2005 FORECAST: What to look out for this year

Given that at one point in my life I was a futurist and that I still claim to know something about forecasting, let me start 2005 at THCB by telling you what I think may be the big trends to look out for this year. I’m not going to necessarily tell you what the end results will be, but if you are interested in health care, and working on topics that matter to you and your organizations, these issues are where you may both see plenty of activity and also spend much of your time.

So in no particular order

FDA reform: Last years revelations included unsuccessful clinical trials going unreported, data being selectively reported in major journals, information not released to the public when it was available to the FDA, and drugs being put on (and in at least the case of Vioxx taken off) the market without full disclosure of the dangers that were known to the manufacturers. Furthermore the blame for all this is shared between pharma, the FDA and the main medical journals. There may be good reasons for keeping potentially dangerous drugs available for physicians to prescribe (see Sydney’s sensible view in the last paragraph of this post at Medpundit). But I urge you to read John Abramson’s Overdosed America which demonstrates how poorly the information that’s known about the use of drugs and other therapies is presented to the public and the medical profession. Even with the domination of all branches of government by the Republicans, it’s unlikely that nothing significant will be done to the FDA. Look for the bolstering of the post-market surveillance function, and also for an enhancement of the clinical trials.gov site as better reporting of all trials is demanded by governments internationally. However, we’re not ready for an American NICE just yet.

Medicare “Modernization” (or NAIM as Jeanne Scott calls it or TEOMAWKI as I called it after Ross wrote about it–prizes for those figuring out the acronyms). There is going to be a great deal of mind-numbing details to be sorted out in 2005 regarding how much of what’s happening in Medicare this year and next will work. Five quick ones are:

  • How the Part D private drug benefit plans are going to be developed, marketed and chosen, and what they’re going to have to include in their formularies, and how much lee-way they’ll have to negotiate with pharma
  • How (and if) the new Medicare Advantage PPOs are going to work cross-state-borders.
  • Will the Medicare Advantage HMOs grow as fast as Wall Street thinks they will with the new money going to the plans?
  • What will be the real progress of the Medicare CCIP disease management programs? This will be the focus of disease management wonks for the next 24 months.
  • Everyone involved in the business of injectable drugs for oncology, ESRD, etc paid for by Medicare Part B will continue to scramble to figure out what’s really going to happen and what “ASP plus 6%” really means.

My impression is that the next 2-3 years will see slightly slower transformation of Medicare than the hype would have us believe. Most seniors will stick with their current drug coverage, and employers will be relatively reluctant to dump their retirees from Medigap coverage immediately. Most seniors will be somewhat reticent to go back into the HMOs which dumped them a few years back. And eventually the Congress will notice that paying private plans more for something the main Medicare program can deliver cheaper is not great business in a time of ever largening deficits. So I’m not among those thinking that the traditional Medicare program will be gone in a few years. But for those of you in the business there is a lot of work to be done figuring out the details of these new programs.

Pharma Marketing Reform: I don’t think that the FDA will ban DTC advertising quite yet, and I don’t think that the current Congress will get too involved in regulation of pharma marketing. But I do think that the slow changes seen last year in the way that big pharma itself does its sales and marketing will become more obvious. Results are starting to come in that some of this electronic detailing and other approaches to marketing are more cost-effective than sending out reps. Sales teams are the biggest empires in big pharma, and big empires only change in times of stress. But stress in the form of some big patent expiries and some unexpected pulls of drugs from the market–and the associated decrease in revenue–is on the way (or already here in Merck’s case). Despite all the money spent on data and sales force automation, there is room for a lot more efficiency in this area. Expect pharma to grapple with making their sales forces smaller, more effective at physician targeting, and less willing to use the technique of throwing vast quantities of mud at the wall and hoping that some of it sticks.

Medical Errors: Michael Millenson will continue to write articles about how appallingly slow the response by the health care system and medical profession has been in responding to the crisis. The current slow rate of CPOE installation will pick up the pace oh-so-slightly, and going to the hospital in the US (and the UK) will remain a somewhat dangerous endeavor. Congress will do, effectively, nothing. (Yes that’s an actual real-life prediction).

