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QUALITY: Malpractice Jury-Award Median Up Slightly

A new study out from Jury Verdict Research shows that the median malpractice award for 2002 was stuck at $1m–no real increase from 2001. The proportion of successful cases brought against doctors went up slightly but was still only 42%. This is though up from 29% in 1996. Although the denominator is not in this report, the total amount awarded was estimated at $4.2 billion in 2002 according to these data from the National Practitioner Databank. The figures disagree from Jury Research’s in that in 2002 the National Practitioner Databank estimated that there were 452 awards for a median of $286K and a mean of $506K (implying some 650 odd cases that made it to court and were won by the defendant physician). But in any even the vast majority of the $4.2 billion handed over was in settlements, of which there were 14,852 in 2002. In other words around 7% of cases make it to court, and around 15,000 cases end up with money paid to the plaintiff each year.

Given that there are around 550,000 practicing doctors in the US, this means that roughly 3% are in some way being successfully sued for malpractice each year. When you look at it that way, it’s not that big a problem. (Cue barrage of email, no doubt!).

POLICY/QUALITY: Antibiotics overuse as an emerging public health threat

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THCB is now so influential that people are seeking to advertise on it. Really! (Stop that sniggering). I did get a message from John Riley at Keep Antibiotics Working to ask if he could advertise to my readers. As this site is designed to produce neutral but opinionated reporting (that advertises only me and my services as a by-product) and also I’m not set up to take advertising, I declined. But after I saw what the site was about and read this post from Family Medicine Notes about the dangers of antibiotic overuse in humans, I thought that it would be worth giving John some space to explain why antibiotic overuse in animals is such a health and policy problem. So here’s his argument:

    Over the last 60 years, effective antibiotics have turned bacterial infections into treatable conditions, rather than the life-threatening scourges they once were. The effectiveness of many life-saving antibiotics is, however, waning. Health experts have deemed the rise in antibiotic resistance a public health crisis. Everyone is at risk from antibiotic-resistant infections, but children, the elderly, and people with weakened immune systems are particularly vulnerable.

    The overuse of antibiotics is to blame. A major source of this overuse is routine use of antibiotics as feed additives for livestock and poultry–not to treat disease, but instead to promote growth and compensate for crowded, stressful, unsanitary conditions. The Union of Concerned Scientists estimates that 70% of all antibiotics in the U.S. are used as feed additives for pigs, poultry and cattle. In June 2001, the American Medical Association went on record opposing the routine feeding of medically important antibiotics to livestock and poultry (i.e., “nontherapeutic” use).

    Antibiotic use in animal agriculture has been linked definitively to human bacterial infections resistant to antibiotics. Mounting evidence suggests that widespread overuse of agricultural antibiotics also may be contaminating surface waters and groundwater, including drinking water sources in many rural areas. Nonetheless, agribusiness and the pharmaceutical industry are fighting hard to thwart restrictions on the use of antibiotics in agriculture.
    While medical use of antibiotics is a major contributor to the emergence of antibiotic resistance, agricultural uses also pose a significant problem since they promote the development of resistant bacteria that can reach humans through several different pathways – directly via contaminated food or indirectly via environmental contamination.

    In an effort to curb the spread of resistant bacteria and protect the efficacy of antibiotic drugs, the “Preservation of Antibiotics for Medical Treatment Act” (S. 1460/H.R. 2932) is bipartisan legislation pending in both houses of Congress that would phase out the routine use of eight classes of medically important antibiotics in animal agriculture, unless their use can be shown not to pose a threat to human health. The legislation would continue to allow antibiotic use for treating sick animals and preventing the spread of documented illnesses in a flock or herd. Over 325 organizations around the country have endorsed this legislation, including 83 professional health groups, such as the American Medical Association and the American Public Health Association.

    Keep Antibiotics Working, a coalition of health, consumer, agricultural, environmental and other advocacy groups with over 9 million members, is seeking individuals who have experienced an antibiotic-resistant illness to share their stories and help protect the effectiveness of antibiotics. For more information, please visit www.KeepAntibioticsWorking.com.

