Last week the Food and Drug Administration announced that about 180 drugs used to treat cancer and other serious illness are in short supply. A survey by the American Hospital Association found that a large majority of hospitals sometimes have to delay treatments or substitute a less effective drug. Some hospitals are forced to ration life-saving drugs.

Available data do not say whether the shortages specifically have compromised mesothelioma treatment, but they have hindered treatment for childhood leukemia, breast cancer, colon cancer, and other more common cancers. So, what is causing the shortages, and is anyone doing anything about it?

More than half of the shortages occurred because batches of drugs failed inspection. Many drugs sold in the U.S. are manufactured overseas in factories that are rarely inspected. This saves money for the manufacturers but results in products that are not made correctly or, worse, are contaminated by bacteria and other toxins. In other cases, the foreign suppliers simply are unable to keep up with demand.

Generic drugs are most likely to be scarce. Once the patent on a drug has run out, anyone can manufacture it. Price competition drives down the cost, and then many companies will stop making that drug because there’s not enough of a profit in it.

But then when a drug becomes scarce, the price shoots up. Some wholesalers purchase large quantities of drugs that they think might become scarce, and of course the wholesalers are helping to make them scarce. Then they contact hospitals to offer the drugs at 10 to 20 times the normal price. At the moment, this is completely legal.

So why don’t manufacturers crank up production of the scarce drug? The Medicare Prescription Drug Act of 2003 stipulates that the price of a drug cannot increase by more than 6 percent in any six-month period. Manufacturers say this keeps them from responding to a shortage, because the price they can bill Medicare for a scarce drug does not go up enough to provide an incentive to re-start manufacture of the drug.

Somehow, that doesn’t stop wholesalers from making a killing. And it needs to be noted that other industrialized democracies, which nearly all enforce strict price controls on drugs sold within their borders, are not having the same problems with shortages.

What’s to be done? There are proposals that the federal government keep a national stockpile of cancer drugs that can be used in case of shortages. Some want the FDA to temporarily suspend laws against buying a drug in a foreign country if that drug becomes scarce. Others argue that tax incentives or subsidies would encourage American manufacturers to continue to produce older generic drugs that are essential for cancer treatment.

One generic drug company has proposed the pharmaceutical industry pay to have FDA inspections of foreign plants making drugs for sale in the U.S. This would cost the industry $299 million a year and would have to be approved by Congress. However, from the manufacturers’ point of view, that might be less expensive than having to dump large batches of product because they didn’t pass inspection.

Now that Texas Governor Rick Perry has entered the race for the GOP presidential nomination, let’s review some of his policies in Texas. In particular, let’s look at the malpractice reform laws Perry championed and whether they brought about the benefits Perry claims.

Perry’s laws have substantially reduced the number of malpractice suits filed in Texas and reduced the amount of damages awarded in court by millions of dollars every year. As a result, Gov. Perry claims, many more physicians are setting up practices in Texas, and health care costs are reduced. If true, this would be great news for all of us, including those facing the cost of mesothelioma treatment.

Are the claims true? Well, yes and no.

Sarah Kliff of the Washington Post found that the number of physicians practicing in Texas has indeed increased since Perry’s malpractice reform went into effect. However, the population of Texas has been growing steadily also, so the ratio of patients to physicians is now about the same as it was in 2003.

More telling, the rate of increase of new physicians practicing in Texas was the same before the law went into effect as it was after. In other words, the data do not show that the malpractice law caused more physicians to move to Texas than would have moved there anyway.

Earlier this year, the American Medical Association released a study that shows Texas continues to suffer severe physician shortages. According to the San Antonio Business Journal, one cause of the continuing shortage is another of of the state government’s reforms — slashing Medicaid payments. Medicaid is a significant source of funding for physician residency programs, and increasing numbers of Texas medical school graduates are having to go out of state to find residencies. And once out of state, they usually don’t move back.

What about cost? Avik Roy, writing for the conservative National Review, says that although the cost of Texas health insurance premiums continues to climb, it has climbed more slowly than the national average. If true, this would be quite an accomplishment.

