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A more market-based expensive drug and device payment system

to complement my enhanced EMTALA level insurance plans

Right now insurers often have to pay $10,000 for a drug for a person that only makes $11,000/year.

That is absurd.

New drugs at over $10,000 with high volumes are rapidly hitting the market.

Few people would pay these prices themselves.

Some market-based restraint needs to be introduced.

PAYING FOR EXPENSIVE DRUGS and DEVICES

If a drug is very expensive, an insurer might not cover it under my enhanced EMTALA level plans laid out in my diary yesterday.

What I propose is a federally managed and funded patient assistance program using the federal exchange and its information base:

Drug makers who have an FDA approved drug that has a Canadian maximum price and European Union approval could go to the FDA and request that their drug be listed on the federal exchange for a $3,000 FDA processing charge and a $10,000 federal exchange processing charge.

The exchange price must not be more than 120% of the Canadian maximum price.

Implantable medical devices which can be legally sold in the USA could also be listed on the exchange by their maker, a US marketing subsidiary or a maker authorized distributor for the same processing charges.

The exchange will not sell the drug or device to people in households having exchange reported income over 400% of FPL, unless authorized by the maker in writing.

The exchange may refuse to sell the drug or device unless the order is traced to:

  1. a known/identifiable person or
  2. a residential housing unit in the United States or
  3. a federally funded, exchange known/approved organization

[People wishing to buy in secret should do so through their prescriber, not their Iphone or home computer.]

The drug maker would list discount percentages for people in households with annual incomes at 400%, 300%, 250%, 200%, 150%, 100%, 75%, 50%, 30% and 0% of FPL.

Each discount percentage must be at least 10% higher than the preceding percentage.

Those discount percentages would be linearly interpolated by the exchange.

Federal exchange listed drugs may be sold in 30-day, single-dose, short-course, or weekly dispensed amounts (such as psychotropics with overdose dangers).

Federal added payment matches on 30-day, single dose, and short-course prescriptions will be issued as follows:

  1. for people in households with incomes at 200% FPL or less  on 100% of consumer payment up to .4% of household income

less 75% of consumer payment exceeding .4% of household income

  1. for people in households with incomes at 300% FPL or less and exceeding 200% of FPL on 100% of consumer payment up to .5% of household income

less 50% on consumer payment exceeding .5% of household income

  1. for people in households with incomes at 400% FPL or less and exceeding 300% of FPL on 100% of consumer payment up to .6% of household income

less 50% on consumer payment exceeding .6% of household income

  1. for people in households with incomes over 400% of FPL  100% on consumer payment up to $70, less 10% on consumer payment over $100, on each purchase

Added federal payment matches on weekly dispensed prescriptions will be issued as follows:

  1. for people in households with incomes at 200% FPL or less on 100% of consumer payment up to .1% of household income

less 75% of consumer payment exceeding .1% of household income

  1. for people in households with incomes at 300% FPL or less and exceeding 200% of FPL on 100% of consumer payment up to .125% of household income

less 50% on consumer payment exceeding .125% of household income

  1. for people in households with incomes at 400% FPL or less and exceeding 300% of FPL on 100% of consumer payment up to .15% of household income

less 50% on consumer payment exceeding .15% of household income

  1. for people in households with incomes over 400% of FPL on 100% on consumer payment up to $25, less 10% on consumer payment over $30, on each purchase

except that:

  1. the federal payment match amount will be reduced by 2% on a sale unless the drug was approved for sale in Japan two weeks prior to the sale and/or
  2. the federal payment match amount will be reduced by 5% on a sale unless the drug was approved for sale in the Peoples Republic of China two weeks prior to the sale.

[We don’t want to match purchases for foreigners – the major risk in my plan. Some richer foreigners will be able to cheat the system unless they can get the drug in their own country.]

[We also want to cut federal payment help when drug makers price their pills too high.]

[We want to only match substantial payments substantially to minimize fraud.]

There will be no federal payment matches for medical devices.

The federal exchange will simply be an easy means of setting prices of expensive medical devices by household income level.

