Over at SignalHealth Tom Hilliard has another interesting analysis of the Hilliard on Cato analysis of the Shadegg bill. He’s a bit too nice about Mark Pauly but otherwise it makes for combustible reading, and don’t miss the rebuttal comment from Cato’s Michael Cannon. I will be reviewing a copy of Cannon’s new book shortly, but head over to Signalhealth if you like this kind of policy wonk debate.
Above the Fold
PHARMA: Blogging impact on pharma
I will be speaking at a conference on Blogging and Pharma later this year. More details here and there’ll be more about it on THCB soon. Meanwhile, do you think that this is the kind of story that pharma companies should be concerned about? It never mentions the word lawsuit, but if SSRIs cause birth defects, how long before the Vioxx lawyers get ahold of this one and run with it?
It may be a while before we can be all grown up about our pills.
PHARMA/POLICY/POLITICS: FDA Official Quits Over Delay on Plan B, with UPDATE
The FDA official in charge of women’s health quits over the delay on Plan B‘s approval. Well it’s good to see that some of the staffers left at FDA have some spine, because it’s clear that, whatever the lies being told by the Administration, this is all about cow-towing to the loonies on the Christian right rather than the science of the situation.
There are a couple of telling shots in the story. Crawford swore up and down that this was his decision and that it was a science-based one. Not so.
Susan F. Wood, assistant FDA commissioner for women’s health and director of the Office of Women’s Health, said she was leaving her position after five years because Commissioner Lester M. Crawford’s announcement Friday amounted to unwarranted interference in agency decision-making. "I can no longer serve as staff when scientific and clinical evidence, fully evaluated and recommended for approval by the professional staff here, has been overruled," she wrote in an e-mail to her staff and FDA colleagues"I can no longer serve as staff when scientific and clinical evidence, fully evaluated and recommended for approval by the professional staff here, has been overruled," she wrote in an e-mail to her staff and FDA colleagues.
Of course there were strenuous denials from all concerned, but what was she told?
Wood also said other FDA officials who are typically involved in important matters were kept in the dark about the contraceptive, called Plan B, until Crawford announced his decision, which she believed was made at higher levels in the administration. Wood said that when she asked a colleague in the commissioner’s office when the decision would be made, the answer was, "We’re still awaiting a decision from above; it hasn’t come down yet."
So you could argue that this was not Crawford doing what he thought the loonies wanted him to do, but instead he was actually taking instructions from Leavitt or Rove or whomever. On this issue they can send a sop to their "social conservative" friends. After all it’s only a small pharma company they’re pissing off here, not a big one, Just as well Lipitor doesn’t impact birth control, eh?
Meanwhile, there’s just a delicious piece of doublespeak from Leavitt that really outdoes some of the stuff we’ve had to put with from Rumsfeld over the years:
Many supporters of the Plan B application — including Sens. Hillary Rodham Clinton (D-N.Y.) and Patty Murray (D-Wash.) — accused Crawford of making a political decision that ignored science and public health. The two senators were especially angry at Crawford’s ruling because they had lifted a hold on his pending nomination based on promises, relayed by HHS Secretary Mike Leavitt, that the Plan B issue would be resolved by Sept. 1.
Clinton and Murray have accused the administration of breaking its promise, but Leavitt has disagreed. "The commitment was they would act," he told Reuters on Monday. "Sometimes action isn’t always yes and no. Sometimes it requires additional thought.
So now when you’re asked by your wife, boss, teacher, whomever why you haven’t done something you were supposed to have done (you know, "taken action") you can tell them that you were thinking about it and that is exactly the same thing! Not only that — it’s now official policy in what passes for the circus we call a government.
UPDATE: Bob Steeves points me to this quote from the spokesman for Mike Enzi (a Senator with an "R" after his name), showing that he didn’t get the Talking Points on this one and looks a little pissed:
Sen. Michael B. Enzi (R-Wyo.), chairman of the Health, Education, Labor and Pensions Committee, is considering whether to hold hearings on the FDA’s handling of Plan B, said spokesman Craig Orfield. Enzi had expected "a firm decision" from the FDA, not further delays, Orfield said.