POLICY: Just one more poll showing that Medicare bill is a loser for Bush

I tend to believe that the Adminstration wouldn’t have tried quite so hard to pass PDIMA had they known that 55% of seniors would dissaprove and only 35% approve of their handling of Medicare a mere 100 days later.

This matters of course only because Florida and Pennsylvania are the two biggest swing states in the November election, both were very close last time (dead heat in Florida or fraud at the polls–take your pick), and whoever wins them probably wins the Presidency. In the 2000 census, the over-65s make up 12.4% of the population. In Florida they make up 17.6% of the population and in Pennsylvania, 15.6%. Yes, those are the two highest of any states. Seniors vote in greater proportion than any other age group and they vote about health care more than any other issue. Oh, and they hate drug companies, or at least don’t trust them any more. Prepare for 6 more months of some variant of the phrase "drug company written Medicare give-away" from Senator Kerry’s mouth.

CONSUMERS/INDUSTRY: Reggie’s back and the intellectual slop goes on

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Regina Herzlinger is back and has now moved from Market Driven HealthCare (which in my view produced one of the best letters ever to Health Affairs from Jamie Robinson following her disputing of his review) to a new tome called Consumer-Driven Health Care: Implications for Providers, Players, and Policy-Makers. The new book is basically 7 chapters from Herzlinger and a ton of short pieces (600 pages worth) describing a grab-bag of "innovations" in health care.

Trying to define, understand or explain Herzlinger’s points is maddening, as poor old Jamie Robinson found out–he ges well slagged off in this book in multiple places, mostly for making the mistake of interviewing the CEO of Aetna as he was walking out the door–Reggie though remembers that nasty review. She wraps in so many anecdotes, so many stories, and includes so many variants of health services and insurance packages that what she actually thinks will work is baffling. The market will sort it out. But of course, not the market as we now know it (that for instance Don Johnson supports). She agrees that we need some form of change to the current set of market incentives. But she never actually explains what it is that’s going to get us from our current dud system (on which we are agreed) to the consumer-centered nirvana. What type of changes to the tax laws, what about Medicare, how can you mandate risk adjustment? All big deals and all ignored.

This postulating a bunch of stories, flitting from one to another unrelated issue page by page, and not really getting to a solid intellectual explanation is exactly the problem Market-Driven Healthcare had. And of course there was neither a number nor a date in her book–she really understands how to be a forecaster! Well I suppose she nearly titled the book right. As the pharma industry showed us by spending $3bn a year advertising Rx drugs, it should have been called Marketing Driven Healthcare.

I think what she concludes in the latest tome is that Enthoven-style managed competition is a failure, even though it was never tried, but that it can be replaced with giving individuals the right to buy different assortments of flavor of health plan, using their own HSAs, and using highly complex risk adjustment to make sure no one games the system, and that insurers only seek out healthy people to insure. Providers will immediately respond by creating clear bundled pricing for disease states, or episodes of care, or something, these will be offered to insurers, or is it consumers, or is it both, and everyone will wonder happily into the sunset.

And how are we going toa) get everyone into these systems, particularly those who are in Medicare, where the real money is spent?b) cross-subsidize within a group when 80% of the money is spent on 20% of the people?c) pay for the care of the uninsured, rather than allowing them to be gamed out of insurance via underwriting?d) get the providers to actually create these bundled pricing schemes, when her own book shows that the only providers who ever had an incentive to figure out their costs for different care processes (the fully capitated California medical groups in the 1990s) couldn’t figure out their real cost structures?

Oh, all just details, details that Reggie doesn’t seem to think require explanation. According to her introduction she won the best teacher at Harvard award. Either she manages a much higher level of intellectual clarity in the rarified atmosphere of Cambridge than she gets on paper, or those Harvard MBAs are rather less demanding than their equivalents at Stanford.

Reading these two books is just so frustrating. Most of her criticisms of the current system are identical to the pro-managed competition crowd’s–about excessive provider power, perverse incentives, limited information about quality, low use of information systems, etc, etc. But she doesn’t ever give a clear view about what she thinks ought to be done to get from here to there. Or bother defending her ideas properly from the "naysayers" that she attacks. Somewhere in here there are some interesting ideas trying to get out. I just don’t think Reggie is going to be the one to explain them. That of course won’t stop her going on the lecture circuit and making a packet.

