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E-mail from TEDMED

Nov 7, 2011• 1

By Lucas Merrow

It’s the kind of event where you might find yourself (as I did) seated between the Surgeon General and a Nobel Prize winner in Chemistry, with a singer/actor/model type across the table. Yet somehow, everyone finds common ground.

Once again, a who’s who of people descended on San Diego for TEDMED – three days packed with smart, provocative folks discussing how Technology, Entertainment, and Design play out in the healthcare field.

We’ve been attending TEDMED for a few years now, and this one might just be the best we’ve seen yet. From my perspective – an engineer at heart who’s devoted the past twelve years to growing a healthcare technology and communications company – TEDMED boiled down to this: the challenge of managing a range of increasingly complex systems, the need for collaboration, and a clear call to action to effect change.

We’re not kidding when we talk about complexity. A few highlights: Dean Kamen (one of my former bosses and current mentors) of Deka Research & Development and David Agus of the University of Southern California made their respective calls for a more responsive regulatory environment in the face of more complex and sophisticated medical breakthroughs, as well as an approach for documenting the social cost of not approving them. Eric Schadt of Mount Sinai School of Medicine described the dizzying complexity of genetics the way an engineer might model a network – think of a GPS for your DNA – helping even those (like me) who can’t grasp the genetic system understand how it works and how personalized medicines interact with it.

Could a Pharmacy Monopoly Affect Your Healthcare?

Nov 5, 2011

By John Horton

Teddy Roosevelt, our swashbuckling 26th U.S. President, is probably best-known for his love of the environment and post-presidential African hunting tours. But today, two of his lesser-known but lasting legacies — antitrust law and ensuring that U.S. residents have access to safe medicines — are about to intersect in ways he couldn’t possibly have imagined.

Mention “antitrust” at a dinner party, and you’ll likely be drinking alone soon. But every time you choose which product to buy based on price, delivery times or other factors, you are benefitting from antitrust principles that originated with Roosevelt’s “trust-busting.” As president, Roosevelt saw that corporate monopolists — think Daddy Warbucks types — could, once they controlled the market, set prices as high as they’d like, or even use their market leverage to deny the supply of the same products to competitors. The result: everyday citizens, deprived of choice, would (quite literally) pay the price.

Roosevelt also championed the fight against medical snake oil salesmen, urging Congress to pass the first federal Drug Safety Act — the precursor to today’s FDA and its regulatory structure. Today, thanks to Roosevelt’s foresight, U.S. pharmacies set the global standard for prescription drug accessibility and safety.

But if you’re on a regimen of prescription drugs, you already know how expensive prescription drugs can be — and you may have found yourself comparing prices among pharmacies, looking for the cheapest deal, or trying to figure out which healthcare plan is least expensive for your needs. Here too, basic antitrust principles hold true: anti-monopolistic competition among America’s diverse pharmacies and healthcare plans is a good thing, and serves to drive down prescription drug prices, making medicines more affordable — and thus, available — to millions nationwide.

But what would happen to this diversity, and to patients, if one company — one pharmacy — were to engage in monopolistic behavior?

What if the Supreme Court Strikes Down the Individual Mandate?

Nov 4, 2011• 20

By D. Brad Wright

Any ruling by the Supreme Court on the constitutionality of the Affordable Care Act’s controversial individual mandate isn’t likely for at least another several months, but it’s worth thinking about what might happen after the case is decided. The first scenario is easy: If the Court upholds the mandate, the ACA goes forward as planned to the continued objections of many conservative Americans and politicians. The second scenario is less clear: If the Court finds the mandate unconstitutional, do they find it severable from the rest of the law? If not, they’ll strike the whole ACA down. This seems like the least likely outcome. If, on the other hand, they do invoke severability, the ball is back in the White House’s court. The decision at that point would be whether or not health reform can be successful without the individual mandate.

The concern here is the death spiral first described by Nobel Prize-winning economist Joseph Stiglitz. In essence, if we don’t require everyone to buy insurance, then insurance will be disproportionately purchased by the sick, making it more expensive and leading many to discontinue coverage in a continuous cycle that drives the price higher and higher until no one can afford insurance any more and the system collapses. By contrast, getting everyone into the pool is seen as the only way to keep costs down and maintain the insurance system. So the question is: What happens if the Supreme Court strikes down the individual mandate? Does the Obama adminsitration wash its hands of health reform, proclaiming that it can’t be done without the individual mandate because costs will rise too rapidly and the insurance system will collapse, or does it forge onward and see what happens?

Another Unpleasant Surprise from Obamacare

Nov 4, 2011• 8

By Diana Furchtgott-Roth

Whatever the disadvantages of the new health care law, Obamacare proponents appeared to be on solid ground when they said that it would extend affordable health insurance to millions of Americans.

No longer.

At the hearing of the health subcommittee of the House Committee on Oversight and Government Reform, Cornell University economics professor Richard Burkhauser showed that in 2014, millions of low-income Americans may be unable to get subsidized health insurance through the new health care exchanges.

