Lawmakers Launch Warning to HHS Regarding Skyrocketing Generic Drug Prices

A letter urging the federal government to address “staggering increases” in the cost of generic drugs was sent to HHS Secretary Sylvia Burwell by Senator Bernie Sanders (I-Vt.) and Representative Elijah E. Cummings (D-Md.). The letter asks for the assistance of HHS in addressing significant and rapid increases in generic drug prices, which the lawmakers say are negatively affecting Medicare, Medicaid, hospitals, nursing homes, and individuals across the country. The letter warns action must be taken immediately to protect access to historically affordable generic drugs that countless Americans rely on.

Rising Prices

According to the letter, the Healthcare Supply Chain Association (HSCA) recently revealed that certain drugs have undergone enormous increases in prices. For example, a bottle of 100 2mg pills of the asthma drug albuterol sulfate was available October 2013 for $11, whereas, by April 2014, the cost of the same bottle had risen to $434. Over that same period of time, a bottle of 500 100mg tablets of the antibiotic doxycycline hyclate rose from $20 to $1,849. According to the lawmakers’ letter, the HSCA has documented at least eight generic drugs that have seen price increases of more than 400 percent between October 2013 and April 2014.


To demonstrate the impact of the rising prices, the letter points to 1,500 stories that Senator Sanders and Representative Cummings received from individuals in the two week time period that they spent investigating the issue. Additionally, the letter points to the impact that the price hikes are having on industry. The letter gives the example of a recent report, which indicated that two Walgreens executives were let go for underestimating the cost of generic drug price increases by $1 billion.


In light of the price increases, the letter requests that HHS provide lawmakers with the National Average Drug Acquisition Cost data maintained by CMS, so that the lawmakers can attempt to better understand and address the price increase trends. The letter also inquires as to the steps that HHS is taking to combat the price increases, the authority that HHS has to address the problem, and whether legislative action is required. In addition to writing to HHS, the lawmakers sent letters to 14 different generic drug manufacturers to ask why the prices those manufacturers are charging for generic drugs have increased so significantly in such a brief period of time.

Nursing Homes Under Fire for Lack of Sprinklers

CMS has indicated that as many as 385 nursing homes in 39 states have failed to meet requirements to install sprinkler systems to combat potentially deadly fires in those facilities. According to the Associated Press, the nursing homes with the non-compliant sprinkler systems house 52,000 patients who are being put at unnecessary risk of deadly nursing home fires.


The lack of sprinklers poses a compliance problem for some nursing homes because of a deadline set by CMS requiring all nursing homes to be “sprinklered” by August 13, 2013. CMS warned that it would not grant extensions for the timeline that was officially set out in a 2008 final rule (73 FR 47075). According to the Associated Press, CMS has indicated that compliance has reached 97 percent, with 3 percent of facilities falling out of compliance on the sprinkler mandate. CMS reportedly told the Associated Press that “CMS and states are actively engaging with the rest of the facilities to verify their compliance with this regulation and will take appropriate actions for noncompliance to ensure the safety of residents.”

Slow Compliance

The path to sprinklers in nursing homes has been a slow one. In 2003, attention was brought to the issue when two nursing homes, without sprinkler systems, burned and left 31 people killed. One of the nursing homes that caught fire was the Greenwood Nursing Home in Hartford, Connecticut and the other facility was the NHC Healthcare Center in Nashville, Tennessee.  Although at the time of those fires, newly constructed facilities were required to have sprinkler systems, older facilities were not required to be retrofitted. In 2008, CMS issued the requirement that all nursing homes were to install sprinklers and gave the lengthy five year deadline for compliance. Despite the slow start, the numbers have improved from last December when, according to the Associated Press, CMS reported that 714 homes lacked adequate sprinkler systems.


One reason for the lack of compliance is the cost associated with the installation of adequate sprinklers. For example, in 2003, following the Greenwood fire, the estimated cost of installing sprinklers ranged from $270,000 to $363,000 depending on whether a system needed to be upgraded or no system was in place at all.

CMS Action

According to the Associated Press, CMS indicated that it could resolve continued non-compliance with the sprinkler requirement by denying payment and terminating a facility’s provider agreement. The agency did state that some providers may receive extensions due to extenuating circumstances if, for example, nursing homes are undergoing major renovations. Regardless of the action CMS takes to enforce the sprinkler requirement, compliance is important. The Government Accountability Office indicated in a 2004 report that no facility fully equipped with sprinklers has ever had a multiple casualty fire. Simply put, sprinklers save lives. In the words of Tom Burke, a spokesman for the American Health Care Association, the value of sprinklers as a “safety and patient safety feature is undisputed.

