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Month: August 2004

TECHNOLOGY: Stent sales go begging for J&J and Boston Scientific, with UPDATE

J&J’s Cordis unit has been having production problems with its Cypher stent. Boston Scientific has been having such bad quality problems that it recalled almost all its stents last month. Apparently the surgeons (oops! Alwin points out that I mean) interventional cardiologists and radiologists who want to use these drug-eluting stents cannot get hold of them for love nor money.

When I was a lad standing on the terraces at Chelsea (note to my American readers: that’s a soccer team), we used to say about one of our more inept forwards–after he missed yet another open goal–that he couldn’t score in a brothel with a roll of hundreds. If I was running BSC or Cordis right now I’d feel like that striker’s coach!

UPDATE: Friday’s Boston Globe has an article suggesting that Boston Scientific’s Taxus recall is even bigger than first thought. So this problem is actually getting worse before it gets better.

POLICY: Apparently health care costs real money (and yes, more on CDHPs)

The NY Times has an article on the shocking fact that increasing health care costs actually cost actual money. Apparently it costs businesses so much in additional health care costs to hire new (especially older) workers that they are hiring fewer than they would if health care costs were lower. And of course instead they’re hiring contract workers and sending jobs overseas.

Well it’s good to find out that the laws of economics are reported in the paper, so they must be true. In this case they are. Real wages in this country have barely budged upwards in the past 30 years. So what has gone up and been responsible for our increase in “wealth” over that time?

a) Working hours. Not only has the work year increased by about 10% over that time, but more importantly millions of women have entered the labor force and most families now need two incomes to keep going.

b) Productivity and technology: Which now means that you can buy a throwaway digital cameraphone that somehow you managed to get by without in 1973. It also means that a whole stack of stuff costs less (consumer goods) meaning that overall those real wages buy slightly more than they did, even though some things like education, housing and healthcare cost more.

c) Profits. Corporate profits have gone up faster than wages (especially in the last few years). The Marxists amongst us would note that this means that the share going to capital is rising faster than the share going to labor, particularly as stock ownership is still dramatically concentrated in the upper income groups.

d) Health care costs. Years ago I had a chart showing that the level of real wages was flat over 20 years while the increase in the healthcare cost part of total compensation went up over 200%. For a brief while in the mid-late 1990s the health care part of that equation settled down and real wages even went up a little. But now we are back in the old pattern. I don’t have the chart anymore, but if someone clamors hard enough I’ll figure out the numbers. Suffice it for now to say that health care costs are really eating into total compensation, and as HSC showed the other day, this is leading directly to fewer people getting health benefits at work.

So what to do about it? Kerry seems to care about the fact that health care costs are now getting through to consumers. Given that he barely mentioned this issue in years in the Senate, and now as the NYTimes says he’s raising it on every porch in middle America, methinks that his pollsters have told him that swing voters are feeling the pain. Bush doesn’t care and has no answers other than laughably and disingneuously saying that malpractice reform will solve the health care cost explosion, and promoting HSAs. Kerry’s solution is to basically make the government the insurer of last resort for catastrophic cases and force a pay-or-play solution on employers. Even if he wins (which I think now looks likely) and the Democrats retake the Senate (unlikely) the plan has little more than zero chance of becoming law this time around. It will however linger for the next time we have this serious national debate, which in my guess will be in the 2008-2012 time period.

Meanwhile, Karen Davis, radical commie and President of the Commonwealth Fund has made available the entire issue of Health Services Research that focused on CDHPs. THCB readers may remember that it had some surprising articles in it, not the least of which was health plan Humana’s research on its own internal CDHP which showed that it cost the employer (itself!) more than keeping its members in its standard plan. Davis has an excellent discussion of the research behind what the Canadians call user-fees (long version – short version) in which she points out that the RAND experiment back 25 years ago showed that increasing the actual cost of going to the doctor at point of service reduced services delivered to those patients. Of course you can read that two ways depending on whether or not you believe people use too few medical services or too many. But the key point that Davis makes is that the best way to improve quality (i.e. get the correct amount of services to patients) is to increase incentives to providers to do the right thing. She’s arguing for pay-for-performance, better use of IT, public reporting of cost and quality data, national EBM standards and a whole lot more spent on researching these issues at AHQR. And of course while she’s preaching to the choir as far as I’m concerned, it’s interesting to note that a version of these things appears in the Kerry plan too.

