Latest Drugwonks' Blog


  • 12.09.2015

From the pages of ...

New Compounded Drug Renews Safety Concerns

Last week, Express Scripts announced it would begin processing prescriptions for Imprimis Pharmaceuticals’ drug compound for patients suffering from toxoplasmosis in response to a recent price hike by the makers of the only FDA-approved medication for toxoplasmosis, Daraprim.

“We believe we now have a safe, high-quality and extremely cost-effective way to provide access to a Daraprim alternative,” said Dr. Steve Miller, Senior Vice President and Chief Medical Officer of Express Scripts, one of the country’s largest pharmacy benefit managers (PBM) with over $100 billion in annual revenue.

But the safety and efficacy of compounded drugs have raised questions in the healthcare community and among regulators, and at least two of Imprimis’ compounding facilities have been cited by the FDA for Common Good Manufacturing Practices (CGMP) violations.

Back in 2012, a meningitis outbreak that sickened more than 700 people and killed at least 50, was traced to a compounding facility in Massachusetts setting off a wave of heightened concern and regulatory oversight. Separately, Imprimis’ facilities in New Jersey and Southern California (July 2014 and June 2015) have been issued letters from the FDA citing violations that could call into question the safety and efficacy of the drugs compounded there.

Imprimis says that they did not own the facilities at the time of the violations. The California facility was acquired earlier this year and has not yet been reinspected. The New Jersey facility was inspected in September, and Imprimis says there were “three minor observations noted on the report, all of which have been responded to with no further comments from the FDA.”

But Peter Pitts, former FDA associate commissioner and president of the Center for Medicine in the Public Interest, expressed concern, “just because a facility changes ownership doesn’t mean that existing quality problems can be discounted.”

In testimony before the House Energy & Commerce Committee, Dr. Scott Gottleib, resident fellow of the American Enterprise Institute, said that compounded drugs let “physicians customize drugs to individual patients,” noting that “traditional pharmacy compounding is performed on a small scale.”

According to the FDA’s website, compounded drugs are not generally approved by the FDA and therefore the “FDA does not verify the safety, or effectiveness of compounded drugs.” Additionally, the FDA warns, “[t]here can be health risks associated with compounded drugs that do not meet federal quality standards. Compounded drugs made using poor quality practices may be sub- or super‑potent, contaminated, or otherwise adulterated. Additional health risks include the possibility that patients will use ineffective compounded drugs instead of FDA-approved drugs that have been shown to be safe and effective.”

When Congress passed a new law in 2013 that provided the FDA with greater authority over compounding facilities, Dr. Janet Woodcock, director of the FDA’s Center for Drug Evaluation and Research, expressed some concern that the law didn’t go far enough. “While the new law doesn’t provide the FDA with all the additional authority it sought, these provisions are definitely progress,” she said.

Now with this latest announcement from Express Scripts, Imprimis is set to provide patients a compounded drug comprised of two FDA-approved drugs, pyrimethamine (the active drug in Daraprim) and leucovorin, even though the two have never been approved by the FDA to be used together.

The president of research and development for the manufacturer of Daraprim, Turing Pharmaceuticals, Dr. Eliseo Salinas said, “Daraprim remains the only FDA-approved treatment for toxoplasmosis encephalitis when used conjointly with a sulfonamide. Patients and physicians are likely to assume the compounded product is as safe and effective as the FDA-approved drugs pyrimethamine and leucovorin, even though its safety and efficacy profile is unknown.”

Mark Baum, the CEO of Imprimis, questioned that characterization. “The idea that FDA is not involved in nearly the entire drug supply chain of what is produced by our company is just simply not true.” He says the partnership with Express Scripts speaks to the safety of their practices. “Express Scripts is not going to partner with a company that does things the wrong way,” explains Baum. He says Imprimis is now in talks with other leading PBMs, and these companies won’t partner with a compounder that is putting patients at risk.

Pitts, offered words of warning for doctors treating patients with compounded drugs. “Physicians are not pharmacologists. They do not take medical school courses in drug compounding. And since this is not their area of expertise, they should not be deemed ‘experts’ and asked to make a therapeutic choice.”