Added federal payment matches are by the grace of Congress and will not be issued on consumer payments:

  1. made by credit cards reported stolen or lost
  2. made by checks disputed by a bank or any account holder of the check
  3. for (apparently) improper bulk purchases
  4. that are/were contested card purchases
  5. for purchases made using fraudulent or illegal or improper prescriptions
  6. for purchases made using what could be an excessive number of prescriptions by
  7. a prescriber or
  8. area or
  9. person charged with or convicted of fraud
  10. having a connection with activity, area or people then officially believed to be fraudulent
  11. officially thought to been made using stolen/improperly obtained or provided information
  12. for prescriptions not picked up at doctors or pharmacies by (or for) US patients for whom they were prescribed
  13. for purchases reasonably thought to be destined for foreign consumption or found outside the United States
  14. for sales that are in short-term spikes, excluding clearly proper bulk purchases, not clearly correlated with increased medical need
  15. for sales that are likely to be filling a Canadian or other foreign shortage
  16. for sales in connection with an apparent stock market manipulation
  17. for sales involving a prescriber who received or was promised illegal, improper or unethical incentive compensation
  18. for sales involving a foreign telecommunication connection of a buyer
  19. for sales involving a proxy server or other technical identity hiding means

Denied match payments may be appealed after at least 30 days to the exchange and after 60 days after an appeal to the exchange to a federal district court.

Added federal payment matches will only be issued:

  1. on federal exchange drug sales completed in the prior calendar year
  2. after the drug maker’s corporate tax return is received by the IRS,
  3. the passing of 60 days,
  4. the receipt by exchange of a missive sent by registered mail containing:
  5. a request to issue the added federal payments in a letter signed by either the CEO, CFO, COO, President

or other authorized corporate officer

  1. a completed applicable form as the IRS shall by regulation require

The payment match will take the form of a tax credit issued at the end of the then current fiscal year with a carry forward of unused amounts for just one year.

If the corporation is considered by the IRS to owe past due taxes to the US government the missive shall be sent to the registered agent of the corporation along with an explanation by the IRS. The corporation can resubmit after settling the tax due dispute.

Total program added federal payment matches in any fiscal year may not exceed 10% of the amount of United States government corporate income tax due and paid in the calendar year preceding the fiscal year. Payment matches in excess will be prorated.

Congress reserves the right to cap federal payment matches by listing.

Makers and the federal exchange have a right to cap daily sales by product insomuch as the exchange software/hardware setup allows.

Makers shall have a right to suspend or resume sales of a product of theirs by coded Internet means.

The federal exchange shall have no liability for third party or exchange employee fraud.

Makers, their agents and governments shall have a right to seek civil compensation for fraud on the exchange at law.

The exchange won’t dispense drugs or devices, only:

  1. generate a printer friendly confirmation code web page
  2. and
  3. indicate that payment has been made upon online entry of the confirmation code

and presenting the name and dose of the drug and the first and last initials of the patient and prescriber or

  1. send three e-mails two hours apart to the drug maker’s e-mail address

with the first name and last name and address of the prescribing practitioner

and the confirmation code

and first and last initials of the patient

and the last four digits of the patient’s Social Security number

and the exchange’s idea of the patient’s household income

and the five-digit zip code or after 2016 the census tract identifier of the patient’s household, if known

and a unique transaction ID

What is basically proposed is adding federal payments based on what people paying high (and basically market) prices pay in exchange for makers offering drugs or devices to much lower income household people for much lower prices.

Makers have the right to have each sale require a one-time 12-alphanumeric character order authorization code they provide and enter into the exchange about the same time they give it to the patient or an authorized representative.

Makers and the exchange shall each always have the right to require a household income query and qualification declaration form be signed by a member of the household over the age of 21 if possible, practical and safe before the product is dispensed.

Corresponding federal match amounts shall not be paid (and shall be refunded) to the federal government (via the exchange) if rebates are given on exchange purchases.

The exchange will try to allow Medicaid insurers and programs, hospitals and federally funded patient aid organizations to buy through the exchange at prices that take into account their clients’ households’ limited economic resources.

It should be recognized that a true market price of drugs used by poor people and people barely making ends meet isn’t $10,000/year, $2,000/dose or $84,000/course in a free market.