It’s true that under Obamacare, firms with more than 49 workers have to offer affordable health insurance coverage to full-time employees or pay a penalty. But the coverage only has to be for an individual policy, not a family policy.

And what most people don’t know is that if a worker receives coverage for a single person from his employer, his family will not be able to get subsidized health insurance coverage under the exchange.

This is because, if one member of a family receives employer-sponsored health insurance, other members of the family cannot receive subsidized coverage under the exchange.

Other family members would have to purchase full-price health insurance, which would be prohibitively expensive for those at low incomes, those who are supposed to be protected.

Christie on Obama’s “Government Takeover”

Nov 3, 2011• 2

By Trudy Lieberman

A “government takeover of health care” is back. At least it is in the mind of New Jersey governor Chris Christie. In an interview with talk radio show host Dom Giordano, the governor, who supports Mitt Romney’s presidential campaign, dished out strong clues about how Republicans are going to fight the health reform law. The weapon of choice: Frank Luntz’s focus-group tested messages. On the show Christie showed he was in sync with Romney’s defense of the Massachusetts reform law, which Romney’s administration supported and which later became the model for national reform. But to distance himself from the federal law, Romney has said what was good for Massachusetts at the time may not be good for the rest of the country. And Christie has said that what happened in the Bay State “would not be good for New Jersey.”

On the show, Christie urged the president to tell the truth about the reform law. What truth would Christie tell?

I’d say to the president, in Massachusetts, we didn’t propose to raise taxes, as you proposed to raise taxes a trillion dollars to pay for a government takeover of health care…. Ninety-three percent of the people in Massachusetts had private insurance then and have private insurance now. That’s not what’s gonna happen under Obamacare. It’s gonna be a government takeover of health care.

Really, Governor? As Campaign Desk has repeatedly noted, the health reform law does not call for a government takeover of health care. The law simply brings private insurance to people who are uninsured. You know, the kind sold by those giants of the American insurance business—UnitedHealth Group, Blue Cross, Cigna, and Humana—which just posted a large profit gained mostly from selling private Medicare Advantage plans to seniors.

Off-label Drug Promotion and the First Amendment

Nov 3, 2011• 1

By David E. Williams

Doctors can and often do prescribe medications for different purposes than what the FDA has approved them for. But drug companies face tight restrictions on communicating with physicians about these so-called “off-label” uses. If the pharmaceutical industry has its way, those restrictions may soon ease. Such a change would be healthy overall.

Drugs undergo clinical trials for specific indications, such as Avastin for colorectal cancer. The label received from the FDA upon approval allows the manufacturer to promote the drug to physicians for those specific indications only. But a drug that works for one disease may work for a related disorder (e.g., another form of cancer) or something that seems totally different, like macular degeneration. Often the drug company will follow its initial clinical trials with trials for other indications in order to broaden the label and expand sales, but salespeople can’t bring up these uses until they’re officially on-label.

Drug companies get in trouble all the time for off-label promotion. According to the Wall Street Journal (The Free Speech Pill), 15 off-label cases were settled between 1996 and 2010 for a total of $8.7B.

Herman Cain’s (Mostly) Conventional Plan for Health Care Reform

Nov 3, 2011• 8

By Avik Roy

It’s easy to forget, but Herman Cain first became famous in political circles for his wonky takedown of President Bill Clinton at a town hall meeting where the President was touting his universal health-care plan. (Herman Cain walked President Clinton through the math of why Clinton’s plan would drive Godfather’s Pizza out of business.) Today, Republican Presidential candidate Herman Cain spent half an hour with the GOP Congressional Health Care Caucus, where he outlined his proposals for health reform.

As Newsweek put it at the time, Cain was “the real saboteur” of the Clinton plan:

An articulate black entrepreneur, Cain transformed the debate when he challenged Clinton at a town meeting in Kansas City, Mo., last April. Cain asked the president what he was supposed to say to the workers he would have to lay off because of the cost of the “employer mandate.” Clinton responded that there would be plenty of subsidies for small businessmen, but Cain persisted. “Quite honestly, your calculation is inaccurate,” he told the president. “In the competitive marketplace it simply doesn’t work that way.”

The switchboard at Godfather’s was lit up with supportive calls. It was as if the small business community — a very large and politically powerful group — had been told to march on Washington. Cain, said Larry Neal, an aide to Sen. Phil Gramm, “was the lightning rod.”

For better or worse, Cain’s platform effectively represents consensus Republican thinking on health care. This is good, insofar as Cain endorsed repealing Obamacare, Medicaid block grants, etc. But it’s unclear if he proposed anything that would move beyond the meat-and-potatoes of Republican consensus. And there’s a lot more to do with health-care reform than simply repealing Obamacare.

Jason Millman of Politico was at today’s GOP confab for Cain’s address. “Cain said if he had the right numbers in Congress, he would sign legislation repealing health care reform on March 23, 2013 — three years after it was signed into law. A bill by Rep. Tom Price (R-Ga.), H.R. 3400, would be the starting point for replacement legislation, he said.”

Is Incentive-Driven Healthcare the Holy Grail of Engagement?