CONSUMERS: Trade up players, but maybe not enough of them
Once again there’s something very important in a WSJ/Harris poll which concentrates on the people that, when I was at Harris, were called the "Trade up players". These are the people with enough discretionary income to buy themselves a better class of service from their providers. As I know many of you don’t have WSJ access, I’ve quoted most all of the results.
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"Do you have health insurance? It could be from an employer, that you purchase yourself or from a government program like Medicare or Medicaid?" Base: All Adults
* * *"Which one of these statements best describes you?"Base: Adults with health insurance
* * *"Whether or not you have done so in the past, how willing would you be to go to a doctor who doesn’t take your health insurance if he or she was highly recommended by a source that you trust?"
"How willing would you be to pay the full cost of a doctor’s visit – rather than use your health insurance – if you . . .?"
The important issue is that pretty uniformly, those with incomes over 50K, which is a little over average household income and around US median income, are willing to spend more money to get a better class of service. Obviously this means a couple of things a) If you are marketing a health care service to wealthier Americans there is a willingness to pay for it. Of course that’s a well known fact to chiropractors, orthodontists, and cosmetic surgeons. But it might mean that other physicians and providers might start to think about providing better access and customer service, for a small fee (and I don’t mean insisting on $20,000 for concierge service). This is the Nordstroms approach, and one that health care providers should be thinking about emulating (and one that some are). b) This willingness to pay is a minority effect — it’s a big minority and may be a majority in the case of referrals from someone the patient trusts. But for most of these services more people are unwilling to pay extra, and of course large majorities of those with lower incomes, even those with health insurance, do not want to pay extra. This tells me that continued bifurcation is likely to be the case when people seek health services that they have to pay out of pocket for, with roughly double the number who want to "trade up" skimping on "extras". Why does this matter? Because in our brave new consumer world, cash may be an increasingly important way that patients pay for health care, especially for "minor" care out of their HSAs. So this correlates with much other data about user fees at the point of care–they tend to prevent lower income people from getting care (including often needed care). Like it or not, we are slowly heading towards this future. Unless, that is, you live in Rochester New York. Meanwhile, (and this is a bit of a throwaway for Ron) the Kaiser Network Health Policy Report notes that the CBO is out with a study showing that "Uninsured workers are unlikely to purchase individual health insurance, regardless of whether they receive tax credits or other subsidies to help cover the cost of premiums, according to a report released on Friday by the Congressional Budget Office". Proving to my mind once again that high deductible health plans are not going to solve the uninsurance problem and that voluntary universal health care is a myth. |
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CHARITY: Hurricane donations
I don’t feel like doing much today other than feeling lucky that I don’t live in New Orleans and donating to the Red Cross. Please feel free to follow this link and do the same.
POLICY: Getting transparency in benefit costs, by Eric Novack
After his first post on how to get doctors to provide care to uninsured patients, surgeon, talkshow host and THCB podcast star Eric Novack is back with a second installment. And believe it or not I completely agree with him. Here’s Eric:
I want to introduce another component of an incremental approach to health care transformation. Many of you will wonder why it even qualifies as a reform- it does not require legislation, does not redistribute, reclassify, or create. But let’s summarize the last post and the very insightful and valuable comments:
- People who can demonstrate financial hardship can go to the doctor for care- at no charge to them. Doctors would get a tax credit for a predetermined value (e.g.. Medicare rate) of the services. Those who deliver care are given incentives to provide care to those who would otherwise feel inhibited to seek care. (see prev. post for more)
The next component: Require that employee tax statements (W-2) include the amount that employers spend on health benefits.
Employers understand that employee compensation includes benefits. As health care costs have soared, costs to employers have soared as well. For example, someone earning $30,000 a year in salary sees that number on the W-2. Employers, on their tax returns, list employee health benefits as a line item, because that amount is tax deductible (a topic worth several radio programs and many blogs in its own right…)
The employee is ‘blind’ to this exact cost. If the cost for an employee was listed, employers could demonstrate how much money the employee actually receives directly and indirectly. In the example, let’s make health benefits cost $5000. Now, the W-2 would have $35,000 as the total compensation, but $5000 would appear as a line item for ‘health benefits’, which would be subtracted for tax purposes.
