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Forum

January 11, 2008

In the Wall Street Journal today Scott Gottlieb, MD a senior fellow at the American Enterprise Institute, takes a cold hard look at Democratic presidential candidate John Edwards claim that the insurer Cigna had wrongfully denied a young leukemia patient a liver transplant - and that, under a single-payer system, she would have received better care.

Campaigning in the primaries, former Sen. John Edwards is leveraging the tragic story of Nataline Sarkisyan -- the 17-year-old California woman who recently died awaiting a liver transplant -- to press his political attack on insurance companies and argue for European-style, single-payer health care. But the former trial lawyer, accustomed to using anecdotes of human suffering to frame his rhetoric, is twisting the facts. Organ transplantation, like many areas of medicine, provides a poor basis for his political thesis that single-payer health care offers a more equitable allocation of scarce resources, or better clinical outcomes.

Gottlieb looks at U.S. v. UK data on organ transplants and finds that, overall, the U.S.'s mixed public-private system performs better than the NHS. Read the whole thing.

Posted by Paul Howard at 02:23 PM | Comments (0)

Yes, it is official: Universal coverage is the opposite of health care. Don't believe it? Well, then, please pay attention to the position of the federal government---yes, that same federal government that many believe should guarantee health care coverage for all---in a lawsuit filed by a couple of veterans' groups arguing that the VA health care system "illegally denies care and benefits..."

As reported by the San Francisco Chronicle (January 11): "The government had argued that it was required to provide only as much care as the VA's budget allowed in a given year."

Now, it is absolutely clear that the Constitution vests the power of the purse in Congress, and not the judiciary. Congress has the power to spend whatever it chooses, and if given interest groups deem that amount insufficient, they have every right to petition the Government for a redress of grievances.

But let us shunt that legal/constitutional issue aside. What is fascinating is the policy dimension: The bureaucracy has just agreed that resources are limited---duh!---and therefore that not everything can be covered and that the beneficiaries of government spending programs might not get everything they would like. In other words: They will not be fully "covered" despite future promises of "universal coverage."

And that is for a small (and politically untouchable) population of beneficiaries: veterans. What would the system "cover" when everyone is the special interest, competing with everyone else for slices of the federal pie in the context of health care expenditures skyrocketing? The short answer: Not everything, not the universe, and not the free lunch that so many believe is within reach.

This little spat reminds me of the old joke about the time that the great Leonid Brezhnev was on the phone listening to the desperate pleas of Todor Zhivkov, the general secretary of the Bulgarian Communist Party, as he begged Brezhnev for increased economic aid. "Comrade Leonid Ilyichovich, we desperately need 10 million tons of grain." Brezhnev: "You will have them." "We need 25 million tons of oil." "You will have them." "We need 5 million tons of steel, 40 million tons of cement, 10 million pairs of shoes, 15 million winter coats, and 25 million tons of potatoes." "Fear not, Todor Hristovich: You will have them."

"Leonid Ilyichovich, you are a giant among the defenders of the proletariat, and the savior of the Bulgarian workers. But I have only one question. Do you really think that the Czechs will be able to deliver?"

Posted by Benjamin Zycher at 12:31 PM | Comments (0)

People - including doctors - make mistakes. And every medical procedure brings with it unavoidable risks, even when doctors and hospitals do everything "by the book." So what should patients do when they have a medical procedure and suffer from serious complications? Yesterday CNN recounted the story about one patient, named Christine, who had painful complications from hysterectomy surgery.

Christine says she's spent about $5,000 out of pocket to fix the complication, plus she lost thousands of dollars when she was too sick to work.

"The first question everyone I know asks is, 'Are you suing?'" says Christine. "My mother, my sister-law-law, my husband. My husband is on a rampage -- he's on the lawsuit bandwagon."

...

"What are her losses -- maybe $50,000? I can't afford to take a case that recovers $50,000," says Wayne Grant, an Atlanta malpractice attorney. "My expenses would likely be more than the recovery. She's out of luck."

Studies have shown that many people who are genuinely injured by physician negligence never sue, and that many people who do sue weren't injured by physician negligence. Basically, attorneys cherry pick sympathetic clients with the highest dollar value cases, leaving patients like Christine "out of luck". In short, our medical malpractice system is expensive and profoundly irrational, with little incentive to providers to improve how care is delivered.

Some policymakers have embraced the idea of health courts to remove these cases from the tort system; others, arbitration by contract. Both of these approaches have their advantages and disadvantages.

Here's another market-based alternative: warranties. Many consumer products and services come with warranties that reassure consumers that the manufacturer stands behind the quality of its products and services for a set period of time, from 90 days to several years.

Hospitals and physicians should be encouraged to offer similar warranties for routine services, a process that would drive innovative safety procedures and competition among providers to be "the safest." The New York Times reports that Geisinger Health System in Pennsylvania is experimenting with this very idea.

Geisinger essentially guarantees its workmanship, charging a flat fee that includes 90 days of follow-up treatment.

Even if a patient suffers complications or has to come back to the hospital, Geisinger promises not to send the insurer another bill.

This is the kind of innovation that I think we'd see a lot more of in a more consumer driven health care system, with patients like Christine getting faster satisfaction for their complaints.

Posted by Paul Howard at 11:14 AM | Comments (0)

January 10, 2008

Robert Reich opined in yesterday's Wall Street Journal about the mudfight among the Democratic presidential candidates on the issue of whose individual "mandate" (a requirement that health insurance be acquired) would yield the most extensive coverage. And Reich is right: The differences are small, and the most extensive (or more stringently enforced) mandates are a way of imposing a tax on the young and healthy so as to subsidize other purchasers of health insurance. And thus does the great struggle over health care and "the children" boil down, as usual, to a fight over who gets to have greater snout privileges at the federal trough.

Reich claims that all the Democratic plans would cover roughly the same number of people; but nowhere does he delve into the issue of precisely what "coverage" means in a world in which government mandates insurance. Even apart from the larger reality that all the Democratic plans would lead toward a single-payer system and all the perversities thereto pertaining, government does not have infinite resources, and so must make choices about whom to "cover" and for what. And this dynamic proceeeds in the context of the eternal struggle over budget dollars, in which patients are just another interest group among many.

And that is why "universal coverage" is the opposite of health care, as government squeezes patients and providers so as to engender "savings" that can be used for other budget priorities. Where does the quality of actual care fit in that Beltway universe? The question answers itself, just as it has in the UK and Canada and other places where government compassion reigns supreme.

Posted by Benjamin Zycher at 06:49 PM | Comments (0)

January 09, 2008

What is it this time, you ask? Unsurprisingly, given the election season now entering full bloom, it is some types of drug marketing, according to a couple of disgruntled former employees of Amgen, who now are immersed in arbitration proceedings after having been fired for... well, it's not quite clear. The LA Times reports today that the two are accusing Amgen of requiring sales staff to engage in "aggressive and possibly improper marketing practices to boost Enbrel sales beyond its approved uses." (Enbrel is an expensive psoriasis treatment.) One former employee "contends that the company required salespeople to gain access to patient medical information in doctors' offices and market the drug directly to patients, many of whom may not have needed the medication."

It's not quite clear why the doctors would allow the drug reps to look through patients' files. But the larger policy issue that arises out of such cases as this one is whether off-label drug use, as prescribed by a doctor not being bribed by a pharmaceutical producer, is useful for patients. The evidence---crude, indirect, but compelling--- is that it is indeed. This is not very surprising given the powerful incentives of the FDA to approve drugs too slowly and for too few uses.

And so beware newspaper articles sympathetic to the argument that it is "improper" for the private sector to find ways to serve the interests of patients more fully. Once we allow bureaucrats to define the boundaries of propriety, we will have taken a long step toward serfdom, higher drug prices, and increased human suffering.

Posted by Benjamin Zycher at 01:14 PM | Comments (0)

Check out Robert Reich's Journal op-ed today, The Road to Universal Coverage, which argues that the debate amongst the "Big Three" Democratic presidential candidates (Clinton, Obama, Edwards) over health insurance mandates is a distraction.

In almost every important respect, all major Democratic plans are the same. They require employers to "play or pay" -- either provide coverage to their employees or contribute to the cost of coverage. They create purchasing pools that will offer insurance to anyone who doesn't get it from an employer. The plans preserve freedom of choice of doctors. They aim to save money through more preventive care, better management of chronic disease, and standardized information technology. All of them subsidize lower-income families.

...

As a practical matter, the difference between Sen. Clinton's and Sen. Obama's approaches come down to timing and sequencing. Mrs. Clinton wants a mandate first, believing that enrolling the younger and healthier will help reduce costs for everyone else. Mr. Obama thinks forcing people to buy health insurance before it's affordable isn't realistic. He wants to lower health costs first, and is willing to consider a mandate only if necessary.

Who's left? Only around 3% of the population. So the question they're really battling over is whether it's better to require this 3% to buy insurance, or lure them into buying it with low rates and subsidies.

