Nothing radically new in this but a very good general journalistic article on the arrival of Pay for Performance in middle America. Keeping score on physicians is well worth a read if you haven’t seen it.
You can use this as an open thread as the one on DM below is getting a bit long!
The Maryland legislature enacts a Wal-Mart specific pay-or-play bill. It says that any company with more than 10,000 employees which doesn’t spend 8% of payroll on health care benefits needs to pay into a state fund. What’s not to like about this bill? It allows attacks on the big discount retailers and the fast-food chain while leaving small and medium businesses out of the legislation.
Of course, it doesn’t really help much in terms of reducing the number of the uninsured…..but I can hear Bugs Bunny even now.
The winter Olympic is coming up, and you may not know it but the US has a seriously talented, and seriously wacky, skiing star. His name is Bode Miller, and he is a free-spirit, lives in a motor home, skis in an unconventional style, and is the best all round skier in the world — the current World champion — with a serious shot at 5 medals. He also crashes alot.
So he goes on 60 Minutes. You’d think that the skiing powers that be would be delighted that their marginal sport gets publicity of that type. And on 60 Minutes in a light hearted interview, Miller — who might have been in good company in the Oakland Raiders of the Kenny Stabler era — jokes about how hard it is to race the slalom when he’s hung over.
Does he think his partying has ever interfered with his performance? “Definitely. There’s been times when I’ve been in really tough shape at the top of the course,” says Miller. “Talk about a hard challenge right there. I mean, if you ever tried to ski when you’re wasted, it’s not easy. Try and ski a slalom when the gates are,” Miller says, making a hand motion. “You hit a gate less than every one a second, so it’s risky, you know. You’re putting your life at risk there. It’s like driving drunk only there’s no rules about it in ski racing.” Is he saying he’ll never do it again? “No. I’m not saying that,” Miller says.
There are only two alternatives to this. Either the guy is joking or he is so damn amazing at what he does that he can do it hungover. Now I know there was a lot of BS talked about how the Raiders partied all night and won the next day, or how Babe Ruth hit home runs hungover, but I suspect that’s overblown — this guy skis way faster than most of us can drive. But you’d think this would all be great hype? After all aren’t we a little sick of the sports star coming off the field and thanking God for being on his side (and not that of his opponent presumably).
But oh no! Apparently his sponsors are appalled, US Skiing wanted to kick him off the team and he was basically forced into making an official apology
Bode Miller, in a rare gesture of conformity, bowed to pressure from international and United States ski officials and apologized yesterday for his comments that suggested he had skied under the influence of alcohol. In his statement, Miller neither admitted nor denied that he raced while drinking.
Exactly what do US Skiing and its sponsors fear? A boycott of apres-ski parties by Focus on the Family? Just more confirmation that this country’s corporate and political establishment has totally lost its sense of humor.
This is no news to THCB readers, but let me remind you. Chronic care is hard work. Disease management programs are only partially effective because — even if you get it right — it goes against the incentives of doctors and hospitals (to do more, more expensive procedures now) and health insurers (to get sick people off their rolls ASAP). In a long look at diabetes care, the NY Times comes up with the conclusion that In the Treatment of Diabetes, Success Often Does Not Pay.
It‘s a long article but well worth a skim for those of you wondering what’s wrong with our health care system. How can we fix it? With FFS medicine, such as Medicare and copied by most insurers, you just can’t. The only hope is an extension of Kaiser-like pre-payment, or a chronic care system mandated from the top. Pay-for-performance has some potential, but it will require structural change, particularly in terms of the types of doctors and health professionals we train and the resources we allocate to preventative rather than sick care. And of course a system that excludes the poor and the sick by making it impossible for them to get insurance is never going to get close to doing that.
And just to depress you further, one health plan that has a better record than most in promoting DM programs, Pacificare, has just canceled a demonstration project in heart failure for Medicare FFS beneficiaries because it somehow couldn’t get people involved—even thought it will mean sending money back to the Federal government!
