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PHARMA/POLICY/QUALITY: Cost-effectiveness in drug approval

I’ve been hanging with the libertarian Canada-bashers from PRI! They and the California Health Institute (the Cal biotech and drug company industry group) invited me to a very, very nice dinner last night. I assume that they used the drug companies’ money rather than the Scaife’s so I can keep my lefty credentials! Then they had a meeting Friday morning, intended to scare the world about the prospect of an Australian-type cost-benefit analysis requirement for drugs coming here.

IMS put out a report saying that access to drugs in the US would be massively restricted if an Aussie style system was imported here; Randy Frankel from IMS gave the talk (although I sat next to him at dinner and he has a varied and interesting background including setting up disease management at Medco and he basically agreed that we were out of easy targets for drugs and had to decide what to do about biotech drugs that cost $100K for an extra year of life).

Ruth Lopert, adviser to the Australian system gave it a somewhat vigorous, but also defensive defence. She said a few things

  • Government doesn’t set prices…price is proposed by the drug co, but then accepted if it makes it under the cost-benefit analysis (i.e. better come into line!) so prices for me-too drugs are lower than for first movers
  • She says prices for innovative drugs are higher in Australia than they are here! (Gleevac, Embrel)
  • She says it’s not a mechanism for cost containment, Australia’s drug costs are going up 12% a year. (to which I should almost asked, but didn’t, why bother at all then!)
  • And if it’s not reimbursed by the state, you can pay out of pocket! And for most patients in Australia paying out of pocket costs less than the average payment me for drugs by a typical patient on Medicare Part D!

Marjorie Ginsburg, from Sacramento Healthcare Decisions, talked very entertainingly about their report in which they found that people where in general happy to say no to funding certain technologies (including Aricept for Alzheimer’s).  There is a subset of people who believe that if it saves one life (such as an implantable defibbilator) it’s worth it, but once you get past direct life saving technology, they don’t care. Only 12% said cost effectiveness should never be considered. 50% said it should always be. Other things they want — 67% wanted price controls, 56% wanted cost benefit analysis, 49% want more oversight. Her message is that this is acceptable—but don’t do it just by itself. It will have to be part of a whole package of how to deal with health- are. The way to get this done, she says, is to present as getting it best value, not cost savings.

Meryl Comer who’s been caring for her husband with Alzheimer’s for 12 years gave a harrowing talk about the impact that’s coming from that disease. She said that there’ll be 13.9m Americans with Alheimers by 2010. 650K are diagnosed while still under 65. Make it to 65 and there’s a 1 in 10 chance that you’ll get it; by 85 it’s 1 in 2. Still no cure, even though the disease was discovered in 1906. She wants to make sure that the access to successful cures is not prevented, because it’ll save so much.

Kwabena Adubofour, a diabetes care clinic director from Stockton gave a long talk about how EBM analysis for drugs is largely irrelevant while care is generally problematic, and that there’s massively unequal treatment based on ethnic origin, poverty, et al. His concern is that limiting pharmaceuticals via cost containment in this environment is a double hit on minority health care. He points out that there’s a huge gap in care for blacks compared to whites (much fewer rates of referral) women only got 60% of the referrals that men did, blacks only got 60% that whites did. He thinks formulary redesign is irrelevant—there’s lots more to do first. His long list of stuff included DM, pay for Improvement, reducing unnecessary care, etc, etc). He thinks that no one (as far as he can tell) is against rational thinking about how to tackle pharmaceutical costs (Can’t say that I agree with him about that!) But we should only be doing that in the context of this other stuff.

Peter Pitts, ex-PRI, ex-FDA, claims that the problem is that one size doesn’t fit all in health care (or anything else) because EBM is a regression to the mean. And the studies ignore the massive patient based variation. (and he’s right….) So his answer is no formualries. He says that restrictive formularies cause higher costs later. Genomics/personal medicine will fix all this. At least I think that’s what he’s saying. He’s saying we need innovation? (Are we opposed to that over on the EBM supporting side….I’d guess he’d say we are!)

BTW if you’re a former governor, you still have to show up at things like this. At least Pete Wilson is here. Another disincentive to run for public office!

The Q&A pretty much was a fight between Pitts and Lopert.

The audience was very amusing. 2 doctors asked random questions. One said “why is the government establishing these guidelines, shouldn’t a 100 flowers bloom”. Another decried cookbook medicine and said that “Evidence-based medicine is creating Alzheimers in doctors brains…” (i.e. it’s stopping doctors from thinking). Randy Frankel smacked them both down by explaining the variability in medical practice, and showed that it takes 17 years for a guideline to come into being.

Peter Pitts answered my long long rambling question/comment trying to figure out what the panel was about by (essentially) saying that he’s opposed to formularies, and that third party payers should pay for whatever the doctor wants to prescribe. Kwabena Adubofour says that in cost containment with pharmaceuticals, it’s always the cheapest drug that gets pushed—not the best “value” overall.