He added, “the FDA approves innovator and generic medicines based on the benefit/risk/quality equation. It’s a dangerous precedent for a PBM [Express Scripts] to decide on its own to use cost as the sole factor in reimbursement policy. It is irresponsible at best and dangerous at worst.”

There also remains some question as to the legality of Imprimis distributing its unapproved compounded drug widely. Gottleib, who many consider a potential nominee for senior FDA position should a Republican win the White House, said later in his testimony, “but once pharmacies begin manufacturing and shipping medicines on a wide scale, and do so in a way that isn’t in response to a valid prescription, these firms often become ‘drug manufacturers’ and fall squarely under the FDA’s extensive authority.”

A spokesperson for the FDA declined to comment when asked about the Express Scripts-Imprimis announcement and the use of a compounded drug when an FDA-approved drug is available.

Baum argues that an unintended consequence of current policy is to encourage drug companies to engage in monopolistic behavior for some drugs that have no generic competitor, in part because it is so difficult to get new drugs approved by the FDA. “I really believe the future of compounding is in 503B outsourcing facilities. It is in making as many drugs that are compounded as possible,” Baum said.

However, Pitts, the former FDA associate commissioner, said: “The way to drive prices down is not to promote the unapproved use of unapproved compounded medicines. A more effective route is to inject competition into the marketplace. Competition, in this case, coming from additional FDA-approved generic pyrimethamine products.”

I have noted previously that "to create a social movement for cures, the prevailing pessimism must be overcome. This enterprise is critical to progress because social and political movements are essential to sustaining medical innovation.  In the past, progress occurred because social movements overcame the pessimistic resistance of the time and turned a demand for cures into a national strategy."

Perhaps such Partners for Better Care is such a movement.  The organization has 6 objectives.  Most important (at least in my opinion) is this statement:

"We believe patients should have access to adequate formularies that do not discriminate against any medical conditions and ensure patients have affordable access to prescription drugs, devices, and other therapies. Tiering and pre-authorization limitations are becoming more common in formularies, and problems persist with access to devices and allied health professionals such as physical therapists."

I am not usually a joiner beyond my shul and gym.  But I just joined PBC.  You should too. 

Why is a lifeline -- the 9/11 Health and Compensation Act for 9-11 survivors expiring?  The clinical evidence, gathered with great care and in considerable detail, demonstrates that survivors still struggle with heart conditions, asthma, post tramautic stress disorder and depression at a higher level than other people that we not directly affected.  The Act is NOT an entitlement.  It is a unique, registry based program that has been critical to improving the quality of life and health care of people suffering from the long term effects of war.   Sadly, what has been learned about the impact of war on the homeland through this consortia, will be important in treatment future victims.  We are far behind other countries, including Israel, in treating the casulties of war and terror.   So once again, those affected by 9/11 are First Responders. 

It's not that Congress won't pass the bill.  It's just that it, by letting the act expire, have demonstrated an indifference to suffering and terror.  Talk is cheap.  

Meanwhile, Jon Stewart has been leading the effort to get the legislation renewed ASAP.  He returned to The Daily Show to cajole Congress into taking action with humor and genuine outrage 

Stewart asked viewers to contact congress on social media with the hashtag, "#WorstResponders."

"People forget, with all this talk now about terrorism from the World Trade Center to San Bernardino, the one common link to all of this is the first people on the scene were first responders," Stewart said. "What message does it send to our first responders if once we're done as a nation with them helping us that we forget about them? That's unacceptable to me."

So it should be for us all!

FDA Postpones Generic Drugs Safety Update Rule Again

Drug Industry Daily

After pushing a proposed patient safety rule back yet again, the FDA has received criticism for putting patients at risk.

The rule - which would empower generic drugmakers to update labeling to provide warnings about newly discovered risks to patient safety without prior FDA approval - now is expected to be final in July 2016, after being delayed several times following its proposal in 2013.

Under current FDA regulations, NDA and BLA holders are permitted to make safety updates without agency approval, but generic drugmakers cannot do so unless instructed to by the FDA.

