BB&T Washington Editor

The healthcare reform movement has not lost steam here in the nation's capital, but is unlikely to budge this year, thanks to the elections. That fact, however, is insufficient to blunt the appetite of the Senate for a mid-June conference on the topic, replete with lofty rhetoric about bipartisanship.

The event's organizers tried to tamp down expectations by informing them that this event was designed to set the stage for 2009, but the most sober moment was provided courtesy of the chairman of the nation's central bank, who told attendees that virtually any sweeping changes are likely to boost, not trim, the cost of healthcare in the U.S., at least in the early going.

Sen. Max Baucus (D-Montana), chairman of the Senate Finance Committee, said going to the moon "sounds like a piece of cake compared to reforming healthcare." He attempted to sound a big-tent tone by stating that such efforts "will succeed only if we work together and think outside the box."

Baucus asserted that there is "solid agreement that too many Americans lack access" to coverage and that some believe that "solving the cost and coverage problems will fix the quality problem." Still, he claimed "we're not here to push an agenda," but to "lay the groundwork for next year."

Sen. Chuck Grassley (R-Iowa), the ranking member of the Finance Committee, said reform "will happen in the very near future" and described healthcare as the "number one economic issue facing our country" as well as "the No. 1 political issue." Grassley also asserted, "We also know that we can't fix our healthcare system just by finding ways to cover the uninsured."

Grassley said the U.S. cannot follow the road traveled by other Western nations. "We need a uniquely American solution," he said, pointing out that a big problem on Capitol Hill is that "it is so easy to kill legislation in Congress ... and difficult to pass legislation." He also decried the "protection of narrow interests."

"I challenge you to compromise as you will challenge me to compromise," Grassley said.

Another featured speaker was Ben Bernanke, PhD, chairman of the Federal Reserve Bank, who opened by reassuring the audience that he is keenly aware that "improving the performance of our healthcare system is one of the most important challenges our nation faces." He said new therapies promise further medical miracles, but said that "the decisions that we make about healthcare reform will" influence much of the larger economy.

"By any measure, healthcare represents a major portion of our economy," Bernanke said, and is "the largest single component" of household budgets, even larger than food and housing. He also reminded attendees that some projections call for healthcare to consume 30% of GDP by 2030. He warned, however, that reform should not jettison the existing strengths of healthcare in the U.S, which he said "has many."

Access, Bernanke said, is "the first challenge healthcare [reform] must address." He said the uninsured incur roughly half the cost of those who have insurance, and are 37% more likely to die from car accidents and significantly more likely to die from cancers due to later-stage diagnoses.

The second issue is quality of care, which Bernanke said "is generally very high" despite the fact that "inconsistent use of best practices by doctors and hospitals" remains an issue. "More widespread application of evidence-based medicine" could change much of this dynamic, he said.

"At some point, healthcare spending [growth] as a percentage of GDP will stop," if only because of the threat of a bankrupted economy, Bernanke said, but he admitted that he could not forecast when such a state of affairs might prevail.

Device makers got a small message nested in the larger message. "The health benefits of new technologies ... have generally exceeded the cost," Bernanke said, but he also said that the inflation fed by new therapies is a significant factor in healthcare inflation.

He did not recommend that policy makers put the pedal to the metal, however. "We may need to first address the problems that seem more easily managed."

Bernake cautioned against the prospect of losing babies with the emptied bathwater, stating that "as we focus on the problems of our health system, it is easy to forget what is good about it," naming the advances in care provided courtesy of medical technology and pharmaceuticals. "We must take care to maintain the vitality and the spirit of innovation that has been its hallmark."

Legislation introduced to delay DME process

Baucus and Grassley had their thumbs in another portion of the healthcare pie last month, introducing legislation that would delay implementation of the durable medical equipment, prosthetics, orthotics and supplies (DMEPOS) competitive acquisition program (CAP). The senators said the bill also would make the bidding process more fair and transparent, require suppliers to meet quality standards, and make other improvements to the program.

Introduction of this legislation comes following reports of problems with implementation the program and concerns that the program would result in decreased access to care for Medicare beneficiaries.

"This is important legislation for Medicare beneficiaries," said Baucus. "Durable medical equipment can give seniors the freedom to live at home, and so it's important to maintain a reliable system in Medicare to provide these vital items."

Baucus said he supports competitive bidding as a means of reducing cost, but noted "that cannot be accomplished at the expense of low quality and inconsistent care. The competitive bidding program for durable medical equipment should stay on hold until it's certain that seniors will get the products they need in a way that works for them."

"This legislation will lead to lower prices and higher quality medical products while ensuring that beneficiaries will still have access to the medical equipment and supplies they need," opined Grassley." These improvements also will help prevent many small home medical equipment suppliers from going out of business.

