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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 enrollment in insurance plans, mandatory acceptance by insurance plans, mandatory checkups and other preventive care, mandatory employer-sponsored plans, and, of course, mandatory taxes to pay for all of this government compassion. Is anyone in the press paying attention to the implications of all this coercion?

Posted by Benjamin Zycher at 04:59 PM | Comments (0)

The Kaiser Foundation has a very nice round-up on the food fight now developing in the Democratic party between Hillary Clinton and Barack Obama over health care reform. The candidates are sparring over which one of them provides "universal" health insurance, as opposed to merely "comprehensive."

They are also competing to see who is most in the pocket of "special interests", i.e. drug companies and insurers. Good grief.

Check it out.

Posted by Paul Howard at 04:49 PM | Comments (0)

This past Saturday marked the 20th anniversary of World AIDS Day, so it is a fitting time to reflect on how far the battle against the disease has come since the late 1990s, when the first anti-retroviral drug "cocktails" came online.

In the U.S., AIDS deaths plummeted in 1997, after a combination AIDS therapy came online called HAART: highly active antiretroviral therapy.

But what is much less well known is how the rapid development and marketing of drugs to fight AIDS was made possible by a steady slew of FDA reforms in the late 1980s and early 1990s that encouraged the agency to "fast track" drugs that had promising preliminary evidence of efficacy against the disease.

Thanks to these reforms - and to a better scientific understanding of the AIDS virus - there is a steady pipeline of new drugs to help fight the disease.

In many ways, the fight against AIDS has become a model for other types of patient groups (think cancer) to push the FDA to be more flexible in its approval process for drugs to treat serious and life threatening diseases.

The question now is whether that approach will survive given the bruising the agency has sustained in the last few years over Vioxx and Avandia, and accusations that the agency has become too quick to approve new drugs.

More about this issue in future posts.

Posted by Paul Howard at 01:14 PM | Comments (0)

November 30, 2007

The holidays approach and the elves are busy in the North Pole suburb of Westwood. A friend who works at the UCLA Medical Center forwarded to me the following paean to silliness, distributed to all employees:

THE GREAT PEN EXCHANGE! Once again, UCLA is leading the way. This time in adopting new guidelines for our relationship with industry. To start, we're asking everyone to bring any pens (as well as mugs or other items) that bear the imprint of a medical company or product, to exchange for a brand new, spiffy UCLA Health system pen. Don't be left out! Starbucks $5 gift certificates to the first 100 participants at each location!

So, let's see here. Quite apart from their poor grammar, the august administrators of the UCLA Medical Center---world renowned for reasons that remain curiously obscure---apparently believe that their staff will sell out the interests of their patients for... a ballpoint pen. And how, precisely, would such perfidy proceed? Well, that is far from clear; presumably, the doctors will prescribe drugs ineffective for a given patient rather than an effective alternative because their morning coffee (not from Starbucks) was consumed from a mug bearing the logo of the former. Can the UCLA bureaucrats actually believe anything so stupid?

Well, the apparent answer is "Yes." Notice that this corruption on the part of the doctors would be observed not only in the case of new gifts---shiny pens and the like---but also for such goodies already received and presumably with the removable pen caps already chewed. Why would an old gift yield continuing corruption? The UCLA bureaucrats offer no clue. And notice as well that the mere presence of a gift is not enough; no indeed, it is the gifts that "bear the imprint of a medical company or product" that raise the concerns of the UCLA green-eyeshade types. Someone might see it! The reality, that any six-year-old would know, is that it is hidden gifts that, theoretically, might provide cause for concern; gifts that advertise themselves have the opposite effect.

And, by the way, if the coffee mugs are valued so highly as to yield corruption, why would any self-respecting, corrupt UCLA doctor sacrifice it for a lousy (oops, sorry, "spiffy") UCLA pen? Moreover, did UCLA buy the Starbucks gift certificates? Or were they donated? In either case, the potential for corruption in the UCLA paradigm is immense---after all, five dollars would buy only a small latte, but a whole packet of pens---and the only difference is the identity of those to whom the doctors will have prostituted themselves.

So there we have it. Pens, mugs, and other gifts not bearing logos are kosher; so, how about some cash in an envelope? Obviously---obviously---it is not real corruption that concerns the UCLA bureaucrats; can any adult actually believe that the science and art of their doctors' medical practices are affected by pens and tissue dispensers? Instead, their real concern is that modern journalists---political science majors who couldn't get admitted to law school---are sufficiently dumb to believe in so trivial a purported appearance of "corruption," and then to report it in dark verbiage on the front pages. Just imagine the headline: UCLA DOCTORS ACCEPT PENS FROM GIGANTICPHARMACORP AND THEN PRESCRIBE THEIR DRUGS! Experts and Officials Are Concerned. And so as this corner of the medical sector descends into utter inanity, the journalists have been joined by the deep thinkers among the UCLA administrators: spineless, stupid, and supremely self-satisfied in their moral superiority.