He also cites research from Health Affairs finding that mandates might not be all that effective anyway, since "Switzerland now enjoys near-universal coverage, but this reflects only a tiny increase over the rate of coverage before it was mandated, when over 98% of population had mostly voluntary coverage."

Now, I have my criticisms of the Dems health care plans, but besides offering thoughtful advice to Democrats he lays out an implicit challenge to supporters of a free market or consumer driven alternative: how can we design a voluntary, market-based system that will achieve affordable coverage for the vast majority of Americans and yet still encourage high levels of innovation? Hopefully this challenge will be answered soon.

Posted by Paul Howard at 11:24 AM | Comments (0)

January 08, 2008

You'd better sit down. The Washington Post offers the following headline today: "Medicare Helps Push Drug Spending Up."

No kidding. When patients get a subsidy, they take advantage of it! And not just any subsidy: a federal subsidy defined as a budget entitlement for the purchase of prescription drugs under Medicare Part D.

Down around paragraph 2,938 it is noted as well that "The primary driver of the higher drug spending was increased consumption, not price increases..." This is not very surprising---notwithstanding the predictions of the usual suspects that prices would rise in the absence of federal negotiations of prices---in that Part D has expanded the market, for better or worse, and thus allowed the pharmaceutical producers to exploit the sizeable scale economies that characterize the cost conditions under which most drugs are produced.

And so we have some indirect but important evidence that an expansion of drug advertising would have a similar salutary effect on prices, again contrary to the simple-minded arguments of many that such advertising costs money, and so obviously it must drive prices up. How is it possible for some to get everything wrong? Good question.

Posted by Benjamin Zycher at 04:46 PM | Comments (0)

More wailing and gnashing of teeth on the pharma productivity front, with the FDA approving a record low 14 new molecular entities in 2007, the lowest number since 1983.

How bad is the productivity picture? The In Vivo blog explains just how bad it is:

If you want to understand the decline in productivity industry wide, consider this: total R&D spending by brand-name companies in 1983 was $3.2 billion, compared to $43 billion in 2007. In other words, the industry spent $228 million per NME approved in 1983, compared to $2.7 billion each in 2007. Or, if you prefer, the extra $40 billion in R&D spending brought with it a total of four additional therapies.

Now, there is something to be said for industry gloom but here are a couple of other factors to consider. This is a mature industry that is extremely competitive with multiple product lines competing for scant health care dollars (think statins) against generics that, just a few years ago, were extraordinarily lucrative drugs for industry. And many more drugs will go generic in just the next few years. In other words, the industry today is competing against itself in more ways than one - an ironic side effect of the PhRMA boom in the 1990s.

Also, the relative risk tolerance of the public has changed over the last 10-15 years as ever larger portions of the population take one or more prescription drugs for chronic illnesses for what may be the rest of their lives. Again, this is a "side effect" of the fact that drugs are incredibly safe for the vast majority of people who use them; but once tens of millions of people start to use a single drug, anomalous side effects start to add up (think Vioxx).

As a result, Congress, the FDA and the news media have become sensitized to the postmarket risks of medicines taken for very long periods of time in very large patient populations, and the bar for safety has changed, whether the FDA will openly admit it or not. Drugs that might have been approved just a few years ago are not passing muster now.

Last but not least, the promise of the new technologies - genomics, bioinformatics, systems biology - are just beginning to be realized. Until now, companies were just throwing money at R&D with very little to show for it.

So things look bad now - but only in comparison to the tremendous successes that preceded them. And there is every reason to think that - in the long run - the industry will rebound as new technologies and sunk R&D costs finally bear fruit. The real question is: How long will this process take? After all, a risk averse Congress can push the FDA into a reactionary posture that may take years to shake off.

Posted by Paul Howard at 03:40 PM | Comments (0)

January 07, 2008

The January issue of Archives of General Psychiatry---we here at MPT labor mightily day and night so that you, dear Reader, do not have to read such stuff---has a nice article reviewing the California data on thimerosal and childhood autism. You may recall that the purported link between thimerosal---a vaccine preservative containing ethylmercury---and autism is one of those conspiratorial fads promoted by the likes of Robert F. Kennedy Jr., and believed with religious fervor by thousands of desperate parents despite the utter absence of systematic evidence showing any such effect.

Anyway, the article reports an examination of the evidence reported by the California Department of Developmental Services. The removal of thimerosal from childhood vaccines was accelerated between 1999 and 2001, and the data report the incidence of diagnosed autism by age and birth cohort from January 1995 through March 31, 2007. The finding? "Since 2004, the absolute increase and rate of increase in DDS clients aged 3 to 5 years with autism were higher than those in DDS clients of the same ages with any eligible condition including autism."

What does that mean? "The DDS data do not show any recent decrease in autism in California despite the exclusion of more than trace levels of thimerosal from nearly all childhood vaccines. The DDS data do not support the hypothesis that exposure to thimerosal during childhopod is a primary cause of autism."

Maybe Bobby the Child now will argue that Californians are just weird. And you know what? He's right.

Posted by Benjamin Zycher at 05:39 PM | Comments (0)

Here's a quick round-up of health care articles to peruse while you're still coming to grips with Monday morning.

The Wall Street Journal editors explain why "progressives" can't stand Obama's health care plan - it lacks an individual mandate. On the same page, Matthew Collier and Lisa Walsh, two partners at Bain & Co., explain how the insurance industry can flourish by focusing on sales to individual consumers. Investor's Business Daily explains why the pharmaceutical industry is retrenching in the face of expanded generic competition, weak drug pipelines, and a risk-averse FDA.

Speaking of the FDA, the Star-Ledger reports that a public-private foundation designed to help the FDA improve drug safety and drug development science is under siege by critics who view it as an industry front group.

In the blogosphere, In the Pipeline takes issue with the PLoS Medicine article on marketing costs in the pharmaceutical industry.

Last, but far from least, the news division of the Wall Street Journal reports on how the John Edwards campaign is making political hay of an insurers decision to turn down a liver transplant for a leukemia patient in a coma, who later died.

In a nutshell, the health care news and commentary can be summed up in two words: change and anxiety. Change is coming down the pike, driven by the presidential election and unease with the health care status quo, and it is making everyone nervous.

Posted by Paul Howard at 09:57 AM | Comments (0)

January 04, 2008

There is a line of argument in some policy circles - and amongst quite a few public health advocates - that the pharmaceutical industry spends too much time and money promoting "me too" drugs that aren't any better than cheap generic alternatives. For these critics, "Big Pharma" claims of being a research industry are belied by its spending on marketing, which, they claim, far outstrip industry spending on R&D. If Big Pharma stopped spending money on advertising and spent more on R&D, or so the argument goes, we'd have a lot more truly innovative drugs.

This dubious claim, which has been around for a very long time, got another plug this week when Canadian researchers published a study claiming that the industry spends nearly double on marketing drugs as it does on researching new medicines.

In their analysis of data from two market research companies, Marc-Andre Gagnon and Joel Lexchin of Toronto's York University found that American drug companies spent US$57.5 billion on promotional activities in 2004.

By comparison, spending on industrial pharmaceutical research and development in the United States was $31.5 billion in the same year, according to a report by the National Science Foundation, which included public funding for industrial research.

The authors clearly have an agenda and aren't shy about promoting it. You can read their whole article for free at the Public Library of Science.

They conclude that "governments should force the industry in the direction of more research and less promotion" in order to bring more innovative medicines to market. There are a lot of problems with this line of argument; for instance, the authors can, by choosing what to count as marketing and what not to count as marketing, skew their findings in whichever way they want.

But let me just make a few other observations that challenge their argument. The first, and most fundamental, is that the authors assume that pharmaceutical marketing is intrinsically bad, which runs counter to mainstream economic thinking.

Marketing helps to protect and promote brand value, educate consumers about product quality and other attributes, and (most likely) lowers the cost of pharmaceuticals by allowing development costs per-pill to be spread over a greater volume of sales.

Ideally, doctors may some day have the technology to prescribe the right drug to the right patient at the right time - developments in personalized medicine will help in this area - but, until then, they doctors have to make educated guesses based on their clinical experience, patient characteristics and preferences, and - you guessed it - communications from drug companies. (Which BTW, are regulated by the FDA.)

Couldn't the government just tell physicians what drugs to use? This merely substitutes one potential bias problem for another, as government bureaucrats have their own agendas, mainly revolving around budget savings, not patient health. At least in a competitive marketplace, consumers and physicians have access to many different sources of information and advice to choose from in helping them select the right treatments.

Second, the drug development process is highly regulated, both in the U.S. and Europe. Companies cannot depart from this process, even if they wanted to. Sadly, the vast majority of drug research efforts fail, much to the dismay of the industry and its investors.

