I have had a very bad experience with domain theft from a terrible company called primesource-hosting.com. So until I can get my domain back, the blog will appear here. This should be sorted out in a week or so. Please keep coming back! Matthew
Matthew Holt
Medicare bill: not any time soon
So the NYT reports today that the Medicare bill compromise discussions between the teams from the house and the senate are being held up by a dispute on payments to rural hospitals. A dispute between different republicans! (Bill Thomas in the House and Chuck Grassley in the Senate). This bill is supposed to be about getting prescription drugs to seniors, but instead is getting bogged down in electoral politics. So don’t expect any news any time soon, because the Democrats haven’t even put their oar in yet concerning the ‘ "privatization" of Medicare’ part of the House bill. And they certainly don’t want the Republicans to be able to run on "we gave seniors drug coverage" for 2004.
Online detailing & prescribing: taking off at last?
In the midst of the e-health boom, there were a huge raft of companies hoping to profit from e-prescribing and e-detailing, and there were some very odd business plans about how to pay doctors to receive these "e-details". Well some recent research seems to be indicating that this is starting to take off. Manhattan Research’s ePhysician service (the old CyberDialogue) reports that 50% of doctors seeing more than 50 patients a week and writing more than 50 Rx a week, use or want to use e-detailing, eCME, a PDA or online Rx information–in other words are ripe for e-detailing and interested in e-prescribing. Jupiter reports that of those doctors who use the Internet at least once a week for work (which is most of them) 58% have taken part in at least one e-Detailing session. And of course 85% said that they’d use it more if they got paid to use it. In a related data byte, Harris Interactive reported back in April that by the end of 2002 16% of doctors were using online prescribing and another 21% plan to use it within 18 months.
So the argument I was making back in 1998 and 1999 seems to be coming to pass–the use of information tools by doctors is starting in this country (even if it lags behind those rates of adoption abroad). There’s now a sizable minority using more than just a pen. Partly in response to that Pharma companies are now getting very interested in e-detailing, mostly because they want to cut the costs of sending the nice detail people out to hassle the doctors. So perhaps those odd business plans weren’t so odd.
Quickies: PBM stocks
Looks like the PBM stocks are now taking a downward move . Express Scripts’ stock (ESRX) is under pressure partly following some comments from a short-seller in Barrons. Meanwhile, Medco (MHS)continues upwards. Some of this is probably caused by institutions re-allocating their PBM portfolio. Medco has added about a billion in market cap since it started trading last week, and is now finally worth a little more than what Merck paid for it back in 1994–not bad when you condsider that PCS (ADVP) has still not come close to being worth the $4 billion Eli Lilly paid McKesson for it back then!
Tenet reshuffles
Tenet changed management at its Redding, CA hospital on Friday. As discussed in an earlier blog, that hospital is where significant amounts of unnecessary surgery took place. This article from thestreet.com even goes as far as to suggest that Tenet might get the death penalty of being kicked out of the Medicare and Medicaid programs. If that’s true, they would have to give up and go home, but bear in mind that they’ve already settled the worst of the charges, and that thestreet.com is a haven of short-sellers.
PBMs: Quick update on Medco
So Medco has officially split off from Merck as of this week, and is trading separately on NYSE, ticker is MHS. The stock actually rose 10% its first day adding over $600m to Medco’s market cap and (after accounting for the value of Medco shares issued to shareholders) Merck rose too! This indicates partially that institutions like the future of the PBMS, all of which have rallied slightly along with Medco. It’s worth noting that Medco’s market cap is 80% greater than that of AdvancePCS.
Meanwhile Medco has been at pains to say that it will be totally separate from Merck, and the market may be taking this to mean that it will be able to get the best deal, rather than the best deal after Merck’s need have been considered. It may also be indicative that the market believes that Medicare reform will be good for PBMs. As I mentioned in an earlier post, that is likely but by no means certain.
Anti-clotting drugs: Not as good as angioplasty?
When I got into health care one of the big fusses was whether Genentech’s Activase (TPA) was more effective than Streptokinase in clot-busting immediately after heart attacks. You may recall that in the late 1980s Genetech made its name and fortune on the back of the fact that a huge clinical trial evidenced that Activase saved 2 more lives per thousand incidentsat a cost of ten times the amount. While the health service researchers amongst us thought that this was a huge price to pay for a few incremental lives saved, a combination of aggressive marketing by Genentech, ER docs wanting the best outcomes (and being fearful of malpractice lawyers, some of whom showed up on briefings from Genentech detailers) and insurers OKing the bills mean that it became the treatment of choice and a $250m drug by the early 1990s. It’s still around that level of sales ten years later.
