Friday, December 7, 2018
Blog Page 1042

POLICY: The uninsured–can Pfizer’s solution really help?

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I stumbled across the web site healthpolitics.com recently while looking for Jeanne Scott’s site health-politics.com (you spot the cunning difference!). HealthPolitics with Dr. Magee is a site which does a weekly power-point, talking head (literally!) and transcript presentation. It’s neatly done and when you find out the Dr. Magee is head of Pfizer’s Medical Humanities Initiative you understand that they have the bucks to make it so. I’ve seen a few of the webcasts, they are less than 10 minutes long.  Normally these webcasts are about extremely specific patient-physician issues, so the "healthpolitics" title is a bit of a misnomer.

This week, however, the program is about care for the uninsured. Worth watching; it runs about 8 minutes but you can click ahead and read the transcript and slides in about 3. Magee draws heavily on the Kaiser Family Fund backed study by Jack Hadley and John Holohan in Health Affairs that shows that government picked up $35bn of the tab for caring for the uninsured already. Magee ‘s solution is take to those funds and several other sources including cash paid out of pocket from by the uninsured and use it to give the uninsured health insurance.  Magee does not mention the follow up study by the same authors which showed that the uninsured would use "$33.9-68.7 billion (in 2001 dollars) in additional medical care if they were fully insured". In other words covering the uninsured with health insurance by using the current government funding would require extra money, but it would still be considerably less than, say, the $87bn going you know where this year.

Of course Pfizer (and its fellow pharmas and private insurers) are not going to be in favor of a comprehensive national health insurance policy.  However, because they have shown considerable ability to derail health reform in the past, any reform proposal needs to consider their position to be realistic. We are now in a situation where PhRMA, the big pharma trade group, has put its backing behind Medicare Drug Coverage, even though in the long run this will probably mean price controls over their products. Magee’s view seems to show that big pharma is willing to work on ways to get to insurance for the uninsured (who after all then would have more access to their products). Meanwhile the lefty Foundations like KFF believe that there’s less than $50bn required to get to comprehensive insurance for the uninsured, much of which could be recouped from the uninsured themselves (80% of whom, don’t forget, are working and who are already paying over $25bn out of pocket for care). This means that there is potentially less than $20-30 billion required out in new government funding to solve the whole deal.

Is this likely to happen?  Obviously not soon, and extremely unlikely unless we see a "regime change" next November. But given the fairly formless proposals offered by the Democratic candidates so far, this type of minimalist practical approach may make sense by February 2005.

PHARMA: The Lancet vs Crestor, or why I’m not on statins….yet!

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I’m going to start this with a little personal info. I am an ideal candidte for a life-time regimen of statins. I’m 40 years old. I have high-ish cholesterol and have had for a while, and my father had a  life-saving quadruple by-pass when he was 64. I do exercise but I’m careless about my eating habits and actually I’m sitting here eating a mid-afternoon snack of potato chips. (Incidentally, the chips are Safeway’s own brand Barbecue flavor, the best since the very evil Frito-Lay bought and closed Eagle Chips, whose Mesquite Thins BBQ were so good they must have been laced with crack cocaine. Where the hell was the Anti-trust guy at the DOJ when that happened? But I digress….).

As you know, statins lower "bad" cholesterol (LDL) and hence reduce heart disease.  There’s not too much dispute about that.  There’s also not too much dispute about the fact that they are financially the most important class of prescription drugs in the pharma marketplace and, as I posted about here, their future can make or break huge companies. Baycol’s removal from the market nearly broke Bayer, and Lipitor’s current success is responsible or keeping Pfizer top of the heap. Hence there’s an enormous amount riding on statins, and it’s a classic case of spend now, recoup later. For instance, after taking them for 25 years an at-risk 40 year old may avoid heart disease.