For instance, the industry has more than doubled its R&D spending in recent years, with (relatively little) additional productivity to show for it. If there was a direct relationship between dollars spent and drugs discovered, it isn't showing up in the data. And this isn't surprising: discovering new drugs isn't like making widgets. Many drug candidates that look promising in preliminary research fail dramatically and expensively in late stage testing - and companies just have to eat the losses (remember torcetrapib's implosion at Pfizer?).

Even if we accept the authors claim that the industry spends "too little" on R&D relative to marketing (an entirely arbitrary judgment in itself), this fact alone undercuts the idea that government could magically bring more or better new drugs to market by mandating X level of R&D research.

Last but not least, consider the fact that the industry is losing tens of billions of dollars in revenue on bestselling drugs to generic competition as patents expire now and over the next few years. If companies could just invent new, more innovative drugs at the drop of a hat to fight off new generic competitors, don't you think they would have done so a long time ago?

In other words, patent expiration, advances in science, and market competition drive industry innovation, not government fiat. The claim that the case could be otherwise is, to be blunt, incredible.

Posted by Paul Howard at 11:35 AM | Comments (0)

January 02, 2008

As reported Monday in the Wall Street Journal, "a handful of Western nations and international bodies" are trying to implement a system of incentives for drug development in which "donors commit to buying yet-to-be-developed vaccines in bulk for poor nations, if drug makers are able to deliver a product that meets specifications and a price can be settled on in advance."

This "advance market commitment system" sounds faintly like the orphan drug program in the U.S., for patient populations otherwise too small to yield sufficient profitability incentives for investment in cures for rare diseases. And---no doubt about it---there is some real potential merit in this sort of approach, particularly in comparison with the current efforts of governments to steal patents when prices are not to their liking.

But---let's face it---significant problems remain. Notwithstanding the claims of some advocates, this system would not replace government with the market as the institutional vehicle with which decisions are made on who will produce what and when. "Western nations" means... western governments. And "international bodies" means... well, there is no need to ask. And since it is governments and international bureaucrats who will do the deciding, the actual reliability of the advance market commitments is less than entirely obvious. After all, governments and bureaucrats face powerful incentives to mortgage the future in favor of the present, that is, to make decisions that are myopic. And precisely how effective does a new vaccine have to be to qualify for the agreed price; and just how easy is it likely to be to define such contractual parameters in advance for nations in which health statistics are not exactly world class? Moreover, "specifications" are not so easy to define in advance when the science is fuzzy or unknown; and disputes over the contracts inevitably will be drawn into the international court system, itself not a great example of analysis and jurisprudence untainted by political considerations.

Whatever the potential promise offered by this approach, let us not forget that it is a top-down system rather than a market system, and so, accordingly, all the usual problems observed when markets are circumvented are unlikely to disappear.

Posted by Benjamin Zycher at 03:07 PM | Comments (0)

The Nanny State starts out sounding helpful, promising universal care with no waiting.

But as costs rise and quality declines, Nanny State bureaucrats have to find ways to slash costs and improve performance. But how to accomplish that in a centralized system that purports to be free at the point of service? Here's a great idea: only offer care to fit, healthy people!

You cannot make this stuff up: Britain's National Health Service is floating plans to withold care from the obese and smokers until they shape up.

Patients could be required to stop smoking, take exercise or lose weight before they can be treated on the National Health Service, Gordon Brown has suggested.

In a New Year message to NHS staff, the Prime Minister indicates people may have to fulfil new "responsibilities" in order to establish their entitlement to care.

Despite the NHS commitment to provide free universal care, it is already common for doctors to set conditions on patients seeking treatment.

Now the interesting thing about this movement towards "mandatory prevention" is that the government gets to ration care by appealing to popular prejudices about smoking and obesity - that they are merely signs of personal weakness.

We are, of course, all in favor of private insurers and employers offering discounts or other perks to employees to help them stay healthy; people who smoke, for instance, pay higher premiums than those who don't. We are even more in favor or individuals having more responsibility for their own health care by owning and controlling their own insurance.

But the NHS plan goes beyond market competition or persuasion, which enourages autonomy - it edges toward outright coercion, which is likely to hurt its most vulnerable low-income citizens.

The one bright side to this program? The next time Michael Moore heads to the England to praise the NHS, they'll send him off to the gym.

Posted by Paul Howard at 11:30 AM | Comments (0)

Happy New Year to all of our readers.

And, along the lines of "the more things change, the more they stay the same," check out the Wall Street Journal's editorial page today, which inveighs against Congress' (and the media's) zero-tolerance for medical risk.

Politically, it's one thing to raise legitimate safety concerns, quite another to turn them into a pretext for longstanding agendas. Republican Senator Chuck Grassley, for instance, is targeting the device makers' consulting agreements with physicians. The implication, as with his campaign against Big Pharma, is that "kickbacks" lead to inferior products and buy "a doctor's allegiance to a particular product line." With Medtronic as Exhibit A, Mr. Grassley is pushing legislation to require regular public disclosure of the terms of all financial relationships.

Other innovation disincentives are provided by Henry Waxman, chairman of the never-sleeping House Committee on Oversight and Government Reform. He's kicked off an investigation into "what is apparently a serious shortcoming" in the FDA's device-approval process, and legislation to make it even more restrictive can't be far behind.

Read the whole thing.

Posted by Paul Howard at 11:17 AM | Comments (0)

December 27, 2007

The International Herald Tribune ran a story on December 25th on the rush to build particle accelerators in the U.S. to treat cancer patients.

The accelerators are tremendously expensive ($100 million plus each) and it's not clear whether they are - with the exception of certain rare cancers - superior to existing treatments for the disease they will be most widely used to treat, prostate cancer.

"I'm fascinated and horrified by the way it's developing," said Anthony L. Zietman, a radiation oncologist at Harvard and Massachusetts General Hospital, which operates a proton center. "This is the dark side of American medicine."

Similar cost concerns were expressed in the past about other new technology like MRI scanners. While those have become accepted staples of medical practice, there is still concern about their overuse and the impact on medical spending.

I wouldn't call it the dark side of American technology (I'm all for medical innovation). But it should also remind us of why pharmaceuticals are great medical investments; for instance, the upfront costs are high, but after patents expire, drug prices plummet.

There's also plenty of competition within drug classes, and relatively good data (and getting better all the time) to help doctors pick the best therapies for their patients.

And if somebody invents a great drug for prostate cancer (to my limited knowledge, there aren't any good treatments outside of radiation, hormones, and surgery) it will automatically put these proton accelerators - and lots of surgeons and radiologists - out of business. That saves money in the long run, and doesn't leave you with lots of messy outdated infrastructure.

For more on this argument, see Peter Huber's Forbes article Medicine Gets Cheaper.

Undoubtedly, more of these tumor-bombing particle accelerators will get built, but the future of medicine isn't in hardware, but in software - genes and personalized medicine.

And rather than vilifying the industry, we should be doing much more to encourage this transition.

Posted by Paul Howard at 03:53 PM | Comments (0)

December 26, 2007

'Twas the night before Christmas,
When all through the house,
Not a creature was stirring,
Not even a mouse.

Yeah, well forget the house; inside the Beltway, the politicians are making a g*dd*m racket, and the looming election season does not bode well for the triumph of peace and quiet. So you think that SCHIP and Medicare and Medicaid and the VA and the other health-care machinations that show up on the front page are enough to keep the elves busy on Capitol Hill? Guess again. In the last year, even a quick review reveals the following attempts at health-care meddling, in various stages of completion in the legislative oven:

---Minority Health Improvement and Health Disparity Elimination Act.
---Health Equity and Accountability Act.
---Healthy Places Act.
---Environmental Justice Act.
---Telehealth and Medically Underserved and Advancement Act.
---Indian health Care Improvement Act Amendments.
---Indian Youth Telemental Health Demonstration Project Act.
---Tribal Health Promotion and Tribal Colleges and Universities Advancement Act.
---Communities of Color Teen Prevention and Pregnancy Act.
---Native Hawaiian Health Care Improvement Reauthorization Act.
---Legal Immigrant Children's Health Improvement Act.
---Border Health Security Act.
---Office of Men's Health Act.
---Mental Health Services for Veterans with Limited English Proficiency Act.
---Minority Diabetes Initiative Act.
---Diabetes Prevention Access and Care Act.

'Nuff said? Maybe; but always bear in mind that politics is the art of wealth redistribution, and when Congress "acts," no outcome is possible other than ever-greater politicization of the health care system. Precisely where do the patients and their needs fit into this framework? Good question.

Posted by Benjamin Zycher at 12:57 PM | Comments (0)

December 21, 2007

Medical Progress Today will be posting sporadically between December 21 and January 2, 2008 when we will return to full time posting, well-rested and probably somewhat heavier after consuming copious amounts of Christmas cheer.

Posted by Paul Howard at 12:26 PM | Comments (0)

The Massachusetts Supreme Court has held that doctors can be sued for "failing to warn patients about the side effects of the drugs they prescribe."

