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PHARMA/POLICY/QUALITY: A deluge, sorry

I said a while back that I wouldn’t do just tell you to go read other stuff, but there’s a deluge that you just must pay attention to–all out in the last 24 hours.

1) Kaiser Family Foundation is out with a confirming study that those seniors at the bottom with high drug spending will be better off from the drug-benefit in the MMA, but that many more in the middle will not be.

2) Arnie Milstein shows why he believes that the "shark" of rising health care costs will be contained by the efficiencies brought to the system by the "engineers".

3) The continued aftershocks of the Vioxx hearings continue very very loudly. JAMA is out with a whole raft of articles mostly suggesting that major FDA reform is needed, and that drug company studies have routinely withheld data from the public and by inference JAMA and its fellow journals. While a lawyer for Bayer fires back very aggressively, Astra-Zeneca CEO McKillop seems to be breaking with PhRMA orthodoxy and admitting that there’s a real problem–possibly in an attempt to save Crestor before it falls victim to the Vioxx syndrome.

Given that my work putting together the FierceHealthcare newsletter (go sign up!) was, shall we say, made somewhat challenging by this plethora of activity, I suggest that you go take in some of these articles, and I’ll be back with more comment later in the day/week.

Thank God we get to take the end of the week off!

Meanwhile one of my true fans has nominated THCB for the worst medical blog over at Echojournal!

PHARMA: The Industry Veteran on drug patents and who pays for research

Last week the NY Times had an NY article about drug pricing that suggested a new approach for keeping innovation while controlling prices. In particular it suggested changes to the way the patent system works, and how the Federal government might change some of the ways it spends the $30bn the NIH spends on basic research and the $40bn it spends via various programs as a purchaser on drugs:

The government could compensate drug companies for their inventions as an incentive for them to keep innovating. How to determine how much an innovation is worth? One possibility would be for the government to selectively buy patents at a premium over the price a private bidder was willing to offer, and then put them into the public domain, Professor Kremer said. Aidan Hollis, an assistant professor of economics at the University of Calgary in Alberta, devised a different approach: the government would set up a fund to compensate drug companies based on how much their new drugs improve the quality of life and how often they were used. These alternatives would carry several benefits, economists say. In addition to making drugs available at lower prices, they would make it much less profitable for pharmaceutical companies to spend millions of dollars to develop drugs, like Nexium and Clarinex, that are protected by patents but offer little improvement over similar drugs already on the market.

The goal is not to spend less to develop new drugs, Professor Hollis said, but to get more therapeutic bang for the buck – by channeling investment to where it matters most – as well as to increase access to the resulting drugs. "This can be done within the same budget as we devote to pharmaceuticals now," he said.

The Industry Veteran is intruiged by this ray of innovative thought in the nation’s paper of record. He writes  for THCB that:

There are some cute ideas here, but in what is rare for a piece of mass media journalism, the author did a good job of pointing out the flaws in each one of the patent-altering proposals. My own ideas on this matter are somewhat similar to one of the proposals. Let the government fund and conduct all new drug research from pre-clinical up through Phase I clinical trials. At that point they would auction off the compounds, each carrying patent exclusivity to run from the auction date and extending a specified number of years. Since the Big Pharma companies are, essentially, late development managers and marketers, my scheme would just rationalize the process. The auctions would attract high bids because the compounds would carry patent exclusivity and not, therefore, become immediate generics. Of course, I don’t know how much this process would reduce drug costs. I suspect it wouldn’t be much at all. The main virtue of my plan is that it would allow clinical needs and scientific evaluation to drive research instead of profit potential. Then too, it might knock down the fiction that Big Pharma propagates about their high R&D costs for introducing every product. People familiar with the situation already know that their claim is BS, but I suppose the current fiction diverts the general public.

Isn’t it just like economists to advise fixing the basement when the roof is leaking? You want to reduce drug prices? Use price controls the way Europeans do. Afraid that will stifle innovation? Use tax policy to end the 50% tax credit and the expense deductions for me-too’s and for cock-raising, wrinkle-smoothing, lifestyle products. That way you give drug companies a simple message: innovate or die.

POLICY: A Blue state Republican talks about expanding healthcare access

One of the great ironies of American political life is that three of the biggest Blue states have Republican Governors. One of those governors (and of course it’s not Arnie or Pati-Pati-Aki) has developed a plan for universal health care, of sorts. OK so he’s been forced into it by the Democrats who run the rest of the state, and he doesn’t want to put any more money into it but Massachusetts’ own Mormon Mitt Romney is at least talking   about expanding healthcare to the uninsured.

His theory is that he can expand Medicaid (i.e. get the Feds to pay) to more of the uninsured, relax state mandates on insurers so that cheaper plans can be offered to the working poor, and expand the state’s community clinic program. Ideologically this isn’t a million miles away from what Bush sort of hinted at in the campaign. But this is a real announcement, and we haven’t heard Bush say anything nationally–and we won’t. So look to state experiments, and hope that the fate of Tenncare isn’t shared everywhere else they try to extend health coverage. And for the time being we can all go along with the fiction that no real subsidies are needed to get health insurance to the working poor.

TECHNOLOGY: Molly Coye’s call for action


Molly Coye

Molly is the CEO of HealthTech a research organization that looks at this introduction of new medical technologies, mostly from a provider point of view. She was asked how IT is changing health care in California. The answer is not much yet. She’s also going with the line that you can reduce inadvertent services and improve quality (showed the VA numbers that Health Hero Network improved costs). The VA is rolling it out nationwide because they are stuck with those sick vets for life. Of course in California remote monitoring is not reimbursed, so no one does it.

The tech is there but the social and policy infrastructure is not.

Actually several states are getting further along. Wyoming, Florida and Delaware are getting along, but adopting it in California is tough.

