News in brief - Sept. 10, 2007

Government health care's share of the GDP growing

Health care is taking up a larger piece of the nation's budget pie and continues to grow faster than the economy, the Congressional Budget Office said in a new report. Total federal spending on Medicare and Medicaid is expected to reach 4.6% of the gross domestic product this year. This figure will reach an estimated 5.9% in 2017.

Demographic changes in the two programs only account for a small fraction of the expected increase over time, meaning that rising health care costs are the principal driver in this economic situation.

"Over the long term, the budget remains on an unsustainable path," said the CBO, which produces cost estimates for Congress. "Unless changes are made to current policies, growing demand for resources caused by rising health care costs and the nation's expanding elderly population will put increasing pressure on the budget."

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Managed care lobby fights back with new ad campaign

The managed care industry has stepped up its fight against proposed Medicare Advantage reductions by launching a new television advertising campaign warning about the possible effect on seniors.

The ads from America's Health Insurance Plans, titled "Last Time," note that when Congress reduced Medicare private health plans' funding a decade ago, more than 1.5 million seniors who were enrolled in these plans lost access to them when the sponsors pulled out of the program. This year's proposed cuts, which the House approved last month as part of a children's health and Medicare measure, are significantly larger than those reductions were.

The American Medical Association and AARP have run their own joint television ads calling for Congress to approve the proposed Medicare Advantage changes. By eliminating additional federal subsidies to the plans, the proposal would put Medicare Advantage on equal ground with traditional Medicare and would free up nearly $160 billion over 10 years to spend on other health care priorities, the organizations say.

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Drugmaker settles off-label lawsuit

In a case that put the spotlight on doctors' role in off-label marketing, drug manufacturer Jazz Pharmaceuticals Inc. agreed to pay $20 million to settle criminal and civil charges that its subsidiary, Orphan Medical Inc., illegally promoted the narcolepsy drug, Xyrem (sodium oxybate).

The Justice Dept. accused Orphan of improperly marketing Xyrem for uses not approved by the Food and Drug Administration and of paying kickbacks to doctors to induce them to endorse off-label treatments. Xyrem contains the depressant GHB.

In April 2006, the government indicted Maryland psychiatrist Peter Gleason, MD, for allegedly conspiring with Orphan and accepting money for speaking engagements to promote Xyrem for treating pain and fatigue. Dr. Gleason and his attorney could not be reached for comment.

The Justice Dept. agreed not to prosecute Jazz for Orphan's actions as long as Jazz complies with the terms of the agreement. The company agreed to cooperate in the ongoing probe.

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Governor signs Calif. budget, releasing delayed Medicaid payments

California Governor Arnold Schwarzenegger signed California's $145.5 billion state budget for fiscal year 2007-08 on Aug. 24 -- 54 days after the prior year's budget expired. The state withheld $1.2 billion in Medi-Cal payments to various program participants during the impasse. State Controller John Chiang announced on Aug. 27 that his office had begun processing the delayed claims.

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