PHARMA: A great look at how a prescription drug gets marketed

Of all media sources you don’t usually expect in depth, balanced features from USA Today. But Tuesday’s USA Today has an excellent article by Julie Schmit on how Warner-Lambert (and now Pfizer’s) Neurontin went from being a minor epilepsy drug to a major CNS blockbuster. In 2004, the last year before it goes off patent, Neurontin will do over $3bn. Not Lipitor, but a pretty respectable number.

The answer is that Warner-Lambert promoted the off-label use of Neurontin from 1994, when it was introduced, to 2002, when it was given an additional approval for pain from shingles. The story:

Warner-Lambert’s offense was marketing Neurontin to doctors for purposes other than as a supplemental anti-seizure medication for epileptics. That was the only use approved by the Food and Drug Administration during Neurontin’s early years, when prosecutors say Warner-Lambert’s illegal marketing took place.

The Justice Department says that’s what Warner-Lambert did from shortly after introducing Neurontin in 1994 until 2000. Prosecutors alleged that Warner-Lambert lied to doctors about the drug’s effectiveness, paid doctors to allow a sales representative to sit in on sessions with patients and paid doctors, some up to $250,000, to unethically talk up Neurontin to other doctors. In fact, the list of ailments that Warner-Lambert claimed Neurontin alleviated was so long — covering pain, headaches, bipolar disorder, attention-deficit disorder, alcohol detoxification — that some Warner-Lambert employees dubbed it the “snake oil” list, government documents say.

The strategy worked. In 2002, 94% of Neurontin’s sales were for off-label uses, up from 40% in 1995, the government estimates, citing company documents and independent market research. Wall Street firm Lehman Bros. estimates that 90% of Neurontin sales are currently off-label

So Pfizer, having got Neurontin as a side dish to what it really wanted (Lipitor) when it bought Warner-Lambert, inherited the good and the bad with it. By 2002 the horse had left the barn and Neurontin was being prescribed for virtually anything that doctors and patients felt it might work for. Now that’s not necessarily a bad thing, and its very common. As PhRMA likes to point out, the FDA tends to be over cautious, but the same drug works differently for different people, and if a drug is doing some people some good who’s to blame them for using it and doctors for prescribing it. As one quoted patient says: “If it doesn’t work, then why do I feel better?”.

But that’s exactly the same argument made for medical marijuana. And while DOJ is massively over-zealous in enforcing its perception of the law in that case (at great cost to patients and society), fining Pfizer $430m for violating marketing practices over 8 years (although the admission is only up to 1996 not 2002) on a drug which is probably dropping more than $2 billion to the bottom line this year is not exactly vigorous retribution. But that is the typical state of play. It’s how the pharma business has worked for a long time and it’s unlikely to change any time soon, even if the DOJ chief’s name in February 2005 is Spitzer.

PHARMA: Is this the best they’ve got?

So after Marcia Angell rips the pharma industry a new one in the LA Times last week, the official comeback from Alan Homer, President of PhRMA is nothing short of pathetic. Is this really all that big pharma feels it needs to respond to? Go after her credibility (as Atlas did in THCB last week). Go after her facts, if you can. Or do something positive. Try to explain how drugs have reduced other health care costs over the years, and how they’ve improved life expectancy and that we have to pay for that. But apparently the only thing that Holmer can come up with is that his mom had fewer side-effects on a me-too? That absolutely justifies the sixth statin on the market to rise in price by 15% each year.

I don’t know if they can’t do any better or if they just don’t care what people think of them. Maybe the tobacco companies’ place at the bottom of the reputation list isn’t safe after all.

TECHNOLOGY: Forrester ‘s “Healthcare Unbound” gets some backing from NEHI

Brad Holmes at Forrester Research has a brief out looking at what they are calling Healthcare Unbound. Don’t get too worked up about the title–it’s the same thing as mobile eHealth (I think!). They think that this could be a $34 billion market in 10 years time. You can tell that Forrester’s a newcomer in forecasting. They break the number 1 rule by putting a number and a date in the same sentence, and $34 billion is a very precise number!

However, the concept that as Brad says “Some of the IT essential to the success of technology in, on, and around the body that frees care from formal institutions is now ready for prime time” is probably correct. Health Hero’s Health Buddy has been around for about 7-8 years now, but is still making steady progress. Meanwhile, my old boss Wendy Everett’s shop, the New England Health Initiative, is out with a study showing that remote heart monitoring is cost-effective and saving lives today. Here’s the key part of the summary:

Remote physiological monitoring (RPM) consists of an electronic device in the patient’s home that collects data on the patient’s condition, technology that enables transmission and analysis of those data, and most importantly a care delivery service that uses those data to communicate with and monitor the patient. It is the coordination of these three elements — the device, technology and care delivery service — that is essential to this innovative tool for disease management. Patients typically use electronic home monitoring devices once a day to collect basic physiological data and to answer specific questions about their condition. The patients’ data are electronically transmitted to a central monitoring station where the data are analyzed by nurses and care managers. These care managers can track early warning signs and symptoms and contact patients, providing feedback, education and medication changes long before they need to be hospitalized.