Last week's decision sent a chill through physicians' offices across the country. It will increase malpractice insurance costs for doctors, which will likely decrease access to care for patients, medical law specialists predict.

The high court ruled 4 to 2 on Dec. 10 that Dr. Florio's responsibility as a physician extended to anyone who could be put at risk by his failure to warn a patient about the side effects of drugs. The justices overturned a lower-court decision that held doctors were not responsible for anyone other than their own patients.

Read the whole thing. If this becomes a national trend, it will be bad news for patients and doctors alike.

Most side effects on listed drug labels are quite rare; if doctors are held liable for explaining all of those risks to each and every patient they risk scaring patients away from drug treatment entirely, leading to poorer health outcomes from much more dangerous diseases like depression or diabetes.

Posted by Paul Howard at 11:39 AM | Comments (1)

December 20, 2007

Data released from the American Cancer Society apparently shows that uninsured cancer patients are "twice as likely to die with five years as those with private coverage."

An Associated Press estimate - based on hospital cancer deaths in 2005 gathered by the U.S. Agency for Healthcare Research and Quality information and other data - suggests that at least 20,000 of the nation's 560,000 annual cancer deaths are uninsured when they die. Experts said that estimate sounds reasonable.

"Insurance makes a big difference in how early you are detecting disease," said Ken Thorpe, an Emory University health policy researcher.

Now, cancer is always a burden, and cancer deaths always a grueling tragedy. Having said that, we have to recognize that premature cancer deaths that can be attributed to a lack of insurance appear to be relatively small (4% of total cancer mortality, according to the AP). And, if you believe widely quoted figures about the numbers of uninsured that put their numbers at 47 million, cancer mortality per se in this group isn't a major problem.

Having said all of that, we can definitely do much better. Outcomes for patients with AIDS, cancer, or diabetes for that matter are undoubtedly better for patients with good private insurance.

Screening and rapid treatment count, and they count for a lot.

The solution? Break the link between insurance and employment, through some mix of either a capped tax deduction or a refundable tax credit that would give low-income families and Americans that don't qualify for public programs a way to buy affordable health insurance from a national menu of plans.

This would give every American access to portable health insurance policies.

We should also remember that the U.S. leads the world in cancer survival for most types of cancer. Our challenge is to fix the gaps in private insurance coverage for the uninsured without impairing our commitment to cutting edge cancer treatment.

Posted by Paul Howard at 03:52 PM | Comments (0)

Out here in the Great State of California---land of sunshine, beautiful women, and government spending that gives new meaning to the term profligate---we have as our dear leader the ineffable Governator Arnold. Disciple of Milton Friedman. Motorcycle rider. Magnet for television cameras. True believer in the warm, warm church of AlGoreEarthWorship, HealthCareForEveryone, debt as a source of long term government finance, and other such institutional attitudes popular in the watering holes and expense-account restaurants of Hollywood.

Anyway, Arnold is promoting the Golden State version of salami-slice socialism in health care insurance, with an individual mandate, pay-or-play for employers, guaranteed issue, community rating, the whole nine yards. This proposal, an utter disaster in the making, is opposed by the California Nurses Association, which is pushing for a real single-payer system (Senate bill 840), with which the nurses' union could negotiate ever-richer contracts and retirement systems from public officials driven by short time horizons and all too happy to spend other people's money.

Dan Weintraub of the Sacramento Bee reported yesterday that the nurses are organizing a protest at the offices of Cigna because the evil insurer refused to pay for a liver transplant for a young girl, arguing that the procedure is experimental, and thus not covered under the terms of the insurance contract.

The nurses go on to argue that Arnold's healthcare proposal should be opposed because it "does not address the problem" of denial of care. But wait: SB840 does not do so either. Indeed, it would create an office of Administrator that would decide what treatments would be covered by the single-payer system. Just as bureaucrats now make identical decisions every day for MediCal (California Medicaid) patients.

Just as any system of insurance, self-insurance, etc., government or private, must make such decisions, because we live in a world in which resources are limited, always and everywhere. California, New York, Montana, Mississippi: There is not and cannot be "universal coverage," because some services will be too expensive to cover for some patients or for all, and the central policy question is whether those decisions will be made by individuals contracting voluntarily in the market, or by government officials who do not have "patients" or "customers," but who do face the crushing interest-group pressures of budget competition, 24/7.

The nurses have their own political goals, similar to those of any (public employee) union, and would be very, very happy to "negotiate" with public officials dependent upon their campaign contributions. And that is why government should be kept away from health care and most other markets as well, notwithstanding the usual blatherings about compassion and The Children.

Posted by Benjamin Zycher at 11:01 AM | Comments (0)

December 19, 2007

Forget about that 10 percent reduction in Medicare reimbursements for physicians, scheduled to take effect January 1. Congress, reflecting the joy of the Holiday Season, is about to approve an increase of---roll the drums, please---0.5 percent. For six whole months!

Sigh. Does anyone believe that 0.5 percent will cover the increased costs borne by doctors over the last year? The increase in physician costs as reported in official data over the last five years are: 2.8 percent (2002), 2.7 percent, 4.0 percent, 3.3 percent, and 1.5 percent (2006). (See www.healthinflation.com.) Moreover, those data understate significantly the true increase in physician costs, as price controls both official and unofficial hide the true increase in the real economic cost of delivering physician services. And that is one central reason among many that physicians in increasing numbers are opting out of the Medicare market, leaving increasing numbers of Medicare beneficiaries with reduced access to actual medical care.

Maybe government compassion isn't all that it's made out to be. Always remember: The feds have interest groups rather than patients, and the cost of reduced access for actual patients is not something that shows up in government budgets or that yields direct political impacts relevant to political calculations. Patients, physicians, taxpayers, you name it: It's the opposite of Las Vegas. Everybody's a loser!

Posted by Benjamin Zycher at 12:17 PM | Comments (0)

The Massachusetts Connector Authority voted last week (Dec. 13th) to cut reimbursements for managed care providers offered through the Connector.

Is this a problem? In a word, yes. At a time when Massachusetts is trying to move hundreds of thousands of uninsured residents into health insurance and primary care settings, they are slashing payments to doctors - in other words, giving them an incentive not to treat patients covered by Connector sponsored plans.

The Massachusetts Medical Society weighs in on the problem on its blog:

The MMS is dismayed by the Commonwealth Connector Authority's reported decision to require insurers who bid on insurance products offered by the connector to cut provider payments next year by 3 to 5 percent. The reductions, voted on Thursday (Dec. 13), will be included in bid documents that will be issued early in 2008.

Until recently, the four managed care plans had offered a fee schedule above Medicaid indemnity rates for services provided to Medicaid and individuals insured through the Connector. Patrick Holland, the authority's chief financial officer, was quoted in news reports stating, "There's no justification to be paying more than Medicaid rates."

Here's one "justification" for paying more than Medicaid rates: low reimbursements are driving doctors out of the primary care system according to a July article in the Wall Street Journal, Doctor Shortage Hurts Coverage for All Plan:

The dearth of primary-care providers threatens to undermine the Massachusetts health-care initiative, which passed amid much fanfare last year. Newly insured patients are expected to avail themselves of primary care because the insurance covers it. And with the primary-care system already straining, some providers say they have no idea how they will accommodate an additional half-million patients seeking checkups and other routine care.

State officials have acknowledged the problem. "Health-care coverage without access is meaningless," Gov. Deval Patrick said in March.

Coverage without access is meaningless - but, as the Connector faces rising costs, policymakers are falling back on the time-honored tactic of price controls to try and reign in spending.

This doesn't bode well for the future of the Connector experiment.

Posted by Paul Howard at 10:53 AM | Comments (0)

December 18, 2007

The Senate apparently will vote this week to delay for six months---not for the year as originally planned---the scheduled reduction of 10 percent in physician reimbursements for Medicare services. So why the shorter fix? Forget all the handwringing about unanimous-consent demands and short-term fiscal patches and the other variants of Beltway
blarney fueled by an eggnog recipe not prominent in family cookbooks passed down from generation to generation just for the holidays. No, merely bear in mind that next year is a leap year: Six months from now, both the weather and the election will be heating up. Would our honorable solons play politics with physician reimbursements for services provided our seniors? Perish the thought.

Posted by Benjamin Zycher at 02:15 PM | Comments (0)

The Australian blog Socialized Medicine has a great post today explaining why Congress is wrong to consider extending a moratorium on speciality hospitals. In the process, he also cites Manhattan Institute senior fellow and Harvard Business School professor Regina Herzlinger:

Specialty hospitals provide the only real competition to traditional hospitals, and they offer a real opportunity to improve quality and cost control in the highly protective health care sector. However, Congress is once again considering measures to block or hinder specialty hospitals from effectively competing with traditional hospitals. During the current session of Congress, the House of Representatives has already included and enacted such restrictions in the Children's Health and Medicare Protection Act of 2007 (H.R. 3162). There is discussion of reviving these kinds of restrictions in draft Medicare legislation.