There are, though, repercussions from taking statins.  The side effects from Baycol included killing enough patients due to the kidney disease it created that it was withdrawn from the market.  A rational economist might say that the deaths of 52 patients were worth the millions Baycol would save from heart disease, but that’s not how humans work.  We like seeing the "identified life" (or conversely don’t like seeing the "identified death") and we don’t care too much about the unidentified lives that might be saved in years to come.  And of course in the case of Baycol there were alternative statins like Lipitor on the market. Lawyers who have already won over $500m with more to come from Baycol’s maker Bayer, are closely monitoring this situation! Here was a list from some class-action lawyers of various side-effects of Baycol, put above those the same lawyers claim are related to Lipitor.

Baycol’s alleged Side effects                           
>  Fibromyalgia                                                
>  Kidney Failure                                              
>  Memory Loss                                                
>  Myositis (muscle pain)                                 
>  Rhabdomyolysis  (leads to kidney failure)    
>  Hip Joint Problems
>  Nausea
>  Kidney & Urinary Tract Disorders
>  Liver Problems

Lipitor’s alleged Side effects
>  Fibromyalgia
>  Kidney Failure
>  Memory Loss
>  Myositis (muscle pain)
>  Rhabdomyolysis  (leads to kidney failure)

By now you’ll see where this is going.  If only a very few people have fatal complications from any drug, the trial lawyers will jump all over the pharma companies.  Of course the pharma’s fight very strongly to protect their turf and they are only really vulnerable when they "agree" with the FDA to withdraw a drug from the marketplace; something that has happened with increasing frequency in the past decade.  However, the sheer size of the statin market is so huge that it attracts pharma cos and trial-lawyers like moths to a lamp.

Last weekend, though, something new entered the picture. The world’s oldest and one of its most respected medical journals The Lancet came right out and said that a new statin, Crestor from Astra-Zeneca, had been rushed onto the market by the company and that the company had effectively pressured the FDA and authorities in other countries in the approval process.  For details go read The Lancet’s editorial and the accompanying rebuttal from the CEO of A-Z, Tom McKillop. The science of the issue is well covered by bloggers like Derick Lowe at In The Pipeline, and the impact on medical practice and how treatment patterns actually get adopted are well covered by the renaissance-doc Medpundit. But before you go look at their articles, let me end my market analysis and then my personal story.

Analysis: The Lancet says, while statins work to reduce LDL, we have enough of them about already. Meanwhile it says that Crestor–for which it criticizes the legitimacy of some of the clinical trials–reduces LDL but hasn’t yet been proven to reduce heart disease. As such it is being rushed to market for the primacy of A-Z’s profits. (I’ll refrain from going "Duh!). To my recollection only Pravachol (or is it  Mevacor?) which has been around for years, has had the time for a follow-up and can thus boast that it reduces heart disease and associated mortality as a consequence of lowering LDL.  It may well be that Lipitor, Zocor, etc and Crestor do, but as McKillop points out, they haven’t had time to prove themselves in that end-point, though they are all rushing through the clinical trials trying to prove so. The real development here is that a respected journal has cried foul on the whole pharma company process of getting a drug onto the market as quickly as possible. And they’ve directly linked that process to the withdrawal of Baycol due to its (fatal) side-effects. The ubiquity of those side-effects versus the positive saving of lives many years into the future is the key to the future use of statins. If physicians are essentially pushing statins onto patients based on "incomplete" clinical trials slanted towards a particular drug, the Lancet is right to raise a warning flag. Plus it will inevitably encourage other stories of side-effects, lawsuits and possibly reforms in how the FDA conducts approvals. However, don’t forget that the side-effects might be very, very rare, and so drugs that are good for the vast majority of people may be taken off the market. Watch this space very carefully.

My personal analysis I actually talked to my doctor about this a week or so ago. I asked about his view on statins without mentioning my fear of side-effects. Tacitly acknowledging my concern about doing something now with a potential near-term cost for an uncertain long term pay-off, he told me to think again when I’m 45.  Perhaps my early 60s and the threat of heart disease will seem closer then.  There’ll certainly be a ton more research for me to look at to assess the long-term use of these new statins.  Plus as an added bonus, if they’re off patent, they’ll be a darn site cheaper too!