Posted by Benjamin Zycher at 09:29 AM | Comments (1)

November 29, 2007

"FDA Contemplating Crackdown On Salt"---Los Angeles Times, November 29, 2007.

So there it is: Bureaucrats, do-gooders, politicans, and the morally superior have their eyes on salt in processed foods, and next week the ingredients in cookies, and then the recipes for pies made at home from scratch. Talk about an obesity crisis: There is no limit---none whatever---to the meddling in individual choices available to those who believe profoundly in the infinite perfectibility of man; can an exercise requirement be far behind?

And let us not forget that the central justification for such nanny-statism is the public budget for health care: The government (actually, the taxpayers) pays for health care, and so the government has a regulatory interest in individual health. Forget for the moment the fact that the bureaucrats often enough get even the scientific questions wrong, or the larger reality that such judgments inevitably must be politicized. Will this dynamic be reduced if the U.S. moves ever closer to a system of government single-payer health care? Don't bet on it.

Posted by Benjamin Zycher at 12:07 PM | Comments (0)

November 28, 2007

The New York Times, aka the Journal of Record, published an editorial on Sunday entitled "The High Cost of Health Care," eliciting from readers a stream of letters to the editor published today.

One Reno DiScala makes the crucial point that health care reform faces "true complexities," and will never be achieved until "there is fundamental compromise," which faces obstacles from those "guided only by their political ambitions." Thank you, Reno!

Mr. Peter Hanauer weighs in with a plea for "Medicare for all," justified by the fictoid that "the administrative costs of Medicare are approximately 20 percent of [those] of private insurance," an utter non sequitur, and utterly incorrect anyway, as demonstrated in recent Manhattan Institute research located here. Please forgive me, Peter.

Melvin H Kirschner, M.D. finds single-payer government-run health care to be a panacea. No, I am not kidding: Dr. Kirschner likes "one form to file, one payer, one set of rules... and the assurance that everyone has health care coverage..." Why, then, are so many doctors fleeing Medicare and Medicaid? Alas, Dr. Kirschner is unavailable to comment further.

Professor Jan Warren-Findlow believes that the U.S. should "allocate our economic, medical, and research resources to provide good health to every American; then we can figure out how to do it cost-effectively." All right, then!

Mr. Allan Ostergren believes that we should raise taxes, and then allow patients to choose between a Canadian-style system and private insurance operating under a guaranteed-issue, community-rating system. He seems not to realize that only the sick would buy private coverage, and the government would get all the healthy people. A bonanza for the Beltway!

The ineffable Marcia Angell, M.D.---not economics Ph.D---opines that "some sort of single-payer system will be necessary to control costs, even if not sufficient," an observation utterly clueless about the difference between reported and hidden costs. That's our Marcia!

Joshua U. Klein, M.D., reminds us that "there's no such thing as a free lunch." Truer words were never spoken.

Mr. John A Rowland supports federalism: "The federal government should not develop a one-size-fits-all national program." (Applause track here.) Uh, will the states pay for this themselves? Or will they demand Uncle Sam's dollars? The question answers itself, but seems not to have occurred to Mr. Rowland. But he gets a B+ for class participation.

Mr. William L. Burge points out that "health care costs cannot be contained without addressing the legal issues," to wit, the tort system. Mr. Burge goes to the head of the class with Dr. Klein.

And finally, Kenneth A. Fisher, M.D. complains that too many die in costly intensive-care facilities. True enough; that is one outcome when patients spend other people's money.

And so remember: All this wisdom was published on one day in the NYT! Proving, of course, that it all was fit to print.

Posted by Benjamin Zycher at 02:57 PM | Comments (0)

There is a lot of worry in the policy and medical communities that the rapid increase in genetic testing tools will lead to insurance discrimination against people who have a genetic propensity for cancer, diabetes, or other diseases. Call it the "Gattaca" scenario.

I think that this concern is somehwat overblown; another way to look at the surge in genetic testing is as a potential market for insurers and other companies who want to tailor prevention and treatment strategies to consumers based on their personal health risks.

Take Aetna, which announced yesterday that it would offer genetic counseling services to members who may carry an increased risk of cancer:

Aetna (NYSE: AET) today announced that effective immediately it will offer members confidential telephone and web-based cancer genetic counseling services as a component of health benefit plans which include coverage for genetic testing. The services will be offered through Informed Medical Decisions, a national genetic counseling company staffed with board-certified genetic counselors with expertise in cancer genetic counseling.

A significant proportion of colorectal, breast and ovarian cancers are due to an inherited susceptibility. Prevention strategies are available to reduce risk, but concerns about a shortage of board-certified genetic counselors have made access to reliable information challenging for patients and physicians alike. Aetna is trying to facilitate informed decision making through member education, increased access to genetic counselors, and involvement of the member's primary care physician in genetic decision making.

