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TECHNOLOGY: The Ten Year Plan — American health care IT goes Stalinist

So following in the footsteps of like-minded Lenninists Stalin and Mao, HHS secretary Tommy Thompson announced a 10 year plan for health technology on Wednesday. Speaking as a Lenninist (or at least someone who agrees that it’s usually better fewer but better) I can now say that I approve of something the Adminstration has done. For the guts of David Brailer’s (the new Health IT Czar–not such a Lenninist title I guess!) speech come several new initiatives–detailed in this article. The associated report has serveral overall reccomendations:

The report identifies four major collaborative goals. With these goals are 12 strategies for advancing and focusing future efforts:

Goal 1: Inform Clinical Practice. This goal centers largely around efforts to bring EHRs directly into clinical practice. Three strategies for realizing this goal are: Strategy 1. Provide incentives for EHR adoption. The transition to safe, more consumer-friendly and regionally integrated care delivery will require shared investments in information tools and changes to current clinical practice. Strategy 2. Reduce risk of EHR investment. Clinicians who purchase EHRs and who attempt to change their clinical practices and office operations face a variety of risks that make this decision unduly challenging. Low-cost support systems that reduce risk, failure, and partial use of EHRs are needed. Strategy 3. Promote EHR diffusion in rural and underserved areas. Practices and hospitals in rural and other underserved areas lag in EHR adoption. Technology transfer and other support efforts are needed to ensure widespread adoption. Strategy 1. Regional collaborations. Local oversight of health information exchange that reflects the needs and goals of a population should be developed. Strategy 2. Develop a national health information network. A set of common intercommunication tools such as mobile authentication, Web services architecture, and security technologies are needed to support data movement that is inexpensive and secure. A national health information network that can provide low-cost and secure data movement is needed, along with a public-private oversight or management function to ensure adherence to public policy objectives. Strategy 3. Coordinate federal health information systems. There is a need for federal health information systems to be interoperable and to exchange data so that federal care delivery, reimbursement, and oversight are more efficient and cost-effective. Federal health information systems will be interoperable and consistent with the national health information network.

Goal 2: Interconnect Clinicians. Interconnecting clinicians will allow information to be portable and to move with consumers from one point of care to another. This will require an interoperable infrastructure to help clinicians get access to critical health care information when their clinical and/or treatment decisions are being made. Three strategies for realizing this goal are:

Goal 3: Personalize Care. Consumer-centric information helps individuals manage their own wellness and assists with their personal health care decisions. Three strategies for realizing this goal are: Strategy 1. Encourage use of Personal Health Records. Consumers are increasingly seeking information about their care as a means of getting better control over their health care experience, and PHRs that provide customized facts and guidance to them are needed. Strategy 2. Enhance informed consumer choice. Consumers should have the ability to select clinicians and institutions based on what they value and the information to guide their choice, including the quality of care providers deliver. Strategy 3. Promote use of telehealth systems. The use of telehealth — remote communication technologies — can provide access to health services for consumers and clinicians in rural and underserved areas.

Goal 4: Improve Population Health. Population health improvement envisions improved capacity for public health monitoring, quality of care measurement and bringing research advances more quickly into medical practice. Three strategies for realizing this goal are: Strategy 1. Unify public health surveillance architectures. An interoperable public health surveillance system is needed that will allow exchange of information, consistent with privacy laws, to better protect against disease. Strategy 2. Streamline quality and health status monitoring. Many different state and local organizations collect subsets of data for specific purposes and use it in different ways. A streamlined quality-monitoring infrastructure that will allow a complete look at quality and other issues in real-time and at the point of care is needed. Strategy 3. Accelerate research and dissemination of evidence. Information tools are needed that can accelerate scientific discoveries and their translation into clinically useful products, applications, and knowledge.

While we can all agree that these are laudable goals, which should have been pushed by the government long ago, the obvious reaction is along the lines of "Show me the money!" In iHealthBeat’s excellent roundup George Isham, chief medical officer for Minnesota-based HealthPartners said the 10-year plan is "awfully ambitious" and will "take a lot of money and a lot of time," but is "needed. I hate to mention it here but the equivalent of what the Brits will spend on their 10 year Health IT plan in US dollars per population is about $100 billion and they are starting from 80% use of ambulatory EMRs by their GPs! And of course if you adjust that spending per capita spending on health care, you’d need to spend more like $250 billion or $25 billion a year. (Brief Editorial: My proposal is that we stop blowing the $25 billion a year we waste on the Drug War and spend it on this instead!)

