Happy Labor Day

Labor Day means that we are close to the end of the August Congressional recess (on September 8) and OPM’s release of 2015 FEHBP premium information (sometime later this month). The Wall Street Journal reports that “Almost a year since the last partial government shutdown began, many House Republicans say they have little desire to start another.” Because Congress is only expected to be holding sessions for around 20 days before adjourning for the election season, we can expect Congress to pass a continuing resolution to take us into the new federal federal fiscal year that starts on October 1. The continuing resolution will likely last at least three months.

Last Friday, according to Govexec.com, the President issued an alternative pay plan which will result in a 1% across the board pay raise for federal employees beginning January 1. 2015.

Last week, the FEHBlog noted that Community Health Systems, a hospital chain, had lost 4.5 million patient records to computer hackers. Healthcare Dive reports that according to a Forbes report, the theft could cost the hospital chain $75 to $100 million due to litigation (which already have been filed), government investigations, etc. The National Law Review notes that

Hospitals should be accustomed to protecting data against privacy breaches as part of their HIPAA obligations, but outright cybertheft is a threat that many providers have not likely considered. The FBI, which is now investigating the Community incident, said in April that health care providers typically do not use the same high levels of security technology as companies in other industries (such as banking or retail). This makes providers an easy target for hackers. If a leading hospital system like Community can be breached, then hospitals of every size are at risk.

Health plans should be on guard too. In this day and age, it also is essential for HIPAA covered entities and business associates to carry cyber-liability insurance.

The FEHBlog also noted last week that the IRS has issued draft forms and instructions that health plans and large employers will use to comply with the Affordable Care Act’s onerous IRC §§ 6055 and 6056 reporting requirements that kick in for the 2015 reporting year. LifeHealth Pro notes that the forms are filled with ACA gobbledygook which is hardly surprising. It will be incumbent on health plans and large employers to educate recipients about these forms. Otherwise they will be flooded with customer service calls in early 2016 (which could happen despite best efforts).

Finally the New York Times reported yesterday that according to clinical trial results Novartis is on track to release a prescription drug that will vastly improve treat of chronic heart failure.

The drug [LCZ696] reduced both the risk of dying from cardiovascular causes and the risk of being hospitalized for worsening heart failure by about 20 percent in a large clinical trial.

Of course, there’s no such thing as a free lunch. Five to six million people in the U.S. suffer from this serious disease.

Some Wall Street analysts predict the drug, a tablet taken twice a day, will achieve billions of dollars in annual sales. Seamus Fernandez, an analyst at Leerink Partners, said on Saturday that the results were “near best case” and “could result in faster uptake, higher penetration and more robust branded pricing.”
As a proprietary drug, LCZ696 is likely to be expensive. Tim Anderson, an analyst at Sanford C. Bernstein & Company, estimates that it might cost $7 a day in the United States, or about $2,500 a year. Existing drugs are generic, costing as little as $4 a month, so insurers might balk at paying for the new drug.

The FEHBlog is happy about such research results. The manufacturers should recognize that they could not charge astronomical prices without the price supports provided by health insurance. Moderation is a good thing. It appears that Novartis may understand this concept while Gilead Sciences does not in the FEHBlog’s view.

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