October 2012 Archives


Thanks to Charlie Hooper for drawing attention to a terrific Wall Street Journal article this week on the FDA's compassionate use program, which allows a small fraction of patients (about 1200) battling deadly diseases to receive access to experimental drugs.

The compassionate use program is designed to allow patients with serious or life threatening diseases to access medicines that are still in development, and haven't been approved for marketing by the FDA. In this case, Dr. Nisha Gupta was infected with Hepatitis C, a very nasty viral infection that, until relatively recently, had few good treatment options. Dr. Gupta became very ill, with the disease eventually causing liver cancer, leading to a liver transplant.

Dr. Gupta petitioned several companies and the FDA for access to experimental therapies, with one company, Bristol Myers Squibb (BMS), eventually granting her and her physician access to daclatasvir. (My fellow blogger Josh Bloom has written quite a bit about the next generation of antiviral therapies for Hep C, which represents a true breakthrough in the field). Today, thanks to BMS, Dr. Gupta is doing much better.

But the WSJ article implies that there is some sharp break between "experimental" medicines and FDA approved drugs.

The reality is far more complex. The public has the false impression that after the FDA approves a product, it is 100% safe and 100% effective. This is simply impossible. The enormous complexity of human biology means that no drug is safe and effective for every patient under every conceivable use - let alone in combination with other drugs the patient may be taking.

And yet pressures from Congress and the public to meet this impossible standard have led the FDA to demand ever more safety and clinical trial data from drug manufacturers, making drug R&D ever more expensive and time consuming. Some commentators have gone so far as to call this Moore's law in reverse, or Eroom's law, where productivity is falling across the industry even as costs for new technologies (like genomic sequencing) plummet.

Plunging pharma productivity.png
Source: The Productivity Crisis in Pharmaceutical R&D

The FDA, or at least its senior leadership, has understood this challenge at least since the AIDS epidemic, and has moved to create regulatory "safety valves" that allow some compounds to come to market without the full dossier of safety and efficacy data otherwise required from manufacturers.

Compassionate use is one of those "safety valves" programs. Accelerated approval is another. These programs recognize that patients like Dr. Gupta will die if they don't have access to "experimental" therapies for which there are good - not perfect, but good - reasons to believe that they might help them.

The trouble is that these programs are very small, and (and the case of accelerated approval) have been largely limited to cancer, HIV, and orphan drug indications. It's also no coincidence that these diseases benefit from very well organized, very vocal, and very influential patient's groups. Other diseases - usually slower killers that afflict millions of Americans, aren't so lucky. Think diabetes, obesity, and central nervous systems (CNS) disorders like Alzheimer's.

One study, by the Tufts Center for the Study of Drug Development, found that CNS disorders spend 102 months in clinical review, 40 percent longer than non-CNS drugs.

What do to do about this disparity? And how can we create a better societal approach to balancing the risks and benefits of new medicines that can accelerate innovation?

The evolution of cancer treatment gives us a lens through which to view the future. Many new targeted cancer treatments attack only a small fraction of the true genetic diversity of cancer. Cancer is not one disease, or even one hundred diseases. There may be dozens of different subtypes of even rare cancers like gastrointestinal stromal tumors (GIST), which afflict just a few thousand patients annually.

Take the new, and very effective, drug crizotinib, from Pfizer. Crizotinib is an anaplastic lymphoma kinase (ALK) inhibitor, and the ALK rearrangement is found in about 4% of lung cancers. Now, crizotinib is a great drug for this population, and 4% of a common cancer like lung cancer is still a great many tumors, but what about the other 96%?

We're going to need far more drugs - many, many more drugs - to challenge not just the genetic diversity of cancer but the inevitable development of tumor resistance to targeted therapies. Even relatively "simple" cancers like chronic myelogenous leukemia (CML), with a single driving genetic mutation (BCR-ABL), will eventually develop resistance to powerful targeted drugs.

Gleevec, first approved by the FDA in 2001 may work for CML 5 or 10 years in many patients. But resistance will come. And eventually, patients will develop resistance to follow on versions of Gleevec as well.

So, even with many of the best drugs we have for CML today, in a relatively uncomplicated cancer, what we're really doing is buying time. The trade-off is eminently worth it, because we're talking about years or decades for patients, but we haven't achieved the kind of disease control we have for, say, AIDS.

At the other end of the spectrum, new molecular screening technologies are uncovering prospective targets in cancer much faster than we're coming up with drugs for them.

So the challenge is to put more shots on target, and develop multiple drug cocktails that shut down multiple targets simultaneously and eventually conquer the problem of tumor resistance (again, AIDS is the paradigm here).

Drug companies are very worried about this. Why are they worried? Because the time and cost necessary to bring even targeted therapies to market is still staggering. Even in a banner year - 2011 - the FDA approved only 35 drugs (and not all of them for cancer, obviously). Crizotinib, a miracle drug for some lung cancer patients, took five years to go from lab to patients.

That's blazing speed for any drug, but still far too slow, given the challenge. And think about the need, for a moment.

Not just for Dr. Gupta and a few thousand patients she represents for the compassionate use program, but for the over 500,000 patients who die every year from metastatic cancer; 80,000 from Alzheimer's; and nearly 70,000 from diabetes.

Tweaking the system around the edges - expanding compassionate use, for instance - is not what we need.

What do we need?

Another approach, gaining currency among regulators and drug companies, is the idea of adaptive licensing. Adaptive licensing would allow market access to targeted populations early in the drug testing process, i.e., after basic safety and efficacy testing is completed. Drugs would then be followed in the postmarket environment through electronic medical records.

Adaptive licensing/approval might be followed by ongoing randomized controlled trials to confirm efficacy or uncover rare adverse effects, or outcomes could be validated by using observational methods or targeted diagnostics. In some cases, just comparing the treatment group to the natural history of the disease (for ALS, for instance) might be sufficient for translating adaptive licensing into full approval.

The trade-off, or bargain, is that companies start selling their drugs in very small but targeted patient populations with very high medical need, but then expand the label and indications as data is developed. This would be an iterative digital learning process that breaks down the barriers that currently exist between clinical research and real world patients.

Another way to think of it would be as a "rolling" approach to drug approval where safety and efficacy data would be continually collected in different populations in the "real world" to expand use, restrict use, or withdraw the product.

Obvious hurdles that an adaptive licensing approach would have to overcome would include liability concerns, patent issues (companies will have to be convinced that they FDA won't trap their drug in niche population while the patent life of the drug is eroding), and convincing providers and insurers that adaptive licensing wouldn't foist expensive and unproven medicines on a credulous public.

But I think these are all very tractable problems. The key for success would be shifting from the idea of informed consent, which is now focused patients enrolled in highly selective clinical trials, to an idea of informed choice in a market environment.

Consumers would have to accept more uncertainty in some respects, but it would be in return for greater potential benefits in areas of high unmet medical need.

The FDA's job would also shift from gatekeeper to chief information officer, ensuring that patients and physicians were empowered with the data they need to make smarter choices.

The irony is that we often don't have the information we need to make truly informed choices today. Drugs are tested in highly artificial clinical trials, before they are released into large populations. In fact, the way we test and approve drugs today actually penalizes companies for taking a more stepwise approach to learning about their products, because the patent clock is ticking every minute they are in testing.

In short, the FDA's compassionate use program is a very small tool, for what is a very big problem. We need a new paradigm for thinking about patients and sustaining breakthrough innovations - offering patients less compassion, and better informed choices.


If there is any perfect example of how supplement makers get away with murder, this is it.

So-called "energy" drinks are currently in the news because the FDA is investigating whether the deaths of 5 people who drank concoctions with names like Monster and Red Bull, are related to the caffeine content in the drinks. The FDA isn't talking yet, but the idea is certainly plausible. Here's why.

In addition to caffeine, coffee and tea also contain smaller amounts of a nearly identical drug called theophylline. If you are an asthmatic, this name probably sounds familiar, because prior to the discovery of prophylactic inhalation therapies (such as Advair), theophylline--a bronchodilator was the mainstay of asthma management.

Theophylline is no longer the first line treatment for asthma. This is because it has a very narrow therapeutic index (the difference in dose between efficacy and toxicity). So when it was used, it had to be used carefully. So much so, that patients (and I was one of them) regularly needed to have their blood checked to make sure that their theophylline levels weren't too high.