PHARMA: Pharma no longer a safe haven?

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Merck, which span off Medco as featured in the previous story on today’s THCB, has not been having such a good time as its former subsidiary. It’s recent lay-offs of over 4,000 has lead to the now quite widespread belief in New Jersey that the sky is falling.  For instance this Reuters’ article says that the pharmaceutical area (is) no longer (a) safe haven for jobs.  It raises all the issues that THBC readers will be familiar with–Canadian imports, drying pipelines, Medicare drug coverage, expiring patents, government probes, generic competition, and more.

Perhaps it’s time for a little perspective here. No question that pharma is in a tight spot compared to the cream and jelly days of the late 1990s. However, this industry has always been tremedously profitable.  Some of my former colleagues some time ago went to see a company that’s now part of a giant UK conglomerate (the corporate name has expired but think of a common greeting). They toured the research facility and were amazed at the plushness, the marble sinks and the general over-abundance.  Their host noticed their observations and after noting that the policy consulting guys were always telling them to not be out in front with their profitability, said "we had to hide the money somewhere!" Even if big pharma’s profits fell by half, it would still be the most profitable business in America!

The last time the stock market beat down the Pharma stocks was in 1994.  If you’d bought Merck stock then at between $14 and $18, you’d still be very happy now.

PBMs: PBMs doing well while CaremarkRx/AdvancePCS’ deal is still uncertain

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The newly independent PBM Medco Health Services’ stock has been doing very well since its independence from Merck just a few months ago.  In fact if you received Medco stock at the time of the disbursement you’ll find that it’s up about 30% while Merck’s is down about 15%. There are some grumbles on the Medco message board about the management, but that’s being ignored by the market  which has bid the stock up more than $5 since Medco increased its projected earnings for next year (from 44 cents a share to between 44c and 47c).

Meanwhile competitor CaremarkRx has also seen a decent rise in its stock. It’s now back up to roughly where it was before it fell on the news that it was "overpaying" for rival AdvancePCS on September 3. On Tuesday it announced results that beat the market’s expectations by a penny. More interestingly Caremark seems to be shrugging off a recent lawsuit that claimed it misled shareholders over a settlement concerning its failed purchase of Phycor back when it was called Medpartners. Neither its stock price nor that of AdvancePCS showed any concerns that the FTC’s has made a ‘Second Request’ regarding the merger deal. While the lawsuit claiming $3.2 billion is probably a long-shot, the FTC does have to look carefully at the merger. 

Between them Caremark and Medco control a big chunk of the mail-order drug market.  If the merger goes through, Caremark’s main job is increasing AdvancePCS’ use of mail-order. Currently about 10% of Advance’s drugs go out via mail order, whereas for Caremark it’s about 40%. (Medco’s is around 33%)  Of course supplying a drug via mail-order is much more profitable than just processing the claim and having another pharmacy fill the script.  If Caremark manages to increase mail-order use, it becomes a significant lever in its dealings with both pharmacies and perhaps manufacturers, and mail-order overall will become much more significant–something the FTC will be watching. This market concetration also goes for supplying mail-order and other services in the specialty pharmacy market–usually based around drugs for specific relatively rare diseases which use a lot of expensive drugs.. The Drug Cost Management Report (full article well worth reading) notes that:

    The existing managed care clients that AdvancePCS brings to the table could theoretically give the new company enough leverage to severely disadvantage other specialty pharmacy players, including CVS ProCare, Accredo Health, Curascript, Chronimed, Option Care and MIM Corporation’s Bioscrip unit.

Added to this concern from the FTC is the accusation from pharmacies that Medco and other PBMs are deliberately routing scripts away from them to their mail-order businesses. Meanwhile others like health plan Highmark are getting into this business.