Now that’s not exactly a fair comparison as American private sector spending on IT is going to be the driving force here, but there is still a need for government funding and pump priming. So what was the atmosphere in DC Wednesday, and are we likely to get that pump priming? For that here’s some comments from the ever wonderful Jane Sarasohn Kahn:

Carolyn Clancy’s (head of AHQR) assertion that, "The framework ROCKS!" was indicative of the level of excitement and passion around Dr. Brailer’s report that, in the words of Secretary Thompson, "launches the decade of health IT."  Dr. Brailer introduced the day by invoking the image of Neil Armstrong walking on the moon (as I was thinking good karma all the while for the other Armstrong of the day, Lance).  The day was full of gravitas lent by Senator Frist and Rep. Nancy Johnson, and Patrick Kennedy had a front-row seat waiting to introduce his legislation for comprehensive electronic health system in ten years’ time.  The morning had the key Federal health care leadership all committing to the plan, from the VA and DoD (both far ahead of the private sector, which you can do with scale and one large purchaser) to AHRQ, the FDA, and the eloquent Elias Zerhouni of NIH.    The afternoon was quite interesting: on the private sector vendor panel, Neal Patterson (Cerner) spoke about railroads and the Federal input on "gauge."  But it was Dan Garrett of CSC who made Mr. Patterson’s blood pressure boil as Garrett waxed lyrically about open standards, with our old friend Neil deCrescenzo of IBM echoing the same.  In fact, open standards are crucial to Dr. Brailer’s vision of interoperability and could be the friction point for moving forward.  But Tommy Thompson wants to take no prisoners in this effort and is very aggressive on the topic of the health IT decade.  Even Mark McClellan of CMS is pushing forward with a Medicare Internet portal in Indiana later this year to roll out nationally after they learn what they need to learn.  And he’s also pushing eRx sooner rather than the MMA mandate suggests.

So keep your eyes on this. After 40 years of activity towards electronic health records the Feds have finally called for the building of a Railroad, and the train may begin to leave the station sooner rather than later….

PBMs: Something old and something new

You may not know this (I admit I didn’t) but there’s a trade association for PBMs called the Pharmaceutical Care Management Association which yesterday was one of the first to come out and laud the Administration’s call for improving the Nation’s Health Care Information Infrastructure. That reminded me of something old and something much more recent about PBMs. I’ve written pretty widely about PBMs in THCB, with the much shorter version being that despite the fact that they have totally failed in their stated mission to keep the lid on drug prices, and for that matter haven’t really done much to advance care management (or "health improvement"), they have made a business out of being decent claims processors and by inserting themselves firmly in the financial dealings between their clients and their "partners" in the pharma world. filed Monday against Caremark:

  No wonder that the biggest PBM, Medco, is starting its first ever PR campaign. There’s no question in my mind that PBMs need to find what we consultants call a new value proposition–but then I’ve been thinking that for a while. What that new value prop is and whether they can get away with doing what they’ve been doing for a while longer while they figure it out is of course up in the air.

It’s interesting that the PBMs are now loudly backing the new health IT initiative (more on that from THCB tomorrow when I hear back from my spies in DC) as the data processing part of their business was indeed launched by the last major change to Medicare. That was the ill-fated Medicare Catastrophic Act which was passed in 1988 and repealed in 1989. One thing that its passage caused was the installation of what ended up being NDC and PCS’ pharma claims and editing transaction systems. So now when you go to the drug store, your claims and co-pay information is right there for the pharmacy tech to read off to you–no, you didn’t notice that happening in the doctor’s office! So it looks like PBMs have decided that the new Medicare "Modernization" Act with its somehow associated IT initiative will do something equally good for its business in the future.

They’d better hope so. Whatever the future holds, their present continues to come under increasing attack. THCB has mentioned before the attempt by large employers to go around the PBMs in negotiating rebates, and several of the bigger PBMs have been settling with trial lawyers and their customers over the extremely opaque nature of their rebate mechanisms. I thought that the plaintiff’s attorney put it rather well in a further lawsuit

The lawsuit says that Caremark keeps discounts from drug makers and pharmacies instead of sharing them with members of the Morrell benefit plan. It says Caremark secretly negotiates rebates for drugs and keeps that money. It also says that the company provides plan members with expensive drugs, instead of cheaper alternatives, to get rebates.

TECHNOLOGY: Are consumer health plan web sites finally taking off? Matt Quinn doubts it!

Interesting blurb on consumer use of health plan web sites from Manhattan Research. Matt Quinn writes:

I haven’t read the whole study, but I feel that it significantly overstates the case: 21.9 million Americans using health plan web sites for anything isn’t critical mass… and significant hurdles (specifically in the area of of organizing and providing access to information) still exist with the vast majority of plan web sites to make them useful for what most consumers want (the ability to make decisions on cost, among other things).

