A quickie today. A Harris survey from the CHCF on California employers’ health benefit offerings shows that California employers are ahead of the nation in getting out of paying health benefits and probably also ahead of the nation in realizing that it doesn’t help society in the long run.
Here’s the press release confirming that (for employees at least) the world is going to hell and no one knows how to stop it…..
Harris Interactive is out with a survey of the people attending a recent health care conference in DC which was attended by a who’s who of health care notables. Unsurprisingly, there don’t seem to be too many new ideas.
Forty percent of respondents believe a combination of IT, practice guidelines and patient safety measures is both an effective and desirable way of containing health care costs. Furthermore, 27 percent named disease management programs as the second most effective way to better manage costs.
When asked about the most significant opportunities that their organization can pursue during the next two years, the results again underscore the growing importance of IT in health care:
- Forty-eight percent (48%) name greater emphasis on data-driven clinical care (including evidence-based medicine and advanced care management programs).
- Thirty-one percent (31%) cite the development of portable, shared electronic health records.
- Twenty-nine percent (29%) identify increasing prevalence of pay-for-performance initiatives.
With regard to the adoption of electronic medical records (EMRs), more than two-thirds (68%) of those respondents who work for hospitals, physician practices or health insurers say their organization has increased or accelerated their investments in clinical IT and EMRs and an additional 15 percent plan to make new investments soon. However, only one-third of them say they are working with other local health organizations on these initiatives.
Conversely, 38 percent say slow adoption of IT poses the most serious threat to the health care industry, closely followed by rising medical costs (37%) and the increasing number of uninsured/or under-insured (34%).
Interestingly, support for universal health insurance is relatively strong, with 49 percent of respondents in favor and 37percent opposed. However, 94 percent say such coverage is either highly unlikely or somewhat unlikely to happen during the next five years.
So we can all sing Kum-Ba-Ya over health information technology while appreciating that the problems of getting this stuff communicated between organizations are barely understood, let alone overcome. And that the disease management programs that the core of "data-driven care" are also in their infancy.
Oh and there seems to be no hope for the uninsured, and less than half of the crowd even cares.
I was more than a little cynical about a speech from Fred Hassan of Schering a while back in which he suggested that everyone should put more money into their retirement accounts so that he could have more money in his. One would have thought that, with their stock prices tumbling, many of their products being pulled from the market and the public’s trust in their products and performance in dissarray, the CEOs of big pharma would be looking for a conciliatory approach. Instead here’s Eli Lilly CEO Sidney Taurel’s world view:
The nation’s health care system is ‘unhealthy to the core’ and soon will move from being chronically to critically ill if no changes are made. The principles of competition…… have become deformed in the health care field……Patients don’t see the true costs of health care because the government, their employers or insurance companies appear to be paying for them. Costs also are higher than they should be, Taurel believes, because the system is overregulated. "The free market hasn’t failed in the U.S.," Taurel will say. "It’s never been given a chance to work."
At least we agree on that last point. Basically Taurel says that he wants an unregulated system in which the consumer pays for everything out of pocket, and no doctor (or perhaps pharma company) is liable for anything they ever do. Funny that he didn’t seem to mention doing away with patent protection, but perhaps that’s not regulation in Indiana. Nor did he mention the teeny fact about how much money his company is going to make now that Medicare will be paying out for their products. Perhaps they just don’t know how their companies make money, although given the amount of money they spend on lobbying and corrupting PBMs and health plans, I suspect they do. Then it starts getting really funny.
Not every proposal would help the drug industry — at least not in the short term, Taurel says. Drug companies will feel as much pressure as the rest of the health care industry to cut costs. But Taurel says drug companies are better prepared to compete in that environment because they’re already feeling consumer pressure over drug prices and are trying to respond.
By putting up drug prices 5-10% since the election. That is a response, I suppose. But then comes the clincher:
"I’d much rather take my chances in a true, transparent, free-market system ruled by consumer choice than in a command and control system, driven by the winds of politics," Taurel says.
Now I’m rolling on the floor laughing my ass off. Pharma has made all its money in the last decade because of the increase in mostly private third party payment. Consumer payments went from being over 50% of all pharma spending in 1990 to less 32% in 2000. And pharma will make all its money in the next decade because of the increase in government third party payment. Payment that come courtesy of the Medicare Modernization Act that they bought and paid for! If you want to talk about the vagaries of politics consider that the director of the OMB and now new governor of Indiana is Mitch Daniels. What did he do before he went to DC? He worked for Tuarel at Lilly! The winds of politics are fine if you control the wind tunnel!
