HHS Secretary Leavitt informed the National Governors Association on August 6 that the President soon would be signing an executive order on health information technology. I expected that the order would be signed in September but President Bush is not taking a vacation this August. He signed the order today in Minneapolis, and it directly impacts the Federal Employees Health Benefits Program, as well as Medicare, TRICARE, and the Indian Health Service, and the Veterans Affairs Department health care programs. (Medicaid is not subject to the EO).

According to the White House fact sheet,

This Executive Order Directs Federal Agencies That Administer Or Sponsor Federal Health Insurance Programs To: 1. Increase Transparency In Pricing. The Executive Order directs Federal agencies to share with beneficiaries information about prices paid to health care providers for procedures. 2. Increase Transparency In Quality. The Executive Order directs Federal agencies to share with beneficiaries information on the quality of services provided by doctors, hospitals, and other health care providers. 3. Encourage Adoption Of Health Information Technology (IT) Standards. The Executive Order directs Federal agencies to use improved health IT systems to facilitate the rapid exchange of health information. 4. Provide Options That Promote Quality And Efficiency In Health Care. The Executive Order directs Federal agencies to develop and identify approaches that facilitate high quality and efficient care.

OPM has explained that the Executive Order is a continuation of the long term process that began with this year’s call letter for 2007 FEHB Program benefit and rate proposals.

The New York Times included an overview of health information technology developments in yesterday’s business section. Because I am not a public health expert, I generally have looked at the advantages of electronic health records from an individual patient’s perspective. Former House Speaker Newt Gingrich reinforces this viewpoint with his “paper [records] kill” mantra.

I was struck by the section of this article that discussed how researchers hope to comb through electronic health records to find out what treatments work and which don’t. The article provides the example of Kaiser Health Plans and the Veterans Administration which discovered from a review of patient records that less expensive lovastatins work just as well as Lipitor and Zocor for many patients. (Of course, this finding occurred before Zocor lost its patent protection in June 2006.) The article quotes J. Mark Gibson, deputy director of the Center for Evidence-Based Policy at the Oregon Health and Science University who observed “The whole blockbuster model relies on prescribing a drug for a whole lot of people who don’t really need it.”

The article also explains that such studies also may lead to fine tuning the dosage of potentially harmful medications such as anti-coagulants, for particular types of patients.

A second day of hearings on Bristol Myer’s preliminary injunction motion was heard today before Judge Sidney H. Stein of the U.S. District Court for the Southern District of New York in Manhattan. An MIT economics professor, Jerry Hausman, testified for Bristol Myers that the damage has already been done to Bristol Myers’ Plavix patent. “According to data from pharmaceutical market clearinghouse IMS Health Inc. (RX), about 65% of prescriptions filled nationally for Plavix on Friday (and 78% of new prescriptions) were for the generic version, Hausman said.” Evidence from the hearings also has disclosed that Apotex has been manufacturing its generic version of Plavix for almost a year. No ruling on the Bristol Myers motion has been issued yet.

Yesterday U.S. District Judge Sidney Stein heard the first of two days of hearings on Bristol Myers Squibb’s motion for a preliminary injunction barring Apotex from continuing to sell its generic version of the anti-coagulant drug Apotex. Apotex will present its defense on Monday. It is not known how soon Judge Stein will rule after the hearing. My gut reaction is that Judge Stein will issue the preliminary injunction, the purpose of which is to preserve the status quo. Preliminary injunctions are immediately appealable to the U.S. Court of Appeals.

But the issuance of a preliminary injunction here may be akin to closing the barn door after the horse has run away. The Wall Street Journal has described this patent dispute as a “debacle” for Bristol Myers Squibb, thereby making it a takeover target. Barry Sherman, the billionaire owner of Apotex, is generally credited with outmanuevering Bristol Myers’ CEO Peter Dolan.

While Congress is in August recess, Government Health IT magazine published an article on the status of the major health information technology (IT) bills in Congress, HR 4157 (passed by the House in July) and S. 1418 (passed by the Senate in November 2005. The article notes that time is running out to reconcile the bills and enact a comprehensive health IT law in this session of Congress.

The article erroneously suggests that the ICD-10 mandate is not in the House bill, but in fact it is found in Section 203 with an October 1, 2010 compliance date. What’s more Section 202 of H.R. 4157 would require replacement of the ASC X12 4010 electronic claim standards with the ASC X12 5010 standards and the adoption by pharmacies of the latest National Council for Prescription Drug Programs (NCPDP) Telecommunications Standards by April 1, 2009.

The Food and Drug Administration approved another use of Plavix today; the Bristol Myers Squibb board of directors issued a statement in response to the Justice Department’s anti-trust investigation, and I just saw a Plavix ad on television. I therefore must conclude that Bristol Myers Squibb is not giving up on its patent which in that company’s view has five years left before it expires.