Caffeine and theophylline are very similar in structure and function (in fact, when caffeine is metabolized in the body, it forms theophylline). Their pharmacological profiles are similar, although theophylline is 5 times more toxic than caffeine.

Symptoms of theophylline (or caffeine) overdose include nausea, diarrhea, an increased heart rate, and arrhythmias (irregular heartbeats). Sometimes it gets worse--seizures and death can also occur. And this can be triggered by taking as little as twice the recommended dose--an example of a very narrow therapeutic index.

The recommended daily dose of theophylline is 200-600 mg per day. The highest allowable dose is 900 mg per day (and you wouldn't like this one bit). Suffice it to say that theophylline is not the safest drug in the world. And therefore neither is caffeine in sufficiently high doses. How high?

The LD50 (the dose that is lethal to 50 percent of the population) for caffeine in humans is estimated to be 5000 mg. But in the presence of certain drugs that block caffeine metabolism, this amount can decrease by up to five-fold. There are about 80 drugs, including antibiotics, antidepressants and decongestants) that can do this.

So, in a worst-case scenario, 1000 mg of caffeine (equivalent to 10 No Doz pills) can be very harmful--even fatal.

Yet, a 24 ounce can of Monster Energy Drink supposedly (we'll get to this later) contains between 240 and 550 mg of caffeine. Assuming the higher amount, it is not difficult to see why a 14-year old girl weighing 90 pounds and taking Cipro could end up in the emergency room (or worse) by drinking two cans of the stuff.

Now for the idiocy. How much caffeine is actually in two cans of Monster Energy Drink? No one really knows. This is because these drinks are considered to be supplements and are therefore exempt from FDA labeling requirements.

Perhaps I'm being picky, but I'm pretty sure that a drink that has enough caffeine such that two cans of it can possibly kill you really ought to have a label letting you know exactly how much caffeine you're getting. Cosmetics labels list dozens of harmless chemicals, yet Red Bull doesn't have to reveal anything? Welcome to Bizzaro World.

Can anyone in his right mind really call this a supplement? No. Because it's not a supplement. It's a drink containing an unknown amount of a drug that can be really dangerous at high doses. There is nothing "supplemental" about these drinks--they are sugar and water with some number of No Doz pills chucked in.

This is just another example of the pure insanity spawned by the Dietary Supplement Health and Education Act of 1994, sponsored by Senator Orin Hatch of Utah--coincidentally where many supplement companies are based. My editorial in The American Spectator discusses this law in more detail.

Well, congratulations, Senator--you did some damn fine work letting this (and other) garbage be sold with virtually no restriction. Your law is pure Red Bull _ _ _ _. And it might be killing kids.


A survey conducted by the Medical Group Management Association (MGMA) confirms in greater detail what we already know about the dangers of cutting Medicare's Sustainable Growth Rate (SGR).

The SGR was enacted in the Balanced Budget Act of 1997 as a means of controlling Medicare costs, tying them to a number of factors including changes in fees for physicians' services, change in GDP-per-capita, and the change in overall expenditures. Over the years, cuts to the SGR have been delayed (through the 'doc fix') by Congress, and have now snowballed into a serious budgetary problem - it will cost $245 billion to delay implementation of the looming 2013 cut of 27.5 percent. At the same time, as many have noted, allowing the cut to go through could be disastrous for Medicare beneficiaries, who would see greatly reduced healthcare access.

MGMA's survey results, which consisted of responses from over 1,000 practices with over 26,000 physicians, reaffirm the need to fix the SGR permanently.

58 percent of respondents said that they would be somewhat or very likely to stop accepting new Medicare patients; 72 percent would reduce the number of new appointments for new Medicare patients.

On a final note, 34 percent said that Congress's short-term fixes have led them to seek revenue from other sources - in other words, shifting costs onto private insurance.

The full results are available here.



The Wall Street Journal ran an interesting article yesterday about Nisha Gupta, a medical resident who accidentally poked herself with a needle while treating a patient. Unfortunately, that incident infected Dr. Gupta with hepatitis C and led her on a harrowing multi-decade path of liver transplantation, encephalopathy, and cancer. "We were all stressed out. I was going to die soon and I was prepared," she remembers.

That was her prognosis then, but Dr. Gupta is alive today, thanks to a drug that isn't commercially available. Dr. Gupta, through her physician, contacted Bristol-Myers Squibb to acquire compassionate use--really "expanded access"--doses of BMS's daclatasvir, while daclatasvir was still in early clinical trials. The BMS drug worked miracles and there is no longer a trace of the hepatitis C virus in her body.

Interestingly, Dr. Gupta had first contacted Merck and Vertex to obtain expanded access doses of boceprevir and telaprevir, but both companies were worried that their unapproved drugs would interact with the other drugs the woman was taking. "As a company, and a physician, we were taught not to do harm. We thought we would do harm," Vertex's chief medical director, Dr. Robert Kauffman explained.

We have been told for decades that without the FDA to protect us, drug companies would sell us all manner of dangerous and ineffective drugs. Yet here is a gravely ill patient begging two drug companies to let her try their hepatitis C drugs before she dies, and they refrain. Does that make sense? Yes it does. Drug companies are run by people, often physicians, who want to help patients, not hurt them. Executives and employees alike hold their heads high when they consider their progress in the war against disease. Drug companies make money when they successfully treat medical conditions and they risk going out of business if they don't, or even worse, if they hurt patients. Just look at the Vioxx fiasco, the army of lawyers that took on cases, and Merck's near brush with corporate death. Vioxx was a misstep that Merck hopes to never repeat and Merck didn't need a government agency, such as the FDA, to state the obvious.

Anyone who thinks that established, reputable pharmaceutical companies would foist dangerous products on the American public absent the FDA hasn't studied the situation very carefully. Pharmaceutical companies clearly understand the situation. It's time policy makers joined them.


The doctor-patient relationship is unique; almost sacred. Predicated on the Hippocratic Oath of "do no harm," physicians accept on themselves the responsibility for their patients' well-being. On the other side, patients entrust doctors to advise them on all decisions affecting their health. When government - whether state or federal - decides to intrude on this relationship, issuing mandates or laws, there needs to be more than a 'good reason' - there must be greater harm that can come from not interfering. Otherwise, a law may "[impair] the provision of medical care and may ultimately harm the patient," as noted by U.S. Disctrict Judge Marcia G. Cooke.

In a letter to the New England Journal of Medicine (NEJM), leaders of five professional physician's societies express concern over what they see to be a growing trend of state legislation intervening in the doctor-patient relationship. Among the legislation singled out, a New York law that was

enacted in 2010 and became effective in early 2011 [that] requires physicians and other health care practitioners to offer terminally ill patients "information and counseling regarding palliative care and end-of-life options appropriate to the patient, including . . . prognosis, risks and benefits of the various options; and the patient's legal rights to comprehensive pain and symptom management."

The authors note that end of life and palliative care is not a one-size-fits-all area of healthcare; instead, physicians can best determine what discussions are appropriate, and when. The law even imposes criminal penalties for 'willful violation.'

Another law singled out is the controversial Virginia legislation that originally required a woman to receive a transvaginal ultrasound - relatively invasive - before an abortion. While the bill was changed to require a transabdominal ultrasound instead, the authors maintain that the bill is still an unwarranted intrusion into the doctor-patient relationship.

Given the authors' apparently strong views on government interference in the doctor-patient relationship, it seems odd not to address recent developments at the federal level that are arguably more draconian - the Independent Payment Advisory Board (IPAB) established under the Affordable Care Act (ACA); the FDA's REMS policies; and Comparative Effectiveness Research (CER) used to establish a drug's effectiveness (and, eventually, reimbursement).

The Independent Payment Advisory Board

IPAB's goal is to reduce Medicare spending through 'efficiency improvements' such as reductions in reimbursements to physicians and drug companies. While IPAB is prohibited from changing benefits, they can effectively make reimbursement for a particular drug or medical device so low so as to discourage utilization. Effectively, this is rationing. And of course, it will be unelected bureaucrats making these calls - to the detriment of patients, who may have fewer cutting edge drugs and treatments available to them under Medicare. This is particularly troubling in emerging era of personalized medicine, when drugs or drug combinations may only be effective in discrete groups of patients.  One size-fits-all reimbursement is the last thing that patients and innovators need. Is this an intrusion? Without a doubt. 

