|Selected news articles which highlight important policy issues.||
News: Weekly Archives
News for the week of 10-28-2004
A New Way to Save on Premiums
Kiplinger delivers a very detailed and helpful primer on Health Savings Accounts (HSAs) for those curious about the option and concerned about their rising health insurance premiums. Kiplinger's conclusion about HSAs: "The high deductible policy will cut your monthly premiums while the savings account will cut your taxes." Perhaps best of all, HSAs promise to return power to consumers for their own health care spending and treatment. While these plans are just now taking hold with employer health care plans and sparking interest amongst the self-employed, Kiplinger predicts that "by this time next year, HSAs will be widespread."
U.S. drug prices 81% higher than in 7 Western nations Study of name brands shows steep rise in differential since 2000
Patented drugs ought to be sold with a tiny bull’s-eye on their packaging, since they are inevitably the object of critics who want to pin America’s health care woes on greedy corporations. Fact: America’s prescription drugs are more expensive than elsewhere in the developed world, although not by as wide a margin as most people think. Fact: America’s policy of letting drug prices fluctuate with demand rewards companies for their research and investment and encourages more pharmaceutical innovation. The greater number of new molecular entities released first in the U.S. as compared to Europe, where there are strict drug price controls, vindicates this policy since America is often the first market that gains access to innovative new drugs.
Studies like this one also neglect to mention that, thanks to its laissez-faire approach to prescription drug prices, the U.S. also has the largest market for generic drugs (about half of U.S. prescriptions are for generics), and U.S. generic drugs are cheaper than they are in Europe. If this enormous component of the American prescription drug market was taken into account (which this study does not do), American drug prices would appear much more competitive with European and Canadian standards. Indeed, Patricia Danzon, a health economist at the University of Pennsylvania’s Wharton School of Business, estimated last year that “netting out exchange rate movements, Canadian [drug prices] are only 14 percent lower than U.S. prices.” (See Prices and Availability of Pharmaceuticals: Evidence From Nine Countries," with Michael F. Furukawa.)
Last week, in the New Yorker, Malcolm Gladwell took up the issue of prescription drug prices and noted that most of the total increase in prescription drug spending in the U.S. was due to widening drug treatment for common ailments – for diabetes, heart disease, and asthma, among other conditions – which undoubtedly has enormous patient benefits. The question then is not how much money we are spending on prescription drugs, but how much value we get for the money we are spending (whether on generics or branded drugs).
There is a significant body of data showing that spending on prescription drugs displaces other, more expensive forms of patient care – hospital visits, for instance – and that the shift to drugs from other forms of care is actually a natural and beneficial development. Focusing only on the prices of branded drugs, as this paper does, while ignoring other trade-offs in price versus value – or the degree to which the U.S. underwrites global pharmaceutical R&D – skews the debate over prescription drugs towards the foregone conclusion of price controls.
Vaccine Useful Against Cancer In Clinical Trial
For the first time an experimental cancer vaccine (Provenge, by the biotech company Dendreon) has shown that it can extend patients’ lives in a late-stage clinical trial. (Provenge was given to patients with advanced prostate cancer who had stopped responding to traditional hormone therapy.) Cancer vaccines like this one don’t immunize patient’s against disease the way normal vaccines do. Instead, researchers hope to use cancer vaccines to improve the effectiveness of a patient’s own immune system by training it to recognize the cancer as a foreign invader. While the exact data on the vaccine has yet to made public, if it holds up under public scrutiny it may represent a critical validation for the underlying treatment concept.
Ancestry Trumps Race In Predicting Efficacy Of Drug Treatments
The pendulum swings in strange ways. The late 19th and early 20th century was in many ways a nadir for science in the public square, an age when Social Darwinism and eugenics (pseudoscienes) joined forces with Nazism to identify “degenerate” races and helped to ignite a conflagration of hate.
Since then, scientists have scrupulously avoided the topic of race, or, when they touch on it at all, deride it as an empty concept. Small wonder then that the new science of pharmacogenetics, which seems to tell us that some drugs work differently in different racial and ethnic groups, has stoked controversy by aligning science on the side of genetic racial differences. The controversy was spawned by a study showing that a drug designed to treat congestive heart failure was ineffective in white patients but highly effective in African Americans (the drug in quitestion is BiDil). In short, the latest genomic research tells us that at least some genes cluster in ethnic groups.
Still, the issue is generating more heat than light. After all, visible racial differences (with the exception of certain well isolated ethnic groups) correlates very poorly at the genetic level. For instance, “about 30% of white Americans have enough non-European ancestry – more than 10% – to make self reported race an unreliable indicator of their genetic make-up.” The same is probably true across the entire American melting pot. The real question is figuring out which drugs work best in which gene clusters and why – i.e. we need genetic markers for disease that correlate with high drug response rates or, for that matter, adverse events.
Even so, as genetic biomarkers are developed we are apt to stumble into truly thorny questions of screening for disease propensity, the creation of genetic databanks, and insurer access to genetic information. However, despite these practical and ethical hurdles, our first glimpses into pharmacogenetics promises to help physicians create personalized therapies for individual patients, rather than the treat-first-ask-questions later standard that prevails today.
Is Kaiser The Future Of American Health Care?
This is a very laudatory article on California-based Kaiser Permanente. Their CEO, George Halverson, sums up the secret of their success in the closing sentence: "With the right information and the right incentives . . . capitalism creates very good solutions."
Critics of America's health care system often deride the U.S. system as a market-based system that is ineffective, unjust, and ridiculously expensive. These criticisms have merit, but with the caveat that it is unfair to call America's current health care arrangements market-based: virtually all of U.S. health care dollars are spent through government or employer funded health insurance, and individual consumers have virtually no say in how those dollars are spent. That system may be many things, but its persistent shackling of individual preferences disqualifies it as a market.
Why is Kaiser Permanente garnering so much media attention and critical praise? It does a lot of things right. It focuses on quality outcomes through aggressive prevention and disease management plans, uses technology to improve and monitor patient care, owns all its own hospitals and clinics, and employees more than 11,000 physicians. All-in-all, Kaiser is a modern, nimble corporate firm that uses information technology to manage its employees and implement "best practices" quickly and efficiently. One sign of its success is that, in Northern California, "Kaiser has sharply reduced the death rate for its three million members there in recent years by monitoring and controlling blood pressure and cholesterol levels and by promoting the use of aspirin and beta blockers (to reduce the risk of heart attacks) and statins (to lower cholesterol)." Kaiser's members have significantly lower mortality rates for heart disease than the surrounding Northern California population, even after taking age and gender into account.
So, how do we institute a national, government-run Kaiser model? You don't and you can't. A national plan would short-circuit the quality incentives driving the Kaiser model by eliminating competition and instituting a cumbersome bureaucracy that would strip it of its flexibility and ability to innovate rapidly. A private firm's success is driven by market feedback; a national system locks consumers into the system and gives the government sole control over funding, meaning that control is from the top-down, not the bottom up.
Freeing up consumer demand, through Health Savings Accounts and a national insurance market – coupled with government vouchers for low-income Americans to buy health insurance – would force more insurance providers to embrace Kaiser's quality based health care model or lose out in the market. Quality-driven health care competition would build on the best elements of the Kaiser model without forcing one-size fits all insurance on every American.
|home spotlight commentary research events news about contact links archives|