PAYING FOR INHERENTLY EXPENSIVE DRUGS with a SMALL MARKET using FEDERAL ANNUAL GRANTS

What I propose:

A federal program should attempt to cover expensive drugs with an asking/selling price over $10,000/year

after each drug has been sold privately sans insurance coverage

to at least 10% of the US market for the drug in opinion of its maker for at least six months

to establish a preliminary estimate of a maximum market value for the drug.

The federal program should have a full-time panel of up to eleven experts, appointed by each President during each term of office and serving until replaced, quitting or retiring, which may include:

  1. four accountants, each with at least 10 years corporate auditing experience
  2. two organic chemists who are experts at molecular synthesis
  3. two experts at recombinant synthesis
  4. one doctor with at least five years recent broad experience treating cancer at a research university, hospital or institute
  5. one doctor with at least five years recent broad experience treating autoimmune or rare diseases at a research university, hospital or institute
  6. one pharmacist with a Ph.D.

at least one of which can read French easily and at least one of which can read German easily

and, if available at Senior Executive Service compensation and to Presidential satisfaction:

  1. one retired drug company research executive of at least 60 years of age who has directed the creation of an important new drug since 1985
  2. a retired CFO or CEO or President from a large auto-related and/or unionized manufacturing company

The panel shall prepare reports for Congress from time to time but at least once annually before December 15th each year if possible regarding pharmaceutical developments include me-too drugs, drug side effects, what other countries and private persons pay for such drugs and what would be a fair amount to pay for all the doctors prescribe funding for drugs with a small market of less than 10,000 patients per year.

[A unique $10,000 drug for 10,000 people per year means $100 million in sales annually and $2 billion in sales over twenty years in the US alone.]

Congress shall fund the program annually based on such reports and available revenue as it sees fit considering American needs generally.

No drug shall ever be funded in any fiscal year at more than twenty times the amount of private sans insurance sales domestically achieved in the last six-month period on record.

The panel shall divide out the money Congress has allocated according to the mandates of Congress and the willingness of drug makers to accept the all the doctors prescribe payments offered by Congress.

The drug makers may insist on such co-payments and co-insurance per drug dose, which may be patient and patient household income dependent, as Congress may see fit to allow.

If Congress’ offer for an annual national supply of the drug is not timely accepted, the drug and all successors under patents existing prior to program entry shall be permanently barred from the program.

No state or offspring government may require by any means that any drug to be paid for by any employer or any insurer, except those drugs listed by the insurer in the insurer’s current formulary for an insured’s insurance policy.

The proper solution to most excessive drug prices is retail and R&D supplier price cuts, not picking the pockets of nearly every American to enrich a few.

EASING DRUG DEVELOPER CAPITAL and PATIENT ACCESS PROBLEMS

What I propose:

Per treatment/patient month/course warrants for unapproved drugs may be sold to health-related foundations and charities and health insurers in $1 million increments.

These warrants may also be sold individually to needy patients or caregivers of a child patient once a drug has been FDA-approved.

Only 20% at most of a drug maker’s output can go to warrant redemption without the approval of the Secretary of HHS or the President.

All warrants shall be numbered from 1 up by buyer and date of sale and have a unique by issuer code of at least 12 alphanumeric characters.

Redemption shall be on a delivery request basis from warrant holders, with lower numbered (and then earlier date of sale) warrants having priority.

New drugs need not go through Phase III testing before they can be given free of charge to:

  1. patients who are registered nurses, doctors, physician assistants or pharmacists or who are adult live-in partners of one or
  2. patients being treated by doctors with at least one year of FDA supervised investigational drug research experience

New cancer drugs need not go through Phase III testing before being sold on a two-year money-back satisfaction guaranteed basis to cancer patients deemed incurable by a cancer specialist who has examined them and their pathology report(s), provided the money paid for the drugs is deposited in an FDA controlled account in trust for the two-year money-back guarantee and for remainder payment to the drug company depositor 28 months after the last deposit was made into the account. Upon the death of any patient within the two years, the money paid by the dead patient may be reclaimed by the dead patient’s estate under any state probate process. The FDA may take up to $1,000 from the account for processing each probate and guarantee claim per FDA regulation.

No third party, including an insurer or employer, can be made to pay for drugs in an investigational stage by any court or any state or subsidiary government.

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