This legislation, which is strongly supported by traditional hospitals, is the most recent in a series of attempts to terminate the growth of specialty hospitals. As Professor Regina Herzlinger, Nancy McPherson Professor of Business Administration at the Harvard Business School, has observed, this congressional attempt to suppress competition was not advanced in the interest of patient care: "... no one alleged that the specialty hospitals were bad for the consumers' health. No, instead, the general hospitals alleged that the specialty hospitals were bad for their health."

This debate is a microcosm of how government regulation actually invites capture by the regulated industry; in the name of "protecting" traditional hospitals, Congress blocks access to the very kind of competition that would drive improvements in patient care and cost containment that would help make Medicare sustainable in the long run.

It is certainly true that there are disparities in how Medicare reimburses different diagnostic categories, but the solution is to reform Medicare's payment structure, not grant traditional hospitals a de jure monopoly on medical services.

For more how to encourage innovation in health care, check out this op-ed from Professor Herzlinger.

Posted by Paul Howard at 12:06 PM | Comments (0)

Sigh. Some things stay the same; other things stay the same. This time, dear Readers, during our holiday season of joy, good feelings toward all men, and, most important, golden-brown latkes of recent memory, we find our beloved Congress engaged in the time-honored mating rituals needed to forge majorities and supermajorities in the House and Senate, respectively. There is looming before us a 10 percent cut in physician reimbursements for services given Medicare patients, you see, and now there is a scramble to reverse it before the pumpkin reappears just as the countdown ends in the New Year.

So: Why did they pass this little stink-bomb in the first place, only now to abandon it in favor of reduced stupidity? Well, the reasons are numerous and obvious: The 10 percent cut enabled the ghost of Congress past to claim adherence with some arbitrary budget ceiling that everyone---and I mean everyone---knew was phony from the get-go. It served as honey for campaign contributions from the physician horseflies, oops, lobbyists, forced by government medical compassion to behave like johns on a street corner rather than practitioners of the art and science of medical practice in pursuit of reduced suffering for their patients. And it served as part of the glue needed to forge a coalition in favor of transforming SCHIP into a middle-class entitlement to the joys of socialized medicine, a gambit that would have worked beautifully had it not been for a veto from El Presidente W.

And now the Dems in the Senate want to "pay" for eliminating this reduction in payments to Medicare physicians---who, by the way, already are abandoning Medicare patients in ever-increasing numbers, as the reimbursements authorized by Congress and the bureaucrats even now do not cover the cost of service---by cutting payments to Medicare Advantage plans. This is part of the "paygo" fraud, in which the newly elected Congress last winter made a solemn pledge to "pay for" any spending increases or tax reductions by finding other budget cuts or new revenues. This iron promise, by the way, already was abandoned formally last week when the House passed a bill containing a temporary fix for the Alternative Minimum Tax monster now looming huge over a large slice of the middle class, oops, The Rich. That's right: without "paying for" it. Did they think that no one was watching?

Medicare Advantage, of course, is the private sector alternative to standard Medicare, which is to say that it provides varied plans and options in response to the heterogeneous needs of patients, as opposed to the one-size-fits-all uniformity that such single-payer monstrosities as Medicare are and always must be. That is why Medicare Advantage has been under attack from the political left from the beginning, and why it now is the favored source of "paygo" savings needed to bail out the other machinations of Beltway medicine for another year.

Accordingly: Please raise your hand if you actually believe that a vastly bigger single-payer system, the daydream of so many, would yield effiency, a focus on patients, less politicization, and a chicken in every pot. And then go stand in the corner.

Posted by Benjamin Zycher at 08:47 AM | Comments (0)

December 17, 2007

For more background on the off-label use of cancer drugs, see this article that ran in Saturday's WSJ on a father's quest to save his seven year old son:

Each day, Sam Hutchison swallows 44 pills, most of which weren't prescribed by his physician. They were chosen by Sam's father, who devised the treatment cocktail -- and tests many of the medicines on himself -- in a desperate effort to save his seven-year-old son.

"When your kids have run out of options, you have to think outside the box," Mr. Hutchison says. "It's terrifying, but it's our only hope."

Read the whole thing.

Posted by Paul Howard at 10:56 AM | Comments (0)

Dr. Scott Gottlieb, a senior fellow at the American Enterprise Institute, has a terrific op-ed in the Wall Stree Journal today explaining why government lawsuits against pharmaceutical companies for their communication of "off-label" drug uses to doctors actually hurt patients:

The Justice Department rarely alleges in these cases that the scientific information is false or misleading, only that a firm can be "ahead of the science" in sharing with doctors information about emerging uses of medicines, even when those new uses quickly become the mainstay of care. Underlying this, of course, is a nagging presumption that doctors can't be trusted to weigh for themselves this sort of medical information, and thus need the FDA's supervision.

This might be more tolerable in a world where the FDA rapidly adjudicates study results to decide what belongs in and out of drug labels. In reality, the FDA reserves 10 months to consider supplemental uses for marketed drugs, and the entire process usually is much longer. In many cases, doctors don't easily learn about these new drug uses, or get targeted education on prescribing, without the role of the drug firm that is the only deep-pocketed actor with an incentive to share this kind of information.

This chilling of commercial speech is particularly harmful for cancer patients, because upwards of 50% of all cancer treatments are used off-label. The solution Scott suggests - "that [federal prosecutors] merely check with a public health authority like the National Institutes of Health to see if a certain "off-label" use falls within the scope of appropriate medical care" before launching a lawsuit - is eminently sensible.

Let's hope that someone at the DOJ is listening.

Posted by Paul Howard at 09:59 AM | Comments (0)

Speaking down to us children, the ineffable Jeff Sachs, august professor of health policy at Columbia University---and a prominent economist---now informs the world that Thailand, last seen stealing, oops, issuing compulsory licenses for, the patents for AIDS medicines, "can afford to pay a little more for patented medicine, although not as much as rich countries." After all, Sachs, the former director of the UN Millennium Project---please send me a note if anyone out there remembers what that was---said that "he is sympathetic towards patent protection, [a] system [that] actually had a lot of merit because it created an incentive for drug development."

Gee, thanks a lot, Jeffrey. The use of the past tense in that last sentence is interesting, but never mind. After throwing that bone to those of us intensely interested in preserving the flow of new and improved medicines over time, Sachs then informs us that "there was nothing wrong with the use of compulsory licensing of essential medicines." After all, said UN Secretary-Genneral Ban Ki-Moon last week, "[Thailand's] move on compulsory licensing... [is] progressive, ... a commendable effort in containing the spread of HIV/AIDS."

So there we have it: The Thais could afford to pay a little more, but, hey, stealing the drugs is OK anyway, because doing so is progressive and serves a worthy cause. Only an academic with tenure and a lust for continuing invitations to the Upper West Side cocktail parties could endorse something so silly, so destructive, and so transparent.

Posted by Benjamin Zycher at 09:55 AM | Comments (0)

December 14, 2007

Back to the question raised by Eye on FDA about a stealth change in policy at FDA regarding standards for drug safety.

In April, the New York Sun ran an op-ed by John Calfee, a senior fellow at AEI, that raised the issue in regards to the FDA's decision to deny market approval for Arcoxia, a painkilling drug in the Cox-2 class.

Having been approved by nearly all other advanced nations, Arcoxia approval here should have been a slam dunk. But if the FDA committee voted to approve Arcoxia, it would invite criticism for tolerating a drug known to cause heart attacks. So the FDA offered a way out: simply raise the standard so that only superior drugs are approved. That is essentially what the committee did by a vote of 20 to 1 when it recommended against Arcoxia approval because comparable drugs were already on the market.

What neither the FDA nor its committee seems to have considered is what its superiority standard will do to patients and health care costs. Clear superiority for the average patient can be demonstrated only through mammoth clinical trials at great expense. But some drugs are only superior for subgroups of patients. The only way to demonstrate that kind of superiority is to run even larger trials; Arcoxia's huge 34,000-patient trial was insufficient. Under the old approval standard, patients can find out which works best; under the new standard, they will have to wait years just to get a choice.

Read the whole thing. Raising the standard for new drugs to be "safer" than existing drugs sounds like a good idea in the abstract, but it runs headlong into the problem that different drugs have different effects subgroups of patients. It also ignores the fact, at Calfee points out in this article, that newer drugs are apt to look less safe than older drugs simply because older medicines have not been studied as intensively.

The solution is not to raise the bar for drug approval, but to collect more information about drugs once they are on the market, to help doctors and patients use both old and new medicines more effectively.

Posted by Paul Howard at 01:58 PM | Comments (0)

The blog Eye on FDA raises a great question in response to the latest "approvable" letter for Neurocrine Biosciences' drug indiplon: has the FDA "moved the goal posts" on drug approval to include the de facto provision that new drugs must be safer than comparable marketed products:

...is it a new standard that new compounds have to demonstrate less risk than the status quo in order to gain approval? If so, the FDA should spell that out ahead of time, especially for small companies that have few products or are looking to get their first product to market.