I feel that the principal difference between plan websites today and a couple of years ago is the amount of stuff that they provide for their members. There is a lot more of it on most sites. The jury is still out as to whether the stuff that they are providing is accomplishing any of the goals of e-health: making consumers loyal to their plans, achieving administrative efficiencies by reducing call center volume, making patients healthier, or attracting new employer customers through competitive differentiation (an employer chooses a plan based on its e-health offering vs. strictly on price). Although it’s a managed care organization and not a plan, per se, but Group Health Cooperative is doing many of the above and is actively differentiating with its e-health offering.

Maybe things have radically changed in the couple of months since I was knee deep in this stuff, but I don’t think so.

TECHNOLOGY: Buyer beware when biotech doesn’t live up to its promise

There have been many miracles from biotech but there have also been some rash promises made that haven’t panned out. One of these is featured in this Boston Globe story about Biopure.  Biopure is a company that has been trying to approve and market a substitute blood product. Given the problems with infections in the blood supply and the interest from the military in transportable blood with a long room temperature shelf life,  Biopure’s prospects looked good.   Back in 2001 I heard a stock analyst, who’s name–luckily for him–I’ve forgotten, pitching the stock at a pharma conference. The price was around $25 a share, and when the FDA approved its product Hemopure it was sure to go into the stratosphere.  But the approval never came, and the Street.com ran a series of articles (correctly) forecasting that the approval never would come and the company would run out of cash. Sadly for me, I’d listened to the analyst and bought in before I read the Bears’ version of events.   I keep the few hundred now almost worthless shares in my portfolio to remind me that a) analysts are there to sell stock trades and not tell you reality, and b) that it’s better to take a small loss than a big one! While my minor financial woes are good for a giggle at this distance, Biopure’s story is a salutary reminder that medical miracles are risky and demanding, and that the world of the genome and biotech which promise so much are not certain to deliver in every instance.

BLOGS: Apology to Brian Towell

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Last week I published an article from Industry Veteran responding to an article posted by Brian Towell. On re-reading the Veteran’s piece in a more grounded manner, he went over the line from being rude about Brian’s ideas to being rude about him personally. My aim in THCB is to provide a place where I and others can air strong opinions about the health care marketplace. I welcome contributions from the Veteran and others, and it’s in the nature of this blog that sometimes posts are more like a late night bar conversation than scholarly articles. But there’s enough really bad stuff going on in the world without adding more personal invective. So I apologize to Brian for publishing the Veteran’s piece. I’ll employ a slightly heavier use of my editorial discretion in future and hope that we can now get back to more constructive consideration of the issues.  By the way, Brian’s piece on what pharma has to do about its overall marketing strategy, which is long and thoughtful, is here, and the Veteran will be back doing what he does so well later.

POLICY: Free Market Medical Care, by Andy Ribner, M.D.

