Medical Device Daily Washington Editor

Making healthcare insurance affordable has shown itself to be akin to untying the Gordian knot when lacking a sword, but a recent report by the Urban Institute (Washington) hints that the dilemma may be less convoluted than is sometimes believed. According to the report, subsidies for insurance that are targeted to the individual, rather than to employers, are more likely to expand coverage than subsidies for employers. On the other hand, the report, authored by Linda Blumberg, PhD, and John Holohan, PhD, does nothing to suggest this route will be free of potential pitfalls.

The authors note that about a third of employees in small business – defined as those employing less than 25 – are uninsured, compared to 13% "in the largest firms" of more than 1,000 employees. Employers, the report points out, offer sponsored coverage as a recruiting tool, but subsidies to employers have a limited effect because most firms "hire a mix of low-wage and high-wage workers, even within small firms, and even within firms with low average wages." The authors also make the case that "low wage is not necessarily synonymous with low income," but do not expand on the statement.

Employer-based subsidies also "have the potential to displace a significant amount of private spending" on healthcare coverage, the report states, but the authors also point out that roughly 30% of the employed who are currently uninsured can get employer-based coverage, but pass on the offer. An employer-based subsidy might have little discernible effect if the employer used the subsidy to offset the employer's share of the premiums instead of passing at least part of the subsidy along to employees, the report notes. The authors also note that such a system would crowd out some employee enrollment.

Blumberg and Holohan acknowledge that crowding is a risk of subsidies to individuals as well, a problem that might not be fixed by denying the subsidy to anyone who had previously enrolled in employer-based insurance. In this scenario, popular support for such a program would flag badly. Still, a subsidy amount that is inversely tied to income "would provide the greatest support to those least likely to have insurance." The subsidy could be pegged at a flat dollar amount or as a percentage of the premium. Such a subsidy program could also cap the amount individuals spend on healthcare.

Whatever the merits of a subsidy aimed at individuals, the paper makes clear that there will be tensions with existing private insurance should such a plan make it to market. The report states that subsidies "will tend to undermine the employer-based system, potentially dramatically decreasing the 61% share of the non-elderly" who get their insurance through their job or the job of a family member. Furthermore, a subsidy could prompt small employers to drop existing coverage and push more employees into the subsidized market. The authors also point out that the system now in place "is not currently prepared for a large-scale decline in employer-based coverage," and policymakers would have to ensure continued employer participation via any one of several strategies, including "providing some new kind of employer subsidies."

FTC requires price reports for Fresenius

The Federal Trade Commission announced in September that it was looking into the exclusive licensing agreement signed by the U.S. operations of Fresenius (Bad Homburg, Germany) and Luitpold Pharmaceuticals (Shirley, New York), a wholly owned subsidiary of Daiichi Sankyo (Tokyo) for Venofer (iron sucrose for injection), a drug used to treat iron deficiency in dialysis patients. By a vote of 4-0, FTC decided to require Fresenius to report the prices it will pay in transfers of the drug to its outpatient dialysis clinics.

According to a Sept. 15 FTC statement, Fresenius' acquisition of the license would mean that "the competitive market would no longer determine the price" paid by the company's dialysis unit. This, in turn, would enable Fresenius to "report higher prices ... used in its own clinics to CMS, resulting in a higher average selling price and therefore a higher reimbursement rate."

FTC had proposed in September to require that Fresenius report a market-based price to CMS. In the Oct. 21 final decision memo, FTC declared that the company will report "the value of all intra-company transfers" of Venofer to Fresenius clinics. Fresenius would be required to calculate the manufacturer's average sales price based on the lowest per-unit price sold by Luitpold or Fresenius to any purchaser in the U.S. Fresenius has until Nov. 19 to submit plan for compliance with FTC's order.

Korea signs up for patent doc exchange

The march toward a semblance of an international patent filing system continues with the addition of the Korean Intellectual Property Office (KIPO) to a group of national patent offices to a document exchange program.

According to an Oct. 16 announcement by the U.S. Patent and Trademark Office, South Korea's KIPO has joined PTO, the European Patent Office and the Japan Patent Office in a patent document exchange, effective Oct. 14. The system "will automatically attempt to electronically retrieve a copy of any KIPO priority document without the need of the applicant to file a request to retrieve in a separate document," according to PTO. This system is expected to help patent applicants determine the potential for conflicting patent applications in the other participating nations.