Meanwhile the big health plans are likely to be looking at the PBM market. Given that merger-mania and the underwriting cycle will eventually reduce the possibilities for revenue growth in that market, reintegrating health plan and PBM services must be tempting to the folks in Indianapolis and Minneapolis.  After all, it’s not as if PBMs have actually helped health plans or employers actually do what they were supposed to do over the past decade–reduce the cost of the drug benefit!

PHARMA/HEALTH PLANS: Kaiser ends coverage for brands for seniors

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Kaiser Permanente, the historic group-model HMO that dominates the California market and has over 650,000 members in its Medicare HMOs, has changed its benefits in response to higher costs. Kaiser has the reputation of being loathe to change its members’ benefits, and tends to keep its members for much longer than other health plans.  That is connected to the fact ,of course, that Kaiser is also one of the few HMOs which (essentially) owns its delivery system. Key changes, effective Jan. 1, to Kaiser’s Senior Advantage plan for Medicare members include:

    — Elimination of brand-name drug coverage
    — Unlimited generic drug coverage
    — Co-payments of $200 per day for hospital stays, not to exceed $3,000.
    — Co-payments of $10 to $50 for laboratory and radiology procedures.
    — Keeping local premiums unchanged at $80 a month, or lowering those that are higher than that in some areas.

The major change here of course is the elimination of brand-name drug coverage.  The SF Chronicle reports on some Kaiser members who are taking brand-name drugs and face huge increases in their monthly costs.

While some aspects of this move may yet be rolled back by Kaiser, especially for members who have no generic alternatives for their brand-name drugs, there are several wider implications:

a) All payers are now aggressively pushing against the cost of branded drugs. We’ve seen three-tiered formularies, higher co-pays, etc, etc, from PBMs and health plans. Essentially, if even Kaiser is joining in, insurers are giving up on controlling branded drug costs by giving up on covering them.  This begins to look like drug coverage before the rise of managed care in the early 1990s.  Traditionally most insurance didn’t cover drugs (which is why Medicare doesn’t now), and pharma companies are going to have to continue to deal with the effect of this non-coverage for their branded products. The difference for consumers is that branded drugs now cost much more than they used to, so consumers are likely to start pressurizing pharma companies on retail pricing–such as buying them in cheaper countries!

b) The current Medicare Prescription Drug bill does not include any price controls, generic substitution, or limits on the use of branded drugs–other than the "doughnut hole" in the middle of coverage.  Of course (if it passes!) the bill introduces a Medicare payment system that can and will be changed in the future.

c) The Medicare drug bill on the house side promotes the use of private plans for Medicare.  Given that Medicare HMOs have been losing members in recent years, I’m not so sure that there are great prospects for their success.  However, politically, this type of benefit cut by a well-respected HMO that has always had high member satisfaction, will make the privatization of Medicare even more politically unpalatable.

TECHNOLOGY: More on the Forrester HMO website report (with update)

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A few weeks back I posted about a Forrester report about how bad consumers found health plan web sites.  The Forrester report is online but only for its clients. Forrester did send out an email that non-members can get by signing up here and asking for the emails. This article from Health-IT World includes data from that email and suggests that both navigation and personalization are lacking from health plan sites.

Update: To help those health plans and everyone else out, HHS just came out with a list of to-do’s regarding web-site design.  It’s a big tome available on the HHS web site and, no I haven’t read it. But I did read the Washington Post article that explained why HHS came up with it.  Apparently when Sanjay Koyani, who authored the guidelines for HHS looked at the state of the art in guidelines for web site usability:

    "We looked at guidelines inside and outside the government. . . . Nothing was in agreement or backed up by research. . . . The commercial and internal [government] guides were all over the place."

Sounds to me just like the rest of medicine.

INDUSTRY: Merger Mania Monday

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This morning two big mergers in the health plan world.  The two biggest (ex-)Blues merge (Anthem and Wellpoint), and United buys MAMSI, the big commercial HMO on the mid-Atlantic states.  In the Blues case the market has marked down the acquirer and upped the stock of the target, suggesting that they are paying too much. United’s stock price is dipping too as MAMSI’s has gone up.