The Industry Veteran, who’s opening the year on quite the tear, has been pondering the latest “trend” in the pharma marketing chatter — the idea that Pharma needs to follow the Hollywood model. Here are his thoughts:
Here’s an interesting article from John Mack’s Pharma Marketing Blog that appeared last summer. In drawing an analogy between Big Pharma and Hollywood, Mack claimed the drug industry should learn from the Hollywood studios and substantially alter their distribution strategy. According to Mack and a few other industry strategists, the studios understood that their largest revenue segment doesn’t come from movie theaters, but instead from DVDs. In response they started pushing movies onto DVDs within a matter of weeks after the open in theaters. More important than the revenue from theater distribution, movie appearance in those outlets, and the supporting TV ads, function to build word-of-mouth for DVD sales.
Mack and others in the industry develop some useful insights, although John is actually a bit outdated in his description of movie industry dynamics. The share growth of home sales/DVDs has slowed in favor of view-on-demand. Both Comcast and the dish-satellite companies have tried to sign deals with the studios to show movies in their view-on-demand services within a few weeks after theater openings. The studios want to make these deals but they have hesitated for fear of antagonizing Wal-Mart. Nevertheless, Mack argues that just as Hollywood creates greater revenue through an alternative distribution strategy, Big Pharma could do the same by pushing its drugs to move more quickly into generic and OTC status while the Pharmas acquire ownership of the generic and OTC companies.
This altered distribution scheme is another approach to a demand sensitivity argument by which higher volume and lower prices will net out at a larger total revenue for the industry. The idea of enhanced compliance is the New Year’s buzz in Big Pharma. Brad Sheares, the president of Merck’s US Human Health division, told his reps that he would ask them to support DTC promotions stressing the importance of filling prescriptions and finishing the entire package. In the current era of fewer new molecular entities, Pharma finds that too many written scripts fail to generate revenue because uninsured and underinsured patients can’t afford the high cost. In this scheme of things, Big Pharma’s push for generics won’t compete with the high-priced, branded products that will make their generous returns on investment within their first several years after launch. Instead the older, unconscionably priced brandeds that scream for price controls will give way to affordable generic versions.
Mack’s use of the Hollywood model for distribution dovetails neatly with Larry Ellison’s notion of a Hollywood analogy for product development. Ellison is the CEO of Oracle and he claims that Hollywood provided a precedent for Big Pharma decades ago when it decimated the big studio approach to producing movies that it used from the 1920s through the 50s. The studios since that time have become the financing, marketing and distribution infrastructures for independent producers. Ellison suggests that Big Pharma should learn from its elders.
I suppose the Big Pharma company that has most definitively gone Hollywood in both product development and distribution is Novartis, which is now the largest generic company in the world. Of course all the Big Pharmas have signed scores of drug development deals in the past few years with the counterparts of independent movie producers: biotechs and startups. It’s probably no accident that Novartis, a Swiss company, has adopted a banker’s/financier’s model for Pharma. Its crosstown rival in Basel, Hoffmann-LaRoche, has even truncated the marketing portion of this financing-marketing-distribution model by decimating the marketing function. Unwilling to sustain the fixed SG&A expenses of other Big Pharmas that employ tens of thousand of reps, Roche partners out the marketing-selling activity for any primary care product that falls its way.
If Big Pharma does go Hollywood and contracts out most of its present functions, a new type of personality would have to prevail in the industry. The sort of imperious, arrogant ignoramus who now runs the Big Pharmas (McKinnell at Pfizer, Hassan at Schering-Plough, Miles White at Abbott, J.P. Garnier at GlaxoSmithKline) would have to be replaced by far more anonymous, benign bean counters, much the way that Hollywood’s Louis B. Mayers and Harry Cohens yielded in favor of their forgettable successors. The mid-level managers in Big Pharma are currently small, politics-playing, risk reducing, follow-the-leader types who can barely do their jobs and seek to avoid any original thoughts for the duration of their careers. That would have to change and they would need to be replaced by fast-moving sharks along the lines of the Ari Gold character on HBO’s Entourage.
Yes, I can see it now, on the bottles of blood pressure medication…Eli Lilly and The Ligand Company, in Association with Amgen and American Pharmaceutical Partners, bring you an Anadys discovery of a Cleveland Clinic renin inhibitor: Epericel…”and the vasculature was renewed.”
