Tag: Uncategorized

POLICY: A very tentative deal on drug benefits

Yesterday’s reports that a deal has been reached in the Medicare Drug negotiations do not necessarily mean that we’re actually going to get a finished bill.  There are only 2 Democrats on the negotiating team, and several Senators, led by the old liberal war-horse Ted Kennedy, have previously threatened a filibuster if either a) the bill imposes a means-test on recipients or b) Medicare is forced to compete directly for members with private plans. This philosophical opposition to  heading down what Kennedy and others believe is a slippery slope towards Medicare becoming a two-tiered welfare benefit rather than a global entitlement, dovetails nicely with the desire of Democrats to prevent Republicans from being able to campaign as the "party that brought you drug coverage" in 2004.

POLICY: Other shoe dropping on employer-based health insurance

Yikes–too much to report today! Two confirmations today about employer health insurance confirm much of what I’ve posted about before. First, the Commonwealth Fund reports that a growing share of uninsured workers are employed by large firms. More noticeably, low-income workers (those under 200% of poverty) at big companies are much, much more likely to be uninsured than higher income workers in big companies–46% of those in all. Yup, this means those folks who work at McDonalds, cleaning companies, supermarket chains, home health aides, etc, etc, and the people who are the targets of California SB2.

Meanwhile, Harris Interactive’s latest poll for the WSJ Online (not online yet but you can get on the email list here) confirms the deep emotional connection between employees and health benefits.  56% of employees say that they would rather have no pay increase but a maintenance of current health benefits as opposed to a decent pay increase but a significant reduction in their health benefits.

In other words not enough people are getting insurance at work, fewer are getting it each year (especially the working poor), but employees are loathe to lose that coverage.

POLICY: Medical privacy-what happens when private data leaves the country

And in news from San Francisco, UCSF the biggest teaching hospital in the Bay Area was threatened with release of some of its patients’ data on to the Internet.  The wrinkle is that the threat came from a transcriptionist who is a sub-contractor to a sub-contractor to a  sub-contractor to a sub-contractor…… and the individual lives in Pakistan. The transcriptionist in Pakistan had been stiffed on her bill by the subcontractor she was working for to the tune of $500.  That’s a huge sum–above the average annual income in Pakistan, so you can understand that the transcriptionist was pretty desperate, given that her employer had disappeared and that she had nowhere to turn other than UCSF (as she didn’t know who had hired the person she was working for). In the end no patient data was release, and the threat was rescinded apologetically.

How this works out under HIPAA’s privacy standards is anyone’s guest, but it could lead to a major revisiting of the whole concept of outsourcing transcription.

Update: There was a NPR talk-show on this in San Francisco yesterday, (audio available about halfway down this page).  The journalist who wrote the original story claimed that as many as 50% of all transcriptions are being typed up abroad.

POLICY: Medpundit’s concerns–too much coverage

Medpundit has responded to my queries about her stance on MSAs, coverage and all that. Go read her piece here, then come back. Medpundit’s very concerned that many of the patients she’s seeing are coming in for expensive diagnostic tests that are supposed to prevent illness way down the road and often end up on very expensive drugs. And as Medpundit also points out, there is no cost-benefit rationale to many of these tests and immunizations.  These are all covered by insurance under managed care’s "preventative" ethos, yet in the end these people will get sick and need costly care for something else anyway.  New treatments do tend to keep people alive longer, but they are still going to die eventually and cost more money down the line. This is indeed the conundrum, as represented by the rather amusing "debate" a few years back started when Philip Morris "demonstrated" that smoking saved the Czech Republic money as it killed off people who would otherwise be collecting pensions and using health care benefits.

