In anticipation of Congress enacting a law that creates a regulatory pathway for creating generic versions of expensive specialty drugs, Merck, the pharmaceutical giant, announced that it is creating a division to manufacture biogenerics also known as “follow-on” biotech drugs. According to a Forbes.com article, Pfizer is making a similar move.

Forbes.com explains that “biotech drugs are hard-to-make proteins that will require their own clinical trials. It might cost $300 million to develop a biotech copycat. As a result, these drugs will cost only 30% or so less than branded versions, meaning a single biogeneric could generate hundreds of millions in sales.” Nevertheless, I have heard industry leaders such as Medco’s CEO David Snow express excitement over the savings that biogenerics will create for consumers and health plans. I hope that 2009 will be the year that Congress finally gets off its tail and passes the necessary law.

OPM has created a “Fast Facts” page on its website that provides basic information about Open Season, a step-by-step process of what to think about during Open Season, and guidance on evaluating health plan quality. OPM is allowing a belated Open Season enrollment opportunity through January 2009.

Asparity Decision Solutions issued a press release last week reporting that its PlanSmartChoice [Open Season decision making web tool] “had 22,000 unique visitors and 34,000 total visits by federal employees, who spent an average of 13 minutes on the site (as reported by Google Analytics).” There are 4 million federal and Postal employees and annuitants eligible to participate in the Open Season.

• Last week, the Centers for Medicare and Medicaid Services proposed three national coverage determinations concerning these never events — (1) Wrong surgical or other invasive procedures performed on a patient; (2) Surgical or other invasive procedures performed on the wrong body part; and (3) Surgical or other invasive procedures performed on the wrong patient. Interestingly, the American Hospital Association and the American Medical Association both objected to the proposed determinations. According to Modern Healthcare.com, “While such a rule might sound simple on the surface, the two groups are both arguing that it’s not–that CMS will need to do a better job of defining what can be reimbursed and what can’t be before it begins withholding funds.”
• Government HIT News reports that “President-elect Barack Obama on Saturday [December 6] said health information technology will be included in an economic recovery plan that is now being worked out with members of Congress.”
• HHS has rolled out version 2.0 of its free personal health record called My Family Health Portrait. AIS reports that the “The tool can be downloaded and customized by other health organizations for their own uses. Aetna is encouraging its health plan members and its own employees to use the tool and then enter the results in their Aetna CareEngine-powered PHRs so they can share the data with their physicians.”
• Health Day reports today on a new study that finds – not surprisingly — that “an electronic prescribing system that tells doctors which drugs are the least expensive can save millions a year.”
• Finally, AIS reports on the potential impact of a recent U.S. Court of Appeals for the First Circuit opinion finding that New Hampshire’s law prohibiting the commercial data mining of prescription records is constitutional. If you are interested in the First Amendment, the lengthy opinion is worth a read.

Here’s the notice that OPM provided federal employees on the belated open enrollment opportunity and the related benefits administration letter to federal agencies. More details are found on OPM’s web site.

Here’s a round up of the articles on this development:

• Washington Post Federal Diary column December 6
• Federal Times December 8
• Govexec. com December 8

• Kaiser Daily Health Care Policy Report, December 8

Here’s a link to Chairman Danny Davis’s press release applauding OPM’s solution.

Here’s a round up of the articles on yesterday’s Federal Workforce Subcommittee hearing to examine the changes to the 2009 Blue Cross Blue Shield Service (BCBS) Standard Option Benefit Plan.

• Joe Davidson’s Federal Diary column

This column mentions a statement from Subcommittee Chairman Danny Davis and statement from Sen. Ben Cardin (D Md) urging various actions.

• Federal New Radio

• Federal Times

The Federal Workforce Subcommittee of the House Oversight and Government Reform Committee held a hearing this morning on “2009 Blue Cross Blue Shield Health Benefit: What it means for Federal employee.” Chairman Danny Davis (D Ill.), Del. Eleanor Holmes Norton (D DC), Rep. Elijah Cummings (D Md), and Rep. John Sarbanes (D Md) were in attendance. The statements and testimony is available here. Govexec.com reports on the hearing here.