From the audience The medical director of Safeway (didn’t catch his name) and Anthony Barrueta VP of government relations at Kaiser Permanente both essentially said that EBM is about changing physician behavior and we need to do that. Because, for example, per capita we do 19 times the rate of back fusions than they do in Denmark. That’s some practice variation for you! That’s what happens when there are no guidelines…the Safeway med director says that when Australia is spending 9% of GDP and we’re spending 17% it’s crazy to think that we don’t have a problem.

An interesting session, but I don’t really know what it was about! We’re going to get some level of practice guidelines and EBM incentives via P4P, they’ll be fought tooth and nail, and cost-effectiveness analysis will be part of that process. But it ought to be done in the context of wider health care reform, because this is not the biggest problem in our health care system. And you know what is, with more evidence just last week…

POLICY: Wyden’s health care plan

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Wyden_smile
Oregon Senator Ron Wyden’s health plan is announced with a flourish and a call with a gaggle of bloggers. Best quick explanation is by Ezra

The bill is a replacement of employer-based health care with the purchase of individual insurance via regional pools, which look very like Clinton-style regional health alliances–except they’re now called “health help agencies”. No underwriting, guaranteed issue, community rating and an individual mandate with subsidies up to 400% of poverty and a minimum benefits package equivalent to the BCBS plan in the FEBHP. All very similar to Enthoven circa 1984

From the call. Some notes…

Wyden said that the Hillary bill was too big in 1994 and you can’t expect the Senate to consider a bill that has to be moved around in a wheelbarrow. His is “only” 160 odd pages.

Maggie Mahar asked if the plans just wouldn’t pay the providers for the cheapo plan way way less to the things they provide for the more expensive plans. Wyden says that there’ll be a “floor of decency,” and that all those commercial plans will pay a better rate than Medicare—so he sees the end of Medicaid and second class health care citizens. No global budgets, because the plan would reduce costs  also be a slightly barer plans than some employers provide now. Cost reductions would come from increased competition as people trade down to less rich plans, and through reduced administrative costs—he has a Lewin report to prove it (something else that smacks of 1993!)

Max Sawicky asked whether relying on consumer choice and market competition to hold costs down will work. Here’s what Wyden said. From the first paycheck, employees will see the added health benefits in their paycheck right now, and they’d be required to go out and purchase the basic package. (It would be a wash from tax standpoint for now, as they’d get a new deduction). After the first two years, there’s no longer a requirement that employers would have to pay the salary “increase” but employers would keep the wages up because otherwise the good workers would leave. But after that every employer would be required to make a payment based on their size—and that tax would total more than $100bn) a year. He was asked if that looks like an extra tax which penalizes the employers who were already good citizens and were providing rich insurance already. His response was that overall employers will pay less because in the first two years, the employers will not pay for the growth in health care costs over those two years, they’d just pay the cash amount they were paying in Year Zero. (That does presumably mean that any cost increases will be paid by consumers). Employer wins on day 1 because they don’t pay the increase. Then in 2 years they pay the tax. …..but they haven’t quite figured out that transition for the employers that had very rich benefits. How do you have real consumer choice? How do you make a market? Right now we don’t have one—he thinks his transition will help it.

I asked, so if that works, how are you going to get the provider and supplier industry to not object with extreme prejudice? After all, if we’re going to spend less money they’ll be less industry income! His argument is that primary care docs are going to get a boost in reimbursement; there also be a boost in chronic care preventative spending (although to be honest I missed the details). The doctors will also be bought off with malpractice reforms and all doctors will get paid commercial rates for all patients. He didn’t mention anything about the rest of the industry beyond primary care docs. So I think that he knows he’s in for a big fight! And of course if the plans actually do compete on not increasing costs to consumers in years 1 & 2 with a fixed benefit package, by definition less money will be flowing providers’ way.

Wyden ends by saying that elected officials have been way too timid, and nothing much has happened about health care for far too long. He wants a specific bill to force the debate so that Presidential candidates will have to engage in the debate. And that I suspect is the point, although I fear that he’s 4 years too soon. (And of course given the condition of S. Dakota Dem Senator Tim Johnson, there may not even be a Democratically elected Senate to introduce the bill into!)

POLITICS: Students interrupt Iran president

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Students interrupt Iran president

The president’s speech was interrupted several times by students, ADWAR reported. Ahmadinejad responded by accusing the protesting students of having no shame and being on the payroll of the United States, according to ADWAR. But he added that he loved each one of them and said, "You insult me but I will respond to you calmly.

Given that he’s a complete nut, it’s good to see that some very brave protestors are letting him know that fact. But I thought it was kind of ironic given that the current American President went through his entire first term (and most of is second) having protestors removed from his speeches before he got there, and the few that ever did get in were roughed up by the Secret Service. The Iranian President apparently spoke to some of the protestors after his speech (presumably so they could be identified and dragged off to jail…).