Medpundit’s solution is to make people pay for preventative (and I assume routine) care, and carry catastrophic insurance. Although I have some sympathy with this approach in avoiding what economists call moral hazard (i.e. unnecessary use of services because they are free) Canadian economists Bob Evans and Morris Barer have proved to my satisfaction that point of service user fees only really discourage the very poor from seeking care, and are as such discriminatory. But the real point is that although the testing of the healthy that Medpundit sees too much of may be increasing costs, the real money is spent on the care of those who are very sick. So if everyone bought a "catastrophic" only insurance policy, eventually the cost of those policies would increase to more or less the cost of a regular policy–because, whether it’s done via insurance or taxation, the 80 % of people who are healthy need to pay for the care of the 20% who are sick. Controlling the cost of care of the sick means doing what most Americans view as something very unpalatable–limiting care.  I personally believe that limiting excessive care of those who are going to die soon anyway is totally humane.  However any doctor who remembers the horrendous state persecution of Dr. Robert Weitzel in Utah is going to be highly suspicious of taking such an approach. Of course we are getting nowhere near having the kind of debate about this "rationing" that we need to have. So the status quo of more and more services being available to patients at greater and greater cost to all us will remain.

Finally Medpundit sums up both of our feelings about getting away from employment-based insurance coverage:

    Unfortunately, it’s also a politically unpalatable one. No one wants to give up something they’re already getting for free. (Or think they’re getting for free).

PHARMA: Does Lipitor cause memory loss?

While I was (very worthily) working out at the gym last night I noticed that November’s Smart Money had an article on Lipitor. Given that Lipitor is the single biggest product in health care, currently at $8 billion in revenue, it caught my eye. So I stuck in the reading tray on the elyptical trainer and read away as I elypted. The article (not available on-line) basically said that in a number of cases Lipitor has caused extreme muscle pain and (more devastatingly) alzheimers’ type memory loss in several patients. The article suggested that high doses (above 20mg of Lipitor) actually have the equivalent of 40mg of Zocor, one of its major rivals, yet Zocor can also be obtained in much lower doses (5mg and 10mg) which have virtually the same effect in lowering cholesterol.  Why doesn’t Pfiizer make Lipitor in lower doses?  Bob Erlich, now an industry consultant  running DTCPerspectives Magazine but the guy responsible for Lipitor’s launch at Parke-Davis is quoted as saying essentially (I’m paraphrasing here) that one dose made it easier for the physicians to prescribe as they didn’t have to bother matching patient and dosage.

The article goes on to suggest that independent (i.e. non-pharma funded researchers) have established the high dose to muscle pain link and that the memory loss issue is well known. Behind this is a strong hint that Pfizer is too big to fight either in the dissemination of the message to doctors, or in the law courts–apparently no lawyer will sue until the FDA has withdrawn the drug from the market.  Pfizer for its part acknowledges that the muscle pain is a recognized side effect, but claims that the memory loss–which the article focuses on as it’s pretty devastating–has nothing to do with Lipitor. However, everyone remembers that another statin Baycol was on the market until it was found that in a few cases it caused severe liver damage and was recalled.

It doesn’t take long googling to find several dissatisfied Lipitor users with intense muscle pain and others with transient or long-term memory loss. Unfortunately the Smart Money article doesn’t give any denominators, so there’s no real evidence other than these anecdotal stories about whether significant numbers of people have had these reactions to Lipitor.  So despite the heart-rending stories, you can’t draw any conclusions. Also don’t forget that in the grander scheme of things (if you believe the conventional wisdom that lower cholesterol reduces heart disease), Lipitor is saving thousands of lives for each one it hurts–if it does hurt. This argument is played out in this article on (long registration process required.)

From a business perspective what’s important here is the perception of risk.  If statins work for millions and millions of people but a few people allegedly suffer from its side-effects, that’s really the same story that existed for Baycol.  The FDA has been criticized for allowing too many drugs on the market that have to be withdrawn.  Almost always the reason for the withdrawal is a nasty side-effect (e.g. death!) for a very small minority of patients. For Pfizer and its $8 billion drug, there is a very low but existing risk that this could be the end result for Lipitor. Pfizer’s stock has been off slightly in recent months on fears that some patent lawsuits might hurt Lipitor and Zoloft.  Of course that’s nothing to what would happen if Lipitor had to be withdrawn, so watch this wildcard.

POLICY: Support for “Medicare-for-all” high, perhaps?