Nevertheless, the Wall Street Journal reported yesterday that according to an analyst’s report Apotex has supplied prescription benefits managers with a year’s supply of its generic version of Plavix over the past week. Under a settlement agreement, Apotex was allowed five days beginning last week to sell its generic version before Bristol Myers could file a motion for a preliminary injunction (no temporary restraining order motion was permitted under the terms of that agreement). That motion will be heard tomorrow in federal district court in Manhattan. That settlement agreement also limits the damages that Bristol Myers and its co-marketer Sanofi-Aventis can obtain from Apotex if they prevail in the patent litigation.

Veterans Affairs Department Jim Nicholson announced today that his Department has contracted with Systems Made Simple Inc to encrypt all of the Department’s laptop computers and portable electronic devices using GuardianEdge and Trust Digital technology. “Nicholson has also directed advanced enterprise encryption solutions to be explored as a follow-on to the laptop and desktop encryption program, including all VA servers and data centers.” These actions are directed at remedying the problems identified when an unencrypted VA laptop and storage device, including personal data on 26.6 million veterans, was stolen in May 2006. The stolen laptop subsequently was recovered and the FBI has concluded that the personal data was not misused.

This afternoon, Bristol-Myers Squibb and Sanofi-Aventis, the co-marketers of the blockbuster anti-coagulant Plavix filed a motion for an order (preliminary injunction) barring Apotex from marketing a generic version of the drug. The motion was filed in the federal district court in Manhattan, the court where the Plavix patent litigation is pending. The court has scheduled a hearing for Friday August 18. Bristol Myers CEO Peter Dolan posted a public message about this action.

Next Tuesday, August 15, Bristol Myers Squibb is expected to seek an court order (known as a preliminary injunction) blocking Apotex from continuing to sell a generic version of its blockbuster anti-coagulant drug Plavix. A hearing on the motion may be held as early as Wednesday. Meanwhile the U.S. Department of Justice antitrust investigation of an aborted deal between the two companies continues.

The Centers for Medicare and Medicaid Services (CMS) has started the annual merry-go-round of announcing Medicare cuts that Congress subsequently restores. The merry-go-round is created by the Medicare law’s formula for annual changes to payments for physicians and other Medicare Part B services. Last year, CMS announced a 4.4% cut for 2006 that Congress reversed in January of this year.

Yesterday, CMS proposed a 5.1% cut for 2007. The CMS press release explains

The negative update is projected for 2007 because spending on physicians’ services and other Part B services has been growing at a much faster rate than target spending. Expenditures for physicians’ services in 2005 increased 10 percent over 2004, even faster than had been previously projected, mainly due to an increase in the number and complexity (or volume and intensity) of services furnished to Medicare beneficiaries, including more frequent and intensive office visits, and rapid growth in the use of imaging techniques, laboratory services, and physician-administered drugs. * * * Additional details on recent expenditure growth in Part B and the impact of growth in physician-related spending are available on the CMS website . Every year since 2002, in response to this rise in spending, the statutory update formula would have operated to impose payment cuts. In 2002, an update of negative 4.8 percent was applied to payment rates. To avoid further payment reductions, Congress intervened and temporarily suspended the requirements of the formula in favor of specific, statutorily dictated updates for 2003 through 2006. In passing these measures, Congress did not adjust the target, further increasing the gap between actual spending and the targets, and exacerbating the already difficult situation. As a result of continued rapid growth in utilization of services, coupled with legislative action to eliminate the payment reductions, Part B spending has increased more rapidly than had been forecast, and beneficiary premiums for Part B services have increased as well.

The American Medical Association immediately began its grass roots campaign against the proposed reduction. CMS likely will finalize the rule in October.

CMS also proposed changes yesterday to Medicare payments to outpatient hospital departments and ambulatory surgical centers (ASCs). CMS proposes to modify its payment policies for ASCs and increase by 14 the number of procedures that Medicare will cover when performed at ASCs.
Due to proposed changes in outpatient hospital care payment policies, “CMS estimates that hospitals will receive an overall average increase of 3.0 percent in Medicare payments for outpatient department services in 2007.” The CMS press release further explains that

In order to promote greater value in Medicare hospital outpatient services, the rule proposes to tie payment rate increases to the reporting of quality measures beginning in 2007. In the approach proposed in the rule, hospitals that report quality measures for purposes of the update in the inpatient prospective payment system (IPPS) would receive a full update on outpatient payments as well. Those hospitals required to report quality measures for inpatient services in order to receive the full IPPS update, but fail to do so, would receive the OPPS update minus 2.0 percentage points.