Prescription benefit manager Express Scripts and certain of its customers received extortion demands from data thieves who had stolen confidential Express Script member health information. Express Scripts responded aggressively as explained on its dedicated website.

AIS Drug Benefits News featured an update on the story today.

[Express Scripts} so far has taken all of the right steps, says one security expert. “Textbook-wise, it looks like they’re doing everything possible [to address the issue],” says Harry B. Rhodes, director of practice leadership at the American Health Information Management Association. Among other things, the PBM has examined the audit trail, contacted affected customers and is working with the FBI on the investigation, he notes.Still, Rhodes says that now that Express Scripts has identified where the information came from in its database, the company should be able to start zeroing in on the people that had access to that information. He points out that 80% of data breaches are the result of an inside job.”They need to look at all of their employees, including their current employees,” he suggests. “The current best practice is [that] you do a background check on people who have access to this type of information, especially people who can download or move or copy large portions of information.”

The article also discusses the data security practices of the other two major PBMs, Medco Health Solutions and CVS/Caremark.

There’s not much to catch up on this week due to the short work week. I hope that everyone enjoyed Thanksgiving. I certainly did enjoy Thanksgiving, but not today’s Redskins game.

Mercer, a major consulting firm, issued its 2008 National Survey of Employer-Sponsored Health Plans. According to the study,

Total U.S. health benefit cost rose by 6.1 percent in 2007, the same pace as last year, to an average of $7,983 per employee.

Among large employers (those with 500 or more employees), average in-network PPO deductibles rose by about 11 percent, from $426 to $473 for individuals and from $1,022 to $1,134 for families. Small-employer deductibles, already much higher, rose by only about 2 percent for individuals (from $859 to $872 among employers with 10-499 employees) but by 5 percent for families (from $1,786 to $1,879).
“Given that the majority of covered employees are in PPOs, an increase in deductibles of this size could dampen employers’ total health cost increase by about a point,” said Blaine Bos, Mercer worldwide partner and spokesperson for the survey. But even if employers made no benefit cuts at all, the rate of increase still appears to be slowing. Employers estimated that the cost of their largest medical plan would increase 8 percent in 2008 “before changes.” That’s down from 9 percent in 2007 and 10 percent in 2006. “The slowdown in the underlying trend reflects slowing utilization,” said Mr. Bos. “And that is very likely tied to the proliferation of health management activities and other consumerism strategies.” The survey found that 80 percent of large employers use health management programs as a way to control cost and improve productivity, while 52 percent are actively promoting employee consumerism. The majority of employers using these strategies say they have been successful (63 percent for health management and 62 percent for consumerism). Large employers, which tend to be more proactive in cost management, experienced a somewhat lower average cost increase than small employers in 2007 (5.1 percent compared to 6.6 percent)

Another factor that may have served to slow cost increases was the growth in enrollment in consumer-directed health plans, the type of medical plan with the lowest cost by far. In 2007, the percentage of employees enrolled in a CDHP (based on either a Health Savings Account or a Health Reimbursement Account) rose from 3 percent to 5 percent of all covered employees.

Evidence that the plans are cost-effective is accumulating. CDHPs delivered substantially lower cost per employee than either PPOs or HMOs in 2007. CDHP cost averaged $5,970 per employee, compared to $7,120 for HMOs and $7,352 for PPOs . Of the two types of CDHPs, HSA-based plans were less expensive than HRA-based plans ($5,679 compared to $6,224). Employer account contributions are a standard feature of HRAs but not of HSAs: over a third of large HSA sponsors do not contribute. Among those that make an HSA contribution, the average contribution is about the same as the average HRA contribution: $626 and $621, respectively.

CMS has a released an “issues paper” intended to frame the debate over the best way to transition Medicare providers of care to a value based purchasing system. According to Modern Healthcare.com, “[t]he issues paper will serve as a discussion piece at a public meeting that will be held by the CMS on Dec. 9. Issues identified and discussed during this meeting will assist the agency in developing options for its value-based purchasing plan. The deadline for comments on the issues paper is Dec. 16.”

Finally, a few more Open Season articles — here, here, and here . Open Season ends next Monday December 8.