In Aetna's current scenario, it has no access to the genetic information of its members. But, as the science of genomics advances, I could easily see a scenario when insurers will be able to offer customized benefit packages that include tailored genetic counseling and treatment services that prevent the development of diseases like cancer well before they become debillitating and expensive.

In this area, the interests of insurers and patients align quite nicely, particularly if consumers own and control their own insurance policies and have the option to stay with preferred insurers over the course of many years. (As they do now for 401K plans.)

Imagine this: when you choose an insurance plan you could check off a box (opt-in) to share genetic information with your insurer and physician who could then offer you a broad range of a la carte prevention and treatment services. Patients who stuck to their personalized prevention plans could then get discounts on premiums, drugs, etc.

Sounds like a win-win situation to me.

Posted by Paul Howard at 02:00 PM | Comments (1)

November 27, 2007

Reuters reports today that an FDA "medical officer" is publicly calling for the FDA to change its standards for approving new drugs. Currently, companies commonly test their medicines against placebos to prove that they are "safe and effective" for sale in the U.S. Dr. Robert Misbin would like new drugs to be tested against drugs for the same indication that are already on market:

"You can't really evaluate a drug in a vacuum; you have to evaluate it in comparison to something," Dr. Robert Misbin, a medical officer in the FDA unit that reviews diabetes drugs, said in an interview.

Misbin wrote that although the FDA doesn't have the authority to require that a new drug be superior to existing treatments, the FDA "is not required to have proof that a new drug is unsafe to deny approval."

This is a terrible, terrible idea.

What drug will the FDA require as the comparator? The leading drug in its class?

That's basically giving the market leader a monopoly, because no drug company is going to waste $1 billion and ten years developing a new drug candidate that might not get to market because of a competitor drug, i.e. companies won't know whether their drug is "saleable" until the head-to-head comparison is completed, a massive financial bet that no rational company would make.

And what population is the FDA going to require companies to test the drugs in? At what dosage? Drugs may have different benefits and risks for different populations; so what looks unsafe in one group might be a better drug for another group, or at a different dosage. The complications facing trial designs like this would be a nightmare, with regulators and competitors second guessing challengers every step of the way.

No one in the media ever seems to realize that Misbin's argument cuts both ways: not all drugs are equal, so, all things considered, you want more options not less so that when unexpected safety problems crop up you can switch patients to other alternatives.

It is true that the full benefit and risk profiles of some drugs may not be known for several years after they are on the market and used in large populations - this is precisely when rare safety signals pop up.

Instead of putting new hurdles in front of drug developers, we should be working on developing better tools - like safety biomarkers - to help companies develop safer drugs in the first place, and to give patients and doctors more guidance in how they prescribe drugs.

Misbin's proposal hits the bad idea trifecta: it's bad for patients, bad for medical innovation, and bad for the FDA, who would be in the position of defending monopoly profits for existing manufacturers.

Posted by Paul Howard at 12:38 PM | Comments (0)

Mr. John K. Iglehart is a national correspondent for the august New England Journal of Political Ideology, oops, Medicine, and why the NEJM needs a "national correspondent" is a question to which the answer is less than immediately obvious. Anyway, Mr. Iglehart has an editorial---sorry, article---in the November 22 issue entitled "The Fate of SCHIP---Surrogate Marker for Health Care Ideology," the central theme of which is captured wonderfully in this priceless passage:

President George W. Bush vetoed [a reauthorization of SCHIP despite the fact that] many legislators, a large majority of the public, major private stakeholders, and 43 governors strongly support expansion of the program. By contrast, in an effort to appeal to the conservative base of their party, the leading Republican presidential candidates agreed with Bush's veto---despite the fact that the program, though signed into law by a Democratic president, originated in a bipartisan compromise and was enacted by a Republican-controlled Congress.

It really, truly, absolutely does not get any better than that. Supporters are bipartisan, have a large majority of the public on their side, not to mention major private stakeholders, whatever that means, and 43---count 'em---governors who absolutely, positively are not influenced by the prospect of getting their snouts ever deeper into the federal trough. And the opponents? They are craven ideologues, pandering to their political base, and dismissive of the fact that SCHIP began as a great compromise passed by a Republican Congress.

Thus does Mr. Iglehart gloss over the problem of substitution of public coverage in place of private insurance with the assertion that "the compromise would have required states to prepare a plan to prevent families from enrolling children in SCHIP if private insurance was available to them." A requirement to prepare a plan! And if "available" private insurance is deemed by someone to be unaffordable? Can anyone possibly believe that this requirement would have reduced the crowd-out problem by even one family?

Iglehart simply repeats the budget numbers without any acknowlegement at all that the fiscal 2012 figures were fraudulent, as a means of reducing the official five-year budget projections. He ignores the longer-term problem of weak incentives on the part of public policymakers to feel constrained by the preferences of patients. Ad infinitum.