FDA Risk Evaluation and Mitigation Strategies (REMS)

In order to assure itself that the benefits of a drug outweigh the risks, the FDA has the power to require risk evaluation and mitigation strategies (REMS) from drug manufacturers. Essentially, this means that when providers want to prescribe a certain drug that has a REMS requirement, the manufacturer has to impose certain preconditions - everything from a basic medication guide to including certain tests prior to prescribing it, or limiting the drug to specialist physicians.  Jumping through these hoops may lead to delays in patient access to some medications.  Effectively, this represents an intrusion on the practice of medicine, although the FDA doesn't like to frame it that way.

While ensuring that drugs are prescribed correctly is important, we can't overlook the danger that the FDA may prescribe more REMS to protect itself from the negative publicity and Congressional criticism that attends serious but rare drug side effects.  It's also worrisome that REMS seem to be expanding over time, with regulators increasingly looking over doctor's shoulders. The assumption is that physicians won't reach the same benefit-risk judgments that the agency makes, but they may have good reasons for doing so.     

Both patients' and pharmaceutical industry associations have expressed concern over the FDA's REMS program: pharmaceutical companies have noted that the FDA has no black-and-white criteria for determining when REMS will be required; meanwhile, the National Health Council, an association of health organizations, has called for a Government Accountability Office (GAO) review of the REMS process to determine if it is preventing new drugs from entering the market.

Increasingly, concerns about the abuse of prescription drugs (especially pain medicines and drugs for ADHD) have made it harder for some law-abiding physicians and patients to access drugs for legitimate uses.  Striking the right balance here is crucial, and bears careful watching

Comparative Effectiveness Research

With growing healthcare costs viewed as a substantial problem for state and federal budgets, comparative effectiveness research is increasingly being viewed as an attractive cost control strategy.  As President Obama once quipped, why pay for an expensive red pill when a cheap blue is available that does the same thing? Indeed, the 2009 American Recovery and Reinvestment Act (ARRA) allotted around $1 billion in funding for CER to "support research assessing the comparative effectiveness of health care treatments and strategies."

At the most basic level, CER studies compare two drugs to see which, on average, is more effective. The idea is that if a more expensive drug is as effective as a less expensive alternative, there is no reason to cover the more expensive variant. On the surface this logic may seem intuitive, but it misses a critical point - most people are not the average patient. A drug that looks to help the same 'average' patient may in fact be helping a different segment of the patient population that isn't being helped by another drug. While government sponsored CER can provide important information that markets may not produce (some comparative trials are so large as to be impractical for any single company) , and patients should certainly have better incentives to pursue the most cost effective strategies, it's no panacea - and runs counter to, again, the growing trend of more personalized treatment options.

Controversial social policy issues, like those mentioned in the NEJM article, often garner the most attention.  However, there are broader and potentially much more serious intrusions into the doctor-patient relationship waiting in the wings. 

After all, the more government pays for health care, the more it will want to tell doctors and patients what they're allowed to have - or what they have to go without. 


Nowhere is the adage of "garbage in, garbage out" more apparent than in policy analysis. Dynamic, real-world scenarios and estimates have to be compacted into easy-to-use assumptions, leading to the data underpinning the results. Yet, too often, the media and analysts gloss over the assumptions without considering the implications for the results.

A study conducted by the Urban Institute for the Kaiser Commission on Medicaid and the Uninsured found that block-granting Medicaid and repealing the Affordable Care Act (ACA), both of which are important parts of Governor Romney's proposal as well as the 2012 House Republican Budget Plan, would cut federal Medicaid spending by $1.7 trillion over 10 years ($932 billion from the repeal of the ACA and $810 billion from the block grant), reduce enrollment in Medicaid by up to 37.5 million, shift costs to states, and impose cuts of up to 32 percent on providers by 2022.

The enormity of these estimates gives cause for examining the study's assumptions. When we do, it becomes clear that the numbers are very - shall we say - liberal. It is important to first note that the study uses the ACA and Medicaid expansion as a baseline - therefore, the impact is relative to current law as it is currently predicted.

Medicaid Expansion

One assumption that underlies the analysis is that all states will embrace the ACA's Medicaid expansion. For the purposes of the study, in order to provide a state-by-state analysis, this assumption suffices. However, reality tells a different story. A number of states have already indicated that they will not participate in the Medicaid expansion.  Among them: Nevada, Texas, Nebraska, Louisiana, Mississippi, Florida, Georgia, and South Carolina. In fact, the report acknowledges that "if several states did not adopt the Medicaid expansion projected federal spending with reform would only be $642 billion higher," - therefore repeal of the ACA and a Medicaid block grant would only be able to cut $642 billion, and reduce the number of insured by much fewer than 37 million (since many wouldn't have Medicaid to begin with).

What the study tells us about Medicaid under the ACA, however, is very interesting on its own. The ACA increases federal Medicaid spending by nearly $1 trillion over a 10 year period - instead of working to reform a program that does very little to help those whom it insures, the ACA instead wants to dump as many people into it as possible.

No Alternative

Yet another assumption made in the study is that the House budget goes through with no alternative - that is, Medicaid is block-granted and the ACA is repealed. The study also mentions that this is similar to Governor Romney's proposal.

On this note the authors behave rather unfairly, as Governor Romney's real proposal includes equalizing the treatment of the insurance deduction for employers and individuals, which could mean offering a tax credit or deduction to purchase health insurance. This would reduce the need for Medicaid expansion to upper income uninsured, giving them the viable alternative of  purchasing insurance in the private market.

The impact on both enrollment and the budget would thus be different from Kaiser's projections - exactly by how much is impossible to say because the exact details of the "replace" part of the Romney plan would have to be worked out by Congress.

Impacts on State Spending

While the study focuses primarily on federal spending, one section of the report is dedicated to forecasting how state spending would change under ACA repeal to maintain the same levels of eligibility established under the Medicaid expansion. They find that state spending would have to increase over $300 billion dollars over 10 years.

Once again, it is unreasonable to discuss how state spending would increase to maintain eligibility, without comparing it to increases required by the Medicaid expansion itself - while states only have to cover 10 percent of the expansion by 2019, due to generous federal matching, they still have to increase their spending. If the fiscal balance of the states is of significant concern, then the latter scenario cannot be ignored.

Furthermore, the levels of eligibility are also assumed to be a static 138 percent under Kaiser's study, whereas some states have considered only partial expansions. Again, this  could significantly change the dynamics of state spending  as well as enrollment changes.

The Kaiser-Urban Institute study will undoubtedly be used to attack Governor Romney's plan for Medicaid block grants. Yet, these criticisms will be ignoring the fact that the President has yet to offer a true reform proposal for either Medicaid or Medicare. Additionally, they ignore the horribly inefficient spending that the ACA encourages - via Medicaid expansion and prolonging Medicare's life through accounting gimmicks - treating an extra dollar spent through the bill as equally efficient as the same dollar spent in the private sector. This couldn't be further from the truth, as the private sector has offered coverage for common benefits at less cost than Medicare or Medicaid. By ignoring the actual proposal Governor Romney has put forth to replace the ACA, a straw man is silenced. Under the ACA, the Medicaid expansion, and the double-counted cuts to Medicare, both programs will continue to grow unsustainably, doing little for the poor or for seniors in the long-run.


Unless you live under a rock it would have been impossible to miss this week's big story about vitamins preventing cancer in men. A paper by researchers at Brigham and Women's Hospital concluded: "Daily multivitamin supplementation modestly but significantly reduced the risk of total cancer."

Over an 11-year period, almost 15,000 male doctors, aged 50 or older were given either a placebo or a common multivitamin supplement, and the risk of cancer in two groups was compared. The researchers painted a fairly optimistic picture about the utility of vitamins in cancer prevention. But I have a problem with some of it.

First, the concept that cancer is a single disease is clearly false. What we call cancer is in fact, a conglomeration of at least 100 diseases, characterized by the site of origin and cell type. Is it even logical to ask whether a dozen or so vitamins could impact a set of 100+ different diseases in a meaningful way, and by some unknown mechanism?

