelming the bowels.

. . .

Neonatal units across the U.S. halted use of the probiotics because popular versions were no longer available and the FDA warned doctors against using probiotics for preterm babies outside of clinical trials.

“I was stunned,” said Jennifer Canvasser, who started a NEC patient advocacy group after her infant son died 10 years ago, weakened by the disease. “To think about families having one potential less way to prevent this devastating disease is just concerning.”

Probiotics supporters say the FDA disregarded the evidence favoring probiotics for preterm babies, saying that they likely save hundreds of infants for every one probiotic-caused infection, which can be treated with antibiotics.

An analysis of more than 100 studies involving more than 25,000 premature infants, published . . . [in Oct. 2023] in the journal JAMA Pediatrics, found that probiotics containing multiple strains of bacteria were associated with reduced deaths and NEC.

For the full story see:

Liz Essley Whyte. “Discord Arises Over Treating Preemie Babies.” The Wall Street Journal (Saturday, Nov. 17, 2023 [sic]): A5.

(Note: ellipses, and bracketed dates, added.)

(Note: the online version of the story was updated Nov. 16, 2023 [sic], and has the title “Doctors, FDA Fight Over Giving Probiotics to Premature Babies.” The passages quoted above omit the subheadings that appear in the print, but not the online, version of the story.)

The analysis published in JAMA Pediatrics and mentioned above is:

Wang, Yuting, Ivan D. Florez, Rebecca L. Morgan, Farid Foroutan, Yaping Chang, Holly N. Crandon, Dena Zeraatkar, Malgorzata M. Bala, Randi Q. Mao, Brendan Tao, Shaneela Shahid, Xiaoqin Wang, Joseph Beyene, Martin Offringa, Philip M. Sherman, Enas El Gouhary, Gordon H. Guyatt, and Behnam Sadeghirad. “Probiotics, Prebiotics, Lactoferrin, and Combination Products for Prevention of Mortality and Morbidity in Preterm Infants: A Systematic Review and Network Meta-Analysis.” JAMA Pediatrics 177, no. 11 (2023): 1158-67.

For a useful discussion of how current medical protocols, especially the over-prescription of antibiotics, harm the microbiome, see chapter 3 of:

Makary, Marty. Blind Spots: When Medicine Gets It Wrong, and What It Means for Our Health. New York: Bloomsbury Publishing, 2024.

Health Insurance Firms Tell Regulators Surgery Prices Are Lower than What They Actually Charge, Undermining Price Transparency

Insurance firms that negotiate low prices with hospitals will be viewed more favorably by regulators, legislators, and the public. So they have a substantial incentive to inaccurately report prices as lower than they are. For true transparency, prices would need to be reported by those with no incentive to fudge the figures. Would that be hospitals, doctors, Consumer Reports, or academic economists?

(p. A11) How much does a new hip cost in New York? The answer isn’t at all clear, despite Gov. Andrew Cuomo’s efforts to improve price transparency. . . .

. . . Michael Frank, a 52-year-old Westchester County executive . . . had his left hip replaced in 2015. The Manhattan hospital charged roughly $140,000. The insurance company paid a discounted rate of about $76,000, . . .

. . .

After hearing his story, I told Mr. Frank what I thought was an odd twist: I’d recently had two hips replaced, six months apart, at the same hospital that had treated him.

. . .

Eventually I learned that the hospital had charged $175,000 for my right hip and $180,000 for the left. The insurance company had paid discounted rates of $75,000 and $77,000.

. . .

In 2009, New York’s then-attorney general, Andrew Cuomo, announced the creation of a nonprofit organization called FAIR Health. Its mandate is to provide consumers accurate pricing information for all kinds of medical services.

I found the FAIR Health website and queried its database. It reported that the out-of-network price for a hip replacement in Manhattan was $72,656, close to what Mr. Frank’s and my insurance companies had paid. The problem: We were both in-network, and FAIR Health estimated that cost as only $29,162.

Something didn’t make sense, so I called FAIR Health. “Maybe you had complications,” the spokesperson suggested. Happily, I hadn’t. I was discharged from the hospital each time in under 24 hours, with no issues and no need for a home health aide. How many data points did FAIR Health use to calculate its price estimate? I was told “4,500 in Manhattan over the last six months.” Who submitted these prices? “The insurance companies.”

. . . Rather than relying on insurers, it might be more effective if FAIR Health collected pricing information directly from hospitals and doctors. That way the data would be less susceptible to selective reporting or massaging. That’s what happened in the early 2000s, when class-action lawsuits revealed the main pricing database was being manipulated to the advantage of insurance companies.

For the full commentary see:

Steve Cohen. “You Can’t Put a Price on a Hip Replacement, and That’s a Problem.” The Wall Street Journal (Saturday, July 14, 2018 [sic]): A11.