While I’m sitting here with my mouth gaping about the entire concept of this level of self-serving propaganda, The Industry Veteran has a rational explanation for the whole thing:
I suspect the Big Pharma CEOs are using some fairly simple mass communication principles beneath all their health care "reform" speeches. First, these braying donkeys command a forum. It’s amazing that the public immediately recognizes the mental vacuum accompanying the only other groups that attract such immediate media attention: Hollywood celebrities and professional athletes. CEOs of the top 500 companies maintain even greater access and control, but the public ignores their baldfaced self-interest and typical lack of expertise on subjects where they are venting blatant prejudices. At least there is the fascination of a novelty act in watching a bimbo starlet speak about wildlife conservation or dispossessed farmers. Our response to that phenomenon resembles watching a dog walk on its hind legs or turn the pages of a book with its left paw; we don’t expect it to be done well, as Samuel Johnson said, but feel a sense of patronizing amusement that it’s done at all. No such amusement accompanies a CEO’s pronouncements on public policy issues. As public spectacle it relies more on arousing latent, mass sadism, similar to the process of selecting a subject from the crowd for ritual slaying. At any rate, these thugs speak out on policy issues because they can and because they feel they can influence the outcome in their favor.
Secondly, the Taurels, Hassans, McKinnells, Garniers and McKillops have started to broadcast their plutocratic preferences more widely within the last few years because they are slipstreaming behind George Bush’s strategy of promoting the Big Lie. Not many years ago a person would have been considered delusional after publicly announcing that individuals can more effectively provide insurance safety nets for their retirements than the Social Security system. Custodians of public safety would really have called for the thorazine and restraints if the same person also proclaimed that unconscionable tax breaks for the wealthy make the entire country more productive. When Barry Goldwater made similar assertions in 1964, a number of psychiatrists questioned his emotional competence to serve as president. In past years good burghers might have even stormed the White House/Frankenstein laboratory with flaming pickets if its self-same occupant also started a preemptive war using entirely phony reasons. Alas George W. Bush faced neither angry mobs nor a padded room. Instead thoughtful imbeciles pondered whether the Almighty transmitted His unseen wisdom to the W more or less accurately than a contradictory message He sent to Pat Robertson. So in a society that now constitutes Stanley Milgram‘s laboratory writ large, by virtue of its blind obedience to authority, Big Pharma’s capi di regime figure they might as well trot out their avuncular acts. Why settle for one sucker a minute when a simplified message, repeated frequently in the mass media, can create millions?As a third reason for this pathetic roadshow, the Big Pharma CEOs would not agree with your assumption that the public despises them. Improbable as it may seem, their batallions of sycophants and courtiers successfully insulate them from reality. As a result of such fantasyworld thinking, J.P. Garnier demanded that GlaxoSmithKline’s board double his salary despite the company’s abject failure at drug development under his leadership. Similarly, AstraZeneca’s Tom McKillop asserted his demand for one million pounds added yearly compensation, despite failures such as Exanta, Crestor and Iressa that substantially lowered share prices. I could continue at monograph length along such lines. Suffice it to say that Pharma’s CEOs do not accept public perceptions of their villainy. They actually think of themselves as benevolent, pragmatic, shrewd businessmen who are wrongly villified by a sensationalist press and political opportunists that seek scapegoats for an over-regulated, unworkable system. To change public perceptions, they have adopted Big Tobacco’s PR strategy. In 2004 Astrazeneca actually hired as its VP for US public affairs a fellow who spent his previous 12 years working for Philip Morris, now called The Altria Group. Under his direction their PR posture has been one of swift, hardball responses and preemptive attacks upon critics such as Public Citizen and Marcia Angell. In the UK, meanwhile, Astrazeneca arranged for The Scotsman to run a puff piece on Tom McKillop that makes him appear more a combination of Albert Schweitzer and Johnny Carson than the Celtic barbarian he is.So there you have it. The heads of Big Pharma have the forum, they want to push the Big Lie, they actually think they’re nice guys, and they’ll use every dirty trick to shove that idea down our throats and make us believe it.
It all reminds me a little of when Nicolae Ceausescu was dictator of Rumania and his thugs would arrange cheering crowds and full shops on the streets when he drove around Bucharest. One day he flew back from a foreign trip early and they didn’t know he was coming. He was amazed to see lines of pissed-off people queueing outside empty shops. Of course, it didn’t stop him from ending up against the wall with an over-abundance of volunteers for his firing squad.
