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TECH: The Dolphin Group

Logo_smallThis morning I’ll be doing a webinar for The Dolphin Group which is a newly  formed think-tank organization created by Jack Johnson, the CEO of health plan IT services company AboveHealth.

The Dolphin Group is intended to provide health plan CIOs and IT leaders with guidance on navigating the tricky waters of IT. This is their first webinar with a topic of health plans web strategy, so I’m pretty excited to be in at the start of something new and hopefully important. I’ll be talking about the meaning of consumerization for health plans, and you can imagine I have a thing or two to say. Also on the panel will be Scott Tiazkun, IDC heathcare analyst, and Bruce Madderom, director of ebusiness, Affinity Health Plan — who between them will actually know something about health plans and their web strategy!

It’s theoretically for health plan CIOs, but I suspect that if you ask nicely here they might let you watch it.  On the other hand, I’ll be posting a report about it later today.

PHARMA/POLICY/POLITICS: Clinical trials corrupted by Wall Street

FrontpageThis is a doozy, and as it’s in the second first newspaper of a minor major west coast city metropolis and world class cultural center (Sorry, Ichiro & Frasier fans! See the comments, but I stand corrected!) it hasn’t quite had the attention that the front page of the NYT would give it.  Basically the Seattle Times has found a bunch of cases where hedge funds and other Wall Street brokerages found out who was running clinical trials for supposedly "double-blind" studies, and bribed the doctors (sorry, paid them consulting fees) to spill the beans ahead of the official announcement. Here’s their whole special, go punt around.

Now, insider trading happens all the time in Wall Street.  I myself have seen countless stock charts where an hour or two before an announcement the stock has gone doolally. Nothing ever seems to get done about it.  But this is a little different as it may impact the integrity of the clinical trial and the FDA’s role (not to mention the SEC).  And that tends to mean that Chuck Grassley wants in.  And he does.

For a long time people have been complaining about the fuzzy line between academic medicine and making money off it.  Apparently in several cases that line has been obliterated in a way that was not only unethical for medicine, but illegal even for Wall Street. This might, just might, be one of those trigger events that really changes how things get done in clinical trials and even biotech research. Well worth watching and kudos to the Seattle Times for coming up with it.

POLICY: Where is that tipping point, by Brian Klepper

THCB regulars will appreciate the running conversation I’ve had over the months with Brian Klepper of the Center for Practical Health Reform about how fast things are getting how bad, (hint: he is more pessimistic than I am, but sees a less cataclysmic outcome) and what the likely end result will be. Brian is particularly concerned that state agencies are the canary in the coal-mine of the health care system, and after the LA Times reported about California state agencies being unable to afford their employees retirement care, he wrote this.

One piece of the HC crisis that has received too little attention is the dilemma of state governments, and the ramifications for the health system as their financial commitment to health care is necessarily constrained.

The private sector has responded to HC cost by steadily reducing its commitment to coverage. The percent of private sector jobs with health benefits dropped by 1/3 in the last 13 years, and the erosion of jobs with benefits in this sector appears to be accelerating.

But the public sector has for the most part simply paid, at least so far, with relatively little focus on cost management. This steady infusion of cash has propped up the health industry, but it has also created the illusion that the health system’s financing is stable.Now, as the LA Times article points out, every state budget is under siege due to its HC costs, which are reflected in its fastest-growing line items: for state workers, retirees, Medicaid and prisons.

There is a calculus, a theory of limits, at work here. The concern is that, in the face of fiscal crisis, much of which can be traced to a single issue, all states will need to rapidly cut back on health care allocations across the board. In addition to the obvious human ramifications, the sudden impact on health care providers and suppliers, already experiencing revenue reductions from drops in private sector coverage enrollments, will be profound. The changes in HC funding could come at once, like all the passengers rushing to one side of a boat.

In other words, the states’ dilemma is one candidate for the HC tipping point.

POLITICS: Debunking the Drug War

John Tierney has written an excellent article essentially agreeing with what I said on THCB yesterday — only he gets to do it on the editorial pages of the New York Times. This one is about how addicted law enforcement is to drugs, particularly the meth "epidemic" and it’s called Debunking the Drug War. It’s Tierney’s 3rd article on the stupidity of the drug war in less than a month.  About time someone with some national stature started raising this lunacy as a political issue — and it is a political issue, as we’ve traded in our human rights and our good sense so that law enforcement and the prison-industrial complex can take more of our money.