My final thoughts? Well as we’re dealing with Reggie, true to her style they’re just random anecdotes. First, when I saw her talk in 1998 she gave the presentation, made all these bold assertions and left without taking a single question. That was symbolic to me. Secondly, she spends a great deal of energy slagging off the single-payer and European models. But her favorite example of a really successful health care focus factory is the Shouldice institute for hernia repair in Toronto. You recall Toronto, it’s in Canada, and this care is all paid for by the single payer system in which the focused factory has thrived, without any help from self-actualizing consumers. But sadly even there the story isn’t that great. A 2001 clinical trial found that the Shouldice technique wasn’t as good as one from Lichenstein. So it’s another example of a North American factory being outdone by a foreign one.

The sad thing is that there is something to the concept of consumers making intelligent choices with their own money. Thrid party payment with cost-unconcious payers and guild-model providers is what got us into this mess. So something needs to replace it. The consumer movement needs as honest an intellectual theorist as Alain Enthoven is to the managed competition model or Steffi Wollhandler is to single payer. Regina Herzlinger is not it. But she sure sells a lot more books than they do.

PHARMA: How big a deal is cross-border Internet pharmacy?

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Regular THCB readers will know that I’ve been forecasting that the Republican administration will have the FDA back down from its stance banning re-importation of drugs from Canada (and elsewhere) mostly because over 80% of the public think that they ought to, and it’s by far the most disliked part of the recent Medicare bill. AARP has thrown its weight behind the change and HHS secretary Tommy Thompson has set up a commission to come up with that ruling, but of course there are still massive objections from the pharma industry. An organization called the Partnership for Safe Medicines is so keen on keeping the status quo that it even had a PR firm contact yours truly to ask me to cover a press conference it had yesterday, which included Peter Neupert, President of Drugstore.com speaking out against imports. Here’s the press release which quotes Neupert as saying:

    “Rogue Internet drug sellers, which operate offshore, overseas, or through Canada, are illegal and unregulated by U.S. or Canadian authorities,” said Peter Neupert, chairman of the board of drugstore.com, inc. “It is extremely difficult for consumers to know who they are dealing with on the Internet today; even sites purporting to be Canadian pharmacies may be actually located in Third World countries. We feel the only safe way to purchase prescription drugs over the Internet is to shop at an online pharmacy certified by the National Association of Boards of Pharmacy(R)’s (NABP(R)) Verified Internet Pharmacy Practice Sites(TM) program (VIPPS(R)).”

A little background. There are three types of internet pharmacy. 1) US based mail-order operations that are legitimate parts of US pharmacies and PBMs or are similar–Drugstore is in this number with Medco, Walgreens etc. They request that you send in a genuine prescription and are just another delivery vehicle like the corner pharmacy or the mail order that’s been used for years with no problems. 2) Then there are the ones who send you spam offering access to Viagra or Cialis and allow you to go online and buy with a prescription “their doctor” gives you. These guys are clearly cowboys and they are being dealt with by the proper authorities here, although some bloggers with a libertarian bent don’t believe that type of dispensing should be illegal. (By the way Trent, I somewhat agree, but it’ll never happen!).

3) What the SafeMedicine folk fail to point out is that there is a third group, which is composed of legitimate pharmacies already certified by the Canadian government which are simply mailing across the border as opposed to across the country. These look far more like the first group than the second. If you go to their site they demand a prescription, and their drugs come from reputable suppliers and are handled in as reputable a way as in the US. So is SafeMedicine advocating that these pharmacies receive the VIPPS certification so that US consumers can tell them from the cowboys? Of course not. They’re holding press conferences like yesterdays and peddling propaganda like this from a Pfizer sponsored doctor-journalist. That’s because the members of Safe Medicine are PhRMA and various associations of American pharmacists, who’s economic interests are hurt by imports, and by restricting the supplies available in Canada they are actually making it harder for those legitimate Canadian pharmacies to get drugs to send to the US and so are opening up the opportunity for the cowboys to step in. If the industry really cared primarily about patient safety they would support the FDA or VIPPS certifying Canadian based online/mail-order pharmacies. This was suggested on 60 Minutes a couple of weeks back by the mayor of Springfield, MA:

