Fox News? Likes a commie site like this? Believe it baby!
PHARMA: That can’t have been a fun management call, with UPDATE
Pfizer’s next big drug for heart disease (torcetrapib which was slated to replace Lipitor) has bombed in trials, causing sufficient deaths that the trials have been ended early and development has been stopped. This is obviously dreadful news for Pfizer, and I assume that the stock will be well done on Monday. But that’s how the pharma business is supposed to work—big bets on new blockbusters may not pan out, but others will do so.
But beyond that it is also a pointer that some of the easy “targets” such as heart disease and diabetes may be nearing their natural limits for medication therapy, and that lifestyle changes, the old “diet and exercise” may really be the best way to deal with them—allied of course with the generics which were the blockbusters of yesteryear. Almost all the growth in the drug business in the last few years seems to be in niche and very expensive biologics for virtually orphan diseases.
Which all means that the cuts in the sales-force that Pfizer announced last week are likely to be the first of many. Big Pharma is going to have to figure out how to get to a model beyond hitting every doctor and every patient on behalf of a few big blockbusters. The challenge for the rest of the system is to figure out how to use both the new niche drugs and the old blockbusters in the most effective manner.
UPDATE: Pfizer stock is off 12% in relatively early going, down to $23 and change. Ouch! Although it’s still above the lows of a year ago (Just). If you are a bitter shareholder this morning, you should thank the lobbying dollars sunk into Part D’s passage in 2003 for the industry profit recovery that’s kept it afloat this far in 2006. You should also worry about what comes next on that score!
POLICY/POLITICS/HEALTH PLANS: A Stark future for private health plans in Medicare?
Here’s the SF Chronicle on Pete Stark’s opinion about Medicare Advantage
Boiled down, Stark’s contention — based on a new Commonwealth Fund foundation study — is that the private firms are being paid 12.4 percent more per patient than government-run Medicare to provide the same level of services. In 2005, Medicare Advantage plans, originally created based on the contention that private industry could provide service for less than the government, were overpaid an average of $922 per enrollee, for a total cost to taxpayers of $5.2 billion.The payments “are not a mistake,” Stark charged. “Republicans are overpaying Medicare HMOs as part of a deliberate effort to shift beneficiaries into private plans. The Republicans’ ultimate goal is the privatization of Medicare, complete with a voucher system that leaves seniors to fend for themselves,” he added.The industry questioned the methodology of the study Stark used to make his charge and said that Medicare Advantage plans actually save money by injecting competition into the Medicare system, which covers about 43 million Americans. Figures from the America’s Health Insurance Plans trade group estimate that Medicare Advantage participants save on average $82 a month, compared to what they would pay in the traditional Medicare program. That comes to total savings of more than $6.8 billion annually, the group estimates.
And like the good politicians they are AHIP just changes the subject (See the release for a typical piece of Karen Ignagni’s tenuous relationship with the truth)..
Err, guys, it’s not whether the enrolled seniors are paying less in deductibles and co-pays that Stark is worried about. He knows that the private plans are cross-subsidizing those beneficiary costs (along with gym memberships et al) from the vast profits they’re making on them. It’s the taxpayer who’s paying more, as way too many GAO reports have shown (and now the somewhat more biased but no less true Commonwealth Fund report shows).
So the key question that the private plans need to be focusing on, especially as they are staring risk adjustment in the face anyway is, can they genuinely save money over the FFS on a non-risk selection basis by improving the efficiency and quality of the care they manage? Currently as the details of the report make clear, the risk adjustment has been hidden by an overall increase in the payments, and by the double inclusion of some other technical payments, such as the indirect amounts Medicare pays for medical education.
But surely that can’t last under any scenario. Logically in the high cost states like New York and Florida, making genuine savings over Medicare FFS—given the huge unnecessary care delivered and reported on by the Dartmouth crowd—must be achievable. Those savings should include decent profits for the private plans. They shouldn’t need extra payments to make it worth their while being in the market. If the private plans cannot prove that pretty damn quick, then they need to be prepared to get out—in a replay of the early 2000s. And Stark may want some of his (our!) money back!