POLITICS: Denny speaks, sort of

Who’s Denny Hastert? He’s my favorite politician. I regularly ask this question at parties, among college educated yuppies in San Francisco.  Frequently NO ONE knows — and I am not joking. Incidentally by my recollection of the constitution, he’s number 3 in line to the nuclear codes. Funnily enough he even has some limited power and influence running around after Tom Delay, and he thinks about health care, believe it or not.

What does he think about about health care? Funnily enough he too believes that the main problem in the country is that of the uninsured.  And we’re going to solve that by reducing malpractice costs, or at least I think that’s what he said…maybe it was AHPs and getting the state out of insurance regulation…yes that’s it, that’ll work! After all all those AHPs and cross-state individual plans are going to really help contain costs, and get sick people into easily affordable insurance plans — especially after we’ve driven out the 0.5% of the cost of the system that malpractice causes.

More perhaps on this later, or perhaps we’ll leave that discussion to Jon Cohn. About time I got him back, and I know he’s thinking about it

POLICY: Debunking the latest drug epidemic

So it’s now illegal to buy some OTC cold medications in Texas and Oregon because of the fear of methamphetamine abuse. I’ve had to report on this idiocy over at FierceHealthcare without commenting on how stupid it is, but here I can. Luckily for me, the good people at the Drug War Chronicle have done a great piece of reporting on the subject. So where is the wave of meth sweeping the nation and destroying communities? It’s on the cover of Newsweek so it must be true! Well, funnily enough it isn’t happening, and the data shows that the number of schoolkids using meth, people showing up in emergency rooms because of meth, and those reporting in the government’s own household surveys that they’re using meth, is the same that it’s been for 20 years. Here’s another excellent article in Slate debunking the whole epidemic myth.

So what has changed? Well it would be optimistic to think that people have realized the idiocy of the drug war, and the Administration has clearly come up against serious resistance to its stance about persecution of pain doctors and medical marijuana users. What passes for official drug policy in this country now centers on attacking marijuana use — and why wouldn’t it, as there aren’t sufficient numbers of users of any other drug to arrest 750,000 of them each year, and then justify the $30-$60 billion we spend each year on the "War on Drugs".  But unfortunately I doubt that the as misplaced focus on marijuana is the real reason for the outcry about meth. Instead we have to look to the main proponents of the war on drugs — America’s always hungry law enforcement agencies.

Out in the locales the law enforcement agencies of America, always interested in figuring where the next honey pot of funding is coming from, have decided to make a big noise about methamphetamine. That’s why in a recent survey of Sheriff’s departments 60% said Meth was their biggest problem. Of course if use isn’t going up, but arrests and lab busts are, then something else is going on. There are now sufficiently high numbers of smaller home-cooked meth labs that task-forces can be set up to raid them, and plenty of law enforcement types can be deployed to bust them. The end result is that the amateur criminals will leave the market, and it will be turned over to much more vicious drug gangs, probably run out of Mexico — but that gives law enforcement an excuse for even more fundraising.

Of course the fact that the same things now being said about the evils of meth were said about crack in the 1980s, heroin in the 1960s, marijuana in the 1930s, opium in the 1900s and alcohol before that, may suggest that a) the law enforcement solution to these drugs isn’t a solution (and isn’t intended to be a solution!) and b) that we’ve seen this movie before. In some countries, notably Switzerland and Holland, there is controlled dispensing of various hard drugs to addicts. The result has been a drop in crime rates, anti-social behavior, disease, addiction and even unemployment amongst addicts. And those programs are supported by the local police, who for some bizarre reason think that their job is to improve law and order in society, rather than to just get bigger budgets and go on paramilitary raids.

Let’s be real, speed/amphetamine use has been around for ever and most of it comes from big pharma. My father told me that he took speed to stay awake to study for his final exams at Cambridge — I was at a talk about intelligence boosting drugs this week where I heard that 15-20% of college student are taking Ritalin, which is basically speed, to get through their exams.  My dad seemed to do OK, and I suspect that today’s college kids will make it out alright too! (Incidentally, baseball players call playing without taking speed "playing naked" and the US airforce issues speed to its pilots on a regular basis!)