HEALTH PLANS: Embarrased non-profit insurers still trying to hide the money

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A long time ago (1993)  in a universe far, far away pharma companies were somewhat concerned about public perceptions of their profits. Bob Leitman (long time at Harris, now at Greenfield) told me how, on a visit to a pharma company long subsumed into a bigger one, he went to the bathroom in the new building. He was staggered at the quantity of marble inside. When he remarked as much to his client, the reply he got was “well we had to hide the money somewhere!”

Apparently lots of non-profit insurers are now having the same problem

Blue Cross of Northeastern Pennsylvania said it will spend $175 million to bolster health care systems in the region and support a proposed medical school in Scranton, though the use of the money drew fire from critics of the health insurer’s expected $420 million surplus.

HEALTH PLANS/TECH: PHRs–Can this woman ever tell the truth?

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Time for the Karen Ignagni lie of the day.

It comes in a session during which AHIP and the Blues talk about their sponsorship of a common model for PHRs (or at least for payer-based PHRs). It’s hard to know how she manages to slip in a whopper during a session that’s relatively non-controversial—or at least one supporting an initiative that most of us think is a good idea. (Even if there are grave doubts as to whether health plans really believe in portable health data or records that can be moved from plan to plan, or even could put it together if they did believe it—it’s clear that Kaiser, which is way, way ahead of these guys, has no idea about portability).

Here’s the lie. She says that there are 70m people using online PHRs now. When called on it, she doesn’t bother to justify her numbers. She then says that soon 100m will have access to these from health plans. That number is so wrong, it’s just amazing. Harris and Forrester both think that much fewer than 5% of the population (e.g. less than 15 million) have got PHRs, and Markle and Manhattan disagree but both say that the potential market is between 20m and 60m. So how does she come up with 70m people having one already? Who the hell knows? It must be a derivative of the number of members for whom their plan has a web site they can create an account on (most of those Wellpoint members with WebMD, by the way). I’m prepared to bet her annual salary that the total number of people who have ever actually visited a health plan web site is less than 70 million. After all that would constitute more than 50% of all Internet users.

And would it really hurt her to tell the truth? Which is that health plans have been really weak about creating PHRs and could have done it 5 years ago and chose not to! (Yes, I know I’m bitter). Is their record thus far really that embarrassing? (It is, actually, but no where near as embarrassing as the rest of the industry’s performance in the last 5 years!) What’s changed is that now they realize the time has come to do something before it gets done too them, and now they say they will get us to the PHR land there very quickly. I happen to think that they have a good shot, but can’t for once Ignagni just tell the truth about the progress so far? I guess we know the answer.

(Note: slight edits to end para made 12/15 when I noticed it didnt make sense!)

HEALTH PLANS/POLICY: Kaiser Permanente’s plan to cover all Californians

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Kp
The plan is interesting in that it seems to basically contradict the AHIP plan that Halvorson was touting last week. That one called for subsidies for low income workers to buy into private health plans. This one calls for a state sponsored first dollar coverage plan in addition, plus an individual mandate plus a pay or play tax, plus two different pools for the non-poor to buy high deductible plans from (again both state sponsored). At least I think it’s what they’re saying. The major problem with this plan is that it’s so damn complicated I couldn’t figure out which special interest group was going to get the angriest, as it gets ignored by the rest of the public. It is worth noting that pay or play was turned down at the ballot box (2004) recently in this state and the version that was turned down had an exemption for small businesses. No such exception would exist under this plan. So maybe some anger (read: opposing political contributions) there…(are you watching WalMart?)

It’s also worth noting that they, like the Mass guys and everyone else look at the Medicaid and SCHIP enrollment levels, say “why don’t all those poor people just enroll in the plans that they’re already entitled to enroll in?” They seem to see that as a source of free (Federal) money. Well if they all did, then that money would actually have to come from somewhere…which is why those programs are under-enrolled to start with.

Still this is a serious effort. They’ve even done sums and everything. And we’re starting to count these policy documents by weight now, which indicates that it’s all getting somewhat serious and is picking up as a political issue.

OFF-TOPIC: Which side of the great divide is more intelligent and civilized?

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Gp
Apparently Gywnny’s dissing her heritage

But the question remains: was Gwyneth Paltrow on to something when she noted (or didn’t) that “the British are much more intelligent and civilized than the Americans,” and that “people here don’t talk about work and money; they talk about interesting things at dinner”? Whether Britons are objectively cleverer and more amusing than Americans, or whether they just sound that way, is one of the deep mysteries of British life for expatriates like Ms. Paltrow, who lives in London with her husband, the British rock star Chris Martin, and their children, Apple and Moses.

Of course I have my own opinions and can legitimately talk out of both sides of my mouth on this one. But then again, I can introduce you to some extremely uncivilized and unintelligent citizens of both nations!

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