Anyway, you get the idea. Everyone wants their few minutes of fame, and so the NEJM simply cannot limit itself to medical science. Does this mean that the scientific articles also are politicized? It is hard to see how an editorial process fixated on politics can avoid that outcome.

Posted by Benjamin Zycher at 10:32 AM | Comments (0)

November 26, 2007

Public Opinion Strategies last month released some survey findings on Senator Hillary's health care proposals. A few excerpts:

1. 17 percent favor the proposal, 27 percent oppose it, and 56 percent have no opinion.

2. Among those who have heard "a lot" about it, 30 percent favor it, 47 percent oppose it, and 24 percent have no opinion.

3. Democrats favor it by 33 percent to 4 percent, with 62 percent offering no opinion. Republicans oppose it by 55 percent to 2 percent, with 43 percent offering no opinion. Independents oppose it by 26 percent to 9 percent, with 65 percent having no opinion.

So: One obvious inference is that relatively few are paying attention, and their eventual views are yet to be revealed. But the larger question is why the Hillary campaign is making so much of the health care issue; it looks very risky for them at best.

One answer is that they believe that they can change the polls as the campaign moves on. Are Hillary's political skills that fine? I am moved to doubt, but if I were smart, I'd be wealthy. Another is that they released their plan without a good sense of how it would be received, at least in early soundings. And, who knows? Maybe their focus groups were bad even by focus-group standards.

A third is that such general polls are irrelevant; perhaps among those voters who care deeply about health care as a policy/political issue---particularly in terms of the Democratic primary race---Hillarycare is a winner in early poll findings. This third hypothesis must be correct at least in part. A fourth is that the Hillary camp comprises idealists: Polls, schmolls, these are their principles and they will stand their ground. Oh, please...

An alternative is the Groucho Marx stance: These are their principles, and if others dislike them, they've got some more, to be revealed as the campaign unfolds. Anyway, we shall see. And people wonder why we view the Beltway game as so much fun.

Posted by Benjamin Zycher at 05:13 PM | Comments (0)

It has been brought to our attention that the comments section on the Web site was not working as advertised...actually, it wasn't working at all.

It is now working, so feel free to send us your praise, suggestions, arguments or complaints.

We reserve the right, however, not to publish anything that violates the high moral standards of the World Wide Web, or at least our very small corner of it.

Posted by Paul Howard at 02:16 PM | Comments (0)

Last week, just before Thanksgiving, the UN confirmed long-held suspicions that it's global AIDS estimates have been wildly off base for years.

The latest estimates, due to be released publicly Tuesday, put the number of annual new HIV infections at 2.5 million, a cut of more than 40 percent from last year's estimate, documents show. The worldwide total of people infected with HIV -- estimated a year ago at nearly 40 million and rising -- now will be reported as 33 million.

"There was a tendency toward alarmism, and that fit perhaps a certain fundraising agenda," said Helen Epstein, author of "The Invisible Cure: Africa, the West, and the Fight Against AIDS." "I hope these new numbers will help refocus the response in a more pragmatic way."

Epstein's comment that UN numbers may fit "a certain fundraising agenda" is a case-study in understatement. But this is about more than UN officers fudging AIDS numbers to squeeze more cash out of wealthy nations; it has shifted effort and money away from less expensive prevention strategies and towards more expensive drug treatment regimens.

The real question is how to stop or substantially slow the AIDS pandemic. And Helen Epstein explains eloquently why information and prevention strategies can help save lives when policymakers and NGOs have the courage to face the facts on the ground.

Of course, we should be working on both better prevention and treatment options for AIDS patients around the globe - but an ounce of prevention is better than a life-time of expensive AIDS drugs.

In the meantime, this is an excellent example of how often - and for how long - group think can derail sound thinking about health care.

Posted by Paul Howard at 12:02 PM | Comments (0)

November 21, 2007

In New Zealand anyway. A British man who moved to New Zealand has been told by officials that his wife is too fat to join him.---www.Telegraph.co.uk, 11/21/07.

Yes, you read that correctly. Mr. Richie Trezise "lost weight to gain entry to New Zealand after initially being rejected for being overweight and a potential burden on the health care system... [while] his wife... has so far been unable to overcome New Zealand's weight regulations."

Can anyone actually believe that the "burden on the health care system" criterion will be limited to aspiring immigrants? Or to New Zealand? No, my friends, with the expansion of government power comes the expansion of government control, and for health care it is inevitable that the politically unpopular will bear the brunt of rationing when demands exceed resources, as they inevitably must. The overweight. Smokers. The elderly. Those with conditions expensive and incurable. The unborn with, say, Downs syndrome.

Societies utterly humane and civilized can be driven toward perversity and worse in baby steps, and do not for a moment believe that it cannot happen here. As demands exceed resources under government health care, choices will have to be made, and there is no particular reason to believe that political processes will be constrained by a bias in favor of compassion, because more compassion for one must mean less for others. Such is the path toward which political appeals on behalf of "The Children" inexorably will lead.