However, keep in mind that one in four Texans has no health insurance. In fact, for many years Texas has had the highest percentage of citizens without health coverage. This is partly because of a high percentage of low-paying jobs with no benefits, and partly because lax insurance regulations allow insurance companies in Texas much more leeway to refuse to cover people who look like bad risks. Not having to provide insurance for sick people is a proven way to keep insurance costs down, although it’s not terribly helpful to sick people.

Further, according to Kliff, health care costs in Texas have been going up faster than the national average. Reducing malpractice costs was supposed to lower health care costs, and it clearly does not. Part of the reason Texas health care costs are more out of control than the rest of the country may be that uninsured people are running up bills they can’t pay, so everyone else’s bills are padded to pay for them.

Much of our economy may be limping along, but the health insurance industry is doing just fine. Three companies — UnitedHealth, WellPoint and Aetna — recently reported a combined $2.51 billion in earnings from April through the end of June. On average, these earnings are up more than 17 percent compared to the same period in 2010. In fact, health insurance companies have reported higher profits than analysts predicted for several quarters in a row.

However, don’t expect any reductions in your policy premiums. IOne way the insurance companies are heaping up profits is by expecting their customers to pay more. Annual double-digit percentage premium increases and higher co-pays are par for the course.

However, another profit booster came courtesy of the Affordable Care Act, also known as “Obamacare.” The Act provides that young people who don’t have health insurance can stay on their parents’ plans until age 26. Opponents of health care reform shrieked that this provision would be ruinous to, well, somebody. But it’s been great for insurance companies, because all those young people represent new premium income, and on the whole this group doesn’t need a lot of medical care. So they aren’t costing much.

However, reports say that even insured Americans overall are not receiving as much medical care as they used to, which has padded insurance company profits even more. And no one seems to be looking closely to find out why people aren’t going to doctors as much as they used to.  The insurance companies are accused of refusing to pay expensive claims, but whether that’s the real reason for the drop in demand for health care is hard to say. It may be that Americans are increasingly unwilling even to cough up the co-pay to get professional medical care.

Further, many insured Americans are moving into high-deductible plans. These plans have much lower premiums but require that patients pay the first several hundred to several thousand dollars of their annual expenses out of their own pockets. People who switch to high-deductible plans find themselves thinking twice about seeing doctors for minor problems.

Fewer hospital visits and hospital admissions may cause health care costs to rise more slowly. On the other hand, it might also mean that serious medical problems are not caught as early, making them more difficult and more expensive to treat.

For years, half of all health care costs in the U.S. is spent on only 5 percent of the population. These 5 percent are the most extremely sick among us, such as those suffering from mesothelioma. That percentage is not likely to change anytime soon.

The last couple of posts reported some reassuring news about Medicare. But don’t get complacent. A new effort to cut or eliminate Medicare is in the works.

Medicare was created in 1965 because growing numbers of senior Americans had no health insurance and were going without medical care. Since then, Americans have depended on Medicare to see them through the health challenges of their senior years. These challenges include mesothelioma, which is nearly always diagnosed in people who are in or approaching their retirement years.

But several recent news stories say there is a new, organized effort to cut the program. See, for example, “Beware! The Tea Party Is Coming After Your Medicare” in the Washington Times and “Medicare Overhaul? The Tea Party Sees a Chance” in the Christian Science Monitor.

The conservative activist organization FreedomWorks, which helped form the Tea Party movement, is calling on its members to pack town hall meetings in August to demand that Medicare spending be put on the chopping block. This will be just a first move in an all-out effort to enact Rep. Paul Ryan’s budget plan. Among other things, the Ryan plan will “save” money by turning the Medicare program over to private insurance companies and requiring seniors to pay more of their own health care expenses.

The argument behind the Ryan Medicare plan is that since Medicare costs more and more money every year, the government has no choice but to stop paying for so many benefits. Instead, the government would give private insurance companies  a fixed amount of  money in the form of a voucher to help subsidize health insurance policies for seniors.