Did the FDA ask for this initially and the company simply decided not to do it - or is the FDA moving the goal post on approval in the middle of the application? Granted, there may be studies that are required as a consequence of the studies that are submitted for consideration, but this requirement hardly seems like one of them. The FDA needs to make clear at the outset when these kinds of studies are going to be required. Otherwise, the approval process, while within the letter of the law, certainly falls outside of the spirit of PDUFA - to get drugs approved and to market more quickly.

This year, with an approvable letter rate that bears scrutiny and raises many questions about what FDA policy, has certainly put a dent in the whole point of PDUFA.

That's a darn good question.

Posted by Paul Howard at 10:15 AM | Comments (0)

December 13, 2007

Another great article (free registration required) in The Scientist on one scientists approach to reducing the toxicity of MRSA bacteria - by making them feel warm and safe. She calls it "Prozac for bacteria". Check it out.

Posted by Paul Howard at 03:37 PM | Comments (0)

The Scientist ran a short, but very interesting article on the growth of the biotech industry in San Diego, a development that can apparently be traced back to a single researcher at UCSD who went on to found the company Hybritech. (Note: Free registration is required to read the article)

In 1978, Ivor Royston, then a young assistant professor studying immunology at University of California, San Diego, drove four investors to the airport. He had given them a tour of his lab, shown them how he made monoclonal antibodies, and told them he believed these new tools could be the future of disease diagnosis.

When the investors asked him how much it would cost for him and his technician, Howard Birndorf (now CEO of Nanogen) to start a small, independent laboratory and make antibodies for commercially interesting purposes such as hepatitis testing, Royston had no idea. He asked for $200,000.

Read the whole thing.

Posted by Paul Howard at 03:28 PM | Comments (0)

Yesterday the CDC and the National Center for Health Statistics issued a report that U.S. adults' average cholesterol levels have fallen to acceptable levels - thanks, apparently, to widespread statin use:

Results from a national survey, which includes blood tests, found the total cholesterol level dropped to 199. Doctors like patients to have total cholesterol readings of 200 or lower.

When the survey began in 1960, the average cholesterol was at 222.

In a sense, this isn't really news: U.S. heart disease mortality has been dropping for decades thanks to better treatments, as well as a sharp decline in smoking rates. But the news isn't all good: rising obesity rates may offset some of these gains.

Posted by Paul Howard at 10:35 AM | Comments (0)

The New York Times reports that the National Federation of Independent Business, a trade group for small firms, "warned policymakers on Wednesday not to impose new health-benefit obligations on small employers."

The group said in a statement of principles that "a health care system built on employer mandates or on play-or-pay taxes is unacceptable."

In its statement of principles, the federation called for universal health care, with a government safety net to help the neediest obtain coverage. But it opposed proposals to place health care under an umbrella of Medicare-style "single payer" financing. Government safety nets should not be allowed to "crowd out private insurance and care," the federation said.

Posted by Paul Howard at 10:24 AM | Comments (0)

December 12, 2007

The D.C. City Council, as my learned peer Ben Zycher pointed out earlier in the week, is lurching towards requiring licenses for pharmaceutical sales representatives, as well as banning drug companies from accessing information on what drugs doctors are prescribing.

The first move - licensing drug reps - is a silly idea, but probably entirely within their power. The second idea is equally silly, but less clearly legal.

For the moment, let's consider the drug licensing angle. One has to wonder exactly why the D.C. City Council is engaging in such petty ante politics. Drug costs are, overall, only about 10-12% of total health care costs; there is also some pretty good evidence that prescription drugs (including newer medicines) offset spending on more expensive kinds of health care (like hospital visits). Think, for instance, of AIDS drugs, which, while expensive, are tremendously cost effective.

Drug detailing is also helpful for doctors (it educates them on new treatments), patients (who benefit from such knowledge and free samples) and industry, who can distribute its unit costs over a larger volume of sales, which helps keep per-pill prices lower than they might otherwise be.

Generics are often very good bargains for patients and health plans - which is why insurers offer a number of incentives (think tiered copayments) for patients and doctors to prescribe them. But they aren't a cure-all, and sometimes the brand name drug is better.

Unless the D.C. city council intends on passing a mandatory generic substitution regime of some kind, it is unclear why making drug reps jump through a licensing process and sign a "code of ethics" would reduce the use of branded medicines.

It is also unclear why licensing is even necessary when the information reps convey has already been vetted by the FDA.

If fact, it is hard to see this legislation as anything more than bureaucratic grandstanding against a (momentarily) unpopular industry.

The Washington Post says that this move, if it succeeds, would be "a major blow to the prescription drug industry". This is a gross overstatement.

It would, however, be a major headache if companies had to train their reps to fit 50 (51, counting the hapless D.C. jurisdiction) different state licensing regimes, a nuisance which would only - wait for it - drive up drug prices.

Posted by Paul Howard at 02:10 PM | Comments (0)

Derek Lowe, over at the terrific blog In the Pipeline, mulls over the recent wave of Big Pharma downsizing:

Unfortunately, I don't see the wave of layoffs ending, although I can't see them continuing at their current pace, either. There are more large drug companies with problems than there are large companies with secure positions. The WSJ article, for example, has a graph of total head count at Pfizer over the last few years - what's that one going to look like after Lipitor goes off patent? But offsetting that, to some extent, will be the smaller companies. I continue to think that the pharma research workforce may be shifting away from the largest shops and toward younger companies.

I have just one question: When will the media start to call the industry Significantly Smaller Pharma?

Posted by Paul Howard at 01:13 PM | Comments (0)

I noted a few minutes ago that attacks on pharmaceutical patents by producers of generics have the effect, analytically, of shortening expected patent lives, and thus of reducing R&D investment and long-run competitive pressures in the drug market. Payments to settle such lawsuits thus are likely over time to prove salutary for consumers.

With the exquisite timing so familiar to fans of the Chicago Cubs, I now find in today's Wall Street Journal an article headlined "AstraZeneca Files Lawsuits Against Generic Drug Makers." So: Instead of paying off the generic producers, we now find Big Pharma paying the lawyers. This doesn't really change the original argument in my earlier post, but it does demonstrate convincingly that Medical Progress Today, the official blog of the Center for Medical Progress of the Manhattan Institute, remains on the cutting edge, today, tomorrow, forever. Even if we, oops, I get the direction of things backward on the rarest of occasions.

And let us bear in mind that the Director of the farsighted CMP---the inspiration for this font of wisdom---is none other than my esteemed colleague, Dr. Paul Howard. Gentleman. Scholar. Babe magnet. Connoisseur of thick steaks and fine whiskey. Bon vivant. Etc.

Posted by Benjamin Zycher at 10:58 AM | Comments (0)

Patents are valuable, often enough, and economic value attracts the sort of attention that honey elicits from bugs. And so whole industries evolve around legal challenges to patents, and the more valuable a given patent, the stronger the incentive to use the courts to redistribute wealth. Moreover, litigation is expensive, and the risk of losing a pharmaceutical patent to a challenger---to a generic drug producer in this context---analytically is equivalent to a shortening of the patent period expectationally. The process, therefore, reduces the expected returns to investment in the research and development of new medicines, and reduces as well the development of me-too drugs, that is, competition in the pharamceutical market.

And that is why the geniuses in Congress who want to limit the ability of innovative pharmaceutical producers to settle such lawsuits with payments to the challengers are utterly myopic in their view that such limits would increase (generic) competition and thus lower prices. In the very short run, maybe. But the increased challenges to patents would have the longer-run effect of reducing the flow of new medicines, and thus competitive pressures from them with respect to older, more-established drugs. That this is so obvious is the central reason that many in Congress cannot understand it.

Posted by Benjamin Zycher at 10:13 AM | Comments (0)

December 11, 2007

... is always top-down, particularly in that city of the exalted, Washington D.C. So what is it this time? "A Food and Drug Administration medical reviewer said it wasn't clear if consumers could safely and effectively use a proposed Merck & Co. cholesterol-lowering drug without a prescription." (Wall Street Journal, December 11)

And that just about sums it all up, doesn't it? Forget consultations between doctors and their patients. Forget the heterogeneous characteristics and needs of millions of individual patients. Forget the huge informational advantage engendered by ongoing experience, modern mass communication, and individual trial and error. Forget the reality that some very substantial proportion of prescriptions are for off-label uses. Sorry: The Beltway knows best, children---because it says so---and "safety and effectiveness" is one-size-fits-all.

It is not only inside the Beltway that this sort of arrogance is to be found, but it is the Beltway in which it is rewarded so consistently and in which it simply is more than a way of life. It is a mindset.

