CommonHealth

Two drug company executives were ordered by their employer, GlaxoSmithKline, to stop a little side business they had going, selling resveratrol — the wildly hyped, potential life-extending compound found in red wine — online, as a dietary supplement.

The story first broke on the business tech website, Xconomy.com, and TheStreet.com, and was then picked up in the New York Times prescriptions blog today.

One of the executives involved, Christoph Westphal, founded Cambridge-based Sirtris, which initially sought to commercialize resveratrol, and was purchased by GSK in 2008 for about $720 million. Westphal and a colleague, Michelle Dipp were selling a year’s supply of a less potent formulation of the compound through their nonprofit, Healthy Lifespan Institute, for $540, Xconomy.com reports:

Westphal and Dipp, who are both senior executives at Glaxo, informed the parent company about their decision to start the Healthy Lifespan Institute, according to TheStreet article, but “GSK [Glaxo] was not aware that the Healthy Lifespan Institute was selling a resveratrol formulation on the Internet,” Glaxo spokeswoman Sarah Alspach said in an e-mailed statement cited by TheStreet. “The company has instructed the GSK employees to cease their association with this activity and Michelle Dipp and Christoph Westphal will be resigning their positions on the board of Healthy Lifespan,” Alspach told TheStreet.

GlaxoSmithKline has a huge stake in the control of its resveratrol asset. The company paid about $720 million to acquire Sirtris two years ago, and has invested millions more since then in its potential as a pharmaceutical treatment for diseases that people get as they age, like diabetes. The company’s pharmaceutical grade version of resveratrol hasn’t made it through the clinical trial process required to win FDA approval and start selling a drug in the U.S. But as a dietary supplement in a lower-dose form, resveratrol doesn’t have to pass any of that sort of regulatory scrutiny before it can reach the consumer masses. Dipp told Xconomy in the original story that Healthy Lifespan Institute was selling the supplement for $540 for a one-year supply, just to cover the costs of functions like manufacturing and distribution, not to make a profit.

The Boston Herald reports that Michael Merlina, a 29-year-old glazier from North Reading who says he can’t afford health insurance, has sued the Massachusetts Health Insurance Connector Authority for slapping him with a $2,000 fine.

Merlina apparently doesn’t qualify for subsidized health care but earns too little to afford a plan for himself and his wife, which would cost about $800 a month, The Herald says.

Reporter Christine McConville writes:

Connector spokesman Dick Powers said Merlina is among the 2,500 people who appealed this year’s fine. About half of those appeals were upheld but mostly for people who had lost their homes to foreclosure, suffered through the death of a spouse or had been a domestic violence victim.

For a working guy like Merlina, it seems there’s no relief in sight.

A group of Catholics has appealed to the Pope to try to stop the acquisition of Caritas Christi Health Care by the New York equity firm, Cerberus Capital Management, the Boston Globe reports.

Even though both Caritas and Cerberus have said that the religious identity of the hospital chain will remain in tact, a “stewardship agreement they negotiated with the Archdiocese of Boston would allow the hospital chain’s new owners to terminate its religious affiliation, if it became materially burdensome, in exchange for a $25 million donation to a charity chosen by the archdiocese,” the Globe says. That provision, in particular, has angered the anti-merger group:

In their letter to the pope, the Coalition to Save Catholic Health Care likened the $25 million referenced in the stewardship agreement to the bribe that, according to the Gospel of John, Judas Iscariot took for betraying Jesus.

“Given the threats to human life . . . this is anathema,’’ the group wrote. “The $25 million can only be likened to 25 pieces of silver.’’

Generosity is good, right?

Sure. But given the skyrocketing cost of health care here, should the state of Massachusetts continue its far-reaching mandatory insurance coverage, for instance, requiring that fertility treatments and chiropractic services be covered by every health insurance policy?

In an opinion piece in today’s Boston Globe, Robert C. Pozen, a senior lecturer at the Harvard Business School says “No.”

He writes:

Massachusetts has one of the longest lists of mandatory insurance coverages of any state. There is no option for forgoing any mandatory coverage and paying a lower premium. The total incremental cost of mandatory benefits in Massachusetts was over $300 million during 2004-2005.

Pozen also suggests that a new system of co-payments — one that took into account the vast price differences for services delivered by different hospitals and providers — would also stabilize overall costs.