A simpler version of this study would ask the same question, but confine the study to of one particular cancer, for example breast cancer. But breast cancer itself actually has 10 different types, each differing in the genetic makeup of the tumor, and the response (or lack of it) to a given therapy. So, even a study confined to only breast cancer would be still complicated by the heterogeneity of the disease. If different subtypes displayed different responses you couldn't even accurately make the statement that vitamin supplements (or anything, really) reduced the incidence of breast cancer--only that it reduced certain types of it. And studying all types of cancer together raises the complexity of the study enormously--perhaps to the point that the data is not interpretable.

In fact, the multivitamin study shows a similar pattern. Although there was an 8 percent reduction in overall cancer risk in the vitamin group compared to the placebo group, this did not hold true for prostate or colon cancer--there was no significant difference between the groups in these cases.

Furthermore, there was no significant difference in the cancer mortality rate between the groups, which is counterintuitive to what you might expect if the stated 8 percent reduction in incidence was real.

So, in order to believe that headlines, typically like CNN's "Multivitamins may prevent cancer in men," you need to accept that there is some mechanism by which a bunch of vitamins taken over 11 years has a small protective effect against some cancers, and this fails to translate into a lower mortality rate. I dunno. It just doesn't add up.

But the biggest problem I have is the wording of the conclusion: "[M]odestly but significantly." It may be unintentional, but this phrase automatically distorts the real findings of the study. And certainly makes it more newsworthy.

Scientists will understand that this term means modestly and statistically significant--in other words modestly with mathematically acceptable data. Everyone else, including the press, will no doubt read "significantly" as a lot. Which, I suspect is why this story has generating so much interest.

This hype will no doubt send men stampeding toward CVS in a frenzy that will make Pamplona's Running of the Bulls look like walking a poodle. This is the effect that bad headlines and exaggerated claims have on people that are perpetually confused by bad headlines and exaggerated claims.

If the take-home message from this study becomes "take vitamins and you won't get cancer," it will be just one more example of sloppy reporting, possibly encouraged by overoptimistic conclusions. We don't need any more of this. People are confused enough.


As the election increasingly focuses on the economy and jobs, it should be of little surprise that corporate tax reform has become an important issue for both Democrats and Republicans. - U.S. based multinational corporations hold somewhere around $1.7 trillion in undistributed earnings abroad. This is almost the size of Canada's entire GDP for 2011, and returning even a fraction of that money to the U.S. could have important implications for the economy and job growth.  

America's corporate tax system is basically unique - it is one of only seven OECD countries that taxes the worldwide income of multinationals at domestic rates (albeit with tax credits for payments made to foreign governments) and it has the highest rate in the entire OECD - 35 percent at the federal level and 39.2 percent when combined with state and local taxes.

As my colleague, Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute and former chief economist at the Department of Labor, and I explained in a recent report, this system puts American multinational companies at a tremendous disadvantage in global markets. Companies are unable to take full advantage of revenues from lower-tax jurisdictions when competing with foreign companies, and as such, tend to keep earnings abroad to avoid paying this tax. That's money lost for domestic job creation, R&D, valuable acquisitions or mergers, and manufacturing investments.   

The American pharmaceutical industry in particular is prone to be disadvantaged by this state of affairs. Because a growing share of their business is abroad (after all, the U.S only has about 6% of the global population), American pharmaceutical manufacturers have to constantly try to figure out the best way to compete with their foreign competitors.

Increasingly, this involves keeping more of their money invested abroad than at home.

Pfizer, the largest American-based pharmaceutical company had, as of the end of 2011, $63 billion in undistributed foreign earnings sitting abroad. This is money being indefinitely held abroad, doing little to help the American economy in the wake of the slowest recovery in post-war history.

Being able to repatriate this money, over time, with a predictable tax code (stepping away from the unpredictable nature of intermittent repatriation tax holidays), would help spur increased investment into domestic jobs and domestic R&D.

If even a quarter of Pfizer's undistributed earnings were to be repatriated, that would mean $15 billion returning to the U.S for investment in R&D and job creation; it would also mean around $187 million in government revenue (assuming a top rate of 25 percent). This is just one company; much more capital would be repatriated under thorough, comprehensive reform.                                                                                                                                                                                            

The simplest solution, and one favored by most economists, is moving to a territorial system, under which only the domestic earnings of a company are taxed at a domestic rate. Most realistic proposals do this through a 95 percent dividend exemption, leaving an effective 1.25 percent repatriation tax with no foreign tax credits. 

This is where the presidential candidates differ quite a bit. While both support reducing the top marginal rate on corporations, President Obama wants to impose a minimum global tax on all income as it's earned; Governor Romney would move us to a territorial system.

The president's justification given for his plan is fear of job flight to other countries.  But this is fundamentally wrong headed, since capital will always seek out its highest rate of return.  In fact, the president's plan wouldn't alter this state of affairs, but it would continue to penalize American companies operating abroad.  Ironically, his plan would encourage even more American companies to merge with foreign competitors, and then relocate their headquarters abroad.  That's not good tax policy or good economic policy.


As I wrote here a year ago, Abbott seems to be the company to watch in the race the hepatitis C finish line where a potential $20 billion market awaits.

Recent data from a phase IIb trial are astounding. Abbott's four drug, interferon-free cocktail is turning hepatitis C into the New York Yankees -- impotent and powerless. There are a number of other companies getting close (Gilead, in particular), but I wouldn't bet against the folks from Chicago.

The four-drug cocktail they are testing has all the right ingredients:

A protease inhibitor, which, if approved will be the third drug in this class.

A polymerase inhibitor, which blocks viral replication by a different mechanism -- preventing the viral RNA from being duplicated, minimizing resistance and increasing efficacy.

Ribavirin--an old drug that inhibits viral replication (by an unknown mechanism) and is used in conjunction with interferon.

Ritonavir-- a clever addition that was originally developed as an HIV protease inhibitor for AIDS. It was not especially good, but it was subsequently discovered that ritonavir increased the blood levels of other HIV protease inhibitors by blocking their metabolism. Ritonavir is referred to as a booster, and just happens to work in a similar manner with hepatitis C protease inhibitors.

The Abbott clinical results read like science fiction. Consider that, as of two years ago, hepatitis C treatment consisted of interferon (a god-awful drug, if ever there were one) and ribavirin. After six months of torture, fewer than half of patients were cured.

How things have changed.

In treatment-naive patients, 76 out of 77 patients attained a sustained virological response (SVR12), defined as having virus levels below the limit of detection for 12 weeks after the cessation of therapy. An SVR24--having undetectable virus levels for 24 weeks-- is now considered to be a cure.

But perhaps more significantly, 93 percent of patients that had previously failed interferon-ribavirin treatment--the most difficult to treat--also attained a SVR12. Prior to this, these patients had to be re-treated with ribavirin and a different type of interferon, with about a 30 percent response rate. There were few other options, with a liver transplant--problematic in its own right--being the last resort.

Of course, phase III trials, with many more patients, are required to confirm the present results, and about half of all drug candidates that get through phase II fail. But based on the magnitude of response so far, I would put my money here. This is an amazing pharmaceutical success story.


With great fanfare, the Henry J. Kaiser Family Foundation released a study addressing some implications of switching Medicare to a premium support system, as the Romney-Ryan ticket has proposed. As most work released from the Kaiser Foundation, the study is well-designed, and transparent in its methodology.

As expected, some left-leaning journalists have latched onto the sound bite of the study - "six out of ten Medicare beneficiaries would have faced higher premiums under premium support," using it to attack the Romney-Ryan plan.

These journalists seem to have missed the big disclaimer in the executive summary of the study:

The study focuses on beneficiaries' Medicare premiums, but does not take into consideration out-of-pocket spending due to the effects of changes in benefits, cost-sharing requirements and premiums for supplemental insurance.  Nor does it assess potential savings to the federal government, which would be achieved to the extent that the government pays less for beneficiaries in traditional Medicare in counties in which private plan costs are lower, and less for beneficiaries in private plans in areas where traditional Medicare costs are lower.

Further into the executive summary, the study notes that it is not an analysis of the Romney-Ryan plan. This is because one of the critical assumptions the study makes is that the premium support model were fully implemented in 2010, for current seniors. This 'big bang' approach is radically different to the proposal on the table.