IOM (of which Molly was a big part) called in 2000 for a paperless system in 10 years. Not going to happen, but 10 years from now it might be possible. And all the indicators in a very unscientific survey she did asking about patient electronic connections with providers and plans are very low. She wants a state agenda to accomplish that goal. Also numbers aren’t much better in administrative care and clinical indicators.

Molly thinks we need private and public sector state leadership to get this done. But she calls for 80% of health data to be available online in California within 5 years. She says "We need the leaders to step forward". The Feds will help with the standards, including with the interoperability" but we need to do it ourselves in California.

I think that we should put this on the ballot–it worked with Stem cells! In answer to my question Molly doubts that we can get people riled up about chronic care management technology (and from her time in state government she doesn’t like initiatives!)

TECHNOLGY/QUALITY: Carolyn Clancy says DSM works; Sam Ho agrees; Arnie Milstein says that we’ll cut costs just in time

No cats for Friday blogging, but people blogging instead, as I went to the ballpark witha camera today. Here are some of the people I’ve been watching and chatting with.


Carolyn Clancy, Head of AHQR

Shorter Clancy: AHQR is bought into the concept of DSM adn using IT for it, but that there’s a disaggregated messed up medical system. but there are beacons of hope where cardiac care, etc has been improved


Sam Ho, Pacificare

Shorter Sam Ho, Pacificare CMO. Need to focus on particular patients based on predictive relative risk. Use case management and incentives wth physician groups to improve DM enrollment. It works and saves money, and Pacificare is integrating a huge range of IT functions across the board to get it down via their portal.


Arnie Milstein, MD and Sharkmeister

Shorter Arnie Milstein: The cost of care is going up too fast and that low wage earners are seeing it at 35% of total wages. That’s the shark (chart not online — imagine the difference between 2 lines with teeth!) who’s jaws can’t be shut. Crossing the Chasm is an engineer’s report about supporting the people who have to get more efficient than the advanced technology coming down the road will cost. He thinks that we can take out 25% on costs and increase efficiency by 40%.

QUALITY: More from HIT conference (Friday)

Today we’re going to tour the ballpark and have a go in the batting cage. But first…

Shorter Bob Pearl, CEO Permanente Medical Group: Our docs are convinced we care about outcomes. Other people’s docs (other IPA and med groups) have doubts.

Chronic care management is an IT intensive, patient outreach intensive, 24/7/365 process that’s really tough, but need a whole system. We have to track and predict bad incidents. One example is tracking bi-polar people every day in order to predict a manic incident. But the system needs to track all patients –those with chronic illness and those at risk of getting one (which is everyone else!). The system needs to track everyone all the time and find the failures, and report them out for both intervention and later analysis.

Right now 500K in the KP system are being watched by a care manager, but that 500K is not a static population — and they are trying to get them out of that system back to baseline. Everyone everywhere needs constant prompts and that’s where KP’s heading. (Implication is that every one else needs to get on board or they won’t be around…)

POLICY: What will turn the tide? by Atlas

Correspondent Atlas (who you may recall is the token right-winger on THCB)   writes regarding my question as to what will turn the tide regarding reform:

The pondering of what might start a proletarian revolution in health care sounds jarringly reminiscent of Lenin’s observation about Czarist Russia: "The worse, the better."

The reality is that most Americans are reasonably fat and happy with their healthcare, which is why the starry eyed Reds of the health care firmament (Dr. Angell et. al.) are always disappointed when the rage at the machine so fashionable among the chattering class don’t resonate with Red-land.

The real power behind the move to give big pharma and the rest of the healthcare sector, as you allude to in your post, is mean old big business–GM and the rest of the Fortune 500. One industrial titan’s revenue is another’s expense, and since big biz picks up nearly half the tab, they are leading the charge behind the scenes to cut that cost through the usual means–get government to pay for it, or outsource it to India.

Government is the other pincer putting the squeeze on the healthcare-industrial squeeze. Those of you who lament Bush II pay close attention and watch how the Administration uses clever cost cutting wolves in private sector sheep’s clothing to penetrate deep behind healthcare-industrial complex lines.

I’ll have you know there are some otherwise reasonably rational Republicans running around Congress waving bloody reimportation shirts. There are cheap votes to be had in this farce, and most of the Chamber will still respect you in the morning.

Most big business would like nothing more than to unload their healthcare costs on the government, which will then either tax and spend until the whole deck of cards collapses, or (much more likely) ration us into a Kafkaesque gulag system ala Great Britain or those envied denizens of the great white north who migrate south like birds in Fall should they actually need healthcare rather than the illusion of it gratis.

Sad but true, there is no free lunch. Would that there were. But no one works for nothing. Not even noble minded authors. And they are far less likely to be sued into oblivion for human faults than big pharma, hospitals, and the beleaguered medical profession, its ranks already projected to fall 20% short of projected demand by 2015.

Even now, why would any intelligent young person choose medicine over law? A good trial lawyer can make more in a year than a good doctor can make in a lifetime? So those who clamor for socialized health will have to rely on scholarly saints in a capitalist world, which will make the queues for healthcare even longer.

Nonetheless, there are legitimate problems that need to be solved and can be addressed without killing the geese that lay the golden eggs. Some of Kerry’s ideas and some of Hillary’s had merit. If we fully funded Medicaid and raised the eligibility limits, possibly by means testing Medicare and Social Security, I think a lot of the legitimately uninsured would be covered. But instead politicians waste time and political capital on stalking horses like reimportation. Let those who are serious–big business, big pharma, big government, organized medicine and hospitals and all the other players, purveyors, and payers–sit down at the table and make great compromises for the good of the people, instead of demagoguing  for political gain. Only serious candidates need apply.

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