But the amount of money the Ryan plan provides is far below the real cost of comprehensive coverage. According to the Congressional Budget Office, the subsidized policies would cover only about a third of seniors’ medical expenses. Under the Ryan plan, seniors might have to pay thousands of dollars per year for their own health care, or go without.

Supporters of this idea argue that private insurance companies would do a better job of providing benefits for less money than government bureaucrats. Also, they say, requiring seniors to spend more of their own money for health care will make them savvier health care shoppers, which would help keep down costs.

Opponents of the Ryan plan point out that there is no real-world evidence that private insurers would be more cost-effective at providing benefits than government. In fact, all the evidence says just the opposite is true. The per-person cost of private health insurance has risen much more in recent years than the cost of Medicare. Further, in spite of what you may have heard, countries that provide health care to most of its citizens through government programs have much lower costs than the U.S., and by many measures some are providing better health care overall than we are.

There is also plenty of real-world evidence telling us than people without adequate insurance go without necessary health care because they can’t pay for it. And then when they do go to a doctor, their health issues are harder, and more expensive, to treat.

The problem the U.S. has is not that Medicare is too expensive, but that health care is too expensive. Health care costs more everywhere on our planet, but in the U.S. costs have gone up much faster and much higher than anywhere else. This is not just a problem for federal and state budgets, but also is slowing business growth and job creation. Taking Medicare benefits away from seniors doesn’t solve the real problem.

With the frightening economic news we could all use some cheering up. It might surprise you to learn there really is some good news out there, and some of that good news is about the Medicare program.

In 2010, about 47 million Americans were enrolled in Medicare. This number probably includes the majority of people diagnosed with mesothelioma, since symptoms often don’t develop for decades after exposure to asbestos. If you don’t receive Medicare yourself, you very likely are close to someone who does.

So what is the good news? First, the average cost of Part D prescription drug premiums will be slightly lower in 2012. This is an average cost, mind you, which means that not every Part D plan will be lowering premiums. But seniors who shop around during the open enrollment period in the fall may find some bargain prices. This is a little ray of good news for taxpayers, also.

Here’s another cheerful thought for the taxpayers — a study published recently in the Journal of the American Medical Association found that the prescription drug program actually offsets costs in other parts of Medicare. In particular, hospital and nursing home costs are reduced because seniors stay healthier when they take the medications their doctors prescribe.

This week the U.S. Department of Health and Human Services announced good news about seniors who hit the infamous Part D “doughnut hole,” the benefits gap that that leaves some seniors paying all of their out-of-pocket prescription drug expenses.  This year 900,000 Medicare beneficiaries who fell into the “hole” received a 50 percent discount on their medications.  They saved a total of more than $461 million, HHS said.

HHS also announced that millions of American seniors have taken advantage of the new provision that lets them receive preventative services without a co-pay. These preventive services include annual flu shots, check-ups, and many kinds of cancer screenings. It is hoped that this benefit will save money by catching health problems earlier, when they are easier to treat.

The lesson we might learn from these news stories is that sometimes you have to spend money to save money. It’s less expensive to fix a small hole in your roof than a big hole in your roof. It’s less expensive to maintain a bridge than to build a new one. Often it’s less expensive to treat a disease when you catch it early than if you put off seeing a doctor.

The idea behind a lot of proposals to “save” Medicare is that seniors should be spending more of their own money on health care instead of less. This is supposed to make them “smarter” consumers. But in the real world, many people simply put off getting care, or they stop taking medicine they can’t afford, and the result is that more money comes out of the health care system, not less.

So, don’t let politicians take any of these benefits away from seniors because they’re “too expensive.”

Seniors who were worried about their next Social Security checks or Medicare benefits can rest easy, for now.  The debt ceiling is raised, and the Treasury Department will be able to pay the nation’s bills at least to the end of 2012. Americans in their retirement years, which include most of the nation’s mesothelioma patients, will continue to receive benefits for the foreseeable future.

Many lawmakers had refused to vote for the debt ceiling increase without a package of spending cuts attached to it. Will Social Security and Medicare be affected by those cuts? Maybe.

The deal spells out $1 trillion in spending cuts, but none of these cuts are to Medicare or Social Security.