The Romney-Ryan proposal would not affect current Medicare beneficiaries, but would be implemented over time for future seniors. It would give seniors a fixed sum of money each year based on the second cheapest plan that covers the same range of services as traditional Fee-For-Service (FFS) Medicare. Seniors would have the option to purchase more coverage, but would do so out of their pockets. Additionally, they could always enroll in FFS Medicare if it is cheaper, but would have to pay the difference if it isn't. Additionally, pre-existing conditions would not become problematic for seniors, because other reforms proposed by the campaign would improve portability - if combined with a limited open enrollment period (to prevent adverse selection), these concerns should be allayed.

This critical difference - not evaluating the Romney proposal explicitly - is important for a more nuanced reason - the Kaiser study admits that they don't estimate changes that could result from a more competitive marketplace. The more competitive marketplace in insurance that would come from the full bag of the Romney campaign's proposals would help hold down insurance costs. If it didn't, then FFS Medicare would be there to pick up the slack.

There is one more oddity with the study: generally, benefits covered by Medicare cost almost three times more(table 16) than common benefits covered by private insurance. This makes it hard to believe that the same benefits covered under private insurance would raise premiums.

Despite all of the study's deficits, it does a good job of analyzing a hypothetical - and this is key. It does not analyze a particular proposal, nor are the results applicable to the Romney-Ryan proposal; despite what some may allege.


Medicare is (and has been for a long time) on an unsustainable trajectory - with cuts to the Sustainable Growth Rate being (rightfully) delayed through Congressional action, the U.S. population growing older and living longer (and thus incurring higher costs), and the Obama administration getting caught with their hands in the cookie jar (double-counting Medicare reimbursement cuts that have already been spent on Obamacare insurance subsidies).

Medicare cannot survive for much longer, and will become insolvent either by 2024, or by 2016 (if you believe that the same money can't be spent twice).

The Obama administration's solution for Medicare is a grab-bag of solutions, ranging from foolish to impossible:

1)      Close the "donut hole". The infamous precipice where seniors' Medicare Part D does not offer coverage for prescription drugs - from $2,700 to $6,154 - is closed over time under the Affordable Care Act (ACA). Populist appeal aside, this is problematic - the donut hole is one of the important cost saving measures under Medicare Part D, and has helped it remain 30 percent below cost since its inception. It forces seniors to shop around for the best value in drugs, and to use generics instead of brand name drugs. The evidence that closing the donut hole should be a policy priority is also not very convincing. As John Goodman, a health economist and author of Priceless, points out, only six percent of seniors actually reach the donut hole. The cost of coverage for those who do? An extra $32 a month

Closing the donut hole is, in short, unnecessary, and will increase Medicare spending.  It removes the program's cost-containing, market-based incentives, and will turn a successful program that has run below budget into one emblematic of excessive government largesse.

2)      Turn Medicare into Medicaid. Not literally of course. Another one of the administration's plans for Medicare is to allow it, like Medicaid, to 'bargain' with drug companies for lower prices on drugs - essentially setting price controls. Numerous studies have shown that price controls on drugs will significantly reduce the number of drugs developed. A notable study published by the National Bureau of Economic Research found that a 40 to 50 percent reduction in drug prices would lead to between 30 and 60 percent fewer R&D projects.

More importantly, Medicaid doesn't 'bargain' with anyone; the term bargaining implies that market forces influence the final outcome in some way - they don't. Medicaid's reimbursement rates for drugs are set by law, and are significantly less than the average manufacturer price. On the other hand, Medicare Part B (while it does cover less than private insurance) covers the average sales price + six percent, which is updated quarterly by the manufacturers.

Reducing Medicare's reimbursement rates through the same price controls that Medicaid establishes will either lead to reduced drug R&D or will lead to cost-shifting onto those with private insurance. While reducing spending on R&D may reduce healthcare spending, it's certainly not a palatable way of doing so.

3)      Extend Medicare's solvency...according to government accounting rules. The Obama administration did what isn't possible in reality (but of course happens a lot in government) - spend the same money twice while extending Medicare's solvency.

The ACA is an expensive beast - $2.6 trillion dollars over 10 years. In order to make it look affordable, the administration had to resort to clever accounting gimmicks as part of their funding apparatus. An important gimmick and one of the most controversial is $716 billion being raided from Medicare to fund the state exchange subsidies and administration.

This includes $415 billion being cut from provider payments, $156 billion from Medicare Advantage, and $31 billion from Disproportionate Hospital Share (DSH) payments. The rest comes from various other cuts to Medicare. In addition to these cuts, the ACA relies on Medicare's Sustainable Growth Rate (SGR) formula, which governs reimbursement to healthcare providers, being cut by about 30 percent after cuts being delayed for many years. With the SGR cuts as well as the ACA cuts, Medicare can remain solvent for much longer. But here's the kicker - if you then go and take $716 billion out of the Medicare cookie jar, you can still say, according to government accounting rules, that the money is still in the Medicare fund. In reality, all that remains are Treasury IOUs.

With all that the ACA did wrong, there is perhaps one saving grace. It expands Medicare's Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) Competitive Bidding Program - this program, which was established under the Medicare Modernization Act of 2003 (MMA) required Medicare to take bids from suppliers for certain supplies provided to patients. Projections estimate that the program can save over $40 billion over the next 10 years. Medicare Part D, the prescription drug benefit discussed earlier, also employs a system of competitive bidding to control costs.

And this brings up the question - if competitive bidding works for one part of Medicare, why can't it work for others? The Romney-Ryan proposal calls for a system of premium support that would require competitive bidding among plans to provide service to Medicare beneficiaries - among those plans would be the standard fee-for-service Medicare itself so that none of the beneficiaries' benefits would be at risk.

Competitive bidding may not be, as Austin Frakt at Wonkbook noted, a "panacea" for Medicare - though at the very least, it's a great start. 


"And by the way, they talk about this Great Recession if it fell out of the sky, like, oh my goodness, where did it come from? It came from this man voting to put two wars in a credit card, to at the same time put a prescription drug benefit on the credit card..."

In his debate with Republican challenger Paul Ryan, Vice President Biden did his best to pin everything wrong with the economy on Republicans - a terrible accusation if true.

What we know for a fact, however, is that neither the Bush tax cuts, nor Medicare's prescription drug benefit (Part D) created the Great Recession or created the current budget deficit.

Earlier this year, the CBO released a report explaining why their projected cumulative $5.6 trillion surplus turned into a cumulative $6.1 trillion deficit.

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Source: Tax Foundation

According the CBO, spending along with "economic and technical corrections" contributed 72 percent to the change in projections. Spending, at $5.2 trillion had the biggest impact. Medicare Part D, however, has been a fraction of the spending - totaling $336 billion from 2006 to 2011; 6.5 percent of total change in spending. It also seems odd for the Vice President to attack Medicare Part D since it has cost a full 30 percent less than initial projections - an anomaly for any government program.

While the Vice President can be forgiven for thinking that Medicare Part D (spending) led to a huge increase in the deficit, there is little logic in associating it or the Bush tax cuts with the recession. James Pethokoukis at AEideas notes that even Keynesian economic theory, which forms the basis for justifying things like the stimulus, accepts that tax cuts spur economic growth.

What Ryan should have responded with was noting the $2.6 trillion that the administration has put on our credit card with the Affordable Care Act. 


As America waits for Vice President Biden and GOP nominee Paul Ryan to duke it out on the national stage tonight, setting some facts straight is important.

One of Paul Ryan's, and indeed, the Romney-Ryan ticket's more controversial proposals are their reforms to Medicare and Medicaid. As Chairman of the House Budget Committee, Ryan proposed voucherizing Medicare and turning the Medicaid program into a block grant to states. The Romney-Ryan plan takes some cues from these proposals, but instead of voucherizing Medicare,  proposes a premium support (also known as 'managed competition') model, where seniors would receive a sum of money from the government in order to purchase health insurance - either on the private market, or through the government's fee-for-service Medicare program. Because of Ryan's obvious influence in the development of the GOP ticket's proposal, he will likely have to defend it on several points.

