The Government Accountability Office released a report today on retail drug price trends.

GAO found that the average monthly usual and customary [or retail] prices reported by two state pharmacy assistance programs [New York and Pennsylvania] increased 13.6 percent from January 2004 through January 2007 for a typical 30-day supply of the 122 prescription drugs frequently used by BCBS FEP Medicare or non-Medicare enrollees. This represents a 4.3 percent average annual rate of increase. Prices increased at similar rates for the 96 drugs frequently used by BCBS FEP Medicare enrollees and the 91 drugs frequently used by BCBS FEP non-Medicare enrollees. We also found that the average monthly usual and customary prices decreased for the 57 generic drugs and increased for the 65 brand drugs from January 2004 through January 2007. Specifically, the generic drug prices decreased 12.8 percent, a 4.5 percent average annual rate of decrease, while the brand drug prices increased 21.2 percent, a 6.6 percent average annual rate of increase. During the same period, based on nationwide data from the Bureau of Labor Statistics, prices for all consumer items for all urban consumers–the Consumer Price Index (CPI)–increased 9.3 percent, a 3.0 percent average annual rate of increase. We also found that from January 2000 through January 2007, average monthly usual and customary prices increased at a faster rate for the 44 brand drugs than for the 43 generic drugs. Specifically, prices for the brand drugs increased 48.6 percent, a 5.8 percent average annual rate of increase, while prices for the generic drugs increased 7.1 percent, a 1.0 percent average annual rate of increase. During this same period the CPI increased 19.9 percent, a 2.6 percent average annual rate of increase.

• U.S. Representative Jo Ann Davis (R VA), who chaired the House subcommittee with FEHB Program oversight responsibility at the time that Congress approved the federal employee supplemental dental and vision benefit law, died from breast cancer on October 6.
• President Bush did veto the State Children’s Health Insurance Program reauthorization bill. The continuing resolution that funds the federal government temporarily also funds the SCHIP until November 16. In the meantime, the Congressional leadership will attempt to override the President’s veto, which requires a 2/3’s majority of both Houses.
• There was a lot of health information technology news last week. Microsoft introduced its Health Vault product, which offers consumers and the health care providers the opportunity to upload their medical records to a secure web site. In a Washington Post article about the product release, privacy advocate Deborah Peel was quoted as supporting the Microsoft consumer oriented site over a health insurer sponsored site as follows: “You have to have lost your mind to give them [the health insurers] any more info about you than they already have.” Health Vault’s business model relies on advertising revenue generated by consumer searches. Consumers are not charged to use the service. Hitting a similar note, the AHIC quality workgroup is predicting that over the next three to five years health care quality programs will switch from using health care claims data to electronic clinical data according to Modern Healthcare.com. Also in that same vein, the Department of Health and Human Services (“HHS”) awarded contracts totaling $22.5 million to nine health information exchanges to begin trial implementations of the Nationwide Health Information Network, or NHIN according to Health IT Magazine. Finally, the National Committee on Vital and Health Statistics, an HHS advisory body, sent HHS Secretary Leavitt a Sept. 26 letter urging upgrades to the HIPAA electronic transaction standards.
• The press is reporting that the Bush Administration is proposing legislation to means test Medicare Part D prescription drug plan premiums similar to the current means testing for Medicare Part B premiums.

In an October 2, 2007, report in the Federal Times, Sen. Tom Carper (D DE) reported that he plans to hold a hearing on his FEHBP personal health records bill before year end. According to the report, Sen.Carper now favors a demonstration project, which for all intents and purposes, is underway.

The Centers for Medicare and Medicaid Services announced yesterday that the Medicare Part B premium will increase next year by 3.1% to $96.40 per month, up $2.90. The Medicare Part B annual deductible will increase from $131 to $135 and the Medicare Part A inpatient deductible will increase from $992 to $1,024. (The Medicare Part B premium is now means tested; it is higher for people with taxable incomes over $82,000 for individual files and $164,000 for joint filers. Also the Medicare Part B premium is higher if the Medicare eligible individual fails to enroll at the first opportunity.)

President Bush signed a law over the weekend that will provide hospitals partial relief from a CMS cut in their Medicare reimbursement.

Finally, CMS announced today that it has awarded AHIMA a contract to study the impact of converting the standard diagnostic and inpatient procedure code from the ICD-9 to the ICD-10, which is a big information systems deal for health plans and providers.

• HHS released a report this month on personalized health care , “opportunities, pathways, and resources.” HHS explains that this initiative “will improve the safety, quality and effectiveness of healthcare for every patient in the US. By using ‘genomics’, or the identification of genes and how they relate to drug treatment, personalized health care will enable medicine to be tailored to each person’s needs.”
• HHS researchers published in Health Affairs a publicly available report on “Health Spending by State of Residence 1991 – 2004.” Not surprisingly, the study found health care spending to correlate with the percentage of uninsured, per capita income, ratio of physicians to population, and Medicaid spending. Health care spending is highest in the New England and lowest in the Southwest in 2004.