In addition, the deal provides for a special commission to identify another $1.5 trillion in spending cuts. This commission must report to Congress by November 23. Congress will not be allowed to change the recommendations and must give this package of cuts an up-or-down vote by December 23. Obviously, there is no way to know what the commission will recommend.

The deal includes a “trigger” in case Congress cannot agree to pass the recommended cuts. If the cut package fails, $1.2 trillion in spending cuts automatically go into effect. Half of these cuts would come from the defense budget. The non-defense cuts come from several parts of government. Social Security, Medicaid, unemployment insurance, military retirement pay, and some other programs are off the table and will not be cut.

However, the “trigger” includes significant cuts to Medicare. These cuts are not supposed to reduce benefits. However, Medicare providers would see their payments reduced 2 percent across the board. Some health care experts fear that such cuts could cause health care providers to cut back Medicare services or even eliminate Medicare patients entirely.

The “trigger” was set up to cause politicians of both parties to think hard before voting no on the commission’s recommended spending cuts. The theory is that Republicans will not want to cut defense spending and Democrats will not want to cut Medicare. Of course, it’s possible that politicians will decide whatever the commission wants to cut would be worse.

The debt ceiling deal as signed leaves a lot of details to be worked out. There could be many unintended consequences. But Social Security and Medicare won’t disappear just yet.

The word from Washington is that the U.S. is hours away from defaulting on its public debt, because Congress is unwilling to raise the debt ceiling. If the debt ceiling is not raised, the Treasury Department will be unable to raise money to pay all of the government’s current obligations.

By some estimations, if the debt ceiling is not raised on August 2, the Treasury Department will have $306.7 billion in expenses in August but will receive only about $172.4 billion in revenue. The government will be forced to slash spending by as much as 40 percent.

America’s seniors must be especially worried. Will Social Security checks arrive next week? Will the Medicare program still pay for health care? Since most mesothelioma patients are in their seniors years, many must worry whether they will be able to continue mesothelioma treatment.

We do not yet know what might happen. But here is what some experts say might happen:

Social Security. The Social Security Administration appears to have enough funds to pay Social Security checks through August. The SSA also is still receiving money from payroll (FICA) taxes. As long as revenue from FICA is at least enough to cover current expenses, seniors should still receive their Social Security checks.

That said, it is possible that the government will be forced to divert some of the FICA revenue to pay for other needs, such as national security. That would probably be a last-resort move, but it is not out of the question. If that happens, Social Security checks would stop much sooner.

Assuming the Social Security Administration is still receiving its usual share of FICA taxes, what might happen when FICA income isn’t enough? When there is a shortfall, as there was for a time last year, the Social Security Administration normally would turn to the Social Security Trust Fund.

And what is the trust fund? When Social Security receives more money in revenue than it needs to meet current obligations, the “extra” money is invested in U.S. Treasury interest-bearing securities, such as bonds. These securities are the trust fund. When Social Security has a shortfall, it can redeem some bonds to make up the difference.

However, some experts warn that default could affect the value of those securities. In particular, the Treasury Department might stop paying interest on the bonds. If that happens, the Social Security Administration could be short the money it needs to issue checks. And if playing politics with the national debt brings the value of U.S. securities into question, the health of Social Security could be permanently impaired.

And if you are about to become eligible for Social Security, your application may have to wait on someone’s desk for a long time. The Social Security Administration may be forced to lay off employees or even shut down.

Medicare. Medicare appears to be a bigger question mark than Social Security. The Medicare programs also is funded by FICA taxes, and as long as those taxes are not diverted elsewhere, it ought to be able to continue for a time. But Medicare is in a bigger danger of future shortfalls than is Social Security.

In a worst-case situation, rising interest rates caused by default could drive companies out of business and increase unemployment, which would also mean a serious reduction in the amount of payroll taxes the government is receiving. Even if the programs do not shut down immediately, a default could cause both programs to be less secure in the future.

Last week, while most people were focused on the debt ceiling debates, Congress also was arguing about health care costs.

