Weekend update

Congress remains at work on Capitol Hill this coming week. The Senate Health Education Labor and Pensions Committee will be holding another hearing on Tuesday morning about reducing health care costs. The Senate Homeland Security and Government Affairs Committee will hold a hearing on the President’s government reorganization plan on Wednesday morning.  OMB Deputy Director Margaret Weichert will testify at the reorganization plan hearing.

Healthcare Dive reports that according to a recent Avalere study more insurers are using value based contracts with drug and medical device companies.

“Health plans continue to examine how outcomes-based contracts can be deployed to help patients get needed medicines while containing costs,” said Kathy Hughes, vice president at Avalere. “Health plans will look to build experience on what works and what doesn’t, including how to overcome perceived operational challenges.”

In the FEHBlog’s view, a cooperative working relations between the insurers and the vendors is the key to successful contracting.

The Wall Street Journal reported yesterday that

A small Colorado drugmaker recently raised the price for a spray form of sleep aid Ambien by as much as 843%, the latest example of how some firms are increasing prices despite mounting pressure. 

So far this year, companies have made 3,653 price increases on 1,045 different drug products, according to Raymond James & Associates, even as President Donald Trump and other members of his administration have criticized such moves. 

The median price increase is 8%, but some specific increases have been far greater. Aytu BioScience Inc. raised the list price of a 7.7 milliliter bottle of its sleep aid Zolpimist to $659 from $69.88, while increasing the price of a 4.5 milliliter bottle by 747% to $329.50, according to RELX PLC’s Elsevier Gold Standard Drug Database. The drug is a spray version of zolpidem, the key ingredient in Ambien, which is widely available as cheap generic pills. 

Chief Executive Josh Disbrow said Aytu raised Zolpimist’s list price to bring it in line with the cost of other brand-name sleep drugs. He said Zolpimist was for the small number of patients willing to pay more, often out of their own pockets, for the oral spray than for lower-priced pills.

As the FEHBlog’s late father who owned a small boiler and chimney cleaning business once  jokingly observed, “The proper pricing policy is to stick the knife in the customer’s back, twist it until the customer screams and then turn it back a quarter turn. That’s a fair price.”

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