Public Citizen's Health Research Group described the postponement as a "safety gap" for patients who take generic medications.

"The agency should resist pressure from the pharmaceutical industry and finalize a rule that will protect patients," says Michael Carome, director of the Public Citizen Health Research Group.

GPhA and PhRMA are pushing an alternate plan that would make the FDA the central arbiter of all labeling changes - for NDA and ANDA holders alike - once the first generic version hits the market (DID, May 27).

Peter Pitts, president and founder of the Center for Medicine in the Public Interest and a former FDA associate commissioner, also has underscored the importance for such a rule, noting there have been several high-profile recalls of generic drugs because they did not deliver the outcome they were supposed to.

"How can you communicate the fact that bioequivalent does not mean identical?" Pitts rhetorically asks.

Pitts, however, notes that the rule would be a significant addition to the Food, Drug and Cosmetic Act, and would need to be carefully worded legally. He tells DID that his educated guess for the postponement of the rule is because of the high volume of comments being examined from a legal perspective.

CDC Feels the Pain

  • 12.04.2015

From the pages of Politico:

HHS split on CDC opioid prescription guidelines

A panel set up to coordinate pain research across the federal government is blasting a CDC proposal to rein in opioid prescribing set for release next month.

Members of the NIH's Interagency Pain Research Coordinating Committee, which was created by Obamacare and includes the FDA, AHRQ and the Department of Veterans Affairs, announced at a meeting Thursday that they plan to file a formal objection to the CDC prescribing guidelines. Those guidelines are a key piece of the administration's effort to combat the prescription overdose epidemic that claims more than 16,000 lives a year.

The level of evidence cited to support the guidelines, which are non-binding on physicians, "is low to very low and that's a problem," said Sharon Hertz, FDA's director of the Division of Anesthesia, Analgesia and Addiction Products.

AHRQ health scientist Richard Ricciardi called the recommendations "ridiculous" and "an embarrassment to the government."

The dissension within HHS adds to a chorus of complaints from both the pain community and major medical groups including the American Medical Association and the American Cancer Society Cancer Action Network, which have criticized CDC's selection of experts and the limited opportunity for public input on the guidelines. CDC has not released a draft but an early version has circulated.

Wanda Jones, principal deputy assistant secretary for health at HHS, told the interagency committee members that they should still register objections, even though time is running out. She said the CDC process had been "shortsighted" and rushed. "You know, damn the torpedoes. Full speed ahead."

Jones is not a member of the NIH committee but provided an update on the National Pain Strategy.

Several committee members were frustrated that the response to the opioid epidemic appeared to trump a broader effort underway to develop an integrated strategy to combat pain and could in fact hinder it by limiting access to certain necessary drugs.

"We have both a pain and an opioid use disorder problem. Both are important. Both are serious," said Richard Frank, HHS assistant secretary for planning and evaluation.

CDC did not respond to a request for comment.

CDC policy official Sara Patterson told the interagency group by conference call that the guidelines' three main goals are to have providers prescribe non-opioid options for pain when possible; to use the lowest effective dose when opioids are necessary, and to actively evaluate the risk and potential harms of ongoing treatment. The CDC is not recommending any changes in the role of opioids in treating cancer pain for palliative care.

Each category has a number of specific guidelines, and many are characterized as a "strong recommendation" with "low evidence" or "very low evidence" because of the lack of randomized control trials. Patterson said that they were supported by an exhaustive literature review, however, including a 2014 AHRQ review of "The Effectiveness and Risks of Long-Term Opioid Treatment of Chronic Pain."

AHRQ found scant evidence that opioids control chronic pain and that long-term use had serious risks. Deaths from prescription painkillers have quadrupled since 1999, according to the CDC, topping 16,000 in 2013. Nearly 2 million Americans either abused or were addicted to the drugs that year, the agency estimates. In 2012, health care providers wrote 259 million prescriptions for the drugs - enough for every American adult to have a bottle of the pills.

Patterson emphasized that the guidelines would be "non-regulatory" - meaning non-binding - and that the CDC "stands by" them.