Posted by Benjamin Zycher at 03:20 PM | Comments (1)

The august Los Angeles Times does it again: Yesterday's edition features a front-page op-ed by Ricardo Alonso-Zaldivar in which the glaring gap in the Republican candidates' health-care plans is revealed. To wit: The reliance on private insurance yields no guarantee that those without coverage will be able to obtain it, particularly in the case of those with pre-existing conditions, since insurers purportedly have obvious incentives not to cover such individuals.

And so the utter ignorance of the journalists is revealed yet again. It is government policies---in particular, constraints or proscriptions on underwriting (allocation of premiums in accordance with expected costs)---that lead insurers to avoid those with pre-existing conditions. In the absence of such regulations, premiums would be driven by competitive pressures to reflect actuarial reality, and there would be no reason not to cover people whatever their health status, except in the case of those with conditions so expensive to treat that they would not be willing to pay the actuarily-fair premiums. Perhaps such individuals are worthy of compassion and even subsidies; but that is not a very powerful argument for socialism in health insurance.

Such regulations are exacerbated by legal/regulatory mandates for coverage of a broad set of medical services, the effect of which is higher costs for coverage, particularly given the absence of interstate competition in health insurance. And the tax subsidy for employer-provided insurance makes it easier for legislatures to pass such mandates, as the attendant costs are hidden from the employees buying the coverage indirectly.

And so Mr. Alonso-Zaldivar's central argument, in this waste of fine newsprint, is the need for government regulation to ensure the availability of coverage. That it is government regulation that has yielded this problem in the first place is a reality with respect to which Alonso-Zaldivar is utterly oblivious.

Posted by Benjamin Zycher at 02:42 PM | Comments (0)

Personalized medicine is already well on its way in the field of oncology, where several drugs and diagnostic tests are targeted at the genetic mutations that lead to cancer.

The increasing synergy between cancer genetics and new medicines means that cancer treatments are more effective, and less toxic than ever before:

Genetic tests have taken their place alongside imaging equipment, biopsies and family history in helping doctors tailor treatments and make prognoses. The biological tests have broad implications for other branches of medicine - from cardiology to neuroscience - but it is in cancer where the technology has ventured the furthest the fastest.

Other commercially available tests can spot mutations in a small subset of lung cancers that a new class of targeted therapies can pierce with missile-like precision. Another test searches for genetic variants in colon cancer patients that make them resistant to frontline therapy. Still others search for a rare quartet of mutations that dramatically raise the risk of colon and reproductive cancers.

The field is growing by leaps and bounds - driven, at least partly, by the fact that cancer treatments are so expensive. By using targeted cancer drugs, we can reduce the use of wasteful treatments and increase survival. That's a win for everyone.

Posted by Paul Howard at 10:29 AM | Comments (0)

November 20, 2007

I think the answer is "both." Reuters reports that drugmakers speaking at a recent health conference downplayed the idea that personalized medicine - which for drugs means pharmacogenomics - is just around the corner.

Pharmacogenetics is not going to transform this market any time soon," said Jean-Pierre Garnier, chief executive of GlaxoSmithKline Plc.

"Let's be clear -- it's going to take 20 years plus. Does that mean you are going to have zero happening? No. It's already happening. But it is going to be very specific examples."

I'm not that pessimistic. Not because the science isn't hard, because the science is mind boggingly difficult, but because I think there will be discontinuous leaps in advances - early going will be very difficult, I think, for the next several years, but then payoffs will start to take off as scientists become increasingly adept at merging discoveries and advances from many different fields like bioinformatics and pharmacogenomics.

Single silo companies like drugmakers (with a few notable exceptions) may be late in coming to this realization because they aren't, typically, places where this kind of fertile mixing of disciplines gets done.

But the future lies in mixing computer chips, test tubes, and pills and with the companies who can successfully leverage IP from these new combinations of diagnostics and treatments.

Another note in favor of these new chip-tube-pill combinations: products tied to a validated diagnostic platform will have a market advantage because they can prove specific outcomes for patients using them, as opposed to previous generations of non-targeted medicines.

Posted by Paul Howard at 05:16 PM | Comments (0)

My colleague Ben Zycher and I attended a conference in D.C. last week on Transforming Health: Fulfilling the Promise of Research, co-sponsored by PhRMA and Research!America.

It was a fascinating event, but it underscored one word for me: Risk.

Academic researchers take risks by spending countless hours searching for new discoveries that may never pan out; companies spend hundreds of millions of dollars developing potential treatments that the FDA may never approve; and patients deal every day with health risks that accompany serious and life threatening diseases, and take more risks on side effects from medical treatment to treat those diseases.