So why are they buying now?  Health Plans, as evidenced by results released today from Anthem, Wellpoint and Humana, are banking in the bucks.  We can expect profits in the insurance business to start to slowly fall from this high point of the underwriting cycle. One possible explanation for the timing of the merger is that Anthem and Wellpoint have been acquiring smaller Blues plans at a rapid clip, and of course have been bidding up their price. Now there is only one major buyer for smaller Blues, so you can expect this to be the last time that Anthem pays too much!

One last comment–there is now a national for-profit Blues organization with some 26 million members in one organization, roughly one third of all Blues members. As a national force the Blues have never really existed, but individual Blues have been very strong in individual states. As so many individual Blues will now be controlled from Indianapolis, we might expect some slow changes, but health care is still a local good.

TECHNOLOGY: Physicians like the Internet, eventually

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In the old days (well, 1997), there were many reports about physicians annoyed with patients coming to their office with reams of paper printed out off the Internet and asking, for example, if rolling in moose dung reduced blood pressure, just like it said on the Acme Chinese Medicine web site. Although the physician disdain with their patients being "Internet positive" was always overstated, I’m a little surprised to read in Modern Physician that most physicians say Internet improves patient encounters.  The report, from advertising agency Accel Healthcare Communications, is available here and, besides the patient stuff, has lots of other insights into physician Internet use with CME, their participation in market research, and their relationship with pharma reps. Beware though that the sample size is a little small.

POLICY: User fees, employer-based insurance and why it won’t go away

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Suddenly it feels very like 1991 again. Imagine that the 49ers and Joe Montana has suddenly become human and the newspapers are full of stories about how the high cost of health care is the cause of all the world’s troubles.  The NYT is back with an article asking Do Some Pay Too Little for Health Care?  So managed care has run its route, gotten clobbered by Lawrence Taylor with a vicious hit in the open field, and coughed up the ball just like Roger Craig in the 1991 NFC championship. The west coast offense led by Kaiser, Pacificare and the rest has run up against the Bucs and Redskins defensive combination of medical power and government intervention, and its tactics have broken down in dis-array.

OK, enough with the hackneyed football analogy.  We all now accept that "managed care", which never really made it out of California and was killed by a combination of Wall Street greed and popular discontent, is not the secret to cost control. The old chestnut that has returned, as this week’s flavor of the month, is the issue of what used to be called "first dollar coverage".  The argument is essentially that if you charge people to use the relatively cheap services provided by physicians, it’ll prevent them from using those services and save the system money.

I had a similar conversation with another blogger, Medpundit*, last week (and have liberally repeated myself here!). Medpundit’s solution (scroll down a ways), is to make people pay for preventative (and I assume routine) care, and carry catastrophic insurance. Although I have some sympathy with this approach in three-tier drug coverage, and in helping to avoid what economists call moral hazard (i.e. unnecessary use of services because they are free) Canadian economists Bob Evans and Morris Barer have proved to my satisfaction that point of service user fees only really discourage the very poor from seeking care, and are as such discriminatory. But the real point is that although the testing of the healthy that Medpundit sees too much of may be increasing costs, the real money is spent on the care of those who are very sick. The NY Times article and even the normally sage Uwe Rheinhardt, who’s quoted in the article, miss this.  But in health care 80% of the money is spent on 20% of the people.  Even if you got the other 80% to cut half their use of medical care by charging them for it, you’d only save 10% of the costs.  It’s in the 80% of the costs you need to look if you want to save money.

Meanwhile, as Harris reported last week, apparently to the surprise of the NY Times, employees want to keep their health benefits rather than take cash in exchange.  Just when I didn’t believe that I could say any more about the tax advantages for employees of getting their benefits in health insurance rather than in cash, and the disadvantages of buying insurance in the individual "market", the self same NY Times provides this horrendous story of the complete fraud going on in that individual "market".  As if it was needed this provides one more reason for employees to stay huddled in their protective groups. Hence, trying to make employees pay more out of pocket is the only real option for employers, even if it does little to change the overall dismal cost picture.