    Mayor Albano concedes that casually buying drugs on the Internet could be risky, but says it was quite simple for him to check out his Canadian supplier, and challenges the FDA to do the same thing. “The FDA has become a pawn of the pharmaceutical industry, that they are protecting those high profit margins. If the FDA wanted to put a plan together similar to what we’re doing in Springfield, that would be good for all Americans, they can do it in 15 minutes, relative to safety,” says Albano. “We get all our medications from certified, regulated pharmacies in Canada. It’s no different than going to your neighborhood pharmacy. And it’s the exact same medication.”

So beyond the ridiculous credibility problem that the industry is facing here, and the fact that they seem to have even lost the Republicans they bought and paid for in 2002, how much would it really cost them to retreat on this issue? My guess is not that much. Harris reports this week that only 4% of Americans have bought a drug online when prompted by email (which may of course be spam or a legitimate reminder email from drugstore.com or a competitor). That number is itself a problem for Drugstore.com, because it really means that only a small proportion of the drugs consumed in America come via mail order or online.

One number I found was that mail order counted for around 14% of all drugs in 1999–that was back in the days when PlanetRX and Drugstore.com could actually afford advertising! The vast majority of that 14% comes from the big PBMs mail-order operations. There don’t appear to be any good numbers on the amount of imports (at least the AMA News couldn’t find any) Quick update IMS reports that imports from Canada totalled about $1 billion in 2003 which is less than 0.5% of all drugs sold. The fundamental question is, why would you bother going to the trouble of importing from Canada if someone else is picking up the tab? Most Americans have pretty decent drug coverage and aren’t getting their drugs from Canada. The ones that do are the small share of Medicare folks who don’t have any drug coverage, and a few leading edge employers (like the city of Springfield). I suspect that the cost of losing that revenue is less than the hit the pharmas are taking in bad publicity right now. Let alone how bad it might be for them if this issue is enough to lose Bush Pennsylvania and Florida, which it well might be. In 1992-4 the pharmas kept pricing in check in what we called the “heads down for Hillary” effect. In the end the outrage against their pricing then wasn’t enough to prompt price controls, and they had a bonanza for the rest of the 1990s. Those tactics might be just as advisable now.

TECHNOLOGY/QUALITY: Physician use of point of care clinical information

So the proof is in–informed medical decision making at the point of care for physicians works and they like it. A very large sample of physicians (over 5,000 surveyed, out of 55,000 clinicians who could access the system) were given a point of care information system. 63% of them knew about it and 75% of those, used it. 41% of those users reported that they directly improved patient care they delivered by using the system. (The results are in the abstract here).

The only reason that this isn’t sweeping American medicine as we speak is, of course, that the system is only available in Australia.

PHARMA: Spitzer looks into Norvir pricing controversy

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THCB readers will recall that last year Abbott radically increased the price of its HIV drug Norvir mostly in order to make competitors drugs taken with it more expensive than a combo pill it was launching. Well apparently NY state attorney-general Eliot Spitzer has already opened an inquiry into the issue and several New York state agencies and HIV pressure groups are piling in. In the most recent exchange, the New York Department of Health, which of course runs the biggest and most expensive Medicaid program in the US (yes, more than California’s!) wrote in a letter to an HIV group:

    "We have requested representatives from Abbott to present their documentation regarding this claim [that the price hike would not harm Medicaid programs], however we are not yet convinced that this is the case."

You may love the bureaucratic understatement, but the intent is clear and Spitzer has proved his ability to go after corporate "bad guys" enough that Abbott may have to tread carefully here.