POLICY: For Make Benefit Glorious Nation of California By John Irvine
The first shots in the fight over California Gov. Arnold Schwarzenegger’s health care reform proposal were fired last week. The Los Angeles Times reported that a team of advisers is working to develop the proposal, which will probably be unveiled during Schwarzenegger’s state of the state address in January. The news had led to a pretty serious hoo ha. Liberals are worried that the plan will look a lot like the helpful proposal drafted by America’s Health Insurance Plans. Conservatives, on the other hand, are concerned that Schwarzenegger could get carried away in his enthusiasm to appeal to moderate voters and end up producing something that could hurt California’s businesses.
What should we expect? The backgrounds of the advisers who are helping Schwarzenegger produce the plan may give us some hints. As it turns out, three of the four are Democrats. One recently left his position at McKesson government relations. In his piece this week, the California Health care Foundation’s George Lauer described the makeup of the team:
Richard Figueroa, former
legislative director for Insurance Commissioner John Garamendi and
former aide to former Gov. Gray Davis (D).John
Ramey, former executive director of the Managed Risk Medical Insurance
Board, deputy secretary and assistant secretary of the Health and
Welfare Agency, and chief of staff for the Department of Health
Services. Since 2000, Ramey, a Republican, has been principal and
partner of Ramey, Macomber & Associates a Sacramento firm
specializing in health care and health insurance contracts.Herb
Schultz, former deputy director of the state Department of Managed
Health Care, most recently vice president of government programs at
McKesson Health Solutions. Schultz also served as acting director of
the California Employment Development Department and acting secretary
and undersecretary for the Labor and Workforce Development Agency.Daniel Zingale, chief of staff for first lady Maria Shriver and former director of the Department of Managed Health Care.
A lot of people have focused on the possibility that the plan will look a lot like the proposal produced by former Massachusetts Gov. Mitt Romney. The critics say the idea probably wouldn’t replicate well in California for many reasons. (Short explanation: California is a lot bigger than Massachusetts.) Adopting a variant of the Romney proposal would also be a form of endorsement for Romney, who plans to run for the White House in 2008.
BLOGS: A great Health Wonk Review
Michael Cannon is hosting Health Wonk Review #21 up at the Cato@Liberty blog. And unlike some HWR hosters (i.e. me) Michael does a great job of not only steering you to the posts, but summarizing them and giving you his views on the legitimacy of the arguments. And just because he’s wrong most of the time, doesn’t mean that he’s not doing a fabulous job! This is one of the best HWRs yet. (And apparently I’m James Brown!)
And if you’re not reading the Cato blog regularly you’re missing out on among other things a) some of the best argued views from free market advocates on health policy (which I usually disagree with), b) drug policy and human rights (which I’m with all the way), and c) traffic (which will at the least surprise you in a Heinlein fashion, and those ideas comes from those terrible socialists in Europe!)
POLICY: New York Trans Fat Debate Heats Up
The Wall Street Journal reports that McDonalds and other
fast food businesses are engaged in a last minute drive to convince health
officials in New York City to “soften” the proposed ban on trans fats in restaurants
in the five boroughs. According to the Journal, McLobbyists have approached city council member Peter Vallone and asked him to sponsor a competing measure
that would give the industry more time to make the switch over to healthier
cooking oils. Quoting from WSJ’er Janet Adamy’s piece:
The city’s board of health is scheduled to vote Tuesday on
whether to force city restaurants, from fast-food outlets to servers of haute
cuisine, to eventually remove all but a trace of artery-clogging trans fat from
the food they cook. It’s not certain yet how the board will vote, but people
following the process say the board appears likely to approve the measure.A New York City ban would place the most significant
restrictions yet on trans fat in the U.S. since health officials began warning
of its dangers years ago. Restaurant chains will feel pressure to more quickly
replace oils in their outlets across the country, since the companies get the
most efficiency and consistency by cooking with a single recipe. Other cities
probably would follow New York.