The senators said that they have received numerous reports about potential problems with the implementation of the CAP program. These reports range from suppliers who believe they were wrongly disqualified to questions about the clarity and consistency of information that suppliers received during the bidding process.

Some providers were awarded contracts to serve areas in which they did not previously have a presence. Other suppliers were awarded contracts for service lines with which they have little or no experience.

Round one of the competitive bidding program was scheduled to begin on July 1. At that time, CMS will begin paying suppliers who have been awarded contracts to provide durable medical equipment, prosthetics, orthotics, and medical supplies to Medicare beneficiaries. CMS would subsequently implement round two in 2009, and following its completion, competitive bidding could be expanded across the country and prices may be adjusted in non-bid areas using information from the bidding program.

Under the Baucus-Grassley bill, contracts awarded under round one would be terminated and re-bid those areas. New round one contracts would then take effect in 18 to 24 months.

Round two contracts could not take effect before January 2011 and payment adjustments for DMEPOS in non-competitive bid areas could not take effect until round two is completed.

The legislation is being co-sponsored by more than 20 senators.

Patent piracy not a forgotten issue

Congressional hearings on intellectual property always draw a roomful, and a mid-June hearing in the Senate Judiciary Committee was no exception. This time, however, the interest was not in obtaining and keeping a patent, but in keeping others from pirating patented items.

Attendees who were looking for impending action, however, were surely disappointed, as the hearing adjourned with little more than an acknowledgement that the federal government's efforts to combat IP piracy are in need of a revamp.

The committee chairman, Sen. Patrick Leahy (D-Vermont), said, "I don't think there's a dispute that our nation is in economic and political turmoil," citing gasoline prices and the mortgage crunch as examples of the forces roiling the economy. However, he said that IP piracy "has reached unprecedented levels," costing the economy "at least $200 billion and 750,000 jobs a year."

Acknowledging that "We're deep into a presidential election year," Leahy insisted that the IP piracy issue "should have no partisan element whatsoever." He pointed out that piracy albeit trademark piracy was the source of imported toothpaste with lead content and a host of other problems, including those engendered by counterfeit drugs.

"I've been troubled by reports from the Government Accountability Office that have shown the ineffectiveness of current enforcement strategies," Leahy said in reference to a June 17 GAO report. He also pointed out that the government in mainland China, "which allows some of the most rampant theft of intellectual property in the world," is suddenly attuned to the issue, thanks to "infringement of their Olympic copyrights."

Sen. Orrin Hatch (R-Utah), the ranking Judiciary Committee member, said "without meaningful enforcement" of IP rights, the economy and individuals will suffer. "This is a global problem and the solution will require a commitment" across government branches, he said, reminding those in attendance that "any meaningful solution will need to take an integrated approach" incorporating domestic and overseas governments.

Hatch also said that he is working on a bill that would "provide our government with the tools necessary to combat this very real and growing threat to our economy," but he declined to offer details.

Loren Yager, PhD, director of the Office of International Affairs and Trade at GAO, gave an overview of a five-year review of the federal government's IP enforcement work, saying that "the [enforcement] challenges involved ... are significant." He also said that "the need for greater leadership and permanence" in the federal government's enforcement efforts is acute.

"The current coordinating structure lacks permanence" because that effort is a combination of two executive branch offices, one of which is the National Intellectual Property Law Enforcement Coordinating Council (NIPLECC). Yager said NIPLECC, which Congress authorized in 1999, "has struggled to define its purpose and retains an image of inactivity in the private sector."

The second leg of the anti-piracy effort is administered by the National Security Council via a program titled "Strategy Targeting Organized Piracy" (STOP). The Bush administration put STOP into force in 2004, with a more focused effort to inspect incoming products shipped by firms with records of piracy, among other things.

"In contrast [with NIPLECC], STOP has a positive image but lacks permanence," Yager said, because it is an executive branch program of informal nature and because the STOP approach has not been adopted by NIPLECC.

FDA to get bonus from budget amendment

The FDA should be getting some extra cash in its FY09 budget. HHS Secretary Mike Leavitt said last month that the administration is amending its budget request for FY09 to include an additional $275 million for the agency. He called on Congress to act quickly on this budget amendment and pending administration legislative proposals to strengthen FDA.

The increase brings the administration's total proposed increase in FDA's budget for FY09 to $404.7 million a 17.8% boost in funding over FY08.

The action supports the fundamental change in strategy currently underway at FDA to adapt to the demands of the rapidly growing and changing global economy. These funds are expected to expedite implementation of the strategy outlined in the Action Plan for Import Safety and the complementary Food Protection Plan, both released in November 2007.