(Note: ellipses added.)

(Note: the online version of the commentary has the date July 13, 2018 [sic], and has the title “Heard on the Street; New Biden Law Won’t Kill Drug Cures. It Will Reshape Them.” In the next to last paragraph quoted above, the second quoted sentence appears in the online, but not the print, version of the commentary.)

The So-Called “Inflation Reduction Act” Reduces Incentives to Develop Small Molecule Drugs and Drugs for Seniors

A recent blog entry suggested that the so-called “Inflation Reduction Act” “creates an incentive for Pharma firms to develop many middling drugs rather than a couple of blockbuster drugs.” In the passages quoted below from a different David Wainer commentary, he suggests that the Act also incentivizes pharma firms to reallocate development funds away from drugs for seniors and away from biologics. He assumes that the reallocation is “unintended” rather than based on the government believing that seniors matter less than others, or that biologics deserve more funding than the previous semi-free market allocated to biologics.

(p. B14) . . . the Inflation Reduction Act, . . . requires the federal government to negotiate prices for some drugs. Merck Chief Executive Officer Robert Davis was just one of many to warn it will be “highly chilling on future innovation.”

The 274-page legislation passed in 2022 doesn’t look likely to be a massive damper on innovation, but it will surely have an impact on how capital is allocated. When companies look at their R&D budgets, they will have to consider the law’s ramifications.

. . .

. . ., there is no arguing with the fact that the bill is reshaping many incentives drug companies face. For example, critics of the law point out that it eliminates the incentive to conduct additional research once a drug has been approved—a common strategy to extend patent protection for a drug—because prices are negotiated after nine years for small-molecule drugs and 13 years for biologics. As Kirsten Axelsen, a visiting scholar at the American Enterprise Institute explains, many oncology medications are first approved for severely ill patients and over time those drugs are tested for patients in earlier stages of the disease.

“Thanks to that, we’re now able to hold back the progression of cancer so that many of the major cancers have five-year survival rates of longer than 90%,” says Ms. Axelsen, who is also a policy adviser to law firm DLA Piper.

. . .

The law . . . could shift investment toward drugs that target the general population and away from seniors. That is because it only empowers Medicare to negotiate prices, leaving the commercial market wide open.

. . .

Perhaps the most serious concern is that the law picks winners and losers by favoring biologic drugs over small molecules, which face price reductions four years sooner than their larger molecule counterparts.

Small molecule drugs are chemically derived and simpler to make and can usually be taken orally by patients. These drugs—think medicine cabinet essentials like aspirin or statins—dominated the pharmaceutical industry during the 20th century. Biologics, therapies that are extracted from living organisms, are usually given through an injection and, because of their higher price tags, make up the bulk of today’s top-selling drugs. While biologics are at the cutting edge of medicine, discoveries of new small-molecule drugs continue to be made.

Eli Lilly’s CEO, David Ricks, noted in a recent earnings call that “it sends a signal to investors” that small molecules “aren’t wanted and are worth a lot less.” That could tip the scales toward more development in biologics, a likely unintended consequence of the law.

MIT’s Professor Lo says that is like effectively creating a tax on small molecules, or a subsidy for larger ones.

For the full commentary see:

Wainer, David. “Heard on the Street; Drug Industry’s Secret Weapon: ‘Guided Missiles’.” The Wall Street Journal (Saturday, Jan. 7, 2023 [sic]): B14.

(Note: ellipses added.)

(Note: the online version of the commentary has the date January 6, 2023 [sic], and has the title “Heard on the Street; New Biden Law Won’t Kill Drug Cures. It Will Reshape Them.” In the next to last paragraph quoted above, the second quoted sentence appears in the online, but not the print, version of the commentary.)

Regulations Discourage Search for Magic Bullet Cures

The so-called “Inflation Reduction Act” mandates that several of the biggest blockbuster drugs must have prices negotiated between Medicare and Pharma firms. As the commentary quoted below suggests, this creates an incentive for Pharma firms to develop many middling drugs rather than a couple of blockbuster drugs. Paul Ehrlich’s “magic bullet” may be impossible, but we will never know if no-one is trying to discover it.creates an

(p. B10) A true home run in the drug industry is when a company develops a mega-blockbuster that transforms its finances for years.

But with Medicare trying to bring costs down by targeting the industry’s most expensive drugs, a portfolio of medium-size moneymakers that can keep your name off the U.S. government’s naughty list can be a wise strategy.

That is at least one reason why big pharma is investing heavily in biotech companies developing antibody-drug conjugates. Known as ADCs, these treatments work like a guided missile by pairing antibodies with toxic agents to fight cancer. In short, they enable a more targeted form of chemotherapy that goes straight into the cancer cells while minimizing harm to healthy cells.

. . .

