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A me-too strategy for me-too drugs

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By DAVID E. WILLIAMS

AstraZeneca appears set to follow Merck into the market for “bio-similars.” (See AstraZeneca may join generic rush.)
Congress and the media tend to portray biosimilars are analogous to
generic chemistry-based pharmaceuticals, and therefore believe that
they will lead to much lower prices as a result of the commoditization
of these products. If all goes according to plan, that should cut the
price of biologics by 50 to 95 percent as has been the case for generic
versions of traditional pharmaceuticals.

Pharma and biotech companies aren’t seeing it this way and neither
am I. Although they won’t say so, pharma companies are starting to
realize that biosimilars –which unlike traditional generics cannot be
subsituted by a pharmacist for a branded product– are really like
me-too products within a class of drugs. That’s exactly the model
that’s enabled multiple blockbusters within a given class in the
mainstream pharma business, and led to higher spending overall.
Biosimilars are unlikely to be a lot cheaper than the products they
copy, and they will have all the sales and marketing costs associated
with a branded product, plus some of the development costs. Don’t be
surprised if some biosimilars are actually priced higher than
the original products, based on some real or perceived improvement in
efficacy or safety. That’s what happened when me-too drugs like Lipitor
entered the statin market. (See Generic biologics — or Me Too Drugs 2.0? for more details.)

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A new year’s resolution for greater hospital transparency

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By Paul Levy

Just thinking, along the lines of a New Year’s resolution. What if all
of the hospitals in the Boston metropolitan area — academic medical
centers and community hospitals — decided as a group to eliminate
certain kinds of hospital-acquired infections and other kinds of
preventable harm? And what if they all committed to share their best
practices with one another and to engage in joint training and case
reviews in these arena? And what if they all agreed to publicly post
their progress on a single website for the world to see?

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The Downfall of AIG

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By ROBERT LASZEWSKI

Those of you outside of Washington, DC likely missed the Washington Post’s three-part investigation of the events leading to the downfall of AIG.

It makes for good holiday reading. I highly recommend the series to you.

Knowing the culture at AIG from many years of activity with the company and its leadership, I can tell you the story certainly has the culture right.

While this is not a health care story per se, it is a story about risk taking and understanding, and never getting cocky about, risk. AIG
execs argued for years they really had no risk in their credit default
swap business. My experience is that when someone is willing to pay you
lots of money to lay a risk off on you–in this case a whopping $80
billion of exposure–there is risk.

You can read the full report here.

Are We Finally Entering the Golden Age of Healthcare Transparency?

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By BOB WACHTER, MDRobert_wachter

When will patients start reviewing quality data before choosing their doctors and hospitals? The answer has been “soon” for several years, but “soon” may finally be the right answer. If you doubt it, check out the Commonwealth Fund’s new site, “Why Not The Best?” The central premise of the healthcare transparency movement has been that
putting data on the Web (quality, safety, satisfaction, even cost) will change consumer behavior, the way such data does for autos and restaurants. The movement, which began in earnest with the launch of the HospitalCompare website by Medicare in 2003, lives by the following catechism:

  1. Let’s post some, even rudimentary, quality data on the Web
  2. Patients will look at the data, and demand improvement of their existing providers or choose better ones
  3. This consumerism will create “skin in the game” around performance data
  4. Hospitals and providers, now motivated to improve, will do what it takes to get better.

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Is Massachusetts a model for national reform?

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By Charlie BakerCharlie_baker

I get asked this question a lot these days, which shouldn’t be that surprising.  Harvard Pilgrim is headquartered in Massachusetts, and the Massachusetts health care reform plan is already a couple of years old.  More importantly, it has added about 440,000 people to the insured ranks (185,000 through unsubsidized private plans and another 255,000 through subsidized, Medicaid-like coverage), has maintained high employer participation (over 70%) and doesn’t appear to be crowding out private coverage as public coverage expands.

But my answer to this question remains “it depends.” There were profound differences between Massachusetts and the rest of the country before health care reform took center stage here that make relying on our experience somewhat challenging for the nation as a whole. For example, Massachusetts already had guaranteed-issue requirements for individual health insurance coverage even before reform. Today, most states don’t. So in Massachusetts, individual coverage was available to anyone who wanted to buy it, but it was really, really expensive.