Malpractice: Medrants’ comments section will continue to be filled with dueling doctors and trial lawyers and, barring any new national emergency distracting their attention, the Repubs in the Senate will make a run at instituting a national cap on pain and suffering damages. If they pull the nuclear option of changing the Senate rules in order to get some of Bush’s wackier nut-job nominations through for the Federal bench, then malpractice “reform” might get through too. But even if it passes physicians will quickly figure out that they got it wrong; damages caps don’t help them too much. Instead they should have gone for a real system-changing compromise while they had the chance. But as that would involve giving something up (such as the admission that doctors should be held accountable to national best practices), there’s no way the AMA will allow it.

Consumers, HSAs, CDHPs and all that: The fuss about consultant-directed health plans will continue to grow and their role in the individual insurance market will expand somewhat. I still don’t think that they’ve really got too much chance of being a major force in the employer based-insurance market once VPs of HR start being able to do basic math. However, health plans and banks will slowly get it together on offering integrated products that actually work for consumers. Most important for providers is whether the typical CDHP (or high-deductible plan) comes with a PPO attached as most do now. In that case claims will be routed through the health plans and all the hopes physicians have been holding all these years of the simplicity of direct payment from consumers will be dashed, as the consumer waits for their EOB and gets as confused about it as they do now. Plus they’ll get (or at least see) the discounted rate and won’t want to pay more. I think this is the likely future of HSAs — it’s how mine works– and I foresee physicians being very disappointed by their impact. I also foresee my inbox being filled with missives from ideological libertarians who don’t understand health care and fruitcake insurance salesmen. Oh, and customer service from health plans will continue to suck.

Quality: We may, just, be at the start of some public awareness about quality issues in health care. Obviously Vioxx is part of that, but I also picked up some discussion of quality in more mainstream publications, including in the NY Times Editorial for resolutions for 2005. This is a sleeper issue that may well stay asleep forever, but perhaps something could bring it closer to the forefront, and my hope is that something is a Nobel Prize for Jack Wennberg.

Information Technology: Now we’ve all sung Kum-ba-ya and got the T-shirt, we will return to our caves and notice that David Brailer believes that interoperability (or at least seamless transfer of data) is the reason for making all these vast IT investments. We’ll then also notice that even Brailer says that there are no business reasons for anyone in health care to make their systems inter-operable, and that there won’t be any government regulation forcing them to do so. Then we’ll further notice that Brailer’s office didn’t get funded by Congress and he’ll have to pass the hat around at HHS to buy his staff sandwiches (and pay them); whereas the Brits are putting $20 billion into their IT initiative (and BTW believe it or not are giving Halliburton a job as a watchdog on how the money is spent…yes, that Halliburton!). However, the good news is that some of the bigger private systems, like the Kaisers and the Sutters, will forge ahead with their initiatives but the vast majority of American patients and doctors won’t notice the difference for several more years. The EMR will remain 3-5 years into the future, but it won’t necessarily stay that way forever. (There you go, how about that for a hint of forecasting optimism!)

Specialty Hospitals: A big fight is coming up concerning the end of the moratorium on specialty hospitals. My guess is that the moratorium ends and that hospitals get heavily involved in doing whatever it takes to placate their superstar surgeons, which probably means most of them joint-venturing with them on new facilities. The “haves” versus “have-nots” divide will be exacerbated.

Policy: The Bushies will have a run at promoting the Federalization of AHPs. I suspect that they’ll fail given the strength of the Blues, and the limited capital Bush will have for this. But it’s a new full employment act for insurance fraud if they succeed!

The uninsured: Will continue to be turned back at the Canadian border. If you’re uninsured there’s no hope for significant change this year. But this issue combined with the cost issue will fester away until some Democrat picks it for their 2008 topic and tries to go after Bush’s middle class support with it.

Wildcards: These events probably won’t happen, but if they do it’ll be a big deal

  • A major implantable medical device gets recalled, as in needs to be removed from everyone it’s inside of
  • Avian flu crosses over and public health systems virtually collapse
  • A class action suit against big pharma takes on the anti-tobacco suit properties and dominates the industry.
  • The terms of Medicare Drug coverage are so good that almost all seniors join it
  • Some Republicans develop a conscience and we get a Congressional opposition to many of the wackier Bush plans.

Blogs: If 2004 was the year of the political blog, 2005 might begin to be the year of mainstreaming of business blogs. My forecast is that bloggers will try to figure out how to make money at this, but that most of them will fail at that (and sadly their numbers will probably include me!)

Soccer: Chelsea will finally win the league after 50 years. OK that’s a fervent hope, but we’re 5 points clear and looking good!

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