This topic comes your way via the always interesting Medpundit. Medpundit is a doc who doesn’t want a single payer system, and reading between the lines of her views sounds like she is in the "MSA’s for all" camp. (Even if she isn’t I’ve described the problems with that approach here as well as explaining why employment-based insurance is here to stay for a while). The poll results alluded to here are from an ABC News poll conducted October 9-13.

The most remarkable result is that when asked if they’d favor a "Medicare for all" system 62% said yes, versus only 32% saying no. There is quite a wrinkle in this because, as the article goes on to say:

    This poll asks people what they’d prefer a "universal health insurance program, in which everyone is covered under a program like Medicare that’s run by the government and financed by taxpayers," or "the current system, in which most people get their health insurance from private employers, but some people have no insurance."

    Previous polls have asked this differently; one last year asked if people would support or oppose "a national health plan, financed by taxpayers, in which all Americans would get their insurance from a single government plan," and found 40 percent support. The wording in this ABCNEWS/Washington Post poll weighs the proposal against the current system, and adds the Medicare model to the description.

Opposing the present system makes sense for virtually everyone.  I suspect that if you asked them in a poll 30% of Americans would rather be poked in the eye with a sharp stick than have the current "system". What’s fascinating to me is that 40% of the population wants single payer, and if you call it "Medicare for all" that number goes up.

Now, there is widespread fear of uninsurance. This article shows that "Fifty-nine percent of insured (Note: my emphasis) Americans are worried about being able to continue to afford health insurance in the future" Consequently those that have health benefits via employment are very keen to keep them. Furthermore Democrats still remember from 1993-4 how vigorously the stakeholders in the system will fight to keep the statue quo. However, I’m a little surprised that of the Democrats running for President only rank outsiders Dennis Kucinich and Carole Mosely Braun are pushing the single payer, (or "Medicare Part E for Everbody") option.

So while single payer is "politically unavailable"* to Americans, the public is waking up to the increasing level of real discontent with the current system. Given Bush’s problems abroad and with the economy, do not be surprised if this issue becomes bigger and bigger for the Democrats as we head to November 2004.

*The phrase is from Ian Morrison.

PHARMA: US attorney cracking down on drug companies, by Matt Quinn

From THCB’s legal office, Matt Quinn is back on the track of health care fraud once again.  This time he’s turned his attention from Medi-Cal to big pharma:

The new edition of "Fortune" (the one with, as I remember, Andy Fastow in handcuffs on the cover) also has a great article about the efforts of the Michael Sullivan and his US Attorney’s office in Boston to crack down on fraud by the pharmaceutical industry (only first part avail free).  In a speech at this year’s Pharmaceutical Marketing Congress in Philly that, I’m sure, went over like a fart in church, Michael Loucks (who runs the health care Fraud unit in Sullivan’s office) lectured the assembled industry leaders:

    "Since 2000…drugmakers (have) coughed up more than $2.2 billion to settle such civil and criminal violations as kickbacks to doctors, overcharging, and marketing drugs for unapproved uses…No other sector of the health-care industry," he said, "has ever paid similar amounts in health-care fraud investigations in so short a time."

While some suspect that Sullivan has higher political ambitions and is simply attacking big pharma because it’s an easy target with deep pockets, the US Attorney’s office states that its main concern is "that drug companies are corrupting medical judgment by paying off doctors, then passing on those costs to consumers."  Strict oversight, he argues is "pro business."  That whistleblowers get a cut of the judgment doesn’t hurt either.

According to the article, in 2002 the average American incurred $5,037 in medical costs.  By 2010 that number is expected to jump 60% to $8,368.  As much as 10% of that pricetag, the article postulates, is fraud.

With a trend (see this article in AIShealth’s Government News) of reinvesting money from Medicare and Medicaid fraud back into healthcare, wouldn’t a great use for this money be to invest in 1) beefed up investigation and oversight efforts and 2)  a task force to simplify and streamline Medicare’s rules?  While this would ultimately (hopefully!) be a self diminishing revenue stream, it would serve the good of the taxpayer by driving efficiency in the healthcare system as a whole while focusing enforcement efforts on those who intend to defraud vs. those  who are simply confused with the rules.  And best of all it would be totally self funding (with, perhaps, a little left over for investment back into the provision of care).