But the patients, researchers and companies all know that quest for better treatments is worth all of the risks that must be bourne to bring them into existence.

FDA regulators, however, are not in the same boat as these other stakeholders. Their job is to avoid risks: avoid exposing us to risky drugs, avoid the risk of being criticized by the media or Congress when rare side effects turn up, and avoid the embarassment of being wrong when academics or others question their judgment.

These incentives drive the agency to be risk averse when evaluating new technologies and treatments that don't fit neatly into existing categories.

Can the FDA - in its culture, as an institution - adapt to the new sciences that are driving medical innovation, or will it remain risk averse, wedded to old formulas that are safe but that slow patients' access to more promising technologies and treatments?

It's a tough call. The science is going one way, but Congress is pushing the agency into a "safety first, last, and everything" mentality that is affecting how the agency approves new medicines.

Posted by Paul Howard at 01:48 PM | Comments (0)

November 19, 2007

As the presidential campaign unfolds in all its glory, I am reminded repeatedly of the profound wisdom and good sense of my esteemed colleague, Dr. Paul Howard. Gentleman. Scholar. Bon vivant. Connoisseur of thick steaks and fine whiskey. Babe magnet, as revealed by the incredible intelligence and charm of his wife, the fair Christina. And now it is revealed further that Paul is a public policy analyst of subtle perception and powerful foresight.

After all, Paul is the director of the Center for Medical Progress at the Manhattan Institute. But why Medical Progress, that is, health-care policy? It could have been a Center devoted to the protection of liberty and market processes in any economic sector exposed to the machinations of the Beltway, which is to say, any sector at all.

But Paul chose health-care policy, seeing before everyone else that it would provide full-time employment and a range of emerging issues virtually infinite, thus keeping us busy and out of the hoosegow. And precisely how do we know that this endeavor will provide full-time employment forever? Well, one need look no further than the newly-emerged issue of whether the Hillary campaign has some sort of nefarious information about her rival, Senator Obama, as reported by Robert Novak in a column Sunday. After a series of furious charges, countercharges, denials, non-denial denials, and similar salvos exchanged by the Hillary and Obama camps, the Hillary campaign, standing foursquare, finally came forth with the following:

Senator Obama knows that our campaign responded instantly with a clear denial. Senator Obama is manufacturing an issue to distract voters from a disastrous debate performance that revealed that his health care plan doesn't cover every American.

So there we have it. Everything---everything---leads back to health-care policy and "universal coverage". And I, Ben Zycher, microscopic cog (except for my waistline) in the great public-policy machine, am part of it! And whom can I thank for this? None other than my comrade in arms, Dr. Paul Howard! Gentleman. Scholar. Bon vivant...

Posted by Benjamin Zycher at 09:19 AM | Comments (0)

November 15, 2007

Investor's Business Daily has a fascinating article today on how one company, EHealth, is bringing health insurance into the Internet age.

Expensive, complicated and hard to get—that's all a lot of people know about health plans. But one company is trying to make getting health coverage nearly as simple as booking plane tickets on Travelocity.

"It's kind of amazing that we've been able to get where we are without a major competitor," said Chief Financial Officer Stuart Huizinga. "But we've found that it's a tough business. It takes a long time to build it."

But build it they have. Now, if only Congress would give individuals the same tax deduction for purchasing health insurance that employers have - and create a national market for health insurance - we might see the market for portable, affordable insurance options expand overnight.

Posted by Paul Howard at 02:49 PM | Comments (0)

November 14, 2007

Reuters reports that Brazil's "policy of haggling long and hard for lower prices for lifesaving AIDS drugs" (is that what you call threatening to break drug patents?) has saved $1 billion in government spending from 2001-05.

Amy Nunn and colleagues at the Harvard School of Public Health analyzed the costs of individual AIDS drugs in Brazil and found that generic drugs produced in Brazil were usually more expensive than similar drugs made elsewhere.

"Brazil's AIDS treatment program has been cited widely as the developing world's largest and most successful AIDS treatment program," they wrote in their report, published in the Public Library of Science journal PLoS Medicine.

Brazil isn't a wealthy nation, but it isn't a poor one either, with a GDP of about $1 trillion, and an annual defense budget (as of 2005) of over $13 billion.

Brazil could afford to pay more for AIDS drugs, but doesn't because it's easy (and popular) to bash the companies that make those "lifesaving AIDS drugs."

Or to put it another way, Brazil - all in the name of "public health" - has given companies 1 billion fewer reasons to invest in AIDS research

Posted by Paul Howard at 03:08 PM

November 13, 2007

The Fraser Institute, a free market think tank in Canada, has released its 17th Annual survey of wait times for medical procedures under Canada's single-payer Medicare system. From the Executive Summary:

Canada-wide total waiting time reached a new high in 2007 (continuing to hover near the 18-week mark)- and its level is high, both historically and internationally.