The CDC effort is part the Obama administration's efforts to combat the epidemic, including expanding access to overdose antidote naloxone, making medication assisted addiction treatment more available, and improving state prescription drug monitoring programs.

John McCain has always supported drug importation “from Canada.” And he has been wrong every time.

He has resurrected his effort (via Amendment SA 2884) and cites the Turing Pharmaceuticals example, “"Don't you feel when people are paying $750 for a pill that maybe they ought to be able to go to Canada and buy one that's reasonably [priced]?”

Note to Senator McCain –the Turing product is an off-patent drug but there isn’t any generic competition. And that’s important because generic drugs are less expensive in the US than in Canada. The way to drive down the prices of single-manufacturer off-patent drugs isn’t to import foreign price controls -- it’s to inject healthy competition into the equation by making it worthwhile for multiple manufacturers to offer products like Turing’s infamous Daraprim.

As to the broader arguments against drug importation – here we go again.

Importing drugs from Canada is exceedingly dangerous for a number of reasons. For starters, many Internet pharmacies based up north are stocked with drugs from the European Union. And while many wouldn’t hesitate to take medicines purchased from countries like France and Great Britain, there’s plenty of risk involved.

The EU currently operates under a system of “parallel trade,” which allows products to be freely imported between member countries. This means that any drugs exported from the U.K. to Canada could have originated in an EU country with significantly less rigorous safety regulations like Greece, Portugal, Latvia or Malta.

Just last year, EU officials seized over 34 million fake pills in just two months. And in May, Irish drug enforcers confiscated over 1.7 million pounds of counterfeit and illegal drug packages. So if American customers start buying drugs over the Internet from Canadian pharmacies, they could easily wind up with tainted medicines of unknown European origin.

It’s also important to note that drugs from anywhere in Europe aren’t even legal for sale in Canada. So when politicians say we can get “the same drugs” that Canadians get, they’re just plain wrong.

Even more worrisome is outright fraud — many “Canadian” pharmacies are actually headquartered somewhere else.

A 2005 investigation by the Food and Drug Administration looked at 4,000 drug shipments coming into the U.S. Almost half of them claimed to be from Canada. Of those, a full 85 percent were actually from countries such as India, Vanuatu and Costa Rica.

As part of another investigation, FDA officials bought three popular drugs from two Internet pharmacies claiming to be “located in, and operated out of, Canada.” Both websites had Canadian flags on their websites. Yet neither the pharmacies nor the drugs were actually from Canada.

As an FDA official told Congress, “We determined there is no evidence that the dispensers of the drugs or the drugs themselves are Canadian. The registrants, technical contacts, and billing contacts for both web sites have addresses in China. The reordering website for both purchases and its registrant, technical contact, and billing contact have addresses in Belize. The drugs were shipped from Texas, with a customer service and return address in Florida.” And in laboratory analysis, every pill failed basic purity and potency tests.

The on-the-ground reality of state and local importation schemes has been dismal and politically embarrassing. Remember Illinois’ high profile “I-Save-RX” program? Over 19 months, only 3,689 Illinois residents used the program—that’s .02 percent of the population.

And what of Minnesota’s RxConnect? According to its latest statistics, Minnesota RxConnect fills about 138 prescriptions a month. That’s in a state with a population of 5,167,101.

Remember Springfield, Massachusetts and “the New Boston Tea Party?” Well, the city of Springfield has been out of the “drugs from Canada business” since August 2006.

And speaking of tea parties, according to a story in the Boston Globe, “Four years after Mayor Thomas M. Menino bucked federal regulators and made Boston the biggest city in the nation to offer low-cost Canadian prescription drugs to employees and retirees, the program has fizzled, never having attracted more than a few dozen participants.”

The Canadian supplier for the program was Winnipeg-based Total Care Pharmacy. When Total Care decided to end its relationship with the city, only 16 Boston retirees were still participating.

Programs like this wouldn’t do any better on a national basis. A study by the non-partisan federal Congressional Budget Office showed that importation would reduce our nation’s spending on prescription medicines a whopping 0.1 percent—and that’s not including the tens of millions of dollars the FDA would need to oversee drug safety for the dozen or so nations generally involved in foreign drug importation schemes.