POLICY: Medicare drug coverage issue hurts Bush

Today’s New York Times reports with data what most of us following along at home have suspected for a while–seniors don’t like what they are hearing about the Medicare drug bill, and the blame is shifting towards the President.

    A poll conducted this month by The New York Times and CBS News showed that Mr. Bush had a 41 percent approval rating among the 65-and-older voters, his lowest among any age group. That was down from 44 percent in July and 63 percent in May.

The main issue is that middle income retirees are finding out not only that they’ll have to pay premiums for drug coverage, but also that there’s a hole in the middle of the benefit package–it runs out somewhere after the first $4,000 of spending.  There may also be some nasty compromises required for upper income seniors, in particular means testing for those earning more than $60,000 a year. Furthermore, without any bill there’s a big increase in the amount Medicare recipients will have to pay in Part B premiums next year, up $7.90 to $66.60 per month.

Liberal Democrats in the Senate, led by Edward Kennedy, have vowed not to accept means testing, as they believe it will be the start of a slippery slope to a two-tiered system. And in poll after poll seniors have consistently trusted the Democrats over the Republicans in their assessment of which party is better for Medicare. It may be hard for the average taxpayer to feel much sympathy for the small percentage of seniors who earn almost double the average American household being asked to contribute more towards their Medicare coverage.  However, it was those seniors who caused the repeal of Medicare Catastrophic Act back in 1989.  And all politicians know that the average senior not only votes at much higher rates than younger voters but also that seniors are concentrated in states like Pennsylvania and Florida.  You may remember that one of those states in particular was quite important in the outcome of the last Presidential election, and you can be very sure that, bill or no bill this year, this issue will be at the forefront of the Democratic campaign in those states.

INDUSTRY: The ever-growing power of Wal-Mart

There’s been plenty written elsewhere about the influence of Wal-Mart in America’s economy. For instance, this about Wal-Mart and the recording industry and this critical view of its influence on local communities. Somewhat under the radar Wal-Mart has been growing in scale as grocery store and a pharmacy chain. It’s now the number 3 pharmacy chain in the US, behind Walgreens and CVS. Jane Sarasohn Kahn has written an excellent article about Wal-Mart’s influence on the health care business.

One of the best known aspects of Wal-Mart’s presence is what it does to suppliers.  It forces them to cut costs and pays them later than they’d like, so Wal-Mart makes more of the "float" than other retailers.  In fact I was once told that Sam’s Club (its discount "club" store) actually makes zero margin on goods sold but turns over its inventory every 7 days and pays its suppliers in 90, giving it nearly 3 months to collect interest. Donald Johnson at The Business Word has written a fairly complimentary article about Wal-Mart’s employee health benefit program, particularly the emphasis on cost control and catastrophic care insurance, but he neglects to point out that it takes 6 months for an employee to be eligible for health benefits and that Wal-mart has 40% employee turnover a year. So great swathes of Wal-Mart employees are uninsured. (It could be worse–they could offer no health insurance).

One example of Walmart’s power over suppliers happened this morning.  It pulled out of a flu vaccination program is was going to offer with the FluMist product from MedImmune.  MedImmune’s stock price is off over 5%.

INDUSTRY: Major healthcare M&A deals this year

This Reuters report shows major healthcare M&A deals this year.  I found this after looking at GE’s further incursions into the health care business.  Most recently GE last week bought Amersham. Amersham makes reagents and fits in with GE’s MRI and other scanner business.  Meanwhile GE has also decided to to get further into medical IT, with its purhcase of the old Medicalogic EMR system from Medscape. Add to that Siemens purchase of SMS a couple of years back, and its apparent that the world’s biggest companies are starting to scrutinize the US’ biggest industry, and also see if there are opportunities on the information and medical technology side, as well as on the pharmaceutical side.

Note: Amersham’s interesting historical footnote is that it was the first company privatized by the Thatcher government in the 1980s, and possibly the first privatized company ever


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