For example, the price charged by Massachusetts General Hospital for a normal delivery of a baby is at least $1,000 more than the price of a similar service at a high-quality suburban hospital. Similarly, the price of a magnetic resonance imaging test is $300 to $500 higher at Mass. General than at other Massachusetts facilities.

However, patients do not know about these large price differences and have no incentive to seek out a lower cost provider. By contrast, suppose patients were charged a $100 copayment for a normal baby delivery at Mass. General, and only a $30 copayment for a normal baby delivery at other high-quality hospitals. We would likely see a stampede to these other hospitals.

These are not isolated examples of cost differentials. According to a recent study by the attorney general, the difference in payments made to the lowest-paid versus highest-paid hospital in one major insurer’s local network exceeds 300 percent. Similarly, the price paid by another major insurer to the highest-paid group of doctors was 224 percent higher than the price it paid to the lowest-paid doctor groups.

Jon B. Hurst, president of the Retailers Association of Massachusetts, says a new law set to be signed tomorrow will provide help for individuals and small businesses, but that meaningful health care cost-cutting has only just begun:

As the 2010 formal session of the Legislature ended on July 31st, small businesses and their employees walked away with an important win – the ability to participate in cooperative small business health insurance purchasing. The Governor is expected to sign the bill tomorrow. The Retailers Association of Massachusetts joined forces with a coalition of 46 chambers of commerce and not-for-profit organizations, all determined to get small businesses and consumers finally to the table with big business, government, insurers, and providers! The Legislature and Administration are to be congratulated for passing this important market based reform. Yet the work is not done, and health care costs will again be a top agenda item next year.

Although the opposition was vocal, the Legislature truly delivered for Main Street employers and for consumers. Coupled with vital premium, medical loss ratio and mandate compliance transparency requirements, this legislation provides an important model not only for Massachusetts and other states, but also for the implementation of federal health care reform. A special thank you to our lead sponsors Sen. Steven Baddour (Methuen) and Rep. Steven Walsh (Lynn) for their tireless work!

Up to six cooperatives representing 85,000 lives will be formed under the legislation. The measure helps to push us toward the elimination of marketplace and regulatory discrimination brought about in the mid-90’s when groups of 50 or less were prohibited from group buying. This initiative will allow like-minded and motivated consumers to work together through innovative programs previously only used by big employers, including cost and quality data education and usage, wellness programs, and limited provider networks. The fruits of the labor of the groups will mean increased savings over time as more members of the cooperative become better educated and healthier consumers.

This comprehensive reform package also requires extensive insurer disclosure and transparency on premiums, administrative costs, and medical loss ratios by group size–important data to note differentials in the marketplace and to create pressure for comparable coverage for comparable premiums. It will also for the first time require disclosure by administrators of self-insured clients on the level of compliance with state mandated benefits, which under federal law many large employers can avoid. A change in the age rating factors will provide shock rate relief by requiring insurers to rate every year, as opposed to the current 5 year period. Other important provisions will allow for limited network products and an annual open enrollment period in the merged market, to prevent gaming of the system by individuals.

As we look forward to the next session of the Legislature beginning in January, we will be preparing to file legislation to further control healthcare costs at the provider level. Continue reading →

Earlier this week, Nicholas Wade of The New York Times reported on a fascinating new discovery about the role of certain sugars found in human breast milk that play an important role in protecting the infants gut from dangerous bacteria.

While breast milk has been shown to confer a range of benefits to the baby, from protection against certain diseases to improved cognitive performance, the notion of a protective coating for the gut is something new. Indeed, one of the scientists working to “deconstruct” milk as part of his research is quoted saying that in this phenomenon of evolution, “mothers are recruiting another life-force to baby-sit for her baby.”

Wade writes:

The details of this three-way relationship between mother, child and gut microbes are being worked out by three researchers at the University of California, Davis — Bruce German, Carlito Lebrilla and David Mills. They and colleagues have found that a particular strain of bacterium, a subspecies of Bifidobacterium longum, possesses a special suite of genes that enable it to thrive on the indigestible component of milk.

This subspecies is commonly found in the feces of breast-fed infants. It coats the lining of the infant’s intestine, protecting it from noxious bacteria.

Infants presumably acquire the special strain of bifido from their mothers, but strangely, it has not yet been detected in adults. “We’re all wondering where it hides out,” Dr. Mills said.