I’m not a great believer in the effectiveness of PBMs to hold down drug prices. My evidence is that since PBMs have become important drug prices and the share of health spent on them have gone through the roof. Of course, no one can prove that they wouldn’t have gone higher without PBMs in the picture. But in the middle of this rather fun hatchet job on Caremark from Melissa David at The Street.com there’s this great stat she’s dug up:
The companies claim to save their clients large sums of money by using their bulk purchasing power to negotiate deep discounts from drug manufacturers. But a growing crowd of industry critics, pointing to the rocketing cost of prescription drugs, have voiced their doubts. They believe the PBMs are unfairly keeping much of the savings for themselves. Indeed, a recent survey by Hewitt Associates showed that only 53% of employers believe that PBMs lower prescription drug costs — and that nearly one-quarter believe the PBMs raise the costs instead.
So 25% of their customers think that PBMs do the exact opposite of what they say they do. And don’t forget that next year the taxpayer (i.e. us) becomes their biggest customer.
Meanwhile the NY Times reports on a new initiative where 30 big employers who use Medco have bullied the PBM into letting them monitor the inner workings of its deals with its suppliers. Presumably the members of the "RxCollaborative" are not as happy as they might be about how they’ve been treated so far.
Not two weeks ago Mike Leavitt had no idea what to do about Medicaid. And he certainly had no idea at all about any possibility of a move to block grants. No siree, not a clue, not a whiff of an idea. And he told the Senate committee that fawned all over him while confirming him as HHS secretary that he just didn’t know what the Administration might possibly do about those block grant things.
Well, to paraphrase a certain British prime minister (prize if you know which one), ten days is a long time in politics. Yesterday Leavitt laid out his ideas for the future of Medicaid:
Leavitt called Tuesday for sweeping changes in Medicaid that would cut payments for prescription drugs and give states new power to reduce or reconfigure benefits for millions of low-income people. Leavitt said that Medicaid could save $4.5 billion over the next 10 years if it restricted the ability of elderly people to gain Medicaid coverage of long-term care by transferring assets to their children.
Finally, he said, the federal government could save $40 billion in the next decade if it cracked down on "accounting gimmicks" that he said were used by states to shift costs to the federal treasury. The Government Accountability Office, an investigative arm of Congress, said last week that such moves by the states "generate excessive federal matching payments" and "cost the federal government several billions of dollars each year."
And how exactly might they put a stop to those "accounting gimmicks"? How about if they gave the states freedom to do whatever they liked to their own Medicaid programs and just gave them a big lump sum. But of course they can’t call it a block grant. How about just calling it a "big ol’ pile of cash" and hope that none of those irritating governor fellows notice that the pile will be a little (or, in some states, a lot) smaller than the one they ended up with in previous years by using those "accounting gimmicks." Yup that sounds like a good, and highly original, idea.
Meanwhile, I just hope no one at PhRMA was listening when Leavitt said that Medicaid could save money by paying less for drugs. I’m sure that wasn’t the thinking behind all those campaign contributions. Still I’m sure that the naive man from Utah will soon be taught the ways of Washington on that score!
In case you need to know more about Medicare as a whole and Medicare drug coverage, there are two new excellent web based presentations from Traci Neuman at the Kaiser Family Foundation. They are Medicare 101 and an overview of Medicare Part D’s Rx benefit. Both excellent and well worth sitting through.
Yesterday I left you hanging with three scenarios as to the future of the system; muddling through; complete collapse leading to government takeover; and system self-reform. The Industry Veteran thinks that I’m on the right track but that I need to consider some other alternatives:
Your alternative scenarios for health care economics seem a bit too despondent to me. You’re quite right to say that the stakeholders in power will try to muddle along with the same bailing wire approaches, but that’s the way the American political economy works. Our system disdains national planning, preferring instead to let the market (i.e., the oligopoly capitalists) decide. That means things must approach the crash and burn stage before our power elite considers making substantive corrections. (Any time they do point to a distant crisis well in advance of its onset, e.g., Bush and Social Security, they’re usually trying to rig the system even more radically in their favor.) Throughout American history this predisposition has often placed progressives in the anomalous position of hoping for worse because that’s the only road to better. Now as far as your alternative scenarios, #3 is wish-upon-a-star thinking. Hope is not analysis and any expectation that the rational adults in health care manufacturing will act wisely by curtailing costs seems too far fetched to take seriously. More likely the earth would cease to revolve upon its axis, continents will crash into one another and the meek will inherit the earth. The question then becomes, what will cause muddling through to fail and turn the health care system into something approximating a nationally administered system? And when will this happen?