Posted by Benjamin Zycher at 02:00 PM | Comments (0)

A good fight is always fun to watch, particularly if it is only political blood that is being spilled, and it is flowing freely in the Democratic free-for-all in the context of health care reform. Senators Clinton, Edwards, and Obama are united in their policy preferences for "reforms" that inexorably will lead to a single-payer system of health care insurance and to all of the perversities attendant upon it. Anyway, one way to reduce the taxpayer cost---not the true economic cost---of such a system is to force those who otherwise would find health insurance not worth its cost to buy it anyway. They would pay more than the benefits they receive, and so would subsidize others.

Such an "individual mandate" for all is part of the Clinton and Edwards proposals, and for children in the Obama plan. So: How would the government enforce this requirement? Edwards is quite clear: He would require proof of insurance with the annual filing of income-tax returns, and in the absence of such documentation the IRS would automatically enroll the scofflaws in a plan. And if the freeloaders refuse to pay the premiums? Wages will be garnished! The IRS becomes ever friendlier!

Hillary, after having blasted Obama for not having a mandate, and thus not "covering" everyone, finally has been forced to admit, sort of, that a mandate is meaningless without enforcement, and that she too might consider garnishment of wages and the like. Obama, more honest than the other two---not an exacting challenge---has not responded with a proposal for expanded coercion, and indeed has not explained even how the mandate for kids is to be enforced.

So let us be very clear: Mandates will be hard to enforce, and so the cost estimates in the respective plans---for this reason and host of others---will come a cropper. Which illustrates an eternal truth: Government planning cannot work, never has worked, and always yields unexpected effects less than salutary. Will our crack journalists covering this issue understand any of this? Not a safe bet. Not at all.

Posted by Benjamin Zycher at 09:43 AM | Comments (0)

December 10, 2007

Well, not exactly the Beltway this time, but instead a member of the D.C. Council, David A. Catania, who without any doubt at all looks in the mirror and sees Senator Catania. After all, they all drink the same water. Anyway, Comrade Catania now proposes to license pharmaceutical sales representatives, in an effort to rein in "disreputable agents who drive up the costs of prescription drugs."

Got that? Restricting the supply of reps through licensing will reduce costs! And how will this bit of alchemy be achieved? Elementary, Watson: No longer will we have pharmaceutical representatives who can "mislead doctors and patients into buying the most expensive drugs on the market, shunning reasonably priced generics or drugs that could be just as effective." After all, sayeth the deep-thinking Catania, "the agents' salaries are dependent on sales, [so that] they sometimes give the wrong impressions about drugs and present themselves as medical professionals."

So there we have it. Doctors who are licensed are fools, but pharmaceutical representatives who are licensed are wise and scrupulous. Oh, by the way, since Comrade Catania seems not to propose a change in the way that "the agents' salaries" are determined, it is not quite clear how licensing would change their incentives. And speaking of which, incentives for deception are far weaker than Catania assumes, given that the reps and the pharmaceutical producers have ongoing relationships with the medical providers, so that deception now carries a real risk of damaged business tomorrow. After all, do the representatives not place some value on their credibility? And, of course, there is the FDA: Is Catania oblivious to the fact that the reps are not allowed to make claims not approved by the FDA? Perhaps Catania is generalizing from the record of dishonesty observed eternally in the world of politics---the D.C. government is not exactly a model of good-government progress---a possibility magnified by the view of reality shaped by a lifetime outside the real world.

More wisdom from Comrade Catania: "If [licensing] is good enough for cosmetologists, it ought to be good enough for the pharamceutical company." Catania, naturally, has this precisely backward: Just as market forces are quite sufficient to lead cosmetologists toward honest behavior, so the same is true for pharamceutical representatives, who have to deal with physicians and others who are not idiots. But Catania must truly believe that they are idiots, just as the political class believes that the rest of us are children rather than citizens. That we have to pay their salaries is a monument to the perversities of that sausage factory known as lawmaking.

Posted by Benjamin Zycher at 03:44 PM | Comments (0)

Last week, an FDA advisory committee voted by a narrow margin against an expanded label indication for Avastin, a targeted drug originally approved colon cancer, to treat breast cancer. The split decision (5-4 against approval) highlighted a broad split on the committee between consumer advocates and statisticians on the one hand, who want more evidence that the drug actually improves survival for cancer patients, and oncologists, who know that clinical treatment often outpaces the medical literature.

The Financial Times weighed in on the decision in its Lex column, Roche and the FDA:

Avastin remains a promising cancer treatment, and this stumble is by no means the end of the line...

The Avastin decision suggests that concerns may be growing, and the split between US and EU regulators widening. While four of the five oncologists on the FDA panel favoured approval, the statisticians and consumer advocates all voted no.

The problem is that cancer treatments are widely used "off-label" and in many different cocktail combinations; rather than trying to make a single yes-or-no decision based on single panel recommendation, the FDA should rely more on real world studies that track a drug's effectiveness on market over several years, where doctors may finding surprising new uses for it.

Posted by Paul Howard at 12:14 PM | Comments (0)

December 06, 2007

The Wall Street Journal today has a front-page article on the "grim prognosis" facing Big Pharma, as a number of big-selling drugs soon will lose patent protection even as the companies have fewer new products in the pipeline, as the FDA has become ever-more averse to purported safety risks, and as the costs of drug development rise sharply, in particular for late-stage safety-and-effectiveness trials. This article is certain to engender a lot of discussion and commentary: The firms are shrinking, and the article implies that fewer cures are in the offing, although the heavier implicit focus is on the issue of investment in pharmaceutical stocks and the like.

Yes, there are important problems facing the pharmaceutical industry, but color me far less pessimistic than the article implies. To begin, note what the article does not say, to wit, that research budgets are shrinking. That suggests that the capital market still views pharmaceutical R&D as profitable endeavors prospectively, regardless of what Moody's and the other rating bureaucracies say, green-eyeshade institutions that almost always look backward rather than forward.

Note as well that the recent decline in new drug introductions has a lot to do with the fact that PDUFA was passed in 1992, which had the effect of speeding the approval process significantly (for awhile, anyway), and a bow-wave of drugs was approved in the late-90s to early 2000s period. To some nontrivial degree, the more-recent slowdown has to do with an approval cycle driven by that early PDUFA experience.

The real news, which really is not news at all, is that the FDA and the rest of the relevant part of the Beltway are driven more than ever by powerful political incentives to avoid negative headlines. And so drugs are too safe and are approved too slowly, which means that more death and suffering occurs because beneficial medicines are held off the market too long. Perhaps more important, the industry is changing significantly because pharmacological science is changing: The era of individualized medicines is looming as a direct effect of advances in biological and genetic science. That may be bad for the bureaucrats, and in the short term for the firms forced to deal with them; but in the larger sense this technological advance will yield a huge advance in our ability to reduce human suffering, and no newspaper article can tell me that such a scientific revolution will not prove salutary in spades for Pharma's bottom line.

Posted by Benjamin Zycher at 11:03 AM | Comments (0)

The Wall Street Journal led with a front page, above the fold article today on how pharmaceutical companies' pipelines are running dry at the same time that many blockbuster drugs are going off-patent. Translation: Pharma's bottom line is about to take a big hit.

Some of the top-selling drugs in industry history will become history as patent protections expire, allowing generics to rush in at much-lower prices. Generic competition is expected to wipe $67 billion from top companies' annual U.S. sales between 2007 and 2012 as more than three dozen drugs lose patent protection. That is roughly half of the companies' combined 2007 U.S. sales. ...

The coming sales decline may signal the end of a once-revered way of doing business. "I think the industry is doomed if we don't change," says Sidney Taurel, chairman of Eli Lilly & Co. Just yesterday, Bristol-Myers Squibb Co. announced plans to cut 10% of its work force, or about 4,300 jobs, and close or sell about half of its 27 manufacturing plants by 2010.

Who is to blame? Companies for not being nimble enough, or the FDA for ratching up the standards for approving new drugs?

There's probably plenty of blame to go around, but there is something to be be said for the fact that FDA regulations act as both a floor and a ceiling on how quickly the industry can adapt its R&D processes to fit evolving scientific discoveries.

And the FDA - thanks in part to longstanding funding shortfalls and an ever growing work load - is locked into what can only be described as a risk averse and reactive decision making.

Consider this excerpt from the FDA's own report on its scientific shortcomings:

FDA's failure to retain and motivate its workforce puts FDA's mission at risk. Inadequately trained scientists are generally risk-averse, and tend to give no decision, a slow decision or, even worse, the wrong decision on regulatory approval or disapproval. ...

The lack of a trained workforce means that the FDA is ineffective in responding to emerging fields that require individuals and work teams with multidisciplinary skills built on very complex, highly specialized, often esoteric bodies of knowledge.

This aspect of the agency's problems - its inability to keep up with the rapid pace of scientific and technological evolution - undoubtedly impacts what projects companies pursue and what type of products come to market.