Romney-Ryan Voucherizes Medicare

This simply isn't true. The Obama administration has used scare tactics to attack the Romney-Ryan proposal, claiming that it would force seniors to pay an ever increasing share of medical spending out-of-pocket because vouchers would not grow with the rate of medical costs.

While Ryan's proposal as House Budget Chairman did call for privatizing Medicare (the same as voucherizing it), the Romney-Ryan plan does not go that far. The money given to seniors under the managed competition model would be based on the second-cheapest plan on the market (which would have to be comparable to traditional Medicare coverage), thus ensuring that seniors can receive adequate coverage. Moreover, those with lower incomes would receive greater premium support.

In short, traditional Medicare would be left intact and seniors could choose to stay in it if it offered better value for the same price.

Block Grants Will Strip the Poor of Medicaid Benefits

Yet another attempt by the administration to discredit Romney-Ryan's reform proposal; again this is false. Whereas now Medicaid is a state-administered entitlement program (anyone gets benefits if they meet the income qualifications) that relies on federal matching and is open-ended, i.e., the more state states spend, the more federal dollars they draw down, the Romney-Ryan plan would give states fixed sums of money - block grants - to allow them to innovate in Medicaid delivery systems in ways that  that work best for the demographics of their communities. The administration has criticized this plan by claiming that beneficiaries of Medicaid would lose benefits and be forced onto the streets.

If this refrain sounds familiar, that's because it's the same criticism that was levied at welfare reform in the 90s. The original welfare program, Assistance to Families with Dependent Children (AFDC) had perverse incentives that discouraged returning work, and encouraged dependency on the government - a vicious cycle that contributed to a growing wave of poverty in the 80s. Under the Clinton administration and with a Republican-controlled Congress, reforms were passed, changing the program into Temporary Assistance for Needy Families (TANF). These reforms block-granted money for states to offer benefits to their poor, but had strict work requirements - instead of the doomsday scenarios critics foretold, single-mothers started returning the workforce, pulling themselves and their children out of poverty.

States, given the opportunity, can have had great success innovating programs through block grants. Given the success of block-granting in welfare reform, it is hard to see why block granting Medicaid would be any worse and it would finally give states the right incentives to coordinate care and control costs effectively. For more details on how a Medicaid block-grant program might look, see my colleague Paul Howard's recent paper.

Medicare is More Efficient than Private Insurance

An important talking point that is likely to come up is the conventional misconception that Medicare (and sometimes Medicaid as well) is more efficient than private health insurance. The arguments seem solid - on the books, Medicare's administrative costs are only 2 percent of total expenditures (private insurance is around 15 percent) and government has monoposonistic power to negotiate rates with providers, taking advantage of economies of scale. The only problem is that these two points obscure a critical part of the story - fraud.

The Government Accountability Office (GAO) has consistently found Medicare fraud to be at least 10 percent, and Medicaid fraud to be around 8 percent. For 2011, this comes out to $55 billion and $34 billion, respectively - $89 billion in total. To put that in perspective, this could cover the health care costs of 4.5 million families for a year. And this is just an estimate, which is likely on the low-end.  

Ignoring that Medicare and Medicaid have little to no marketing costs, increasing their fraud-fighting efforts (and thus increasing administrative costs) would be worthwhile. In fact, the GAO has also routinely recommended that the Centers for Medicare and Medicaid Services (CMS) implement their recommendations, while noting that most recommendations have not been implemented. The most recent GAO report found, to no one's surprise, rampant fraud in both Medicare and Medicaid programs. Fraud rates for private insurers, by way of comparison, are about 1.5 percent

Perhaps Medicare and Medicaid should try to emulate the private sector rather than the other way around.

As you watch the Vice-Presidential debates, keep an eye out for these controversial talking points.

The Affordable Care Act (ACA), by most credible estimates will cost at least $2.6 trillion to implement over the next decade, all without bending the curve of healthcare cost growth. Despite the high price tag, these costs are directly visible and on-budget. A potentially more dangerous, stealthy cost is the regulatory burden imposed by the ACA that is not factored into these projections.

Indeed, a new study just released by the American Action Forum found that the ACA imposes substantial regulatory costs.
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At least $27.6 billion in regulatory costs alone will fall on a combination of states and private entities. These regulations include things like changes in Medicaid eligibility and the establishment of state health insurance exchanges. Five states - California, Florida, Illinois, New York, and Texas - will face regulatory burdens of over $1 billion each.

At a time when cities are going bankrupt and states' budgets are out-of-whack with reality, shifting new regulatory costs onto them is, at best, a bad idea.


We may have lost our way. It's discouraging when the political rhetoric dissolves into vacant promises and fear generating threats, verging on hysteria. Everyone wants what they think they have (it's always better than having less when you don't have an alternative vision of what's possible). But exactly what is it that we "have" when it comes to healthcare? We've come to the point as a society where increasing numbers of people have come to the conclusion that something is fundamentally wrong with our current model of healthcare delivery. While pockets of society have understood this for decades, the mainstream attention this point is receiving is a relatively recent development. In fact, over the last three years it's become increasingly front and center.

A recent report by the renowned Institute of Medicine (IOM), which made headlines last month in The New York Times (September 6, 2012), noted that the U.S. healthcare system squanders $750 billion annually in unneeded care, byzantine paperwork, fraud, and a wide range of medical errors. By my reckoning, the figure is closer to $500 billion annually, but I didn't include fraud and abuse. So, if we're conservative in the estimate, by fixing what's wrong on the delivery side of the equation, we'll have more than enough money to cover the uninsured. We may even have some left over to focus on some cures, which ultimately will improve productivity and lower costs for healthcare services. But do we have the will and the insight to take this on?

Inderal Indatoilet
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It is very unusual when an old, well-established class of drugs is suddenly shown to be less effective than previous thought. Or even useless. But according to a large study in the October 3 JAMA, this may very well be the case with beta-blockers, a staple of heart and blood pressure treatment since the 1970s. The implications are huge--almost 200 million prescriptions were written for these drugs in the U.S. in 2010 alone.

Inderal (propranalol) was the first drug in a class of non-specific beta-adrenoceptor antagonists (mercifully shortened to beta-blockers) that was launched in 1964 by Imperial Chemical Industries (now AstraZeneca) for treatment of angina. Its inventor, Sir James Black was later awarded the Nobel Prize in medicine for what is sometimes called one of great medical discoveries of the century. Beta-blockers have been used routinely for decades, and there are now about 20 of them to choose from. But should they be chosen at all?

The JAMA authors concluded that:

"Among patients enrolled in the international REACH registry, beta-blocker use was not associated with a lower event rate of cardiovascular events at 44-month follow-up, even among patients with prior history of MI. Further research is warranted to identify subgroups that benefit from beta-blocker therapy and the optimal duration of beta-blocker therapy."

While this is not definitive, it's pretty damning, especially when another study--the second in one week--says pretty much the same thing .

A group at the University of Maryland School of Pharmacy examined post-MI drug compliance in the Journal of the American Geriatrics Society that examined patient compliance following a heart attack. About 50 percent of patients properly took their prescribed medications following a heart attack. As one would expect, patients who refilled their prescriptions for standard drugs, (typically statins, anticoagulants, blood pressure medications and beta-blockers) had a 29 percent reduced risk of dying than those who did not--except in the case of beta-blockers. It did not matter whether these were refilled or not. This is by far the most interesting aspect of the study.

So, what is going on here?

Beta-receptors are molecular switches that are embedded in the surface of cells. When either epinephrine (adrenaline) or nor-epinephrine bind to these receptors this sends a signal into the cell, which is then activated to carry out some function, such as speeding up the heart. This binding and the subsequent response are responsible for the "fight or flight" response.

Blocking of this process in heart cells partially prevents adrenaline from reaching the receptors, causing the heart to slow and beat less forcefully, while also lowering blood pressure. It has long been medical dogma that these effects give the heart "a rest," thus diminishing the frequency of additional cardiac events.

But it seems that popular wisdom is becoming unpopular. I doubt that these studies will result in the immediate cessation of beta-blocker use, but I'm sure that cardiologists will be paying careful attention.



The wheel of healthcare policy continues to turn. The wheel is turning, that is, from the Cut Strategy to the Cure Strategy. The latest evidence came earlier today, on CNBC, when Dr. Kenneth L. Davis, President and CEO of the Mt. Sinai Medical Center, appeared on that cable news channel to talk a language on healthcare that few have talked in recent years: the language of cures.