Medical research has shown that longer waits can lead to adverse consequences for cardiac patients. Furthermore, economists attempting to quantify the cost of this waiting time have estimated it to amount to $1,100 to $5,600 annually per patient (Cullis and Jones, 1986; Propper, 1990).

Posted by Paul Howard at 04:45 PM | Comments (0)

In an article in The New Republic, Jonathan Cohn argues that a system of universal (government) health-care coverage would not necessarily yield reductions in the investments yielding innovation in disease treatments and the like. After all, insurance companies paying the bills have weak incentives to pay for treatments yielding long-term benefits, because people change insurers constantly, while "the government, by contrast, has plenty of incentive to prioritize these sorts of investments."

Really? Insurers do not have incentives to respond to the preferences of their customers? And policymakers faced with budget pressures in the here and now have long time horizons? Please. Cohn repeats the me-tooism canard with respect to drug innovation---the Nexium/Prilosec episode rears its anecdotal head---and more generally confuses inefficiencies inherent in market forces with those engendered by such government policies as the tax subsidy for employer-provided health insurance.

Cohn fails to distinguish reported European health-care spending from the value of real resource use, two concepts very different because of the European implementation of broad price controls. He fails to distinguish very clearly between basic scientific research that is not patentable---the specialty of the NIH---and the development of actual products that treat medical conditions, an enormously expensive and time-consuming process that government institutionally is ill-positioned to perform. He invokes the "administrative waste" argument, demonstrated as incorrect in recent Manhattan Institute research. He ignores the certainty that government research investgment inexorably would become politicized. Much, much more could be said, but the central point is that the Cohn article is deeply flawed, and at best is the beginning rather than the end of debate.

Posted by Benjamin Zycher at 10:48 AM | Comments (0)

November 12, 2007

News accounts to date suggest that Merck may have found a way to contain the damage from its Vioxx litigation, particularly by insisting on strict standards for claimants eligible for monetary awards. From the Wall Street Journal:

Under the settlement plan, plaintiffs will have to show that Vioxx was taken for at least 30 days. The person on Vioxx must have suffered a heart attack or ischemic stroke -- one that involves blockage of arteries to the brain -- within 14 days of using the drug. Payouts will be lowered if the person had cardiovascular risk factors such as obesity or diabetes. Merck will set up two funds, a $4 billion one for heart-attack claims and a $850 million one for stroke claims.

Another key element of the settlement: paying off the plaintiffs lawyers.

The deal will only go ahead if 85% of eligible claims are enrolled. Plaintiffs' lawyers can only participate if they recommend the program to all their clients.

There could be a big payday for some plaintiffs' lawyers who led the litigation. Lawyers whose clients receive money from the settlement will pay an agreed-upon percentage to a legal-fees fund. A court-appointed committee will then disburse fees to lawyers who did the legwork on the litigation, with an individual firm's take depending on its efforts.

If 85% of the cases do, in fact, sign up for the settlment, Merck will have limited its liability to a fraction of some original estimates ($40-50 billion), allowing it to get back to the business of making medicines.

Are there any lessons to be learned here? It's too early to say for sure, but state (think: Texas) and federal tort reform efforts over the last 10-15 years (particularly Daubert standards on the admission of scientific evidence) may have helped, as well as efforts to prevent plaintiffs lawyers from bundling many dubious cases together in hand-picked state venues so as to bludgeon companies into early settlement talks.

Mostly however, Merck benefitted from the fact that the science was basically on its side and that its management elected to stand and fight, rather than just write a big check. By litigating many high profile cases to jury verdicts - that it won - Merck reduced the value of any eventual settlements and put the plaintiffs bar on notice that it was in for a fight.

Posted by Paul Howard at 11:48 AM | Comments (0)

November 09, 2007

The ineffable Paul Krugman today (NY Times) critiques the arguments against single-payer "reform" of the U.S. health-care system, by summarizing those arguments as such caricatures that his discussion itself truly is a caricature of itself. How does he summarize the arguments against single-payer socialism in health care? "No insurance, no problem." "It's the cheeseburgers." "2007 is better than 1950." "Socialized medicine! Socialized medicine!"

So there we have it: It's all eyewash. But now let us defer to the observations made not long ago by a prominent economist and observer of health-care reform policies: Under a single-payer system of health insurance, "the public sector... sooner or later [would] have to make key decisions about medical treatment... [and] health care---including the decision about what treatment is provided---[would become] a public responsibility."

And who wrote those words? None other than our friend Krugman, in an exceedingly rare moment of honesty (New York Times, December 26, 2005).

So: Once we agree that under a single-payer system health care services inevitably would be rationed, and that government bureaucrats would do the rationing, and that a number of other not-very-attractive effects inexorably would emerge, the arguments against health-care socialism begin to look a bit less trivial, don't they? What say you now, Professor Krugman?