You’re probably correct in stating that health care emerges as a more acute crisis during recessions and, right now, the business cycle appears to be on an upswing. This means 2008 may not be a pivotal year for reorganizing health care. Again youre correct to point out that the old moles of aging baby boomers (talkin’ ’bout my generation) and the ever escalating costs of new health care technology keep burrowing beneath the ground, making the soil ever more friable for fundamental change. What are some other factors at work here?
(1) I look for small employers and state-local governments to stagger beneath the inequitable, irrational weight of health care costs before the large companies do. Even though the top 500 usually maintain self-funded health insurance programs for their employees, health care also causes problems for them, not so much in terms of the absolute costs, but from the competitive disadvantage they suffer if they have to compete against Japanese or other foreign companies who don’t bear such a heavy a burden. I recently reviewed some of the debates over Social Security when Roosevelt proposed it during the 1930s. Auto moguls such as Knudsen at GM favored it because they felt confident of their ability to pass along the cost. Seventy years later automotives are a much more mature industry. Foreign competition constrains their ability to pass through the health care costs but I don’t look for them to take the lead in nationalizing health care. They’ll be around to play a supportive role. I also imagine that other businessmen clearly understand that the current system creates a forced transfer of income and wealth from themselves to health care manufacturers and they will no longer continue to permit it.
(2) The increasing stratification of health care into a two-tiered system represents too obvious a threat to the establishment’s managers. Just as the Vietnam war in the late 60s and early 70s caused students at elite universities to question some fundamental tenets of our entire political and economic system, stratified health care can disaffect wide swathes among the middle-aged and elderly. If social class works through a health care system to baldly determine life or death, too many people can ask too many, disruptive questions. We can see signs of this already from the fact that many elderly, sick people in the middle class must "spend themselves down" to Medicaid eligibility and the states are growing more stingy with these programs all the time.
(3) There is also the possibility, one to be fervently desired, that by 2008 popular discontent with the Iraq war and Bush’s overreach on gutting Social Security will provoke a pervading discontent with his entire program of crony capitalism and evangelical, social Darwinism. (I love your phrase, "theocratic fascism," but the last time I used it, my colleague in New York said, "High fallutin’ terms like that are why John Kerry lost.) If disenchantment with the reactionaries does come about, it’s entirely plausible that the next president, Democrat or Republican, may create a nationally administered health care program as a sort of less contentious sop to a broader, popular discontent. Nixon, after all, pushed the EPA partly as a distracting palliative to his Vietnam war.
In summary, 2008 may not be the year of reckoning, but as Bogart’s Rick said to Ilsa, "Maybe not today, maybe not tomorrow, but soon, and for the rest of your life."
Since I wrote about the Center for Practical Health Reform and their intention to head off a perceived collapse in private sector health insurance at the pass,
a little more attention has been focused on the whole issue. How bad is
the current cost crisis and how long can the rest of the economy go on
pushing money into it? The press is flowing in two flavors. First, we can’t afford the costs. Second, we’re going to pay more for more cool technology.Here’s the word from the Detroit insurers that fund their health care programs by selling cars on the side (sorry for stealing Uwe’s line):
Health
care costs are moving front and center as the single biggest factor
impacting corporate profits and U.S. companies’ inability to compete
globally……Health expenditures rose from $1.3 trillion in 2000 to
$1.7 trillion in 2003. The health sector consumed 15.3 percent of the
nation’s gross domestic product in 2003, up from 13.3 percent in just
three years. Industry observers say the problem is bigger even than in
the 1980s, before managed care came on the scene and curbed increases
for a little more than a decade before costs started spiraling again.Those
who pay for health care — businesses, government and individuals —
are becoming more vocal about the need to bring costs in line. But
that’s about where the agreement begins and ends.
Some rather astute observers of the system think that it can’t take much more of this. My old boss Ian Morrison and his colleagues at Harris have been suggesting that the 2008 election is about the time when this issue will get national attention. THCB regular The Industry Veteran seems to agree:
I’ve
said it for a long time; at a certain point the top 500 (non-Pharma)
corporations will no longer be able to pass along the exorbitant health
care costs and at that point, they will pose the biggest threat to Big
Pharma. It may not come now because, as this article makes plain, some
of the big companies are pursuing diversions such as
pay-for-performance, evidence-based medicine and so forth. I give it
until about 2008 for the big companies to recognize that IT and efforts
to rationalize providers wonÂ’t adequately control costs. At that
point, if our old buddy John Dingell is still around, he may emerge as
a co-grandfather of a national health care system.
