HEALTH Health Policy Advisory Center Volume 14, No. 1 i / BULLET m < * M m , Reagan's Health Care m /fii1 Revolution M aggie Kuhn, Gray Panther P. 19 Brushup on Teeth P.27 Health/PAC Bulletin Peer lanuary-Fcbruory, 1983 Review Board of Editors IAJ Tony Bale Arthur Levin Howard Berliner Steven Meister To the Editor: Carl Blumenthal Patricia Moccia Thanks for the "Profits With­ Pamela Brier Kate Pfordresher out Honor" article (Vol. 13, No. Robb Burlage Marlene Price 4. I think it's greatl That's a Michael E. Clark Virginia Reath gem of a quote by Phar­ Barbara Ehrenreich Hila Richardson maceutical Manufacturers Sally Guttmacher David Rosner Association's Engman at the Louanne Kennedy Hal Strelnick end (and a gem of a re­ David Kotelchuck Sarah Santana sponse!). Ronda Kotelchuck Richard Younge There are a few extremely Richard Zall recent tidbits regarding Bang­ ladesh, just to let you know. Editor: Jon Steinberg For one, there have already Staff: Roxanne Cruiz, Debra De Palma, Loretta Wavra. been measurable effects (compromises) on the original Associates: Des Callan, Madge Cohen, Kathy Conway., Doug Dorman, law, in that: Cindy Driver, Dan Feshbach, Marsha Hurst, Mark Kleiriian, Thomas —the 236 drugs which were to Leventhal, Alan Levine, Joanne Lukomnik, Peter Medoff, Robin Omata, Doreen Rappaport, Susan Reverby, Len Rodberg, Alex Rosen, have been destroyed on 12 Ken Rosenberg, Gel Stevenson, Rick Surpin, Ann Umemoto. September were not, be­ cause MANUSCRIPTS, COMMENTS, LETTERS TO THE EDITOR AND —export licenses have been SUBSCRIPTION ORDERS should be addressed to Health/PAC, granted for these drugs (and 17 Murray St., New York, N.Y. 10007. Subscription rates are $15 for individuals, $30 for institutions. 233 others), permitting their ISSN0017-9051 shipment to West Africa, other parts of Africa, and 1983 Health/PAC. The Health/PAC Bulletin is published bimonthly. Saudi Arabia; Second class postage paid at New York, N.Y. and at additional mailing —41 drugs originally to be offices. phased out have been rein­ Design: Three to Make Ready Graphics/1983 stated in the national formu­ Cover by Kate Pfordresher. lary; —the original time periods for Articles in the Bulletin are indexed in the Health Planning and Administration data base of the National Library of Medicine and the "phasing out" have been Alternate Press Index. extended. This information comes mainly from "War on Want" in Lon­ Health Action International country. Your publication also don. The last thing is that for­ IOCU Regional Office for Asia reported that certain U.S. drug eign news articles have men­ and the Pacific companies (Merck, Squibb and tioned "hints at reducing the P.O. Box 1045 Pfizer) had sought assistance at annual $160 million in US aid" Penang the American Embassy which, from the US embassy if the Malaysia in turn, had made certain rep­ Drug Reform Law isn't recon­ November 11, 1982 resentations to the Government sidered. Dear Sirs: in support of these multina­ The enclosed letter was sent I read in one of your recent tionals. by someone who wishes to re­ publications that the Govern­ I recently sent to you a copy main anonymous. ment of Bangladesh had of a report on this issue which I banned a large number of received indirectly from a Best Regards, drugs and was in the process of friend who subscribes to the so- Erica Gollub implementing a new policy on called "International Organi­ New York, NY drugs to be available in the zation Monitoring Service.''^ Health/PAC Bulletin Notes & Comment Huntington Health Services, Inc., is listed doesn't have the resources to audit all such on the American Stock Exchange. It owns four hospitals, but the selective investigations so far acute care hospitals, seven long term care indicate taxpayers are being taken for a facilities, four retirement homes, a pharmacy multimillion-dollar bath. Blue Cross/Blue company, two physical therapy companies, a Shield customers in some states are paying for medical office building, and two real estate similar fraud in higher premiums. holding companies. Federal regulations on reimbursement are According to a report issued by the General too clear to permit the companies involved to Accounting Office (GAO) of Congress this claim errors in judgement with any credibility. January, Huntington also has some very crea­ Because there is no price restraint through tive accountants. Through a series of complex competition when items or services are pur­ entries, they were able to obtain reimburse­ chased from a related company, Medicare and ment overpayments of $215,000 for fiscal years Medicaid reimbusement for such transactions 1979 and 1980 for purchases of intravenous is limited to the lower of (1) the cost to the (IV) solution by Huntington's North Las Vegas related firm or (2) the market value. In every Hospital from a related enterprise. After the case the hospital engaged in