That’s because most of the people who buy individual coverage — absent a mandate to purchase — usually plan to use health care services once they purchase the insurance. Insurance works through risk pooling – a small number of people who get sick spend the premiums paid by a much larger group of people who don’t.  If most of the people who buy the product plan to use it, there’s not enough healthy people to keep the overall price down.Continue reading…

Health and health care in 2009 – a year of managing risks and wild cards

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By Jane Sarasohn Kahn

As we inevitably do this time of year, we prognosticate about the new year. This time around, it’s a toughie: there are too many uncertainties that preclude us from doing a straight-line forecast for 2009, especially in health and health care.

Here are some trends and wild cards to keep in mind for 2009: the year of managing risks.

How will the macroeconomy play out against health care in the new year? Keep in mind the Kaiser Family Foundation’s metric on unemployment: an increase of 1% unemployment leads to 1.1 million uninsured, and 1 million more people added to Medicaid. This was the math that worked in 2007-8. The metric will probably change in 2009 as Governors struggle to balance budgets while providing medical services, education, and safe streets to citizens. The National Governors Association, and the individual state heads, have all warned that Governors will inevitably cut services in 2009 and into 2010 if tax receipts continue to decline.

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My Health Care Reform House Party

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By Michael L. Millenson

The Obama-Biden Transition Team has encouraged individuals across the country to gather in small groups with friends and neighbors to discuss their ideas for health care reform. The team provided a background paper, discussion guide and a specific list of questions as a framework within which citizens could provide feedback to health reform czar-designate Tom Daschle. More than a thousand would-be hosts have officially registered on the change.gov website, and my wife and I were recently invited to one such gathering in a small village (yes, that’s the official designation) north of Chicago. My report below is not the official one.

‘Twas three nights before Christmas, and despite cold and stormWe’d gathered together to talk health care reform.Clutching Team Obama’s brief questionnaireWe went over each item with scrupulous care.Middle-class, middle-aged and in the MidwestWith our host’s college kids for reality test.O’er the country many thousands had signed up for the sameDespite fear “special interests” would come rig the game.But as we plain folk gathered by the living room fireWe closely read instructions, then vented our ire.

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“Get Well Soon” Wishes for Health Policy Pioneer Paul Ellwood

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By Michael L. Millenson

Here’s a greeting card conundrum. What exactly do you say to an 82-year old man who, emailing you about a joint project you were working on, notes that he has just survived  “a 12-foot backward fall into a jagged confined space. Result at least 6 smashed cervical and thoracic vertebrae. [But] no paralysis! In a halo and off full duty for a while, but eager to rejoin the hunt.”

“Get well soon” seems so pallid a reply.

Paul Ellwood, who survived this most recent harrowing accident, is best known as the man who originated the term health maintenance organization and then got the federal government to support the concept. He was also one of the first policy thinkers to push vigorously for patient-centered measures of care quality, through his Jackson Hole Group and, since the mid-1990s, on his own.

He’s also one tough hombre.

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Naive policy makers need not apply

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By ROBERT LASZEWSKI

Picture_1The Congressional Budget Office (CBO) has released two comprehensive papers detailing the policy and
financial options for health care reform: Key Issues in Analyzing Major Health Insurance Proposals and Budget Options, Volume I: Health Care.I can’t overestimate the importance of these documents to health care reform. I recently did a post as sort of an open letter to the CBO: To the Congressional Budget Office: Please Keep Playing it Straight!After reading these two reports, totaling more than 400 pages of some of the most valuable health policy analysis I have ever seen, I now know that I had no reason to worry that the CBO would just tell the politicians what they wanted to hear.Any Congressional health care reform proposal will need to be “scored” by the CBO and, by preempting the coming proposals with this report, the career CBO health care experts
have now made it very clear they will not be an easy touch. Reformers
are going to have to play the game on the up and up—show real savings
or find the money elsewhere. CBO Director and incoming Obama Budget Director, Peter Orszag, also deserves a lot of credit for supporting his staff and issuing this report.It is also clear that, whoever the Congressional Democratic leadership appoints to succeed Orszag, a marker is down. The CBO is
on the record about what the likely reform options will cost before
anyone had a chance to bring political pressure to bear. And, that just
might have been intentional.The work contains an inventory of about all of the health care reform options being discussed complete with a thorough cost/benefit analysis detailing their impact on federal
spending. There would certainly be impact on private spending from many
of these options but this at least gives us a relative cost index to
compare the many health care reform ideas. This is also a financial report and did not attempt to measure quality improvements.

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