Calling foreign drug importation “re-importation” is a clever way to sell the idea to the American people. But the term simply doesn’t fit with the facts. In reality, in addition to importing foreign price controls, Americans would end up jeopardizing their health by purchasing unsafe drugs while not saving money.

McCain acknowledged that similar efforts to legislate drug importation had fallen short many times in the past, but said, "sooner or later, even pigs fly.

Think again, Senator McCain.

In proposing steps towards value-based drug pricing Peter Bach proceeds from several false assumptions to justify proposals that would make drugs less affordable and give health insurers even more control of the drug prices Bach seeks to regulate. 

He claims that drugs are the “only major category of health care services for which the producer is able to exercise relatively unrestrained pricing power.”  He states that “by law, drug manufacturers can set the price that Medicare and Medicaid programs pay for new drugs, and they also benefit from significant negotiating advantages over private insurers, who are required to cover most new drugs and are unable to obtain significant price concessions from manufacturers, particularly for drugs that offer some clinical advantage or use alternative mechanisms of action compared with available treatment options. As a result, drug prices in the United States are generally 2 to 6 times higher than prices for the same drugs in other major industrialized nations.

These statements are incorrect and the assertion that free market pricing leads to high drug prices in the United States compared to “other major industrialized nations” is largely untrue.

Like every other health care good and service, drug prices are negotiated by private insurers and government health programs.   Bach’s description of Medicare and Medicaid’s approach to drug prices also characterizes how wheelchair and hip replacement prices are established. 

The average discount of off the Average Wholesale Price (a sticker price if you will) is anywhere from 10-50 percent on new medicines.  Those discounted prices are about the same as the prices listed by health systems in Germany, UK, Canada, etc.   The negotiated price for Solvadi in Germany is $46625.  In France, it’s $51000. 

In the United States?  The government programs got a 65% discount. That’s $30000. Private health plans received a 40 percent discount.  That’s $50000.

Bach usually fails to ask if these discounts ever make it to the patients that will be using the drugs.   This, from someone who raised the same question about hospitals marking up drugs discounted for poor patients and re-selling them at a huge markup.  

Some of the biggest health plans take the discounted drugs and then require patients to pay up to 50 percent of the cost of the drug.   The drug price we see is therefore set by PBMs and insurers.   And it is never the price they get the drug for in the first place.

Bach never questions the morality of such business practices.  Indeed, he has successfully avoided answering an inconvenient question:  If new drugs for cancer, heart failure, Hepatitis C etc. are en route to bankrupting America, why are they only 2 percent of the total insurers spend on health care each year.   Bach’s false assumptions are designed to divert attention from this fact.  And to justify a proposal that would give PBMs and insurers even MORE control over access to new medicines and their prices.

Bach and his co-author Steven Pearson have produced an interesting variation of value-based health insurance design.  The would reduce out of pocket cost sharing for drugs that work or benefit patients, extend patent protection to those that demonstrate value in new patients with other illnesses and discourage use of medicines that don’t work.

That sounds sensible.  However, Bach and Pearson would impose this value-based design on patients.  And who would define value?  The payors and PBMs who pocket rebates, re-sell discounted drugs to patients for a profit, force patients to pay a share of the marked up price for drugs they need and use cost sharing and fail first programs that make people sicker and ultimately discourage patients from enrolling in their plans in the first place

In fact, Bach and Pearson’s approach – a one size fits all value that gives PBMs and insurers to cut deals and design drug plans that maximize profits at the expense of the sickest patients -- would legitimize this questionable and counterproductive practices. 

In the absence of dramatic reductions in the time, cost and uncertainty associated with developing new medicines for smaller groups of patients, prices will be what they are.  

The best way to reduce the cost of health care is to insure that more people get the treatment best for them the first time.   We have the ability to customize treatments to patients and replace large upfront costs with long term financing for many medicines.  We are barely using precision medicine tools that would enable such a patient-driven approach.  And what we learn from these new approaches can be used to improve medical care and make it more predictive, prospective, personalized and participatory.   But Bach and Pearson ignore these tools. 