THCB has a new contributor today; Dr Andrew Ribner, a cosmetic surgeon who wrote to me originally in praise of my opinions about a piece I wrote about Regina Herzlinger a while back. After a bit of back and forth, Andrew figured out that despite my call for an intellectually honest backer of health care consumerism, I wasn’t a true believer in the power of the market. Cosmetic surgeons know something about the role of the free market in health care, so Andy sent me this:   Free markets are the most efficient mechanism for exchange of goods and services because they promote the features and price at which willing sellers and buyers agree to exchange.  When free markets are present, the price and features of goods or services offered respond to the desires of the aggregate of buyers.  Knowledge on the part of buyers as to what sellers are offering and on the part of sellers concerning what buyers want is necessary.  Perfect knowledge is desirable but rarely present.   Completely free markets are difficult to achieve, and perhaps not necessarily desirable or practical under all conditions.  Government controls and laws often limit the complete freedom of the market place.  We have laws against fraud, age requirements to purchase certain products and certain guarantees concerning product quality which protect consumers.  We even intervene with the evolution of markets to keep them from being under the excessive control of a single seller in a market monopoly.  Rarely, we do protect sellers when the purchase in a market is dominated by one buyer, as in monopsony.   At the present time there is not a free market in the purchase of health care.  This is the consequence of several factors.  First of all, the user of the service in most cases is not the purchaser of the service.  During the period of wage-price controls in World War II, companies devised a new way to compete for scarce labor by introducing employer purchased health insurance as a benefit of employment.  This continues to the present day.   When the buyer of a product or service is not the end user, this creates non-alignment of incentives between buyer and user.  The market cannot respond to the preferences of a user who is not a payer.  Only the flow of dollars will modify the features of goods or services offered.   On the other side of the coin, a buyer not pressured by the constraints of price or budget will have an unlimited demand for goods or services.  This was the fatal defect of a third party payment system.  This was further exacerbated by years of labor union demand for "first dollar" coverage of medical care.   The health insurance industry response to rising costs was first to increase premiums.  However, payers preferred reduction in coverage to increasing costs, and thus managed care (read reduced care) was born.  Health care users predictably resented gatekeepers and denial of care which has become a mainstay of insurance company strategy.  Although HMOs have begun to disappear, insurance companies are still active participants in treatment decisions through their approval process.   Free markets also cannot exist in the presence of a single dominant seller or small group of sellers who have so much leverage that they can control market price and features offered.  "Trust busting" was the solution to that problem when it was identified under President Theodore Roosevelt.  Monopoly may be more common, but monopsony, the situation of a single powerful buyer distorting a free market, is equally as destructive to free market function.   Today, huge health insurance companies have become monopolies (more accurately oligopolies) as sellers of health insurance.  With competition so diminished it is no wonder buyers can no longer get the features and price they seek.  In addition, these same insurance carriers exercise monopsony power in the purchase of health care services, controlling price paid and scope and nature of services covered.   Hospitals have joined together in ever larger groups in order to maintain market power in negotiation with insurance companies.  Physicians, on the other hand, have not been permitted to negotiate as large groups with few exceptions.  Consequently, during this time of double digit health care cost increases, physician reimbursements have been flat or gone down.  Medical practice has become a high volume exercise just to keep up with overhead.  Adam Smith would predict that as you pay less and less for a service, the motivation to be available at all hours to provide that service disappears.   What to do? Some have suggested "managed competition" to create agreement between insurers, doctors and government would control costs and improve quality.  "Managed competition" is an oxymoron right up there with jumbo shrimp and would more likely result in the insurance industry using its considerable political clout to influence government decisions to the detriment of both patients and physicians.   The best prescription for a responsive and responsible health care system is a free market.  Medical Savings Accounts (MSAs) are a good first step toward market discipline.  MSAs would be funded by pre-tax earnings and would be used to pay the high deductible of a catastrophic or stop loss type of health insurance policy.   Money placed in MSAs could be used to pay any health expense and would be a less painful way to meet a high insurance deductible.  By allowing the individual to roll over money in the plan from one year to the next, it would provide a motivation to spend the money carefully and shop for price as well as features of service.   Tax treatment of health insurance premiums would change. Health insurance premiums would no longer by tax deductible to employers, but would be either a tax deduction or tax credit to individual purchasers.  An employer could pay its employees in salary what it had spent on health insurance.   Overnight, employers would stop providing insurance to its employees, and the purchasers of health insurance would be the end users.  Portability of insurance coverage would no longer be an issue because health insurance would be individually purchased.   In the scenario of individually purchased health insurance would force insurance companies to at least respond to buyer preferences for features.  Change in tax treatment to individuals would certainly maintain price responsiveness on the part of buyers, but it would allow the working uninsured to purchase insurance as individuals. We can encourage healthy lifestyle and reduce overall health care costs if we permit underwriting of risk factors as is done in automobile insurance.  The current argument against this practice is that it would make insurance unaffordable for those who are chronically ill and likely to incur high expenses on an ongoing basis.  That group of patients would be eligible to receive federal subsidies for their insurance premiums.   This is by no means a perfect solution to our health care problems.  But, it is a step in the right direction to encourage the free market to find the solutions to our current dilemmas in the provision of health care.    Those of you looking for an alternate view of MSAs/HSA’s may be interested in Paul Krugman’s views in his NY Times op-ed last week. I’ll reply to Andrew later this week, but my concerns about the consumer directed health plan movement have been voiced in THCB before.

POLICY: In Florida not all the nuts grow on trees

In Florida, the state Supreme Court has decided in its wisdom that its should put competing initiatives on the November ballot about medical errors and malpractice. Both of these are mutual nitpicky tit for tat assaults by the trial lawyers on the doctors and vice versa. Believe it or not these will get to change the state Constitution!

And we still let this state stay in the Union, despite the screw-up that they made of it in 2000. As Charlie Brown said, "Good Grief!"