One of the many fears about HSAs and CDHP is that costs will just be shifted — or, put another way — companies will add to their profits at the direct expense of employees. Since we know that HSA prices actually decreased (eHealthinsurance.com data), if companies are forced to be transparent to employees about healthcare costs, it will be much more difficult to ‘reduce compensation’, as opposed to using the savings to fund the HSA savings accounts.
A win for transparency, corporate oversight, and the promotion of CDHC.
BLOGS/PHARMA: John Mack on “ethical pharmaceutical marketing”
John Mack attributes one of my contributors words to me. So first some remedial education. When I say that this is The Industry Veteran’s views on XYZ, and here are The Veteran’s words, and I introduce that in an indented paragraph, I mean that a guy calling himself The Industry Veteran wrote it and he is NOT me. If an article appears here without such a paragraph you can assume that I wrote it. Sorry to be pedantic, but my desire to have differing view-points up here why this is called The Health Care Blog and not Matthew Holt shoots his mouth off about health care. It’s the same theory as the New York Times having Paul Krugman and David Brooks both writing op-eds. I have enough opinions of my own without wishing to have other people’s attributed to me–even if I agree! And just to prove it I’ll have another article from Eric Novack up here very soon..
Meanwhile, what John has to say about the Veteran’s words is pretty interesting. He notes that the tone set by pharma comes from the top, and I think that the Veteran would agree.
BLOGS: Grand Rounds at Healthy Concerns
Grand Rounds is up over at Healthy Concerns, Elisa Camahort’s "healthcare from the consumer view" blog. And she picked two posts from THCB, so I feel very special!
PHARMA: The Industry Veteran, on what the Vioxx verdict means
After too long an absence, The Industry Veteran is back to tell us what’s really the problem going on in big Pharma. It’s that short-term thinking has invaded its strategic marketing. I remeber being at a meeting in 1998 where then consultant and now big cheese at United Healthcare Bill Whitely warned pharma clients about becoming so keen on being consumer companies, and I think the Veteran would agree. Here’s the Veteran’s restrained tone (and I’m not kidding this time!)
A recent piece in a UK newsletter got me to thinking about some implications of last week’s Vioxx verdict. The newsletter contends that the core of Big Pharma’s problems began in the 90’s when marketing rather than research began to direct the industry’s course. I would draw some other implications from the Vioxx scandal. First, Merck’s malfeasance amply illustrates an argument I have made elsewhere on THCB: the Bush/Right Wing goal of an unregulated market for pharmaceuticals and most other aspects of healthcare remains delusional. Contrary to hosannas from market true believers, sick people either lack the time or the repose to make rational, profit-maximizing choices. Even if they possess such detachment, the asymmetry of information operating against them militates against rational, well informed choices. Moreover, consumers-patients have no idea of the bundled cascade of services or costs that follow from their choice of, say, a doctor or a hospital. A second lesson of Vioxx is that many other parties must share some blame with Merck for furthering the promiscuous overuse of COX-2 inhibitors. Physicians and their professional societies now proclaim in high dudgeon that they were unduly influenced to overprescribe the COX’s by pharmaceutical sales reps, bountiful sample packs and deceitfully published articles. In fact their current wailing amounts to an admission that clinicians and their organizations failed to fulfill their professional responsibilities. For years the societies and the state licensing boards allowed physicians to complete their continuing medical education requirements by attending company-sponsored events. The manufacturers have been only too happy to relieve physicians of the need for footing the bill to keep up with advances in their respective disciplines. Now the same physicians and their accomplices self righteously complain that they have been influenced by promotions. Do they honestly expect us to believe or empathize with their purported shock and outrage, expressed with all the sincerity and histrionic skill of WWF wrestlers?The third-party payers also contributed to Vioxx’s 150,000 hearts attacks and 50,000 deaths. These organizations failed to scrutinize the COX-2 studies and placed those drugs on their formularies, often without even the disincentive of higher co-payment requirements. Their coverage of the COX-2’s was not merely a result of deference to physicians’ preferences or consumers’ demands as much as it was an acceptance of bribery. Merck, Pfizer and the other manufacturers offer competing rebates on their products, thereby reducing pharmacy benefit costs for the payer organization. In such cases the HMOs’ formulary committees and their pharmacy benefit managers eagerly swallow the manfacturer’s claims of efficacy and safety.Contrary to Drug Researcher’s arraignment