Dr. Davis appeared on a segment with Carly Fiorina, the former HP CEO, along with other panelists. Here is a part of the discussion, in which Dr. Davis outlines a larger vision of uniting medical, financial, and political resources to cure disease.

Davis: [We need] the kind breakthrough drug and we would identify the break-throughs to bend the health curve. 

Fiorina: It's common sense, and as a  cancer survivor I'm delighted to hear you say you're excited about progress in cancer but it's such common sense when you say let's align the scientific agenda of the nation with the big cost drivers in medicine.  Yes.  And of course patent law,  what would it take to align the scientific agenda and the cost drivers in health care? Who would do that? Who would cause that to happen? 

Davis: Well, the congress has been very responsive to patient groups that meet with him and make I think a compelling case for why their disease is special. I think if we can get those groups to also talk with an administration, also talk with the NIH, form some kind of consensus between what the country needs and what the patients need, perhaps we could do it. because there's now at least unanimity it would seem to me about very little but there appears to be unanimous agreement about the top five diseases, chronic diseases, that are cost drivers in health care. 

The key point here is at the beginning: The best way to bend the cost curve is through cures. A cure is cheaper than care, and so if we could cure Alzheimer's, for example, we could save hundreds of billions, even trillions, of dollars in Medicare and Medicaid expenditures over the coming decades. The whole video, and the complete transcript, can be found here.

Meanwhile, as another indicator, we might consider a recent side-by-side summation of the science policies of the two presidential candidates, Barack Obama and Mitt Romney. On Saturday, a group called ScienceDebate.org, a consortium of http://www.sciencedebate.org/debate12/ more than a dozen science groups, published the answers that it had received, from the two candidates, on a dozen science-policy questions.

The answers to questions #3, 4, 7, and 14 show that the Romney campaign is taking seriously the issue of streamlining the FDA; on question 3, for example, concerning overall scientific-research policy, the Romney campaign notes that "the FDA's slow and opaque approval process is rated less than one-fourth as effective as its European counterpart." By contrast, in its answers, Obama campaign does not mention FDA reform, which can be taken to be good news for the status quo if Obama is re-elected.

In addition, Romney calls for "robust" funding for the NIH, another topic not mentioned by the Obamans, who seem content mostly to take credit for the passage of the Affordable Care Act.

On the other hand, as noted here last week, the Obama administration has set in motion--or at least announced plans to set in motion--a plan for doubling the output of new medicines over the next 10 to 15 years. This outline, set forth by the President's Council of Advisors on Science and Technology (PCAST), involves coordinating industry, academia, and the federal government. In other words, in its own way, it is similar to what Mt. Sinai's Dr. Davis has in mind.

Now of course, some will say that Dr. Davis is just one man, and that Carly Fiorina is just one woman, expressing opinions, as opposed to making policy. But in fact, a look at the video segment shows that the whole panel was nodding in agreement as Dr. Davis spoke. In other words, that, right there, is a Zeitgeist indicator.

And some might also say that the answers to the presidential questionnaire are just words on a paper. But in fact, those answers were drafted by the experts, and on the Romney side, those pro-FDA-reform voices are likely to have more than a little influence on Romney administration policy.

And some might say that PCAST is just a third-level agency in the Executive Office of the President. And that might be the case, but if the policy Zeitgeist moves in the direction of cures, then PCAST and its pro-science views will inevitably rise.

So we should not underestimate the significance of these shifts. For decades now, the healthcare discussion has been dominated by questions of finance--that is, who should pay, and how. Yet it wasn't always like this: In the 40s and 50s, we focused on polio, and we gained the polio vaccine. In the 70s, we focused on cancer, and while some insist that the "war on cancer" was lost, others insist that not every war is won right away. Indeed, as Dr. Davis said on CNBC today:

In cancer there're extraordinary developments. Decades ago we started a war on cancer and people have been appropriately disappointed with where are the big break-throughs. The big breakthroughs are about to happen.

And in the 80s and 90s, of course, we focused on AIDS, and that was a great medical success as well.

Yet as we have seen, the nation has been less focused recently on science and more focused on finance. The results of this extended financial debate have been both predictable and unpredictable.

The predictable result was that we have had a robust discussion of finance, culminating in the passage of the Affordable Care Act.

The unpredictable result has been the decay of another aspect of medicine, an aspect actually more important: science. That is, we have been so busy fighting over finance that we forgot the science, leaving it to the depredations of the FDA and the tort bar. As The Economist noted recently, the number of new drugs approved by the FDA over the last 15 years has plummeted by more than two-thirds. So now we see that healthcare costs are still rising, for one simple reason: People are still getting sick. And sickness, in the absence of rapidly advancing technology, is inevitably labor-intensive. And labor-intensivity, of course, is always expensive, always falling victim to the inexorabilities of Baumol's cost disease.

In other words, in the face of rising illness, healthcare costs will inevitably rise, too--no matter what sort of financial controls or market mechanisms are put in place. It's as simple as that. Or, to put it another way, rising healthcare costs are as simple as the democratic process in action; people will always vote to take care of themselves.

Perversely, the only variable that price controls really can affect is future scientific research, because the future, unseen as it is, often lacks a solid voting constituency. Meanwhile, in the here-and-now, nobody is going to cut chronic care, because that care, and its beneficiaries, can be seen. Therefore, as Bastiat explained a century-and-a-half ago, such chronic care is safe from budget cuts, no matter how futile the care involved might be. And so, lacking a cure for Alzheimer's, nursing homes in the coming decades will fill up with dementia patients, a sad zombie nation that will always be able to vote, if little else.

So now, as the Cut Strategy falters in the face of public opinion, a new and better opportunity beckons to whoever is sworn in as president on January 20, 2013: the Cure Strategy. With a Cure Strategy solidly in place, the Cuts will come later--and come relatively painlessly. That's the happy cost-cutting story of all technological advancement and productivity growth, and it's finally circling back to medicine.

It's about time.


The old adage about "people who assume" perfectly sums up the results of a recent study comparing the impacts of the Affordable Care Act (ACA) and Romney's healthcare reform proposals.

The Commonwealth Fund  believes that the ACA will decrease the number of uninsured, make health insurance more affordable, protect consumers, improve consumer choice, help small business, improve Medicare, and slow down the growth of health spending while improving quality of care.

Does it? Not really.

A number of flawed assumptions skew the study's results heavily towards the ACA.

The study assumes that all states participate in the Medicaid expansion, which the Supreme Court has already ruled to be optional. In the months after the landmark decisions, many states have opted out of the expansion, while others have indicated that they are considering doing so. Other states like New Mexico have considered partial expansion of Medicaid to their poorest populations, shifting the rest to the exchanges for federal subsidies.

Under the study's assumptions, this reduces the uninsured population by 18.4 million - accounting for more than half of the ACA's total reduction of 32.9 million. The fact that not all states will expand Medicaid means this number is inflated.

Another less than honest assumption is that employers would not dump employees onto the exchanges. In fact, the rather opaque methodology of the study (using the 'Gruber Microsimulation Model' courtesy of former Obama health adviser  Jonathan Gruber) doesn't make very clear how firm behavior is modeled (To be fair, the study seems to take into account some 'employee dumping' because their results show a reduction in group insurance coverage of 3.8 million - there is reason to believe this would be more widespread, however).

Earlier this year, David Gamage, an assistant professor at UC Berkeley, authored a paper pointing out that many companies will have an incentive to withhold 'affordable' insurance coverage from their low-income employees, sending them to the exchanges instead. The Commonwealth study does not address such criticisms.

Implicitly, the study assumes that politically non-palatable changes - like cuts to providers and a nearly 30 percent reduction in Medicare's Sustainable Growth Rate (SGR) formula (a total of $716 billion) go through without a hitch. This is used to simultaneously argue that Romney's plan to repeal the ACA would increase the deficit and reduce Medicare's solvency, while arguing that under the ACA it does the exact opposite. Though it's been said by myself and many others, it is worth repeating - the $716 billion will have been spent on exchange subsidies and administration - it can't be spent twice, despite what government accounting standards may say. Moreover, if the Medicare cuts go through, then many providers will simply stop accepting Medicare as its reimbursement will fall around 50-60 percent of private insurance, or they will charge private insurance more, increasing the cost of private coverage.