Hence, the value based approach to drug pricing as proposed by Bach and Pearson institutionalizes the marginalization that sustains many (but not all) PBMs and insurers.  Value-based drug pricing is nothing more than the health care policy way to pretend that separate and equal is not discrimination. 

A Pharma Pile-On

  • 11.30.2015
An interesting look at the current contretemps facing the pharmaceutical industry, the FDA, American healthcare, and some of our candidates for the Presidency -- from the pages of Medical Marketing & Media.

The article is titled, "A Pharma Pile-On" and can be found here.

An important and enjoyable read.

The last few weeks have been unsettling. There is a foreboding and unease about radical Islam, the fear, to paraphrase Winston Churchill that “the whole world, including the United States, including all that we have known and cared for, will sink into the abyss of a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted science.”

Churchill inserted this last sentence of his 23 page typed speech with a red pen.  Many historians have speculated about why he decided to close with such a warning and what he meant by perverted science.

In an article in The New Atlantis, Justin Lyons observes that Sir Winston was referring to the Nazi’s use of technology to wipe out Western civilization.  In one of his many books, Churchill wrote: The material progress that science offers is “really only valuable in so far as it liberates the innate goodness of the human heart. It would not be a blessing but a curse if it rolled forward uncontrolled by the moral principles of simple decent men and women. It can never be our salvation. It may be our doom.” 

The Nazis – as do the radical Islamist states of today – seek to use technology to obliterate, imprison and enslave humanity, to pave over the moral principles of most decent men and women and rebuild society according their worldview.  These two evil forces have in common a belief that have absolute certainty.

As Jacob Bronowski, biologist and philosopher wrote in “The Ascent of Man”:

The Principle of Uncertainty fixed once for all the realisation that all knowledge is limited. It is an irony of history that at the very time when this was being worked out there should rise, under Hitler in Germany and other tyrants elsewhere, a counter-conception: a principle of monstrous certainty. When the future looks back on the 1930s it will think of them as a crucial confrontation of culture as I have been expounding it, the ascent of man, against the throwback to the despots' belief that they have absolute certainty.

We must guard against this mindset ourselves.  Bronowski assert that Heisenberg’s Uncertainty Principle should be called the tolerance principle.  As Simon Critchley notes: “The relationship between humans and nature and humans and other humans can take place only within a certain play of tolerance. Insisting on certainty, by contrast, leads ineluctably to arrogance and dogma based on ignorance. “

This lack of tolerance shows up in the discourse and debates of today.  Setting aside the campus “crybullies” who have captured our attention, the current debate about drug prices – one of many over the past 50 years – is controlled by those who believe they have absolute certainty that by rationing drugs based on their measure of what a life is worth or what institutions they control should pay, we can save money and sustain medical innovation. 

Whereas, human knowledge is personal and responsible, an unending adventure at the edge of uncertainty, there are those who wish to subvert science to their specific social and political agenda.   They justify restricting access to new medicines and reducing drug prices without reducing the risk and cost of developing treatments by claiming – with absolute certainty – that doing so is necessary to keep America from going bankrupt and that doing so would actually increase innovation.

As I have written elsewhere, if the absolutists had won the day in the times past when they proposed the same policies, we would be bereft of the many medicines for HIV, TB, heart disease and various cancers that saved lives and transformed a difficult problem into a world filled with opportunity.  We would die sooner, suffer more, love, learn and live less. 

I am thankful to pharma for it is truly – warts and all – the most fruitful, sustained investment in the most personal and responsible manifestation of human knowledge: increasing the sustainability of humankind.  It is the highest, most human use of free market capitalism and technology the world has ever seen.  Pharma has contributed more good to our planet in a shorter period of time than any other commercial enterprise, precisely because it is always pushing back against certainty, against what is already known.  And yes, at the core of this enterprise is not just a moral code, but a moral code that has shaped decent and just societies throughout history; every life – no matter who or where or how sick – has absolute value. 

To pursue or use science to replace that moral code (with QALYs based on comparative effectiveness)  is to pervert science anew.