TECHNOLOGY: Boston Scientific recalls thousands of heart stents

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THCB, in many posts on the subject of drug-eluting stents, has picked up on the occassional quality issues plauging both J&J’s Cypher stent and Boston Scientific’s Taxus stent in the past few months. But I must admit I didn’t expect Friday’s news of basically a virtually total recall by Boston Scientific of all its DES and some bare metal stents. (Of course if I had expected it, I’d have gone short and pocketed the $3 a share profit!).   Don’t expect drug eluting stents to exactly fall out of style. This is a production quality issue, carediologists remain sold on the value of the stents, and so are patients, even if the widespread use of DES are contributing to the financial detriment of hospitals and, eventually, Medicare and the taxpayer.

PHARMA: Marcia Angell’s frontal assault on big pharma

Hat-tip to Ross at the Bloviator for this one. I know I promised that I’d try to stop writing about pharma, but….. a synopsis of her thesis. Nothing here that you wouldn’t know if you’d been observing the industry for 20 years, but really interesting to see so may arguments put together in one place. Her main thrust is that:

Marcia Angell, former editor of NEJM has been working away on a damning book about big pharma. Her long article is presumably

a) Pharma is not innovative (mostly gets its products from NIH backed research, and from smaller biotech) b) The big money is spent on marketing not R&D c) They use monopoly protection to continually increase prices d) Pharma buys protection by huge contributions to politicians e) The major players are not trying to innovate their way out of the current situation

    How is the pharmaceutical industry responding to its difficulties? One could hope drug companies would decide to make some changes—trim their prices, or at least make them more equitable, and put more of their money into trying to discover genuinely innovative drugs, instead of just talking about it. But that is not what is happening. Instead, drug companies are doing more of what got them into this situation. They are marketing their me-too drugs even more relentlessly. They are pushing even harder to extend their monopolies on top-selling drugs. And they are pouring more money into lobbying and political campaigns. As for innovation, they are still waiting for Godot.

Angell’s book is presumably going to be a hatchet job (albeit a justifiable hatchet job) on the industry. Her explicit intention is to make what insiders and observers know about the industry well understood amongst the public, hoping to get the political winds to change and reform the industry.

    These are just two of many reforms I advocate in my book. Some of the others have to do with breaking the dependence of the medical profession on the industry and with the inappropriate control drug companies have over the evaluation of their own products. The sort of thoroughgoing changes required will take government action, which in turn will require strong public pressure. It will be tough. Drug companies have the largest lobby in Washington, and they give copiously to political campaigns. Legislators are now so beholden to the pharmaceutical industry that it will be exceedingly difficult to break its lock on them. But the one thing legislators need more than campaign contributions is votes. That is why citizens should know what is really going on. Contrary to the industry’s public relations, they don’t get what they pay for. The fact is that this industry is taking us for a ride, and there will be no real reform without an aroused and determined public to make it happen.

So what’s the likely impact of this book? There have been similar screeds about the pharma industry for over 20 years, many coming from academic docs like Angell. They’ve had zero impact on the industry or on its relationship with non-academic physicians. What may be different this time is that the polls are now showing the decline in the industry’s public image happening at a time when pipelines are drying up. Meanwhile the genomic and information revolutions are going to allow much better tracking and understanding of what drug works on whom. That in turn will begin to make more inevitable demands from payers for better understanding of what they are buying when they pay so much for drugs. So perhaps the pressure on pharma will finally be great enough that they’ll be forced into a change one way or another.   Some innovative people in pharma are planning for that day, trying to integrate the desire to intervene in care with the right cost-effective drug at the right time into their R&D activities. (On a personal note, I’m about to start working with a Foundation that is creating partnerships to promote that model). In the end, to paraphrase Craig Ventner, I believe the greatest days of the pill business are actually in front of us.  But they may not be quite so fantastically profitable, and they will probably not look like the business as usual approach that Angell excoriates.  However, this is an industry that is very conservative (big and small Cs). It’s primary need now is to ensure that it goes into the future on terms that are best for it and the system, rather than invite on itself the kind of dramatic regulation and intervention that Americans frankly do poorly.   Like their kissin’ cousins over at the AMA and their obsession with liability caps, PhRMA and its members need to start fighting the right fight, and their obsession with reimportation is not that.

PHARMA: Free trade and importation redux

So the Australian trade agreement passed the house and it includes the limits on reimporting drugs discussed in THCB earlier this week. Of course they passed it by swearing blind that it won’t impact the reimportation issue as apparently Australian drugs can’t be imported here anyway. Funnily enough the AARP is out with a new push poll survey that shows what Harris and others have been saying for a while now: 80% of seniors favor legalization of Rx re-importation. And for the gazillionth time; Florida, Pennsylvania — swing states, old populations.   Next week I’ll be ignoring pharma and trying to convert this from The Pharma Blog back to the THCB that you know and love (or at least some of you love).

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