The
folks at the Center for Practical Health Reform want to get the whole
of the industry together to get past their differences, essentially so
that the health care industry as a whole can keep manufacturing an
affordable product for their customers. The problem is that the pace of
the technology change that is the major reason for driving these costs
up is not slowing, it’s speeding up. Just this weekend here’s one
article about new scanning technologies, and another about defibrillators.
Clearly there are incentives to do too many scans, and clearly there
are going to be even more incentives to put defibrillators in even more
people now that it’s been approved for virtually anyone with any heart
condition (such as a pulse). So the system will produce more services
connected to those devices. (And perhaps these scans and devices will
save other costs down the road–but that’s a separate argument we don’t
yet want to have).
But
the point is that as these costs get added onto the system, government
will more or less keep paying just as it always has over the last 30
years. Although employers are starting to eject themselves from the
system, enough of them will keep paying that disaster will not
immediately strike. In no event will there be a huge flow of money out
of the system. Why do I have some confidence in saying this?
Health
care costs are highly related to recessions, and the relative
difference in health costs to overall GDP growth causes alot of fuss.
And it does have a big impact. In the early 1970s we had Nixon’s plan
for universal care and price controls (My, how have those Republicans
changed!). In the early 1980s we had DRGs for Medicare inpatient care,
and in the 1990s we had managed care. Each of those was a reaction to
the high level of health care costs coming out of a recession as this
chart shows.
After a one month hiatus, the daily digest newsletter FierceHealthcare is back. There were lots of nice things said about it during its absence and it’s going to be slightly refocusing on the processes building the 21st century health care system. And if I say so myself it’s pretty good–OK I’m the editor so I’m biased! But the price is unbeatable. If you don’t already get it, you can sign up here.
Veteran FDA observer Blunter is back with more accusations about the FDA’s unwillingness to let the public know what it knows.
When I last blogged about the utter incompetence and disarray in the FDA establishment, I emphasized the "transparency" and "culture" there. If any further proof is needed, look at the Public Citizen FOIA complaint for information on parecoxib. (Copy of the complaint is with the FDAWebView article, 1/25) (Ed’s Note: It isn’t available elsewhere on the web but I have seen a copy of it). Here we have the HHS Secretary Nominee saying the White House is looking at new candidates for the FDA Commissioner post, with the issue of Vioxx and similar drugs raising the question of "what did you know and when did you know it," amid the spectacle of supposed protectors of our health groping for their hindsides and unable to find it with both hands.
You will recall, I stated in my previous post:
For sure, more funding which would be effectively applied will be needed but unlikely to do much good so long as the current management and culture is allowed to continue.
Presently, outsiders who want or need information on FDA decisions, and the like, are channeled through a Freedom of Information process which takes two years or more just to get around to the request, and then some more time and redactions to get the info out, if indeed any is released. It has been long-standing, recognized management incompetence, worse in the Center for Drug Regulation than anywhere else (probably in the whole government). There is no transparency in what FDA is acting on, or ability for any one to compare in real time other similar data, by scientists or others, who may have data of their own or seek to learn from the existing records FDA has passed upon. And when it comes to other than medical and scientific data, the likelihood of getting anything at all to look at several years down the road is even more remote.
And there has been no effort in the last near decade to do anything about it, like introduce management or data submission processes to make the system workable. Human clinical data and drug experience (appropriately clad to protect patient privacy) is a public resource, not a trade secret, for example. But youd never know it at FDA.
Last October, the Health Research Group of Public Citizen sought out relevant materials which FDA used to deny approvability of a COX-2 like drug, parecoxib (sold under the brand name Dynastat in Europe). A safe assumption is that Sidney Wolfe wasn’t seeking to compete with Pfizer and was seeking to initiate a public risk/benefit debate.
Not only did FDA fail to grant access to the data in its possession, redacted or not, but has not yet responded to the request at all. This is the old "stonewall" response–not "yes", not "no"–typical of FDA. May be the data that lead to the turndown of parecoxib would have substantiated the position of Whistleblower Graham on Vioxx, et al.
The vision is of the FDA topside huddled together, planning their next move for their own agenda—the world and naysayers be damned.
Need we have further proof of the bankruptcy the policies and abilities of those presently holding FDA positions of control. Lets wish Sid Wolfe swift success in the courtroom.
Meanwhile, the studies from Express Scripts which showed that most patients on COX-2s should not have been, were borne out by this study.
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