*Incidentally, this week Medpundit has turned her attention  to the problems of Medicare, and added some comments from a rather misguided reader slamming "Hillarycare", which–not that it ever existed– was NOT a central single payer model like Medicare.

POLICY: Not enough doctors?

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I’ve been sitting on this story about the number of doctors in the future for a week or two but have finally got around to posting it as Jeanne Scott has written about it and I don’t want to be cast into irrelevance. So the background:

Remember how we were told that under managed care we had too many doctors, and always had too many specialists?  The Council on Graduate Medical Education (COGME) has now decided that was all wrong.  We are now going to have too few doctors by around 85,000 (about 10% of what we’ll then have) in the year 2020.  COGME has now recommended increasing the number of doctors trained each year by 3,000, and also relaxing the aim (that was never close to being achieved anyway) of a 50-50 balance between generalists and specialists.  Their logic is that we will end up with an older population (the peak will be in 2020) and that there won’t be enough doctors to go around. However, there are several reasons to view this very suspiciously.

The first is based on data that comes from an IFTF report that was done by a crack team (ok, me and Marina Pascali) in 1997. The number of doctors in training doubled in the 1970s and 1980s. For roughly the past 15 years and the next 15 years we will have a net addition of roughly 12,000 doctors each year to the labor force. (That’s 16,000 new residents, plus 4,000 immigrants minus 8,000 retirees). The supply of non-federal patient care physicians (that’s post residency docs actually practicing) has gone from 480,000 in 1990 to over 600,000 today and will be around 720,000 by 2020, when the actual number retiring begins to match the number coming out of training each year. In 1994 COGME estimated that the need in the year 2000 would for between 145 and 185 doctors per 100,000 people.  At that stage there were already 210 docs per 100,000, and even with population growth that number will climb to over 230 by 2020.  In other words the physician population will increase by more than 20% over the next two decades while the population will increase by less than 15%. So unless COGME has radically changed its methodology and has decided that we need far more doctors per head, the simple answer is that–unless we are radically undersupplied now–we don’t.

The second reason is that old stand-by, international comparisons. If you want to dive into this table from the OECD, you’ll notice that the US has 280 docs per 100,000 population. (These numbers are higher than the IFTF numbers because they include all MDs including those in residency, those working for the government, those retired and those no longer in practice but doing something else). Plenty of countries have more doctors per head than us, but plenty including the UK, Canada, Japan, Australia and New Zealand have fewer.  Greece has nearly double and Italy has even more! In other words, we’re nowhere near the bottom of the pack, and several of the countries way ahead of us are not those whose systems are held up as the paragons of medical excellence. We are, though, the country that spends the most per head on health care, and has the lowest proportion of government spending as a share of all spending, while we have close to the fewest number of inpatient beds. So you could argue that the cause of our expensive health system seems to be too much private spending and too many doctors.  Perhaps we should be building more hospitals rather then pumping out more docs?

Finally as Jeanne Scott notes in her newsletter (and if you haven’t signed up by now….), do we really need doctors for all this "needed" care?

    But is there really a looming shortage? There were 229 active physicians for every 100,000 U.S. civilians in 2001, according to the American Medical Association. That figure was up from 135 physicians for every 100,000 in 1975, a very significant increase.  And what are we getting for all of these doctors? Double-digit increases in health care costs and more and more uninsured.  It may be time to look and see if there is a causal link between the these phenomena.  It may be time for us to break the reliance on the highly educated "medical doctor" for most routine and preventive non-emergency care. We need to be looking at our physician extenders: nurse practitioners and physician assistants —  highly paid and very capable of handling a significant portion of America’s health care. But this will take, as the old saw goes, a "paradigm shift" in American thinking about health care — but given the rising costs, the aging population and the evident need — paradigm shifts may be called for.