Economists tell us that much of the nation’s economic woes, from the growing budget deficit to the slow growth of jobs, is tied directly or indirectly to out-of-control health care costs. This problem is affecting all of us, including those diagnosed with mesothelioma and other asbestos-related disease. Rising medical costs not only make medical care harder to obtain; they are also weakening the U.S. economy.

Last month this blog discussed the fact that health care costs in the United States are higher than in any other nation in the world, and those costs are rising faster than in another other nation in the world. And this is not, as some would like to believe, because our health care here is so much better. By many measures — such as waiting time to see a doctor, treatment of chronic conditions, life expectancy, and mortality rates for infants and children — many other nations are doing a better job of providing health care for their citizens, and doing it at much less cost.

There is no starker example of this than the cost of prescription drugs. Americans pay, on average, twice as much as people in other nations for exactly the same drugs. This was the finding of a 2010 hearing by a Senate Special Committee on Aging, and the Senators wanted to know why. So, letters were sent to the pharmaceutical corporations AstraZeneca, GlaxoSmithKline, Eli Lilly, Novartis, Pfizer, and Sanofi-Aventis to ask about their price discrepancies.

Now the responses are back and have been compiled in a report released last week. In brief, the single biggest reason drugs cost less in other countries is that other countries have legislated price controls on drugs. The United States has not. So in the U.S., drugs cost whatever the market will bear.

U.S. pharmaceutical companies have argued for years that their drugs have to be priced high enough to pay for research. But when pressed to produced hard information on how much of the price of drugs is actually needed to pay for research, the companies were evasive.

One company did provide a detailed breakdown on the costs behind one family of drugs available in both brand name and generic form. These drugs are priced at nearly 33 percent over cost in the U.S. market, and most of the costs of producing the drugs were related to marketing, not research. The report concluded,

“None of the data received demonstrated a direct relationship between prices charged and the costs of manufacturing, distribution, or research and development. Across the board, the largest expense category was always marketing. …

… we have learned that drug companies charge prices based mostly on what the market will bear without strong pushback from purchasers, and less on what the drug costs to develop, market or manufacture.”

The Senate’s report also notes that “while the U.S. represents the world’s most profitable pharmaceutical market, almost all of these companies employed the majority of their workforce in foreign countries.”

The Affordable Care Act — also called the health care reform act or “Obamacare”  — is still being debated even though it passed over a year ago. Many provisions in the ACA pertain to Medicare, which makes it of particular importance to many mesothelioma patients. This deadly lung cancer is most often diagnosed in people who are in or approaching their Medicare years.

One provision of the ACA generating controversy is the Independent Payment Advisory Board, or IPAB. IPAB will be a panel of health care experts — including doctors and patient advocates — who will look for ways to save money in the Medicare program.

IPAB won’t exist until 2013. Even then, it has no responsibilities unless Medicare spending grows faster than projected. In that event, the IPAB will make recommendations to Congress about how to more efficiently run Medicare to keep costs low, without compromising care.

Congress may accept or reject these recommendations. However, if it rejects a recommendation, under some circumstances Congress may have to find another way to save the same amount of money.

There are some kinds of changes IPAB is not allowed to recommend. These include health care rationing, raising taxes, raising premiums, or changing eligibility. The panel may not dictate to doctors how to care for Medicare patients. And the scope of its authority is strictly limited to Medicare alone.

Even with the limitations, however, the IPAB is expected to help contain costs. Henry J. Aaron wrote in the New England Journal of Medicine,

“In enacting the ACA, Congress created a broad and potentially powerful portfolio of cost-control instruments, containing virtually every method that analysts have advanced for slowing growth of spending in a rational fashion — accountable care organizations, comparative-effectiveness analysis, bundled payments, value-based insurance design, limits on the exclusion of employer-financed premiums from personal income tax, and health insurance exchanges to promote competition among insurance plans.”

So what’s the problem? In a word — politics.

The health care industry is lobbying to repeal the IPAB. Saving money on Medicare means some part of the industry will be receiving less money.

But on top of that, some politicians are trying to paint IPAB as the new “death panels.” These politicians claim IPAB will be set up to ration care, even though it is prohibited by law from rationing care.