Reduced Hospitalizations and Costs

NEHI’s analysis found that using RPM for heart failure reduces rehospitalization rates by 32 percent, compared to standard outpatient care for the six-months following a heart failure hospitalization. Applying this reduction to a population of 100 Class III, or advanced heart failure, patients results in an average of 24 fewer hospitalizations, each of which costs, on average $9,700 and involves 5.5 days in the hospital. That results in a total reduction of 132 patient days per 100 patients. In addition, RPM can produce net cost savings of 25 percent when compared to standard care. On a per patient basis, this cost reduction amounts to net savings of $1,861 per patient, or in our 100-patient group, a total of $186,165. RPM use also has demonstrated a statistically significant improvement in heart failure patients’ quality of life as measured in Quality Adjusted Life Years (QALYs), as well as high levels of patient satisfaction.

As with all these technologies, if they build it, they will come (so long as Medicare pays for it–which is where the NEHI’s paper comes in methinks). Whether CMS wants to have another $34 billion line item on its hands is another matter.

QUALITY: The VA, Managed Care and care management

Navigate your way over to DB’s Medical Rants to read Robert Centor on the VA doing better than managed care plans in a study of care for diabetics. Here’s the AP Version and the study abstract. Essentially back in 1998-9 the VA’s diabetics got statistically better quality care than a matched selection of patients in managed care plans. This tends to make me believe that there’s still not that much care-management going on in the general “commercial” population.

Now the “managed care” population is not a homogeneous blob. You can’t tell which plans these patients were in from the article, but some were in Hawaii and Northern California (where Kaiser is 50% & 30% of the whole market respectively) while others were in Indiana, which basically never had any managed care. So my suspicion is that the rates of care is a factor more of the delivery environment than the type of insurance coverage. But nonetheless, hats off to the VA for this care. (Right, that’s enough praise for that evil socialized medicine….)

However, some of the uglier traits of “Managed Care” (such as utilization review and physician hassling) which were dying out in the late 1990s (the time analyzed in the study) are apparently making a slight comeback, according to this recent HSC report in Health Affairs. There’s even the odd case of care denial that makes me fell that we’re back in 1996, such as Cigna recently doing a flip-flop after denying payment for an experimental procedure. I’m almost expecting $93m judgments against Healthnet with Mailk Hassan making cameo appearances in stretch limos and Time magazine.

I just get the vague sense (based only on anecdotal observation) that the DSM/care management trend is becoming slightly more important again for health plans. But it’s nowhere near as important as getting rid of the bad risks up front, as Aetna has shown its shareholders. Is there a real trend towards care management from health plans? Or is it just medical directors talking shop over at the DM Forum? Comments on a postcard please!

HEALTH PLANS/POLICY: CDHPs, HSAs, and what’s wrong with employer-provided insurance? With contribution from Atlas

The LA Times has an article about CDHPs which is called more choice, at a cost. This article baffles me. A pregnant couple is wondering what services (such as pre-natal ultrasounds) to buy and what not to buy. They need to get a clue. Within say six to nine months (and my sources tell me that it’s unlikely to take much longer!) they are going to bust out of their deductible (and probably also their out-of-pocket) payments for the year, so it doesn’t matter whether they save money on an unnecessary ultrasound or not–their total bill for care will be the same.

CDHPs only puts the onus on saving money on those people who aren’t going to spend beyond their deductible, or in other words those who don’t need much care. Of course in health care overall 80% of the money is spent on people (like the couple in the story) for whom it’s the dollars over $10,000 a year that matter, from which their catastrophic insurance completely inoculates them.