"Last year we outlined important changes in how this nation deals with imports. We are moving from an intervention strategy where we stand at the border and try to catch things that are unsafe to an integrated strategy of prevention with verification. We are rolling the borders back and seeking to build safety and quality into products at every step of the way before they reach American consumers," Leavitt said.

He added, "Combined with crucial legislative proposals, this increase will allow FDA to continue to transform its regulatory strategies to meet the challenges of the evolving global marketplace. I urge Congress to act quickly to give FDA the authority and funding it needs to enhance the safety of our food and medical products."

The extra funds will allow the agency to conduct at least 1,000 more foreign inspections of food and medical product facilities and an additional 1,000 domestic inspections. The budget amendment is also expected to help FDA establish a presence in five countries or regions and implement other measures to ensure greater foreign compliance with FDA standards. Another initiative aims to expedite entry for goods bearing certification by trusted parties. The extra funds also will help the agency modernize its information technology infrastructure.

"FDA's mission to protect and promote the health of the America public will be greatly aided by these additional funds to implement our strategic plan," said Commissioner Andrew von Eschenbach, MD. "FDA has already embarked on an ambitious program to transform the Agency. This added funding will ensure that FDA can move ahead with these proposals more rapidly."

The budget amendment proposes increasing FDA's program for safer drugs, devices, and biologics by about $100 million.

Nanotech bill pushes environmental concerns

Nanotechnology has not made a huge impact on the device industry, but things continue to inch along, partly thanks to the taxpayer. However, the investment made by Uncle Sam will, at least for the next few years, require more study of the environmental and health effects of nanotechnology.

The House of Representatives reauthorized the 21st Century Nanotechnology Research & Development Act in fairly short order in early June. Rep. Bart Gordon (D-Tennessee) introduced H.R. 5940 to the House Committee on Science and Technology on May 1, and the bill passed by a vote of 407-6.

H.R. 5940 requires that the director of the Office of Science and Technology Policy, which is part of the White House, designate an associate director of the office as "the Coordinator for Societal Dimensions of Nanotechnology." This individual would be required to name a panel that would direct research into short- and long-term effects of nanotechnology on the environment and public health.

The Congressional Budget Office scored the effect of the bill in a May 19 analysis, which states that the net impact would be $5 million in direct costs over the five years of the reauthorization (2009-2013). The analysis also states that the bill "would not affect direct spending or revenues."

The greater emphasis on environmental health and safety comes as no surprise, given the considerable controversy over nanotechnology that has arisen over the past couple of years. The Project on Emerging Technologies (Washington), a private foundation that scrutinizes the impact of new technologies on public safety, has staked out a position that the federal government is not doing enough to screen nanotechnology products for potential hazards.

Physicians push for healthcare overhaul

Physicians across the U.S. are joining forces in support of a bill in Congress, H.R. 676, which embodies the single-payer approach and has 90 co-sponsors, more than any other health reform proposal in history. "We have a very expensive, privately funded financing system for healthcare, with very few cost controls built in," said John Geyman, MD, professor emeritus of family medicine at the University of Washington (Seattle) and past president of Physicians for a National Health Program (PNHP; Chicago).

"Our private insurance industry has 1,300 insurers, with 15% to 30% of healthcare dollars. The overhead of traditional Medicare is 2% to 3%. It's not for profit," Geyman said. "The private insurance industry is investor-owned, for profit, and services its shareholders."

He added, "The average family of four spends over $12,000 a year for healthcare and gets less and less. We figure we would save $350 billion a year, or $2,300 a person, with publicly financed Medicare for all, due to administrative simplification, bulk purchasing, improved access to preventive services and earlier diagnosis, basically getting rid of a very inefficient private insurance system."

PNHP includes more than 15,000 physicians who support a single-payer national health insurance program that's represented in H.R. 676, a bill introduced by Rep. John Conyers Jr. (D-Michigan) in January 2007. It was referred to, and remains with, the Subcommittee on Health.

Lest anyone start using the "S" word i.e., socialized medicine Geyman answers: "It's not socialism. The current Medicare system isn't socialized medicine. It's a private delivery system with public financing. This would also be a private delivery system with public financing. Nobody complains about Medi-care."

However, political opposition to this potential dramatic shift is huge. Despite the apparent opposition, device and drug companies, medical suppliers and insurers could do "just fine" with a new, one-payer system, Geyman said, because they still would have to compete for a single, very large market: 300 million Americans in a risk pool with healthcare for all.

"Half of American can barely afford healthcare, medical bankruptcies are going up all the time. The only way to get a handle on this is to move to a public financing system," said Geyman, who is the author of six books, including the forthcoming Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It.