Last month, Minnesota congresswoman Michele Bachmann, a candidate for the Republican presidential nomination, said that under IPAB seniors would lose control of Medicare.  A “politically appointed 15-member board that’s unelected and unresponsive to the will of the people called IPAB will make the decisions about what care we get and what care we don’t,” she said.

Criticism of IPAB has increased in recent weeks, after a Republican proposal to privatize Medicare proved to be hugely unpopular and a political liability. Democrats have been getting traction with voters by bashing the so-called “Ryan plan.” Observers say Republicans are turning IPAB into the bogyman as a way of fighting back.

The fact is that the IPAB will have no authority to decide what health care anybody gets. It is the Independent Payment Advisory Board, not the independent medical care advisory board. Its task will be to look at how medical care is paid for through the Medicare program and find ways to save money. And those ways may not include rationing.

For all the complaining some politicians make about the cost of Medicare, you’d think they’d be open to any plan to cut costs without cutting benefits. But if you think that, think again.

The last post discussed Medicare Part D, the prescription drug program. Drugs purchased through Medicare Part D cost taxpayers a lot more than the same drugs purchased by, say, the Veterans Administration, because the law that implemented Medicare Part D specifically forbids the government from negotiating with pharmaceutical companies for the best prices.

Allowing the government to negotiate to save money ought to be a no-brainer, but many politicians are resisting this idea, tooth and nail. In a nutshell — instead of looking for ways to cut Medicare cost without cutting benefits, some politicians are looking for ways they can save money by cutting benefits, while keeping subsidies going to the private health insurance industry.

As we go into another presidential election year, it is especially critical to stay informed about these issues. The future of Medicare could very much depend on which politicians control Congress and the White House in 2013.  This is a vital interest  to mesothelioma patients, since most patients are in or approaching their Medicare years when they are diagnosed.

Now another proposal is on the table that would also save money, but which is being fought by conservative organizations such as the Heritage Foundation. To explain this, let’s go back to 2006, when Medicare Part D first went into effect.

In January 2006, prescription drug benefits became available to all seniors eligible for Medicare. These benefits also were extended to about 6.5 million low-income elderly and disabled citizens who were receiving Medicaid benefits. The 6.5 million were called “dual eligibles,” because they were automatically transferred to Medicare Part D but continued to receive the rest of their health care through Medicaid.

Under the Medicaid program, drugs are purchased by the federal government and by state agencies. The pharmaceutical companies are required by law to sell their drugs to the governments at the “best price,” meaning the government pays no more than the lowest price negotiated with private insurance companies or any other purchaser.

These drug prices are closely monitored, and sometimes drug companies are required to rebate some of the taxpayer’s money back to government if the government finds someone else got a better deal.

But that cost control ended for the 6.5 million patients who transferred to Medicare Part D. The New York Times reported in July 2006 that the pharmaceutical industry was enjoying a windfall of up to $2 billion because of the switch of 6.5 million “customers” from Medicaid to Medicare Part D.

That’s $2 billion additional taxpayer dollars to pay for the same benefit these people were receiving under Medicaid.

Since then, lawmakers have occasionally proposed applying the Medicaid “best price” policy to Medicare, or at least  shifting the “dual eligibles” back to Medicaid instead of Medicare Part D for their prescription drugs. This year the Congressional Budget Office projected that such a shift would save taxpayers $112 billion over ten years (see page 54).

So far, lobbyists from the pharmaceutical industry have managed to shoot this down. A provision to shift dual eligibles back to Medicaid was written into the House version of the health care reform act passed last year, but it was taken out of the final version because of pressure from lobbyists.

Recently the shifting of dual eligibles back to Medicaid was proposed in Congress. The reaction from right-wing think tanks like the Heritage Foundation and the American Enterprise Institution was swift, and shrill. Such a shift would cost too much, Heritage cried (huh? saving $112 billion costs too much?). The think tankers argued also that such a shift would mean seniors would get poorer quality care, as if Lipitor works better if you pay more money for it. I don’t think so.