Coming soon to a drugstore near you, or call your MCO’s mail order house.
I have a piece up over at Spot-On explaining why local attempts to fix the health insurance mess won’t get too far. More remedial education, but worth a look!
One of the regular system updates Windows automatically downloaded to me the other day was an “enhancement” to the junk mail filter on Outlook. Until this “enhancement” my junk mail was doing farily well, with only a few false positives being missed. Now all manner of lottery winnings, offers of mortgages and longer personal appendages are once again turning up in my main in-box. Anyone else noticed the same problem?
Apparently according to this study “just over 7 percent of American workers drink during the workday — mostly at lunch — and even more, 9 percent, have nursed a hangover in the workplace, according to a study.” This tells me two things that I already know. People lie to survey takers, and Americans can’t drink worth shit!
So the numbers on national health expenditure are out, and health spending plummeted by 50% in 2004!! Oops, what I meant to say was that health spending only went up by 7.9% — barely enough to trouble the scorers (as they say in cricket). But wait — you all think that health spending went down in the 1990s and up by 15% in the early 2000s. That’s not true. That’s what happened to private sector insurance premiums. The overall news (as can be seen in the NY Times chart) is that spending growth in the whole health care sector never went up much over 9% even in the worst years of 2001–2 but it hasn’t slowed down to the mid 1990s when it came down to 5%, which was near the same growth as the rest of the (nominal) economy.
Of course where there has been slowing in costs in the last year has been in pharmaceuticals. Some of you might think that’s because lots of drugs went off patent and relieved consumers switched to generics, but you’d apparently be wrong.
“Mark Merritt, president of the Pharmaceutical Care Management Association, said the new data vindicated the techniques used by members of his organization to manage drug spending”
In other words, it’s another great triumph of the PBMs. Funny, I don’t remember Mr Merritt being quoted in this type of article in the late 1990s when drug costs were going up much faster than the rest of health care spending. Were there no PBMs back then? Oh well, he might as well claim credit as apparently the rest of the health care system is now out to undermine his brave members in their feverish attempts to lower drug costs.
But, Mr. Merritt said, at the federal and state levels, "lobbyists for brand-name drug makers, chain drugstores, trial lawyers and others are working to undermine many of the tools we have used to reduce the rate of growth in drug spending." For example, he said, brand-name drug companies have resisted state laws that encourage the substitution of generic drugs.
It takes a slightly cooler head to respond to what’s really going on. Paul Ginsburg from HSC noted that:
"The rate of growth in health spending slowed in 2004, but it’s still substantially higher than trends in earnings, which are the key to being able to afford health care," Mr. Ginsburg said. "Health insurance is becoming less affordable to more people." As usual, health spending grew faster than the economy or consumer prices. The Consumer Price Index, a widely used measure of inflation, increased 3.3 percent in 2004.
For those of you keeping score at home the count is now $1.9 trillion spent on health care in the US — an average of $6,280 a person, and 16 percent of GDP. Another area in which America proudly leads the world!
Finally there is some word getting out about the reign of terror the DEA has been running against pain doctors and its awful impact. This article, called Let’s Get Serious About Relieving Chronic Pain picks up from the NEJM article I wrote about last week. We have known at least since the HHS report in the early 1990s that pain medication is massively under-prescribed. In this article, Jane Brody notes that :
"Pain is a common symptom in patients nearing the end of life," with up to "77 percent of patients suffering unrelieved, pronounced pain during the last year of life," Dr. Timothy J. Moynihan wrote in The Mayo Clinic Proceedings in 2003.
But the news is that the DEA, on its messianic quest to prevent us all going to hell or whatever the theocratic fascists think they’re doing, is not only wasting our time and money, and condemning innocent doctors and patients to prison. They are also helping most people to suffer in their last year of life. Well I’m sure the DEA think it’s a deal worth taking, but I can’t believe any rational person does. If there’s one government agency that ought to be abolished and have all its employees sent to fill in prairie dog-holes in Nebraska (or wherever), it’s surely the DEA.
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