The Budget Ax Falls on Diabetes
Tough economic times and state budget shortfalls are beginning to expand into reimbursement policies for diabetes products. The most recent example comes from the Arizona Health Care Cost Containment System which according to a recent policy change will no longer pay for insulin pumps for members 21 years old or older. Diabetic Investor can’t say we’re shocked by this trend given the dismal condition of state budgets. The stark reality is with deficits growing no program no matter how important is exempt from the budget ax.
This move by Arizona reflects a distributing trend that started when insurers began transferring a greater share of diabetes management costs to the patient by raising co-payments. A trend which Diabetic Investor sees continuing as healthcare costs continue to rise and place a greater burden on state and federal budgets. A trend that in the long run will actually increase the costs of diabetes as rising diabetes management costs are forcing cash strapped patients into some very uncomfortable decisions.
According to a study published last week in the Annals of Internal Medicine there is a direct correlation between the amount of a patient’s out-of-pocket co-pay and prescription abandonment. The study noted that insulin was among the drugs more likely to be abandoned. It is already a well-known fact that therapy non-compliance, already a problem before rising co-payments, is a major reason why nearly two-thirds of all patients are not adequately controlling their diabetes. And it should go without saying that poorly controlled diabetes leads to even greater costs from the co-morbidities associated with diabetes.
The basic approach from insurers and now state agencies is it’s better to save a few small dollars today while ignoring the higher costs from treating diabetes related complications that occur later in the patient’s life cycle. Simply put what insurers and state agencies are hoping is that these complications won’t occur until the patient’s medical costs are covered by the Federal government. Given the Federal budget deficit is also spiraling out of control and millions of Baby Boomers are headed into the system, the financial costs of diabetes will place an ever increasing burden on already strained budgets. Ultimately the Federal government will be forced to make the same tough decisions now being made by insurers and state governments.
This move also reflects an equally disturbing trend of how diabetes is viewed by our elected officials. As Diabetic Investor noted when the FDA failed to approve Bydureon, governments are basically ignoring the needs of millions of patients and are preventing new drugs and devices from reaching the patients who need them. Had Bydureon been a drug used to treat HIV or cancer, there would have been a public outcry not just from patients but elected officials. The reality is diabetes is not viewed as an important issue by our elected representatives, who quite frankly, have no idea of what it is like to live with diabetes.
While HIV and cancer are viewed as killer disease states and receive huge amounts of attention and money, diabetes is relegated to a mere annoyance. This belief flies in the face of the facts as diabetes is now the seventh leading killer in the US and according to the most government estimates costs over $200 billion per year in direct and indirect costs. A number that will only worsen as the Center for Disease Control (CDC) recently noted that 1 in 3 Americans could have diabetes by the year 2050.
This trend also should send a shiver down the spin of any drug or device company. Companies that now must add whether or not their drugs or devices will be paid for to their ever growing list of concerns. It’s bad enough to have deal with the FDA and their consistently changing requirements, but it’s even worse to have to worry that should they be fortunate enough to make through the FDA, whether their drug or device will actually receive reimbursement.
The move by Arizona also shows that like the FDA, the state is ignoring numerous studies that prove the effectiveness of insulin pump therapy. While this should really surprise no one, the fact is tight budgets trump scientific facts.
Years ago a company called Frame used to run commercials with the tag line – “You can pay me now or pay me later.” It’s obvious that when it comes to diabetes, insurers and state governments are taking the pay me later approach. Their shortsightedness to save small amount of dollars today will merely transfer a higher cost onto the Federal government later. It’s just a matter of time and budget realities before the Federal government begins to institute cost cuts of their own to deal with this increasing financial burden.
The bottom line is there are several low cost initiatives governments and insurers could put in place today that would blunt this coming tsunami of higher diabetes costs. Providing reimbursement for patient education and incentivizing physicians for achieving better patient outcomes are two low cost initiatives that quickly come to mind. The fact is physicians are paid to treat diseases not prevent them. However, physicians are held to standard of care or paid for more effective care. It is also true that physicians are not ignorant and understand that educated patients achieve better outcomes. The simple fact is, physicians lack the time, resources and are not adequately reimbursed for patient education.
This lack of interest in patient education would quickly change if physicians received an incentive for patients that achieve better outcomes. Studies have shown that for every 1% reduction in a patient’s HbA1C level their annual healthcare costs decline by approximately $1,000. Other studies have shown that patients who achieve an HbA1C of 7% or less avoid many of the costly complications associated with poorly controlled diabetes. Why not pass along a portion of these savings to the physician?
Like it or not, medicine is not just a profession, it is also a business. A business that faces an increasing patient load while at the same time declining reimbursement rates. Simply put physicians are not immune from the financial realities of running a profitable business. Yet governments seem to ignore these realities and fail to recognize the impact incentivizing better outcomes would have not just on the quality of a patient’s life but the huge cost savings that would come from fewer complications.
Like so many important issues facing our government and unfortunately diabetes is among them, history tells us politicians would rather push tough decisions into the future rather than develop effective solutions that would ultimately save lives and money. Diabetic Investor does not believe for a moment that these solutions will be easy to implement or not without their detractors. However, we have seen the cost, both human and financial, when politicians do not deal with an issue and merely put off the tough decisions. Ultimately what happens is one day it’s time to pay the piper and when that day comes it comes with a very high price tag. For the millions of patients with diabetes this is not just a financial price, paying more for the drugs and devices they use to treat their diabetes, this is human cost in terms of a lower quality of life and ultimately premature death.
It’s time for the diabetes community to take a stand and get our elected to act and act now. We can no longer sit on the sidelines and wish these problems away. We cannot let the FDA continue to deny patients the drugs and devices they need to help them more effectively manage their diabetes. We cannot allow our states to impose restrictions, deny claims or cut and/or eliminate reimbursement for the drugs and devices we need every day. Most all we can no longer elect politicians who ignore the facts and view diabetes as mere annoyance.
The same goes for every company in the diabetes market. The time has come for these companies to wake up and understand they will no longer exist if the products they make never make it to the market or when they do patients cannot afford them.
The time has come for revolution, a revolution which will change the way diabetes is seen in this country. A revolution, which will make politicians stand up and take notice that we are losing the war against diabetes. As John Kennedy once said; “A revolution is coming- a revolution which will be peaceful if we are wise enough; compassionate if we care enough; successful if we are fortunate enough – but a revolution which is coming whether we will it or not. We can affect its character, we cannot alter its inevitability.”