fraud attempted to GAO audit the hospital reduced its fiscal 1981 conceal the relationship or the nature of the reimbursement claim by $441,000. The GAO transaction. also found that North Las Vegas had gotten Responsibility for evasions and overcharges $188,000 more than it should have from the lies not only with the hospitals involved, ac­ government by "buying" inhalation therapy cording to the GAO, but with the insurance services from another Huntington company companies which serve as their fiscal interme­ which paid excess salaries to employees diaries. They are supposed to be the govern­ assigned to the hospital. ment's auditors, but under one of the more pe­ The GAO found a similar pattern at Wood­ culiar provisions of Medicare law a hospital ruff Community Hospital in California, a facil­ chooses which insurer it wants to perform the ity owned by two physicians through a holding audit. The hospital is likely to drop a company company. Woodruff got an extra $600,000 in which is too tough, depriving it of a profitable reimbursements by overpaying a related com­ sideline. Presumably the individual account­ pany which has a contract to manage it and ants might be concerned that if their employer juggling the books to obscure transactions with loses the job, they might lose theirs. The GAO other related companies from routine audits. believes a better system could be introduced. Mad River Community Hospital in Califor­ Free copies o f the GAO report, No. HRD-83- nia inflated its operating costs by more than 18, may be obtained by writing to the U.S. $500,000 by a sham sale and leaseback General Accounting Office, Document Hand­ arrangement with a related company. Brook- ling and Information Services Facility, P.O wood Hospital in California ran up excess costs Box 6015, Gaithersburg, MD 20760. of over $450,000 through management con­ Herb Semmel tracts and leases with related organizations. The magnitude of these overcharges is parti­ (Herb Semmel is dean of the Antioch Law cularly impressive because all of the hospitals School and Director of the Consumer Coalition involved are small, under 100 beds. The GAO for Health.) ■ This is apparently an informa­ the "Bangladesh drug issue" will be particularly hurt if the tion organization which keeps and indicated that the multina­ Bangladesh Government does subscribers informed on the ac­ tional drug companies are con­ indeed ban Vibramycin, an ex­ tivities of selected international tinuing their efforts to change traordinarily expensive form of organizations. This particular the new policy. Of course, it is tetracycline. report contained a summary of in their interests to do so. Pfizer continued to p. 4 Health/PAC Bulletin continued from p. 3 about attracting investment? Pfizer Bangladesh, receives It has recently come to my at­ How far can other potential in­ the bulk product, puts it in cap­ tention that another American vestors trust the government to sules or compresses it into consulting organization, Busi­ live up to its initial promises? tablets, and then sells the prod­ ness International, plans to join Of course, Pfizer would not uct locally—realizing yet this debate. Business Interna­ include in this presentation any another profit on the finished tional (BI) has scheduled a so- reference to the total cost to product. called Roundtable Discussion Bangladesh of this particular Now, Vibramycin is a good with the Government of Ban­ drug, Vibramycin. Nor would and useful drug. For those who gladesh, to be held in February they refer to the fact that Vibra­ can afford it, the benefits out­ in Dacca. The conference has mycin is a form of tetracycline, weigh the disadvantages. The the full support of the Chief a well known and established question is whether or not it is Martial Law Administrator, Lt. broad spectrum antibiotic an appropriate drug for Ban­ General H.M. Ershad. which is available from a large gladesh, particularly when Pfizer, the American number of sources around the other, cheaper forms of tetracy­ multinational drug company world at prices as low as 10% of cline are available. with substantial interests in the Vibramycin price. Above This involves a cost/benefit Bangladesh, is conducting an all, Pfizer would not want to in­ judgement. But how can the active campaign to encourage clude in their presentation any Government of Bangladesh other corporations in other in­ information at all about the make such a judgement in the dustries to participate in the BI method by which their Bangla­ absence of all pertinent infor­ program. Pfizer plans to use desh plant acquires the raw ma­ mation. They cannot. this conference as a forum to terials to "manufacture" Vibra­ I guess my main‘'point here is "pressure" the Government to mycin in the country. There are that it appears Bangladesh is depart from its new drug pol­ very good reasons why they being ripped off.