But I can say that until I’m blue in the face and no one pays any attention. It is a little different when someone else from the right side of the political spectrum notices and new-ish contributor Atlas does. He understands that there are some people who are going to cost much more than others, and he has a suggested solution–turbo charging the largely dormant state based risk-pools. It’s not my preferred solution but at least it acknowleges what’s been completely ignored in the CDHP and individual insurance market debates–some people are going to need expensive care and how we organize that care is going to impact how much it costs. Here’s Atlas:

Seekers of the truth have always been challenged by the healthcare field, as healthcare is used as a lever to power by public and private sector players alike. But it seems to me that the employer based model has some flaws that need to be addressed. In today’s world, loss of job often means loss of health insurance, which even to the libertarians among us may be too high a price to pay. In an attempt to aid a few friends in such straits, I have found that there are somewhat affordable policies available for those who don’t qualify for public assistance. But individual underwriting is a challenging barrier to access. Some sort of public pool seems to be the solution to that problem. I believe it exists in several states but a well publicized federal solution has merit.

Which leads to the next thought–the hypocrisy of public officials who write checks which they can’t cash for programs like Medicaid are the cruelest sort of joke on people who understandably don’t have a sense of humor. Those in the throes of poverty exacerbated by illness are least equipped to cope with misinformation, disinformation, and Kafkaesque demand deflators. If we’re going to have programs for the poor, they should be adequately funded and pro-actively promoted.

The overarching problem, though, is cost. My understanding of the economic rationale of consumer directed health plans is to force those happy, company insured campers to feel the pain of rising costs so as to exert market forces upon them as close as possible to the real world consumer pressure that has given us $25 bicycles at Wal-Mart. The high deductibles prevent the excesses of pure market dynamics–e.g., you can’t run up so much healthcare debt you declare bankruptcy because you have catastrophic coverage. Yet you get socked hard enough with the high deductible that you start to complain, which triggers the providers to respond by easing the sting.

If this contributes to overall cost reduction, I think it is positive for most if not all parties involved, even the uninsured. Lower premiums resulting from lower overall costs may make insurance more accessible to those in the uninsured zone–above the threshold for Medicaid coverage and yet not wealthy or wise enough to buy coverage.

The “if” which starts the last paragraph is of course the $1.7 trillion dollar question. Whether CDHPs will have anything to do with saving overall costs I find to be most doubtful. But at least Atlas has some concept that throwing people onto the individual market with no way of ensuring access to insurance for those less-than-desirable risks is not good public policy.

TECHNOLOGY: Personal Health Records (or the story of my continuing poverty…)

Harris Interactive has a new study on the use of personal health records. Around 42% keep personal health records with people tending to do it more the older they get. However, the most interesting part of the study was when they asked people how they kept those records.

Of the 42% who keep those records, (with multiple answers allowed) 86% keep paper files, 15% keep files on in a formal paper record, 13% keep it on a computer. Of those 13%, 11% keep it in their own electronic files, while only 2% purchased a specialised computer software to record their information while just 1% use a web site to keep those records.

Assuming these numbers are about accurate, this suggests to me that the health care business has got a serious problem on its hands and a real opportunity. Buried in this article about online banking fraud is this estimate:

According to Gartner, 45 percent of the 141 million U.S. adults who use the Internet pay bills online. Consumers like the convenience and banks like the operating savings.

The Pew Internet research project has some slightly older numbers

Online banking increased by 127% — more than any other activity about which we asked 2000 and 2002. In March 2000, just 15 million had tried some form of online banking, but by October 2002, 34 million had done so.

It’s a good bet that online banking is now up in the range of 50+ million Americans. And where do they keep their financial records? On the bank’s web site, of course.

So can you keep your health records on your health plan or your physician’s site? In general no — (unless you live in certain parts of Boston, Utah, or Seattle and have the right healthplan). I sort of have an online record, in that I have some information stored in RelayHealth‘s messaging service which my doctor is supposed to be (but isn’t actually) using in conjunction with Blue Shield of California. But for the vast majority of Americans, there is no easy way to get access to your health information and store it. And despite going on 8 years of the Internet revolution, essentially very few health care organizations seem to think that it’s important to provide their members or patients with that service.

Oh, and yes I’m bitter. If you don’t know why, the short version is in the last paragraph here. The longer version is buried in this rather fun article I wrote for iHealthbeat in 2002.

BLOGS: Off-topic, THCB predicts future! Craigslist….

A few weeks back I suggested that eBay or Knight-Ridder may be concerned about the way Craigslist is eating small ads. Last Friday eBay bought 25% of Craigslist. So my “prediction” was in some ways correct. Interesting deal though. Craigslist is basically an anarcho-syndaclist commune posing as a small privately-held company, and they have made only a very little attempt to cash in on their success (the only charges are for job ads in SF, and NYC). So in a sense it’s a success story of the old Internet strategy of “get the eyeballs then ramp up the prices,” without ramping up the prices much–although my sources there tell me that they get so swamped with New York apartment brokers that they might be next ones to get a bill! The deal came about because a partner and minority owner no longer working there wanted to cash out, and rather than get a new minority owner who they didn’t like, the management team basically steered the deal to the (hopefully well-behaved!) eBay. BTW Happy birthday Jim, and thanks Susan.