• President Bush signed a joint resolution (H.R. Jt. Res. 52)yesterday funding the federal government, including the FEHB Program, through November 16, 2007. Of course, a new federal fiscal year starts tomorrow, October 1.
• On September 25, the President signed into law the Food and Drug Administration user fee reauthorization law (H.R. 3580). The law expands the FDA’s authority over prescription drug safety after initial marketing approval has been given in order to avoid the repeat of Vioxx type problems. The FDA currently is evaluating the impact of the new law.
• The State Children’s Health Insurance Program reauthorization battle should come to a head this week when President Bush is expected to receive and veto the compromise bill that Congress is in the process of adopting ($35 billion increase in SCHIP funding for Congress vs. $5 billion increase for the President.) The compromise bill is based on the Senate bill which, unlike the House bill, does not include major revisions to the Medicare program. Consequently, the SCHIP reauthorization battle, while interesting from a political perspective, does not affect the FEHB Program.
• Wal-Mart expanded its $4 generic drug program to seven new compounds. Also Wal-Mart announced that it will sell two popular female contraceptive bills for $9 for a month’s supply, which is a significant savings for a woman who does not have insurance coverage according to the New York Times. Obviously attracting young women customers is a plus for Wal-Mart.
• The full House Ways and Means Committee approved on September 27 the House version of the mental health parity bill (HR 1424). Like the SCHIP reauthorization, the likely outcome will be that Congress adopts the Senate version of this bill, which has bipartisan and industry support.

Dr. Howard Goldman has published an article in the American Journal of Psychiatry about the FEHB Program’s successful mental health parity policy. Ironically, also today, the House Ways and Means Committee approved a mental health parity bill (HR 1424) which goes far beyond the FEHB Program’s policy and the bill approved by the Senate (S. 558). The Ways and Means Committee’s version of the House bill differs from the version that the Education and Labor Committee previously approved. The House bill must also be considered by the Energy and Commerce Committee. The Rules Committee will then consolidate the three versions in consultation with the House leadership. I do expect that a mental health parity bill will be enacted this year.

• The House Federal Workforce and Postal Service Subcommittee held a business meeting on September 18 at which it approved a bill sponsored by Rep. Tom Davis (R Va) and others to allow federal retirees the opportunity to pay the FEHB plan premiums pre-tax. The House Ways and Means Committee has been an obstacle to passage of this bill because of its adverse impact on tax revenues.
• The Office of Management and Budget has updated its agency ratings on the ExpectMore.gov web site. OPM’s ratings are here. The FEHB Program is rated adequate.
• The OPM Inspector General’s oversight of the FEHB Program is rated effective at Expectmore.gov. This week the OPM Director submitted the agency’s response to the Inspector General’s most recent semi-annual report to Congress.
• The New York Times reported that prescription drug prices have increased only 1% on average over the past twelve months according to the U.S. Labor Department. According to the report, “Economists say the slowdown has come about because more people are turning to generics and because generic versions of some of the most common drugs have recently come on the market.” The article notes the inexpensive prices that retailer such as Wal-Mart and Target, charge for certain generic drugs. Also it notes that last month the Publix Supermarket chain started a promotion under which its Florida pharmacies provide seven commonly prescribed generic oral antibiotics for free with a valid prescription, even when the purchaser has health benefits.
• Today’s New York Times includes an interesting article about the return of physician house calls provided by companies such as Inn-House Doctor, Sickday Medical House Calls, and My Home Doctor. The fees run from $250 to $450 per visit.

The Leapfrog Group for patient safety released today its 2007 top hospital list, which is based on a safety and quality survey of hospitals nationwide. The only Washington DC hospital to make the list of 33 adult facilities and 8 children’s hospitals was Children’s Hospital. Two Baltimore hospital, Sinai Hospital and the University of Maryland Medical Center, also made the list.

Last night, the Senate passed its version of the enhanced mental health parity legislation (S. 558) by unanimous consent. Today, the Health Subcommittee of the House Ways and Means Committee cleared the more aggressive House version of this legislation by a 10-3 vote (HR 1424). The House Labor and Education Committee previously cleared H.R. 1424 and the full Ways and Means Committee and the Energy and Commerce Committee also must consider it. Business Insurance explains that

[The Senate bill] differs in several significant respects from legislation passed in July by the House Education and Labor Committee. Under the Senate bill, self-funded employers would decide which mental health care disorders they would cover. In the case of insured plans, the Senate bill would act as a floor and not pre-empt tougher state parity laws. By contrast, the House committee bill would tie the type of mental health care disorders that group health care plans must offer to coverage provided by health plans available to federal employees.

An interest group called Wellstone Action is urging the House speaker Nancy Pelosi to hold a vote on the House bill as soon as possible. According to the Associated Press, the Speaker is planning a mid-October vote.
The House of Representatives today passed a compromise version of the FDA Prescription Drug User Fee reauthorization bill by a 405 – 7 vote. The bill now goes to the Senate which is expected to give its prompt approval and the President has indicated that he will sign the bill. The compromise bill includes a number of new prescription drug safety measures, including post-market safety studies, but not a pathway to biogenerics. Crisis averted.

According to the Wall Street Journal, House and Senate conferees are in the process of essentially adopting the Senate version of the State Children’s Health Insurance Program reauthorization bill, which includes a $35 billion increase in SCHIP funding over 5 years but no Medicare changes. The President has threatened to veto the SCHIP funding increase greater than the $5 billion that he proposed, but the Senate passed its bill by a veto proof margin. The solons agreed to consider the Medicare changes later this year. I would not be surprised if the same result is achieved with the mental health parity legislation as the Senate bill has the most bipartisan support.