PHARMA & TECHNOLOGY: JSK on scenario planning, Mittman on forecasting

If you go down a couple of pages in this edition of Pharma Marketing News you’ll find an interesting article written about a speech Jane Sarasohn Kahn gave to a pharma conference about scenario planning. Once you’ve taken a look at that, read this article by Robert Mittman on forecasting technology change. If you can steal the components of these two pieces and make a powerpoint chart, you can now officially call yourself a futurist.

Hey, it’s worked for me for years…..

PHARMA: Pharma stocks–Apparently it’s all Kerry’s fault

Investment magazine Barron’s claims that the pharma sector’s stocks have slid because of fears that Kerry will win the election and presumably institute price controls. Quite how he’ll do that with a Republican house and Senate is a good question, unless of course Barron’s thinks that the Democrats will sweep those races too. And further to this question if you look at the 6 month chart of Astra-Zeneca, BMS and Pfizer versus the S&P, you notice that over time only BMS has really hit the skids–and that has far more to do with Pravachol’s impending patent expiration.

And of course if you want to compare stock prices, note that as shown in the chart below Pfizer’s stock price tripled in the second Clinton administration, and has gone down under Bush.

So I suspect that no matter who’s in power, you’re better off being a pharma with a great pipeline than one with great clout in DC!

POLICY: Redefining the underserved–1 in 8 Americans have no access to basic care

I’ve just returned from a hospital meeting at which some take-all-comers, mission-driven hospitals are seeing bad debt ratios of up to 12% of patients, and at the same time the National Association of Community Health Centers reports that 36 million Americans lack access to basic care. These are not just the uninsured, some of whom do get access to care–hence the 12% bad debt ratio at that hospital. And don’t forget that at any one time 1 in 7 Americans is uninsured.

But roughly half the 36 million do have some level of insurance, even if it’s Medicaid (which in a state like Texas is barely what most of us would recognize as health insurance). The problem is not so much insurance as it is access to providers. As Dan Hawkins, Vice President For Policy at NACHC said:

    "They live in inner-cities and in isolated rural communities. But no matter where they live, the story is the same: they can’t get health care because there aren’t enough doctors in their communities who are willing or able to care for them."

The dirty little secret of American health care is that although we have an over abundant supply of facilities and doctors on a national level, at a micro-regional level there are areas that are severely under-served. Many rural regions have less than one-third the number of doctors per head that are seen in affluent suburbs, and if you are living in an inner city area, the experience is similar. The dedicated folks doing the worthy work at community health centers and in county hospitals are desperate to get this message across. Dr. Gary Wiltz, MD, Executive and Medical Director of Teche Action Board in Franklin, Louisiana said:

    "Where the unserved live, there are higher rates of infant and childhood illnesses, and higher mortality rates. In my state, which is the most medically unserved state in the union, we have a diabetes rate that is out of control–and that is because the diabetics who need help don’t have a doctor, or can’t go to a doctor because they don’t have transportation; or can’t afford a doctor, or even the medicines they prescribe."

This doesn’t stop when patients become eligible for Medicare, even though it’s not supposed to be a "separate but equal" system as Medicaid tends to be. Several reports including this one about knee surgery rates published in the New England Journal of Medicine last year, or this one in JAMA about access rates for Medicare HMO enrollees show that minority populations are less likely to get care than whites. And it’s not racism on the part of plans or providers that’s the cause. The problem is that there are fewer providers where minorities tend to live.

Of course the health service researcher cynics amongst us might think that minorities are doing better because they get less care, but a Kaiser Family Foundation report shows that being poor, non-white, un or underinsured and having problems with language severely restricts access to care, and results in much poorer health outcomes for those groups. For instance:

    One result of limited access to primary and preventive health care is an increase in the extent to which patients are hospitalized for conditions, like asthma, that could be avoided with appropriate primary care. Gaskin and Hoffman found that Latino children and African American adults were more likely to be hospitalized for such preventable disorders than similar white patients. Disparities in access to care are not a new or recently discovered phenomenon; studies done in the mid-1980s found that Latino adults and children had substantially less access to a variety of health care services than their white peers.

Sadly the political impact of this report will barely make a ripple in the sea of the healthcare system it’s dropped into.