For a minority of users of any drug addiction is a problem (although apparently for tobacco it’s not a minority). But of course treating addiction like a health problem isn’t good for business — when your business is based on arresting people, locking them up, and having the taxpayer fund it.

POLICY: Employees want health insurance, not pay rise

This week two studies confirmed that employment based health insurance, or the lack of it, is becoming a political issues. Harris Interactive’s poll of employees shows that American workers continue to view health insurance as a crucial employee benefit. In addition while they perceive other aspects of compensation such as pay to be getting slightly better, they think their health benefits are getting worse. And they’re right. California health insurance commissioner John Garamendi produced a report highlighting the problems with the high cost of health insurance and how it’s forcing employers and individuals out of the market. Garamendi criticized the now popular low cost/high deductible plans as a false solution, and many employees seem to agree.

We have a slowly dying employer-based insurance system, and no apparent ideas on how to replace it. This will have eventual political consequences.

OFF-TOPIC: Bottled water is a bad waste of money

I have been saying that bottled water is a waste of money for years, yet now and again (for parties or convenience, etc) I buy it.  This NY Times article lays out what a bad thing it is, and I will resolve to keep filling my bottles up from the tap, and pouring scorn on waiters, barkeeps and anyone who tries to sell it to me — and on myself when I buy it.

PBMs: PBMs tell the truth while hiding the truth

On a day when Caremark’s stock continues up into the stratosphere, and the earnings machines that are PBMs seem unstoppable even before they get their hands on all that lovely government money next year, a report came out yesterday about mail order pharmacy. The full report from the Lewin Group is here (PDF) and a exec sum press release is here.

The report says what is fairly obvious. Mail order drug distribution is cheaper, probably safer (in terms of error reduction) and probably doesn’t really impact negatively on the patients outcome or experience — despite a lot of guff from pharmacists about the value their in-person counseling brings to patients. And Lewin, which has the reputation of being the arbiter of all public policy budget analysis, while being available to paying clients (a kind of private sector CBO), says that mail order will be 23% of Medicare drugs and that this will save the government money, as we sit around watching baseball and eating apple pie with our mothers.

But there’s a somewhat odd thing about this press release. While it’s clear that the PBMs’ trade association paid for the study, and that those paying the tab for drug costs, who you might think would include the PBMs, would be better off using mail order, it isn’t exactly explicit about the relationship between PBMs and mail order pharmacies. In fact it doesn’t even mention it once in all 11 pages.

Of course it’s no secret that PBMs are in general not at risk for the pharmaceutical benefit they administer for their clients. So, whatever they say, it doesn’t matter to them if their clients drug costs go up — in the last five to eight years or so drug costs have exploded and so have PBMs’ profits and stock prices. It’s also no secret, despite the complete absence of its acknowledgment in this report, that the combination of greater efficiency and bulk-purchasing makes mail-order pharmacy operations much more profitable than their retail equivalents despite the lower prices they charge. So if the recommendations from learned reports like this one from consultants working for people claiming to be pharmaceutical purchasers are followed, then mail order pharmacies will be making even more money.

And who runs the biggest mail order pharmacies?  Well you can work that one out on your own.

(Note. A piece I’m working on that will be publicly available in the Fall reviews PBMs’ role in much greater detail, so I’ll let THCB readers know about it when it’s out)

POLICY: Garamendi says California’s health care system is falling apart

Hot on the heels of the question raised by Dave Reece yesterday about exactly how bad the shape we’re in is, California insurance commissioner John Garamendi — an unabashed liberal — is out with a summary report detailing the effects of high costs and uninsurance in California. I haven’t read the whole study but it seems to gibe pretty much with what I’ve been saying on THCB for some time.  Here’s the press coverage from the LA Times. But other than putting a variety of sources all in one place and getting the odd article in the press out here, I doubt that there’ll be too much impact from this type of study.

Finally for reasons I cannot fathom, Garamendi’s next move is next year to run for Lt Governor — a position which as far as I can tell has no power in California. In fact the current Lt Governor, Cruz Bustamente, hasn’t even talked to Ahhhnold in the last year.

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