Nov 2, 2011• 16

By Michael Dermer

Industry studies confirm the strong connection between healthcare costs and the ingrained behavior of consumers and providers. Ironically, consumers and providers have access to more health information, tools, programs and support than ever before; yet healthcare costs continue to increase and chronic diseases continue to affect a larger portion of the population.

The healthcare industry is at an inflection point where payers, employers, providers and consumers must all be directly involved in the effort to manage the cost of care and to improve health outcomes. A critical aspect of this effort involves the motivation and behavior of all healthcare market participants, but primarily applies to the healthcare consumer and provider at the point of care delivery.

To drive engagement in programs designed to improve health, organizations have applied both incentives and disincentives, with varying degrees of success, as part of an overall engagement strategy. Generally, the presence of an incentive leads to improved results, but most incentive designs have fallen short of their potential. But some valuable lessons have been learned.

The healthcare industry has learned, for example, that incentives can drive behavior change, and can help establish a new baseline for consumer expectations, consumption patterns and health awareness. In turn, this newfound awareness has the potential to address the root causes of the nation’s healthcare crisis, leading to a more rational care model and slower rate of health cost increases.

More importantly, the well-intentioned but haphazard evolution of the application of incentives to various healthcare initiatives has yielded a robust volume of actual performance and cost-related information that can finally provide reliable links between program participation, behavior change, health outcomes and cost savings; and all of the necessary data to determine return on investment.

Is Fee-for-Service Really the Problem?

Nov 2, 2011• 21

By Larry Weed, MD and Lincoln Weed

The authors’ recent book, Medicine in Denial, briefly mentions the subject matter of this post — the effects of fee-for-service payment. This post examines the issue in more detail, because of its importance to health care reform.

The medical practice reforms contemplated by Medicine in Denial have large implications for a host of policy issues. As an example, consider the issue of fee-for-service payment of providers. The health policy community has arrived at a virtual consensus that fee-for-service is a root cause of excessive cost growth in health care. Payment for each medical service rendered seems to involve an unavoidable conflict of interest in physicians: their expertise gives them authority to increase their own payment by deciding on the need for their own services. This conflict of interest has driven countless attempts at health care regulation. These attempts usually involve some combination of price controls, manipulation of incentives, and third party micromanagement of medical decision making. For decades these attempts have proven to be hopelessly complex, illegitimate in the eyes of patients and providers, often medically harmful, and economically ineffective.

Because regulating the conflict of interest has proven to be so difficult, the health policy consensus is now that the only escape from the conflict is to avoid fee-for-service payment. But this consensus misunderstands the conflict’s origin. The conflict of interest arises not from fee-for-service payment but from physicians’ monopolistic authority over two distinct services: deciding what medical procedures are needed and executing the procedures they select. The conflict does not disappear when payment switches from fee-for-service to its opposite–-capitation. Indeed, then the conflict becomes even more acute–-physicians have an incentive to withhold their expertise from costly patients who need it the most.

Inside the NHS Reform Fight

Nov 1, 2011• 2

By Richard Hoey

President Obama’s battle to get his healthcare bill through Congress was big news on this side of the Atlantic last year, not least for the way our own National Health Service (NHS) was used as a reference point in the debate. Now though, it is Britain’s (or, to be specific, England’s) turn to be consumed by arguments about healthcare reform, and if you were to listen to some critics, you’d imagine just as much was at stake. The reform in question is the British Government’s Health and Social Care Bill, which is currently the subject of some fairly furious wrangling in the House of Lords. The bill entered committee stage last week after the Government won a key Lords vote, but although it now looks almost certain to become law in some form, there’s still fierce debate about many of the details.

Depending on where you stand, the health bill will either drag Britain’s creaking NHS into the 21^st century, or it marks the first stage in the dismantling of a national institution. Actually though, some of this rhetoric is a little overblown. The bill represents a wide-ranging and pretty dramatic package of reforms, but it’s still some way short of an Obama moment. One thing it does not do is challenge the fundamental tenet on which the NHS was founded, which is that everyone in Britain has access to universal healthcare ‘free at the point of use’, funded through taxation. That tenet is rather less perfectly applied than is sometimes admitted – many people do have to pay prescription charges, and NHS coverage of dentistry is pretty patchy – but it’s nevertheless an article of faith for the British public, and no mainstream political party would dare to challenge it (overtly at least).

Still, the bill does make two very substantial changes to the way the NHS is organised across England (although it has been brought by the UK government, it does not apply to Scotland, Wales or Northern Ireland, all of which have devolved powers for their own parts of the NHS). The two key changes are both designed to make the NHS more efficient in the face of Britain’s financial crisis, both could have far-reaching implications and both have been hugely controversial. Firstly, it abolishes a whole tier of NHS management and hands its powers instead to the family doctors at the frontline – the general practitioners, or GPs, as they are known here. Secondly, it loosens the constraints on the NHS’s internal market, providing scope for private companies to compete to run many more NHS services. The two reforms are intended to work together to drive efficiency across the health service, and the efficiencies required are pretty frightening – 4% a year for the next four years.