On the affordability side, the study argues that insurance will become more affordable because of reduced out-of-pocket spending under the ACA, mainly due to exchange subsidies. At the core, this is the wrong way to measure affordability. Affordability has to be tied to healthcare costs themselves, which in turn drive insurance costs. Even accepting the study's flawed definition, there is little reason to think that insurance would become more affordable. A combination of increased premiums for the young population to offset increased coverage of the older, sicker population and increased premiums in general due to the health insurance tax (actuarial firm, Oliver Wyman, estimated this alone to drive premium increases in the small group market by $2,800 for individuals, and $6,800 for families, over a 10 year period starting in 2014) will necessarily make health insurance less affordable - even if the individual isn't paying out of pocket, the subsidies would have to increase shifting the cost to taxpayers. Lastly, as I mentioned in a previous post, even CMS's optimistic projections don't reduce the growth of healthcare spending.

On a final note, Commonwealth seems to 'invent' Romney's vision for the future of healthcare. One of the biggest assumptions is that his plan would proceed with a deduction rather than a credit. Avik Roy recently explained some more of the flaws behind the Romney assumptions that Commonwealth makes.

It's easy to defend the ACA when you make certain assumptions - but we all know what happens when you assume.


IN THE FIRST PRESIDENTIAL DEBATE, MITT ROMNEY TOLD THE TRUTH ON HEALTH CARE AND OBAMA TRIED NOT TO

The first presidential debate between Mitt Romney and President Obama was easily the wonkiest such debate I can recall in my lifetime. That's great for the country. But even better was the fact Mitt Romney was able to correct a number of the misleading statements that President Obama has been making about Romney's plans for health care and entitlement reform. Let's review the details. . .

Continue Reading
Avik Roy, Forbes.com's Apothecary, October 4, 2012


An article in Tuesday's Los Angeles Times explores the regulatory hurdles standing in the way of genetically engineered (GE) livestock commercialization. The first GE animals--mice engineered for research purposes to express leukemia DNA sequences--were developed as long ago as 1974. And since the early 1980s, GE lab animals have become ubiquitous in medical research. In 2009, FDA even approved ATryn (recombinant antithrombin), a therapeutic protein purified from the milk of genetically engineered goats.

But while millions of genetically engineered animals have been produced safely for close to four decades, no GE livestock animal has ever made it through the FDA approval process to commercialization. That's not because there's no research being conducted in that field. Dozens of GE livestock animals expressing a broad range of new traits have been developed in the U.S., Canada, Europe, and Asia. Nor is it due to any inherent safety concerns. As noted above, scientists have been engineering animals for years, with not a single identified safety problem. And it is certainly not because the benefits from such products are too small. Quite the contrary, the demonstrated consumer and environmental benefits from the engineered livestock animals already in existence are substantial.

What's holding back GE animals is the functional absence of any legal pathway to secure FDA approval. Way back in 1996, a company called A/F Protein acquired a license to commercialize a GE salmon that was developed by scientists at the University of Toronto and Memorial University of Newfoundland. A/F Protein, now known as AquaBounty Technologies, met with regulators in Canada and the U.S. that year to ask what sort of regulatory requirements the company needed to fulfill in order to sell the product for human food. But since there was no obvious regulatory pathway for GE livestock, the Food and Drug Administration said something along the lines of, "Ummmm ... We don't know." AquaBounty gave FDA copies of its initial safety testing data anyway, hoping that the agency would figure out the process sooner rather than later, and then ask for whatever additional information was needed to secure approval.

You may have read or heard something about this Franken-Fish. But, in case you don't fully understand what the fuss is all about, here's a brief rundown. Wild Atlantic salmon grow to full adult size in about three years, in part because they only grow six or seven months per year. As water temperatures decline and days get "shorter" in the late autumn months, a genetic switch turns off the gene that produces the animal's natural growth hormone, so the salmon can conserve energy through the winter. Energy conservation isn't as big a problem for farmed fish, though, because they have easy access to food all year and little exposure to predators.

So, the good folks at the University of Toronto and Memorial University engineered an Atlantic salmon with a promoter (the genetic switch) from an Arctic fish called the ocean pout, attached to the growth hormone gene from Pacific Chinook salmon. And, voila! The engineered salmon grows year round and reaches normal adult size in about 18 months, lowering the cost of raising them, reducing the amount of waste per animal, and lowering the price of fish in grocery stores. It doesn't get larger than unmodified salmon at maturity, it just reaches full size faster. (For even more details, check out the packet of scientific information FDA prepared for its scientific advisory committee two years ago.)

Now, fast forward to 2009 (Yes. Thirteen years, multiple generations of fish, and dozens of scientific investigations on the safety of AquaBounty's salmon later.), and the FDA finally announced that it would henceforth treat GE animals as New Animal Drugs, subjecting them to that regulatory process. The idea was that, by regulating the new genetic construct engineered into the animals as a drug, the agency could require a highly exacting testing and approval process intended to ensure both effectiveness of the new trait and safety for both the animals and human consumers. The NAD process also lets FDA regulate the animals themselves as production facilities, which gives the agency on-going control over where and how the animals are raised. And, of course, because product approvals are considered "major agency actions" under the National Environmental Policy Act, FDA must also conduct an Environmental Assessment before granting approval.

All well and good, thought AquaBounty. The company had been feeding insane amounts of testing data to the FDA for over a decade. At least now they knew what requirements they had to meet, and they could finally get approval to get to market. And the process was so stringent that even skeptics would have no leg to stand on when claiming the product was unsafe -- or so AquaBounty thought. (It turns out, critics are all too happy to make false and/or blatantly misleading claims in their zeal to stand in the way of technological progress.)

In 2010, FDA concluded that "all of the data and information we reviewed ... drive us to the conclusion that AquAdvantage salmon is Atlantic salmon, and food from AquAdvantage salmon is as safe as food from other Atlantic salmon." And because the company would be required, as a condition of its approval, to take several (arguably unnecessary) overly redundant steps to prevent escape of the farmed salmon into the wild, AquaBounty naturally assumed approval would be forthcoming.

But they're still waiting. FDA seems ready and perfectly willing to approve the product, but the agency is under tremendous political pressure from a strange bedfellows coalition of members of Congress (combining the usual anti-technology suspects and generally pro-growth members from the Pacific Northwest and Canada trying to protect local salmon fishermen from competitors in the fish farming industry) to withhold approval. And higher-ups in the Obama Administration seem reluctant to grant approval -- at least until after the November election.

This blatant politicization and complete lack of regulatory clarity has taken a devastating toll on the GE animal industry. Scientists at the University of Guelph in Canada have now totally abandoned a project to commercialize a pig variety engineered to generate substantially less phosphorous in its waste. What they dubbed the Enviro-Pig could have helped reduce one of the more significant sources of water pollution. But they were forced to give up the project due to the total lack of a regulatory pathway to the marketplace.

James Murray, an animal geneticist at the University of California, Davis, was recently forced to move his research to Brazil. Jim and his team at Davis have produced a herd of goats whose milk contains the enzyme lysozyme, a component of human breast milk that has anti-bacterial properties and plays an important role in our immune response. Milk from Prof. Murray's goats could help protect children around the world against diarrheal diseases that claim the lives of more than a million children every year. But with no clear path to the market here, Jim was forced to move to greener pastures.

That raises yet another important point. As US regulators dither, countries in Latin America and Asia seem to be moving full speed ahead. It is, of course, reassuring that a project as potentially valuable as Jim Murray's goats has found a new home and there is a reasonable expectation the project will in fact be permitted to deliver its benefits to consumers who want and need them. But North America and Europe risk being left behind as the rest of the world embraces a perfectly safe and demonstrably useful technology.

As the LA Times article notes, "In frustration [over the FDA's intransigence on the AquaBounty salmon], more than 50 scientists and biotechnology leaders sent a letter to President Obama last month asking him to urge the FDA to move forward on the AquaBounty salmon decision. 'There is much more at stake here than just a fish,' the scientists wrote."

*My thanks to Paul Howard for suggesting this clever title.


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