— John Irvine
HOSPITALS: Panel Said to Call for Closing 9 New York Hospitals
Somehow I think this will be rather difficult! Panel Said to Call for Closing 9 New York Hospitals
Welcome to the governorship, Mr Spitzer!
UPDATE: Anonymous Coward writes in to say: "The Commission’s proposals actually serve as political cover for the all but certain cuts to Medicaid, and this is actually a good thing for Spitzer. The closing recommendations have to be approved as a whole (or rejected as a whole, unlikely) before he’s even in office. Also, dealing with cuts through a more rational, analytical framework, actually enables the new governor to stay completely out of the business of closing hospitals, and to scale back on what otherwise would have been more devastating cuts to Medicaid for all hospitals. The public relations around this are tricky, but the process is already being closely watched (and followed) in other states."
UPDATE 2: You can read the actual report here. (pdf) Check the New York State Commission for Health Care Facilities in the 21st Century web site for additional materials.
ED’s NOTE: Link fixed to NYT piece.
CONSUMERS/POLICY: Real people really travelling
Via HISTALK, a really interesting column about people traveling to India for surgery. Essentially the total cost slightly exceeds the co-insurance for those with insurance and of course the cost is remarkably lower for the uninsured. The people featured are those in the 50-65 age group who are pre-Medicare and finding it harder and harder to get health insurance are the obvious candidates.
And of course they are the ones for whom the health insurance crisis is biting home, and the ones who will be the swing voters about this issue. I for one cannot believe that this group of Americans will accept that they all need to travel to India and pay out of pocket, over and above whatever catastrophic coverage they are also buying. So when a politician comes up with a believable universal solution, this type of story will be behind what gets it through the Congress.
QUALITY: The herniated disk story
Medpundit has a pretty good explanation of the recent study about herniated disk surgery. Basically it works, but if you wait two years, then the results are about the same as non-surgical treatment—roughly 70% of people get better, and there doesn’t appear to be any long-term harm from delaying surgery. As I have someone very close to me with a current case of extreme back and leg pain from a herniated disk, I’m very interested in the study, and actually more inclined to suggest surgery (especially arthroscopic) sooner rather than later. But in this case the patient, doctor and other advisors are more in favor of waiting it out.
So on a global level it’s more cost-effective not to do the surgery. But on an individual level it probably lessens the pain—and the pain is close to unbearable, and if you have to put up with it for several months, then surgery is probably an option the patient will want.
Note that this is only the case for herniated disks and not lots of the other back issues for which surgery is probably ineffective–but still done at a very high rate.
The good news is that ten years after AHCPR (the forerunner to AHRQ) was decimated by daring to discuss back surgery, we’re getting studies out about this type of issue. Even, as Medpundit points out, it’s not a great study and it’s very, very hard to do studies about this type of intractable medical problem.
CODA: One slightly disquieting anecdote. I asked a local back specialist (non-surgeon) what the best way of doing surgery was (open or athroscopic). He said that the choice depended mostly on the training of the surgeon! Er…shouldn’t the surgeon be trained in the most advanced manner? (I expect those who know to chime in here)
POLICY/POLITICS/PHARMA: PhRMA sends the D out on the field
Even thought the White House will likely veto any change to Part D, the WSJ has started playing desperate defense on behalf of PhRMA.
Apparently if we impose government price controls, it’ll cripple R&D and no new drug will ever be developed. On the other hand, they also trot out the “fact” that Part D as constructed now means that the private sector has the ability to lower prices below those that the government could get. Of course we’ve heard all this before, and we all know who wrote Part D and in whose interests it was written.
But what I wonder is how can the WSJ’s Jane Zhang hold those two contradictory thoughts in her head without smoke coming out of her ears?
Meanwhile, here’s the NY Times on big Pharma’s attempts to buy its way out of the problem. It’ll certainly make some former Democratic staffers much richer!