Expert: Too soon to start writing Obamacare's death certificate

WASHINGTON (Sinclair Broadcast Group) — The Department of Health and Human Services (HHS) insisted Tuesday that the individual health insurance markets under the Affordable Care Act (ACA) have a strong future, despite a warning from one of the nation's biggest insurers that it may drop out of the markets due to unsustainable losses.

UnitedHealth Group (UNH) made the announcement Thursday, saying that the pool of customers that have enrolled through the marketplaces is older and sicker than anticipated. The lack of new healthy customers has led to higher costs than originally projected.

"The Company is evaluating the viability of the insurance exchange product segment and will determine during the first half of 2016 to what extent it can continue to serve the public exchange markets in 2017," UNH said in a statement.

While UNH is the country's largest insurer overall, it has had a relatively small role in the individual markets, covering about 500,000 of the 9.9 million total customers there. If UNH actually does leave and insurers that control a bigger piece of the individual market follow its lead, the viability of the system could be in question. There is no indication they intend to do that, though.

"We can't really subsidize a marketplace that doesn't appear at the moment to be sustaining itself," UNH Chief Executive Officer Stephen Hemsley reportedly told investors on a November 19 conference call.

HHS remains confident, though, noting statements from several other big insurers that their business on the health exchanges has been in line with their expectations and they are still committed to the program.

"This is further indication that statements from one issuer are not reflective of the Marketplace's overall strength going forward," HHS said in a statement.

The exchange markets, which launched in 2013, were always expected to take up to five years to stabilize, Hospital Corporation of America management told UBS analysts.

Taken with reports of co-ops failing, premiums rising, and enrollment projections being cut, critics of the ACA, also known as Obamacare, have argued these developments are proof the whole program is in a "death spiral."

Some experts say such pessimism is unwarranted at this point.

"It's important to understand that UnitedHealth Group...has never been a big player in what we call the individual or non-group market," said Sabrina Corlette, a research professor at the Georgetown University Health Policy Institute.

Before and after the ACA took effect, the company was hesitant to offer plans on the individual markets. When it did, it was sometimes one of the higher-priced options, Corlette said.

"It's never been my sense that this is a market that they've embraced with any sort of enthusiasm."

The individual marketplaces have presented "a very challenging environment for insurers," though.

According to Corlette, the ACA has required a fundamental shift in the way health insurance companies do business from avoiding risk to managing risk, since they can no longer exclude sick patients with pre-existing conditions. The individual exchanges have not been very profitable for anybody at this point and the big insurers have struggled with them.

For the companies that are patient, though, she said the markets could become an opportunity for growth if they eventually stabilize and the risk pools balance out. How long insurers are willing to wait for that to happen is an open question.

"I don't think any of these companies want to see losses year after year after year," Corlette said.

The UNH news comes after several of the non-profit co-ops established under the ACA to compete with for-profit insurers failed and some customers seeking insurance for 2016 found higher prices and deductibles than they expected. Also, the government has decreased its projection for new enrollees, in part because fewer people than expected have lost employer-provided coverage since the ACA was implemented.

Some of the challenges currently facing the ACA were predictable when it was passed five years ago, Corlette said, adding that patient advocates expressed doubts at the time about the affordability of insurance under the law.

"A number of the insurance companies are complaining that the population they are seeing is sicker than they expected," she said, and they have faced difficulties adapting to the law.

Some of the problems may also be temporary. According to Corlette, mitigating factors could make the individual markets more profitable in the coming years.

As the penalty for failure to sign up for health insurance rises, the cost of not complying with the individual mandate could motivate healthy people to seek out insurance on the exchanges. Also, a provision that allowed people to keep some pre-ACA plans is expiring. Those consumers are often healthy people who did not need comprehensive coverage, so the risk pool could widen if they then transition into the marketplace.

"I would not write anybody's death certificate yet," Corlette said.

Other health care analysts agree that UNH leaving the individual exchanges would be more of a symbolic loss than a fatal blow to the program.

"UnitedHealth isn't yet a big ACA player and came late to the party. But their concerns show why enrollment growth is so important," tweeted Larry Levitt of the Kaiser Family Foundation.

