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Jim Kenyon: Drug pricing needs a cure

  • Jim Kenyon. Copyright (c) Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Valley News Columnist
Published: 2/27/2021 10:14:41 PM
Modified: 2/27/2021 10:14:39 PM

John Vogel, a retired Dartmouth business school professor, was able to get a vaccine without any problem.

No, not that one. He won’t receive his first COVID-19 vaccine until later this week.

I’m talking about the vaccine to protect against shingles, a painful nerve inflammation that can last months or even years.

Shingles, which often starts out as a skin rash, is caused by the same virus that causes chickenpox. Anyone who has had chickenpox as a kid is susceptible to shingles — and its burning nerve pain.

About 1 in 3 people will develop shingles in their lifetime, according to the Centers for Disease Control and Prevention. The risk increases as you get older, which is why the CDC recommends that everyone over age 50 get the two required shots.

During his annual physical in September, the 70-year-old Vogel and his Dartmouth-Hitchcock primary care doctor agreed that he was overdue.

His doctor warned that it could be painful — not the shot itself, but the bill that came with it.

He wasn’t kidding. D-H charged Vogel a whopping $457 for the shot that was given by a nurse at one of its satellite medical clinics.

Vogel’s doctor also warned that Medicare doesn’t generally cover the cost of the vaccine. Sure enough, when Vogel received his billing statement, it showed that Medicare had paid zero. The bill also indicated the private insurer from which Vogel buys so-called supplemental coverage hadn’t contributed either.

After paying the $457 out of his pocket, Vogel did some research. He learned the national average for one dose of the Shingrix vaccine, which provides 90% protection, is around $190.

How could D-H charge nearly 2½ times that amount?

The short answer: D-H is a multibillion-dollar health care empire that can do pretty much what it wants.

But D-H picked the wrong guy to gouge. Vogel, who lives in White River Junction, spent 25 years on the faculty of Dartmouth’s Tuck School of Business, where he taught the ins and outs of nonprofit management.

Over the years, Vogel stressed to his MBA students the vital and unique role that nonprofit organizations play in society. “Nonprofits flourish in fields where trust is very important,” he told me. “The assumption is that they’re not just out to make money. They’re out to do some good.”

Vogel wasn’t so much worried about D-H charging him an exorbitant amount for preventive medical care. Frankly, he can afford it. He was more concerned about people who don’t have insurance or are retirees scraping by on fixed incomes.

With the shingles vaccine and other medications, the folks who can least afford it sometimes end up paying the most.

D-H didn’t respond to my requests last week to talk about its shingles vaccine pricing.

It just so happened that I got the shingles vaccine around the same time as Vogel at the pharmacy at Dartmouth-Hitchcock Medical Center, the flagship of the D-H system, in Lebanon.

The cost of one shot: $163. (My private insurance covered the entire amount.)

How the same shot cost $300 more in a D-H doctor’s office than it does in its own pharmacy is a window into how drug pricing works. Insurance companies can negotiate deals with health care systems, but “if you don’t have insurance, you don’t get to make that deal,” Vogel pointed out.

Drug companies and health care systems, including D-H, say they offer help to poor people who can’t afford the cost of medications. Not everyone is comfortable asking for financial assistance, though.

At roughly $200 per shot, the shingles vaccine is the most expensive vaccine recommended for older adults. The cost can “dissuade people from getting it in the first place because they don’t think it’s something they can afford,” Leigh Purvis, director of health services research at AARP’s Public Policy Institute in Washington, told me in a phone interview last week.

Trying to figure out if their Medicare plan covers the vaccine and to what extent can be confusing for many people, she said. Original Medicare, known as Parts A and B, doesn’t cover it, while stand-alone prescription drug plans, known as Medicare Part D, do. (About 46 million of the 61 million Americans who are Medicare beneficiaries are enrolled in Part D, The New York Times reported last year.)

Part D plans, which are offered by private companies, have a “fair amount of leeway in terms of how they cover it,” Purvis wrote in an AARP blog. “For example, some plans require a high level of cost sharing, while others require enrollees’ prescribers to explain why the vaccine is medically necessary before they will approve its use.”

Vogel’s vaccine saga stretched into January when he returned to the D-H medical clinic, where his doctor practices, for his second shot, but learned it no longer administered the vaccine.

Vogel then went to the CVS pharmacy in Hanover. The pharmacist told him he owed $25 for the vaccine and his insurance would cover the rest.

Purvis told me what Vogel ran up against isn’t uncommon. (D-H’s $457 charge, however, was something she hadn’t seen before.) Many health care providers don’t have a billing system that allows them to file claims with Part D plans, she said. “The paperwork falls on the patient,” she said. “Trying to get reimbursed can prove daunting.”

Last week, Vogel called the phone number for Conifer Health Solutions on his D-H billing statement. D-H outsourced its billing department to the Texas-based company about five years ago.

The woman on the other end of the line told Vogel that he might be eligible for money back, if he requested a claim form. Still, Vogel was curious. How could D-H, a nonprofit, charge $457 for a vaccine that cost him $25 at CVS, a private corporation? he asked.

“She said that she hears that a lot,” Vogel told me, “but did not know the answer.”

Jim Kenyon can be reached at jkenyon@vnews.com.




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