Congress recently passed PDUFA IV, which is heavily focused on solving perceived gaps in safety regulation at the FDA; but the FDA's own reflections go much farther and deeper, and point to a persistent "science gap" at the FDA that casts a long shadow over the industry and patient health.

Sadly, this isn't a problem that Congress looks set to address any time in the near future.

Posted by Paul Howard at 10:18 AM | Comments (0)

December 05, 2007

Yesterday, the Wall Street Journal ran an interesting article on how more employers, particularly at small companies, are charging employees with unhealthy life-styles extra for health insurance:

Financial penalties do motivate some workers to improve their health. Three years ago, Melissa Bergman, who works at Bank of Geneva in Geneva, Ind., was upset when her health insurance deductible rose to $2,500 from $500 the prior year. Her employer informed her that she could reduce her insurance deductible if she met health benchmarks in a screening for cholesterol, body mass index, blood pressure and tobacco use. Through this voluntary, supplemental plan, each test passed would earn her a $500 credit toward the deductible in her core medical plan.

While the 35-year-old earned one credit for being a nonsmoker, she learned in a screening her cholesterol was dangerously high. Within days, her father died of a heart attack, and Ms. Bergman went on a regimen of cholesterol-reducing drugs and exercise. Last year, she passed the blood-pressure test and this year she hopes to earn a credit for cholesterol, she says. "I'm eating lots of oatmeal."

Read the whole thing. Like drivers who are in frequent accidents, employees who smoke, or who are seriously overweight, drive up health care costs for everybody else. Since many - but not all - of these behaviors are within an individual's control, it makes sense to charge individuals extra (or give them extra discounts) to encourage them to embrace healthier lifestyles.

Ultimately, however, individuals should also control their own insurance policies with their own spending - through vehicles like Health Savings Accounts. This would still give workers an incentive to stay healthy (and keep monthly insurance premiums low) but would also alleviate the privacy concerns that come with having employers poking into their employees health status.

Posted by Paul Howard at 01:46 PM | Comments (0)

Researchers at Rice University and M.D. Anderson Cancer Center announced this week that they have tweaked Gleevec, a powerful leukemia drug, to reduce its risk of causing a rare but potentially fatal cardiac side effect.

Using a new bottom-up approach for rational drug design, researchers at Rice University and The University of Texas M. D. Anderson Cancer Center have re-engineered the powerful anticancer drug imatinib - best known by its brand name Gleevec - to more specifically target one type of cancer while potentially curbing a rare life-threatening cardiotoxic side effect. ...

"Imatinib actually affects an entire family of kinases beyond those examined here," said Gabriel Lopez-Berestein, a professor of experimental therapeutics at M. D. Anderson. "This is terrific proof of principle that we can enhance the selectivity of a drug by making a small but significant change in its structure and with precise synthesis and formulation of the new drug....It's a completely novel approach."

Kudos to the researchers for their groundbreaking efforts. For more discussion of the chemistry behind the discovery, see this article from the Royal Society of Chemistry. This is exacltly the kind of drug safety effort that industry and the FDA should be doing more to promote.

Posted by Paul Howard at 01:22 PM | Comments (0)

December 04, 2007

Well, now, surprise: Dennis and Kimberly Quaid have sued Baxter Healthcare, the producers of heparin, after their newborn twins were given large overdoses of the drug at Cedars Sinai Hospital in Los Angeles. The suit claims that Baxter was negligent in packaging because both the small and large dosage vials had labels with blue backgrounds, when the vials "should have been completely distinguishable [by] size and shape."

Of course, that might have engendered confusion with some other medicine(s), but, anyway, all pharmaceutical packaging, warnings, etc. must be approved by the FDA. So why aren't the happy parents suing the FDA? And, by the way, why have the Quaids decided not to sue Cedars Sinai, the staff of which made the error? Baxter had sent a letter warning health-care workers to to read the heparin labels carefully, but the suit argues that an "urgent" warning should have been sent. Anyone want to guess the likely outcome if everyone starts using "urgent" warnings so as to keep the lawyers at bay? Hint: Remember the boy crying "Wolf!"

The twins "appear to be doing well." But the lawsuit proceeds so as "to save other children from this fate. [The Quaids are] not looking for money." Right.

What is clear is that "similar" vials are not identical, and that if "blue backgrounds" are the only similarity, then the culpability of Baxter is far from obvious under any definition. But the litigation lottery proceeds apace, and shouldn't the rich and famous get to play too? That all of us ultimately will be the losers is not something that we can sue over.

Posted by Benjamin Zycher at 06:24 PM | Comments (0)

In the U.S. health care debate there are two big "villians" for left-leaning critics: the drug companies and the insurance companies.

For instance, Democratic Senator Hillary Clinton recently claimed that "insurance companies spend $50 billion a year figuring out ways to avoid paying claims." That's a pretty hefty number; but where is she getting her figure from?

Merrill Matthews, writing in the Wall Street Journal can't figure it out:

Currently, the private sector health insurance industry spends about $600 billion a year paying traditional health care claims for those under age 65. According to a major actuarial firm, the industry spends roughly $30 billion a year adjudicating those claims -- not "denying" them, but evaluating and processing them. There doesn't seem to be a solid number for the amount of claims actually denied, but several health actuaries estimate that amount to be around $3 billion.

Read the whole thing. It doesn't add up. I'm still waiting for the Washington Post and the New York Times to accuse her of using false statistics - an accusation both papers have leveled against Mayor Giuliani in his use of prostate cancer survival statistics in the U.S. and U.K.

For a blow by blow decsription of administrative costs in federal and private insurance programs, see this excellent report by my colleague Ben Zycher: Comparing Public and Private Health Insurance.

Posted by Paul Howard at 03:56 PM | Comments (0)

December 03, 2007

The FDA is floating a draft guidance that would allow companies to distribute medical journal articles to doctors that discuss off-label uses of their drugs or devices:

Under a draft "guidance" prepared by the FDA, drug and medical device manufacturers could distribute unabridged reprints of peer-reviewed research from reputable medical journals as long as the articles were not written, edited or otherwise "significantly influenced" by the manufacturers or people with financial ties to them. No other promotional materials could be attached to the reprints, which would have to be labeled as describing uses for the products that have not been approved by the FDA.

In 1997, Congress created a temporary exception allowing companies to distribute reprints so long as they submitted them to the FDA for advance review and had formally asked the FDA to approve the new use. That exception expired in 2006. In recent years, the marketing restrictions have been the subject of legal challenges on free speech grounds.

Who could argue with letting doctors have access to the exact same articles they could read for themselves in medical journals? That person would be U.S. Representative Henry A. Waxman:

Rep. Henry A. Waxman (D-Calif.), chairman of the House Committee on Oversight and Government Reform, said creating a new path to promote off-label uses could improperly influence doctors' prescribing habits. In a letter yesterday, Waxman urged FDA Commissioner Andrew C. von Eschenbach to suspend drafting of the new guidance and cooperate with a committee inquiry into the issue.

The draft guidance "would open the door to abusive marketing practices that will jeopardize safety, undermine public health, and lead to an increase in unapproved uses of powerful drugs," Waxman wrote.

"Abusive marketing?" So if a doctor runs across an interesting article and emails it to 200 of his colleagues that's ok, but if a drug or device company does the exact same thing it's unscrupulous marketing?

Perhaps Representative Waxman should talk a walk down to his nearest vitamin store, which happily advertises its wares to consumers with nary a peep from a doctor or any other "learned intermediary".

Keep in mind that this is only the tip of the iceberg for the multi-billion dollar alternative health industry where there are very few limitations on the information that companies can communicate directly to consumers - as opposed to doctors, who can accurately dissect the information provided to them by FDA regulated companies.

This is what we know now: doctors are already prescribing drugs "off label" based on anecdotes, research, and experience. The majority of off-label uses are probably beneficial, particularly for indications like cancer.

Allowing companies to contribute more to that conversation with peer-reviewed research only brings more information to doctors, and helps to standardize the practice by setting clear guidelines for how information is communicated.

Other intermediaries (like medical schools, the NIH, insurance companies, etc) can then set standards for evaluating that information, which they can also communicate to doctors.

At least one patient group weighed in on the Post article:

"There are nearly 30 million people in the United States affected by almost 7,000 known rare diseases," Dorman said. "Consequently, most of those disease states are treated off-label because there is no therapy specific for their disease. So getting that information to physicians, I would consider to be very, very important for the patient."

These are the people Representative Waxman ought to talk to before criticizing what appears to be an eminently sensible proposal from the FDA.

Posted by Paul Howard at 05:04 PM | Comments (0)

And so it continues: "Policy advisers for Clinton on Saturday said she would consider a proposal to garnish the wages of some U.S. residents who can afford health insurance but do not obtain coverage"---Long Island Newsday, 12/1.

So if we take the Democratic proposals and combine them---a rather crude approach, but not without predictive value---we will have mandatory enrollm