He continues:

The sugars are very similar to those found on the surface of human cells, and are constructed in the breast by the same enzymes. Many toxic bacteria and viruses bind to human cells by docking with the surface sugars. But they will bind to the complex sugars in milk instead. “We think mothers have evolved to let this stuff flush through the infant,” Dr. Mills said.

Dr. German sees milk as “an astonishing product of evolution,” one which has been vigorously shaped by natural selection because it is so critical to the survival of both mother and child. “Everything in milk costs the mother — she is literally dissolving her own tissues to make it,” he said. From the infant’s perspective, it is born into a world full of hostile microbes, with an untrained immune system and lacking the caustic stomach acid which in adults kills most bacteria. Any element in milk that protects the infant will be heavily favored by natural selection.

“We were astonished that milk had so much material that the infant couldn’t digest,” Dr. German said. “Finding that it selectively stimulates the growth of specific bacteria, which are in turn protective of the infant, let us see the genius of the strategy — mothers are recruiting another life-form to baby-sit their baby.”

Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, just agreed to ratchet back proposed rate increases to an average of about 8 percent, according to The Boston Globe, following the lead of three other insurers who reached similar deals with the state.

In announcing the deal, the Patrick administration said the “four agreements collectively cover about 90 percent of the small businesses and working families insured in the merged market in Massachusetts,” The Globe reports:

In a statement, Blue Cross Blue Shield president and chief executive Bill Van Faasen said the agreement will end months of uncertainty and provide for a more stable marketplace.

In April, the Massachusetts Division of Insurance disapproved proposed rate increases from Blue Cross Blue Shield ranging from 9.3 percent to 22.6 percent after finding them to be unreasonable or excessive in relation to the benefit provided, the administration noted.

“The settlement reduces those increases to a range of .4 percent to 12.9 percent, with an average blended base rate of about 8 percent,” the administration said in a press release, adding, “As with previous agreements, the settlement with Blue Cross Blue Shield does not include retroactive increases to April 1.”

Van Faasen said in his statement that Blue Cross Blue Shield agreed to accept “less than adequate premium rates” in order to “help move the community beyond the distraction of arbitrary caps on premiums and toward more meaningful and sustainable solutions that will bring real and lasting rate relief to employers and individuals.”

Insurers in this state are now required to cover a broad range of care and treatment for children with autism, The Association Press reports, making Massachusetts one of the most generous states in the nation for such coverage.

But business groups remain opposed to the law, saying the costs are simply too high. The AP reports:

The legislation, passed during the closing days of the Legislature’s formal session last week, mandates insurers cover the cost of diagnosis and treatment of autism spectrum disorder if it is deemed medically necessary by a doctor.

Those treatments include rehabilitative, psychiatric and therapeutic care, diagnostic tests, applied behavioral analysis as well as the cost of pharmaceuticals. Insurers would not be required to pay for in-school services.

The law also lets insurers opt out of providing coverage for three years if their costs rise by more than one percent a year.

Business groups say the costs of providing the extra coverage will fall largely on employers already struggling to cope with rising health premiums.

They said the law could increase the cost of health care coverage by as much as $340 million over the first five years, and that the average monthly increase in premiums could be as high as $2.45 per member.

Tufts Health Plan struck a deal with state regulators to limit increases in its insurance rates, according to a report in The Boston Globe.

So far, three big insurers — Tufts, Harvard Pilgrim and Neighborhood Health Plan — have agreed to similar rate-limiting agreements with the state. Reporter Todd Wallack writes:

Tufts agreed to raise rates in a range of 5.8 percent to 12.8 percent, starting next month — down from the 11.1 percent to 22.7 the company had proposed.

“This is great news,’’ said Barbara Anthony, the state’s undersecretary of the Office of Consumer Affairs and Business Regulation, which includes the Insurance Division. “I think everyone involved wants the same thing, which is lower health insurance premiums.’’

The pact comes four months after the Division of Insurance denied 235 out of 275 rate increase proposals from Tufts and five other insurance companies, arguing they were excessive or unreasonable. That set up a showdown between Massachusetts officials and insurers.

Still, Wallack reports, “three other health plans, including Blue Cross Blue Shield, the state’s largest insurer, Fallon Community Health Plan, and Health New England, are continuing to appeal the state’s denials of rate increases. A decision on the Blue Cross case is expected in the next few weeks.”