CMS Announces “Investment Model” ACO Funding

CMS will award funding for a new Accountable Care Organization (ACO) innovation model, the Investment Model, beginning January 1, 2016. The Investment Model builds on previous work with advance payments in the shared savings program. This model addresses the need for capital to invest in the equipment and training needed to manage the care of a patient population while increasing the level of financial risk in response to stakeholder concerns.

Two Groups of ACOs

Two groups of ACOs will be eligible to apply for funding under the Investment Model. ACOs that already are participating in the shared savings program may apply from October 15, 2014 to December 1, 2014. CMS will accept applications from new ACOs that will begin participation on January 1, 2016 and ACOs that began participation during 2014 in the summer of 2015.

Types of Payments

Both groups of ACOs will receive two types of variable payments: one “up-front” payment and one monthly payment. Both variable payments will be based on the number of Medicare beneficiaries preliminarily and prospectively assigned to the ACO. The new ACOs also will receive a fixed up-front payment.

Eligibility Requirements

To participate in the Investment Model, ACOs must be accepted into the Medicare shared savings program. ACOs that entered the program in 2012, 2013, or 2014 must have submitted complete and accurate quality reports during the most recent performance year. In addition, the ACO must not: (1) have been assigned more than 10,000 beneficiaries; (2) include hospital participants providers except for critical access hospitals (CAHs) or prospective payment system hospitals with no more than 100 beds; (3) be operated either wholly or in part by a health plan; and (4) have participated in the Advance Payment Program.


In its selection process, CMS will favor new ACOs in rural areas and other areas with low penetration and existing ACOs that agree to increase their level of financial risk. It also will give preference to ACOs that have provided high quality care, achieved their financial benchmarks, demonstrated exceptional financial need, or “presented compelling proposals” for the investment of both their own and CMS funds.

Ebola Preparedness Guidelines May Have Come Too Late

In an urgent effort to warn hospital health care personnel about recognizing symptoms and patterns of the Ebola virus, CMS issued a survey and certification memorandum articulating the Centers for Disease Prevention and Control’s (CDC) health advisory alert to state survey agency directors. The CDC’s October 2, 2014, alert came days after a Liberian man died from the virus in Dallas, Texas, exposing health care workers and family members to the deadly disease.

The CDC outlined the following evaluative and preventive guidelines for hospitals and critical access hospitals (CAHs):

  • Increased awareness of those traveling from West Africa within a 21-day period for anyone with a fever or other Ebola symptoms;
  • Patient isolation into a private room with bathroom for anyone who has traveled to or from West Africa and exhibits Ebola symptoms;
  • Immediate notification to local and state health departments;
  • Use of appropriate personal protective equipment (PPE), including gowns, face mask, eye protection, and gloves;
  • Vigilant monitoring for Ebola infection symptoms such as fever greater than 100.4°F (38°C), severe headache, muscle pain, vomiting, diarrhea, abdominal pain, or unexplained hemorrhaging;
  • Knowledge of Ebola’s incubation period (typically 8 to 10 days, but can range from 2 to 21 days); and
  • Knowledge of patterns of exposure that are either high-risk (needle sticks, mucous membrane contact with blood or body fluids, and direct skin contact with, or exposure to blood or body fluids of, an infected patient) or low-risk (brief direct contact such as hand shaking or being around infected patients who have been in the care area for a prolonged period of time without wearing proper PPE).

CMS has been urging hospitals and CAHs to immediately adopt these procedures, particularly in their emergency and other outpatient departments. Following protocol is key, since two hospital care givers who treated the Liberian man, Thomas Eric Duncan, have contracted Ebola. One of the health care workers was a 26-year-old nurse who provided care that included invasive dialysis procedures and use of a ventilator during Duncan’s hospital stay.

The protocols, however, may not be enough. CNN reported that Texas Health Presbyterian Hospital Dallas nurses have complained that guidance continually changed, and there were no up-to-date protocols available when Duncan was at the hospital. The nurses claim that Duncan was left in an open area, that their PPE exposed their necks, and there was no mandate for them to attend training. Further, the second 29-year-old nurse flew the next day between Cleveland and Texas after treating Duncan.

Regarding the infected nurse, the Washington Post reported on October 14, 2014, that CDC director Tom Frieden affirmed that a “breach in protocol resulted in this infection.”

The CMS memorandum provided a link to an Ebola detection checklist, but it is not mandatory or federally regulated. The checklist covers review of triage procedures, post-screening criteria, adequate training, and preparation of isolation, quarantine, and exposure reports. CMS also cited the CDC’s website for updates to affected countries, but again, the memorandum was issued days after Duncan’s visit.

The CDC and CMS will need to move faster as any changes in guidance arise. Whether current protocols will contain the Ebola virus remains to be seen, as it is likely more health care workers at the Dallas hospital will contract the disease.