"No--emphatically no--Obamacare is nowhere close to collapsing," wrote Wendell Potter on "In many regards, it is a big success, much to the chagrin of the law's critics."

"United pulling out of Obamacare might signal something even more troubling: that the marketplaces aren't a good business decision for other large carriers," said Sarah Kliff of Vox. "Right now, that doesn't seem to be the case."

"Yes, the Obamacare exchanges are proving to be as dysfunctional as many conservatives had anticipated," wrote Reihan Salam on Slate. "But until Republicans can make a convincing case that they will do a better job of meeting the needs of Americans with pre-existing conditions, Obamacare is here to stay."

Some liberal commentators have a more upbeat assessment of the ACA's progress.

"Obamacare has hit a few rough patches lately," wrote economist Paul Krugman in the New York Times. "But they're much less significant than a lot of the reporting, let alone the right-wing reaction, would have you believe. Health reform is still a huge success story."

Krugman characterized the 11% average increase in premiums for 2016 as a "slight disappointment," noting that increases in the two previous years were smaller than expected.

However, Peter Pitts, president and co-founder of the Center for Medicine in the Public Interest, cautioned that UNH's announcement may be "an early indicator" of things to come.

"It is an indicator that these types of insurance designs are not profitable," he said. He called the need for healthy customers to balance out the risk and reduce the cost of coverage "the cardinal flaw in the whole ACA concept."

Any insurance business is built on a model where premiums of people who buy policies and do not use them help cover the costs of services for people who do use them. If the people who need to use the insurance are all there is, the system falls apart.

"I think there's disappointment on the provider and participant levels," Pitts said of the current state of the individual exchanges.

He could not speculate about whether UNH is serious about dropping out of the marketplaces, but if the company's projection of $500 million in losses in 2016 is accurate, it would make sense for them to stop offering the individual plans.

"Public companies do not pursue programs that cost the company hundreds of millions of dollars in losses," Pitts said. "For that, rocket science is not required."

He said he anticipated many of the challenges the ACA is facing now back before it was passed in 2010. The reliance on healthy young people to buy insurance they do not want is one of the underlying problems he saw, and the effects of that are being seen in rising premiums and companies leaving the exchanges.

"It's fair to say that the foundational design flaws are becoming evident, and the question now is what you do about it," Pitts said. He argued that these problems with the law need to be fixed before the situation becomes a crisis.

Others see a bleaker future for the law.

"For anyone involved with the Affordable Care Act, yesterday was a big day," wrote Robert Laszewski, a health policy and strategy consultant, Friday. "It's the day any vestige of the notion that the Obamacare insurance exchanges have a chance of being successful in their current form lost whatever credibility was remaining."

"These problems aren't incidental to Obamacare," said Sally Pipes of the Pacific Research Institute on "They're the inevitable result of the law's central premise--that lawmakers and government bureaucrats can make better decisions about small businesses' health care than millions of businesses themselves can."

"This may be the year of the health care law's collapse," wrote Rep. John Barrasso (R-WY) in an op-ed days before the UNH report, citing rising premiums and the failure of the co-ops.

The public seems skeptical of the Obama administration's position that the law is working. According to a recent Kaiser Family Foundation poll, 45% of respondents view the ACA negatively and 38% have a favorable opinion. 30% support a full repeal, 12% want to scale it back, and 26% want to expand it. The opinions largely break down along party lines.

Democratic presidential candidate Martin O'Malley unveiled his plan for health care reform Tuesday with new measures aimed at controlling costs.

Front-runner Hillary Clinton has her own plan that would make some changes to the system.

The other Democratic candidate, Bernie Sanders, has endorsed a national single-payer system, but the exact details of how that would be paid for are unclear.

 Republican candidates have proposed complete overhauls of the system that begin with the repeal of the ACA.

Pitts believes it will be hard for politicians to sell a repeal plan that takes insurance away from those the ACA has helped, but he said it is difficult to determine exactly how many people have benefited from it. At the same time, he worries about the consequences for the public if the law's apparent shortcomings are not addressed in some way.

"Nobody should go down with the ship. Least of all, patients."


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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