One reason most ADCs aren’t likely to become mega-blockbusters like Keytruda, a cancer immunotherapy that has earned 35 approvals across 16 types of cancer, is that they aren’t one-size-fits-all drugs. Instead, they are designed to target a specific protein that is expressed on the surface of a cancer cell. That means that each drug is made with an antibody targeting a subset of cancer. There are more than 100 ADCs being tested in humans by pharma and biotech companies.

For the full commentary see:

David Wainer. “Heard on the Street; Drug Industry’s Secret Weapon: ‘Guided Missiles’.” The Wall Street Journal (Friday, Oct. 27, 2023 [sic]): B10.

(Note: ellipsis added.)

(Note: the online version of the commentary has the date October 26, 2023 [sic], and has the title “Heard on the Street; ‘Guided Missile Drugs’ Could Be Big Pharma’s Secret Weapon.”)

Medicare Bureaucrats Let Pretty in Pink Boutique Defraud Taxpayers

Fraudsters are scamming the Medicare bureaucracy out of billions of taxpayer dollars. How boldly audacious the fraudsters are. They don’t even bother to give their fraudulent catheter supply firm a plausible name. Pretty in Pink Boutique? Are the fraudsters high, are they stupid, or do they take malicious pleasure in seeing how far they can go and still get away with it? And who is working for the Medicare bureaucracy? Are they simply bitter because they work for a bureaucracy that neither rewards competent hard work, nor punishes incompetent dereliction of duty? Does anyone in the government know the meaning of the phrase “due diligence”? Does anyone care? Congress creates the incentives and constraints and so is more responsible than the bureaucrats. The article quoted below gives one more example of why we flourish when free enterprise grows and government shrinks.

Yes I take this personally–my identity was stolen by fraudsters borrowing government Covid money in my name for an alleged potato farm. Of course the truth is more complicated than my rant implies. Bureaucrats can be conscientious and entrepreneurs can be corrupt. But I do believe that the incentives and constraints of government bureaucracy encourage corruption, or at least lethargic inertia. And the incentives and constraints of free enterprise encourage conscientious hard work and innovative dynamism.

(p. A1) Linda Hennis was checking her Medicare statement in January [2024] when she noticed something strange: It said a company she had never heard of had been paid about $12,000 for sending her 2,000 urinary catheters.

But she had never needed, or received, any catheters.

Ms. Hennis, a retired nurse who lives in a suburb of Chicago, noticed that the company selling the plastic tubes was called Pretty in Pink Boutique, and it was based in Texas. “There’s a mistake here,” Ms. Hennis recalled thinking.

She is among more than 450,000 Medicare beneficiaries whose accounts were billed for urinary catheters in 2023, up from about 50,000 in previous years, according to a new report produced by the National Association of Accountable Care Organizations, an advocacy group that represents hundreds of health care systems across the country. The report used a federal database of Medicare claims that is available to researchers.

The massive uptick in billing for catheters included $2 billion charged by seven high-volume suppliers, according to that analysis, potentially accounting for nearly one-fifth of all Medicare spending on medical supplies in 2023. Doctors, state insurance de-(p. A15)partments and health care groups around the country said the spike in claims for catheters that were never delivered suggested a far-reaching Medicare scam.

. . .

Catheters and other medical supplies are frequent targets of billing schemes. Last April [2023], the federal government brought criminal charges against 18 defendants who had submitted bills for nonexistent coronavirus tests and other pandemic-related services. And in 2019, the Department of Justice said it had broken up an international fraud ring involving more than $1 billion in phony billing for back and knee braces.

. . .

Patients and doctors who have been reporting mysterious catheter claims to Medicare for months say they are frustrated by a lack of communication from the government about whether billions of dollars have been lost to an ongoing billing scam.

One of the advocacy group’s members, Dr. Bob Rauner, runs a large network of doctors in Nebraska. In an interview, he said his patients had been collectively billed nearly $2 million in 2023 for phantom catheters. (He tracks such spending because his organization gets bonus payments from Medicare when patients have good health outcomes with low overall medical spending.)

. . .

The vast majority of the suspicious claims identified by the new analysis came from seven companies, many of which have shared executives, according to public documents and the advocacy group’s report. Only one of the businesses had a working phone number, and it did not return a request for comment. The other numbers were either disconnected, went to different businesses or, in one case, went to a previous owner.

Pretty in Pink Boutique is registered with Medicare to a street address of a house in El Paso. Its phone number goes to an auto body shop called West Texas Body and Paint, where an employee who answered a call from a reporter said the shop receives “calls all day, every day” from Medicare enrollees concerned about fraudulent bills.

Pamela Ludwig runs an unrelated business in Nashville that is also called Pretty in Pink Boutique. She has received so many catheter complaints that she added a page to her website explaining that her business was not part of any scam.

“I have people calling me, cussing, screaming,” Ms. Ludwig said. “They feel violated.”