PHARMA: More on the ethics of reimportation and all that, with new contributor Atlas and a cameo from The Veteran

Well the radical communist moderate social democrat nature of this blog has been somewhat shattered by recent contributors, and this post continues that trend. Mark McClellan (the ex-FDA commissioner and now CMS head), Cato and more radical wingnuts libertarian think tanks like the Institute for Policy Innovation (founded by ex-House GOP leader Dick Armey and funded by corporations, the Scaife family and the rest of Hillary’s VRWC) continue to think that the problem is that drugs in the rest of the world are too cheap. IPI’s latest press-release claims that prices in Canada ought to be 82% of the US level but in fact they’re only 59%. So they think of course that Canadians should voluntarily increase their payments by some 35%. I assume the IPI also thinks that WalMart should start paying its suppliers a ton more every year, or is using your purchasing power only OK if you’re in the private sector? For that matter I don’t think WalMart lets its suppliers get away without innovating, but they certainly don’t let them raise prices to do it!

While espousing the same general view, new THCB contributor Atlas turns his rather entertaining guns on the motivations of Marcia Angell and her colleagues at the New England Journal:

Marcia is no angel when it comes to this. She and fellow traveler Arnold Relman have been biting the hand that fed them for years. The NEJM, unofficial voice of Man’s Best Medical School (Harvard) and Man’s Best Hospital (Mass. Gen.)(reference: Samuel Shem, House of God) is perhaps the only paid subscription medical journal with a circulation of 130,000 plus physicians. However it has for many years accepted pharmaceutical advertising support. Yet somehow it has managed to maintain Brahmin-like integrity and the respect of physicians worldwide. So it is for many of the physicians condemned by Angell. If not, why publish them? Shills don’t make it through peer review. If the pharma companies don’t subsidize these studies, who will? The government, of course. Talk about mega conflict of interest! What incentive will a weasly, rationing American National Health Service as Angell and Relman and fellow Brahmin Kerry advocate have to publish objective research about costly new therapies? and how will NEJM keep its sub price affordable when the only ads they get are PSA’s from their new patron, Uncle Sam?

Ah, the road to serfdom is paved with fool’s gold, and Ms. Angell and Mr. Relman are skipping along it hand and hand, off to meet the Wizard in the worker’s paradise. Wait until they meet the man behind the curtain. He will make Big Pharma look like Dicken’s old Fezziwig compared to Uncle Scrooge

.

Now Atlas points out a very big dilemma–how can journals remain objective while taking money from those they are reviewing. Really only Consumer Reports (with its no advertising, subscription only model) can claim that level of objectivity. Funnily enough the issue is one that I found in an email sent to me from The Industry Veteran late in 2003 (hitherto unpublished in THCB). Concerning the then controversy about Crestor and The Lancet, and in response to a suggestion that the Lancet was attacking A-Z’s Crestor purely on the desire to cuddle up to Pfizer The Veteran wrote:

I don’t for one minute think that the Lancet’s editors are impervious to the pressures of their publishers, and Reed-Elsevier’s business ethics are similar to Tony Soprano’s. Saying that, it remains a fact that only a fool would believe an unscrupulous company always takes the rotten course of action. If the editors are mere henchmen for a corrupt publisher, then I have to question why a company with so many business entities dependent upon the promotional spending of pharmaceutical manufacturers would go out of its way to antagonize a drug maker with an announced $1 billion promotional budget for its Crestor launch. Prestige journals such as Lancet and the New England Journal, and thought leaders in academic medicine, earn their money in the manner of whores by going to bed with every big spender they can. Reed-Elsevier can squeeze more ad pages out of Pfizer for Lipitor and Caduet (as well as Merck/Schering for Zocor-Zetia) in the event of a lavish Crestor splash rather than in the absence of one. Of course Noam Chomsky (and David Hume way before him) is correct in pointing out that the media manufacture consent. That just means we have to rely on diverse outlets and know how to read them instead of thinking reflexively and without context.

The careful TCHB reader may notice a strange confluence between Atlas’ and The Industry Veteran‘s views on medical journals. I assure you that these are two very different people but it warms the cockles of my heart to see that cynicism is very much alive on the right as well as on the left!

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