NEJM has a danish study this morning that shows that acute angioplasty has better outcomes than clot-busting drugs by a factor of more than 2:1 and nearly 4:1 for stopping repeat MIs within 30 days. So can we expect a massive increase in angioplasty and a decrease in clot-buster use? And if not, can we not also expect an increase in suits against hospitals using clot-busters instead of angioplasty?
Quality Quickie
And on the "lighter" side, this news from Brazil shows that mistakes in health care can be made anywhere. but if you were this patient, wouldn’t you notice?
Drug margins under fire
Today’s NYT has an article (Reg Reqd) pointing out how vulnerable the PPI (ant–ulcer/anti-heartburn) drug market is to the oncoming generic versions of Prilosec. Prilosec has been about the most successful drug in history (somewhere around $6 bn a year at its height) and catapulted Astra-Zeneca into the first rank of pharma companies. They’ve also successfully switched their marketing focus to consumers and doctors over to its successor drug, Nexium, including moving the "purplepill" website. The Times reports that generic makers including division of Novartis and of P&G are going to come after the markets of Nexium, Protonix and the rest with generic Prilosec, and it’ll cost 1/5th the price. Wellpoint, the health plan which successfully got the FDA to agree to move Claritin and its allergy competitors to OTC status, is already planning to move as many of its members as it can to the generic Prilosec.
This is beginning to remind me of the early 1990s when there were few new blockbusters, and many old ones, including the first PPIs Zantac and Tagamet, were coming off patent. Some companies then tried to manage a "brand to OTC" strategy, such as Syntex with the brand (Naproxen) that is now the OTC drug Alleve. Syntex found that the sales for the brand fell off a cliff rather than rolled down a slope (and part of the result was their being swallowed by Roche). Then as now drug companies were concerned about the impact of a big new government program, and their stock prices were at bigtime lows. Look at this chart of Merck’s historic price and compare the 1992-94 dip to the one in the last 2 years)
However, overall drug companies have continued to be remarkably successful in both delaying the introduction of generics, albeit by using loopholes that have been partially closed, and at convincing doctors not to bite the hand that feeds them, even though some say they want to. What really will make the difference in their future is the next set of blockbusters.
You can historically look at parts of health care where drugs have replaced hospitalization. For instance anti-biotics replaced TB Sanatoriums, which represented some 30% of health care spending in the 1920s and 1930s, and indeed the first PPIs essentially replaced ulcer surgery. You can also argue that the statins are doing a pre-emptive strike on heart surgery rates in 10-20 years time. But with no imminent blockbuster class on the near horizon, big pharma is scrambling to discover which part of today’s health care system they’re going to replace with a pill, or which unrecognized "disease" they can convince people they can cure (think Viagra). Because that’s the road to another stock run-up as we saw in the late 1990s. I don’t think it will be as easy for them this time, but don’t write this industry off!
A Quality Quickie
I’ve mentioned the quality issue a couple of times, and have somewhat denigrated the quality movement as being made irrelevant by the backlash against managed care. However, given the IOM’s "To Err is Human" report on medical errors and more recent "Crossing the Quality Chasm" (note: scroll down for exec sum), it would be unfair to ignore those who are trying to raise its public visibility, such as the CHCF promoting a series on it. This video about the "Hospitalization from Hell" mostly by Paul Cleary (from Harvard — Here’s the article), is long (50 mins) but if you have a good connection and Realplayer, it’s well worth watching. Clearly suggests that the application of known quality processes used in most industries are still very limited in health care, and that the case he uses as an example is very applicable to most health care organizations. One of his solutions is that local units and individuals must take responsibility for organizing their own quality process improvement, collect good and useful data, and engage the operations research specialists. This is not unlike the strategy that the German Army used to overrun the French in 1945 — command was decentralized to small units working with knowledge of wider goals (as argued in James Q. Wilson’s book "Bureaucracy"). There are also serious efforts funded by several Foundations to improve quality processes, such as this one in Washington state, funded by RWJ and "blogged" by many of its participants including Marcus Pierson, MD.
The problem here is that I heard all this in 1989, and Don Berwick, the guru of TQM in hospitals wrote the same stuff then as he is writing now. Every other industry has been forced into using quality improvement techniques. So this morning I heard about 2 examples of patients I know in the SF Bay Area who were served very badly. One was not called back as promised about a potentially very serious test result. After calling the medical group, no one could locate the result or the file. And then they couldn’t do anything other than give the patient another appointment. The other concerns a new patient who was left on hold for 25 minutes by the medical group. Let’s face it, none of us would put up with this from any other type of consumer service organization. Why do we expect it from health care orgs, and is it our fault for doing so?