of marketing as the Vioxx culprit, I would claim that Merck and other Big Pharma companies practiced short-term gouging and exploitation that are the very opposite of smart marketing. Over the past 25 years the pharmaceutical industry has enjoyed extraordinarily high returns on equity, assets and sales, often the highest of any global industry. The American public has permitted the industry its enormous margins because of an implicit covenant. The pharmaceutical industry’s obligations under the agreement have included the following. (1) The industry must develop products that the public perceives as substantially improving the length and/or quality of life by advancing, each decade, the standard of care in one or another disease condition. Pharma came up short here. The number of new molecular entities that have appreciably advanced the standards of care within the last 10 years has declined considerably. The research paradigm of medicinal chemistry has already “picked the low hanging fruit” and the public correctly perceives that the industry uses a considerable portion of its research budget to develop patent-extending knockoffs.(2) The industry must promote its products in a restrained, professional manner. This sotto voce element of the agreement went out with the trash in April of 1997 when industry lobbyists prevailed on Congress to permit direct-to-consumer advertising on a virtually unfettered basis. The restraint and scientific rigor befitting a research-driven industry conjoined to the medical establishment soon vanished. Big Pharma’s public face was no longer esoteric or dauntingly technical in a manner to command respect. Instead it began to advertise cholesterol medications with Dr. Seuss ads and southern football coaches. Pain relievers were promoted by ice skating champions and glamorous, middle-aged models doing tai chi in the park. The public can endure such fantasy and hyperbole when it comes to soft drinks or automobiles that sell good times and sex over the intrinsic features of those products. When Pharma stooped to the same lowest-common-denominator, however, its exalted image went out with the empty bottles of Pepsi.(3) The industry must not price its products beyond the reach of its core customers: the elderly. Pharma’s lobbying group, the PhRMA, and its lackeys in the media (e.g., the Philadelphia Inquirer) still adamantly contend that Americans must pay double and triple the prices paid by Europeans and others to fund further research. For a while that argument maintained traction but the public now knows that Pharma spends considerably more on SG&A than on research while the total compensation of top executives runs from $30 million to $50 million a year. Of course the concurrent erosion of the wider, employment-based health care system has also helped take the veil off Pharma’s unconscionable pricing. As tiered co-payments became the norm, 28-year old mothers who purchase oral antibiotics for their children must now pay $20 and $30 for the same products that used to cost them only $5 or $10.In short, Pharma has cooked its own golden goose by failing to meet expected standards for product development, by deceptively huckstering its promotions, and by using spurious rationalizations to overcharge its customers. That, ladies and gentlemen, constitutes the opposite of elementary marketing principles. Perhaps I might then differ with Drug Researcher by saying that Pharma has switched from a research-driven industry to one that is driven by bad and unethical marketing.
PHARMA: Vioxx–can we usher in a grown-up era?
Every week I write a brief editorial for my FierceHealthcare newsletter (and if you haven’t signed up yet, why not? It’s free and daily). Today’s was of course about last week’s Vioxx jury verdict. I may be an optimist but here goes:
This week’s news was dominated by last Friday’s verdict in the Vioxx case that was either a decisive blow against the evils of capitalism or the end of Western civilization as we know it, depending on your point of view. The Vioxx case is perhaps a sentinel event. It could be what’s needed to spur big Pharma, the FDA, the medical profession and the public into a new compact. In this new era everything that is known about a drug, pre-and post-market approval, would be tracked, reported publicly and analyzed, and the collusion between pharma and the FDA would need to end. The risks and rewards of taking these drugs would be clearly understood. Pharma would have to change their marketing dramatically (much more so than the minor restrictions on DTC) and accept lower profits and the public would have to accept that there are risks as well as magic in pill bottle, but that for some patients they’re worth taking. Physicians and pharmacists would have to spend much more time educating the public and themselves.
This grown up view about pharmaceuticals may not fit our needs for black and white outcomes, but it is in line with the "consumer" health care system we are moving towards. And if we don’t get there, the more likely future is restrictions on drug development and supply that will overall hurt patients, an over-cautious FDA, and grumpy big Pharma continuing to play dodgeball.