Posted by Benjamin Zycher at 12:00 PM | Comments (0)

Paul Krugman, economist and columnist for the New York Times, has a column today that is a rebuttal, of sorts, to Gregory Mankiw's Sunday Times column.

Krugman is, as always, a model of reasoned argument and restraint. Wait, who am I kidding?

Take this analysis:

We're told, for example, that there really aren't that many uninsured American citizens, because some of the uninsured are illegal immigrants, while some of the rest are actually entitled to Medicaid. This misses the point that the 47 million people in this country without insurance are an ever-changing group, so that the experience of being without insurance extends to a much broader group - in fact, more than one in every three people in America under the age of 65 was uninsured at some point in 2006 or 2007.

Oh, and finding out that you're covered by Medicaid when you show up at an emergency room isn't at all the same thing as receiving regular medical care.

Actually, the point made made Mankiw and others is exactly that: the uninsured aren't a homogenous group; many are young healthy, and relatively affluent, and could afford to buy health insurance if they could find a reasonably priced product that fit their needs. Thanks to many burdensome and expensive state regulations, they can't. This isn't a problem with the private system, but a distortion of the tax system and state regulations. And the EMTALA regulations that require hospitals to treat anyone who shows up on their doorstep discourage people from buying health insurance or signing up for public programs like Medicaid.

Krugman goes on.

Excuse No. 2: It's the cheeseburgers.

There's a grain of truth to this claim: Bad habits may partially explain America's low life expectancy. But the big question isn't why we have lower life expectancy than Britain, Canada or France, it's why we spend far more on health care without getting better results. And lifestyle isn't the explanation: the most definitive estimates, such as those of the McKinsey Global Institute, say that diseases that are associated with obesity and other lifestyle-related problems play, at most, a minor role in high U.S. health care costs.

This is as close to Krugman gets to being fairminded. He admits their might be a "grain of truth" to the arguments about teenage preganancy and other issues affecting life expectancy, without deigning to engage any of the actual research. And he still derides the argument by saying "its just the cheesburgers."

What's his solution? Reign in the "huge overhead of America's private health insurance companies". Huge overhead?

Well, what does the McKinsey study he loves to quote actually say about administrative costs? It finds "excess" administrative costs in the U.S. of $98 billion, of which $14 billion is attributable to public programs (a fact that Krugman ignores entirely).

For those of you keeping count, that means the private sector, if you agree with McKinsey, accounts for $84 billion in "excess costs". That amounts to exactly 4.2% of the U.S.'s $2 trillion health care budget. And, as my colleague Ben Zycher explains, much of that cost goes towards activities highly valued by consumers and the market at large.

It should also be noted that there are enormous spending variations in Medicare from state to state, and even hospital to hospital, which do not correlate to quality; if anything, Medicare ought to be spending a lot more money on administrative costs than it is doing today.

Krugman's last point:

Excuse No. 4: Socialized medicine! Socialized medicine!

But the best way to counter scare talk about socialized medicine, aside from swatting down falsehoods - would journalists please stop saying that Rudy's claims, which are just wrong, are "in dispute"? - may be to point out that every American 65 and older is covered by a government health insurance program called Medicare. And Americans like that program very much, thank you.

Rudy is a big boy; and the cancer stats speak for themselves, as David Gratzer explains in this week's Spotlight article.

Comparing France and Germany, the "best of the foreign health care systems", to the U.S. is just disingenous. The U.S. isn't either country, and our populations and political systems are very, very different. It is just not an apples-to-apples comparison. And Krugman has nothing to say about the U.S.'s leading role in global medical innovation.

We should also note that although Medicare is popular, Americans are also very fond of their private insurance coverage. And Medicare isn't like any of the programs in socialized countries that Krugman loves. It doesn't have a global spending budget - and has massive unfunded liabilities as a result.

If Krugman really wants to slash U.S. health care spending, the first place he'll have to start is in Medicare. Let's see how "satisfied" seniors are with that.

Posted by Paul Howard at 10:11 AM | Comments (0)

November 08, 2007

ABC News, USA Today, and the Kaiser Family Foundation conduct a periodic poll on health care issues, and the findings in the most recent (September 2006) are fascinating. In particular, there is a question on satisfaction with the quality of the health care received by the respondents, of whom 87 percent have health-care insurance coverage, while 13 percent do not. Among all respondents, 89 percent are either very satisfied (52 percent) or somewhat satisfied (37 percent) with their health care. For those with coverage, the respective figures are 56 percent and 37 percent, totaling 93 percent; about 6 percent are dissatisfied.

This means that satisfaction with the quality of health care services actually received among the uninsured can be imputed to be 62 percent. Accordingly, about 37 percent of those without coverage are dissatisfied with their health care.

So: About two-thirds more of the uninsured are satisfied with their health care than are dissatisfied. And bear in mind that even the dissatisfied have access through emergency rooms and other facilities to health care services that are, to be blunt, world class. It may not be very efficient or convenient, but inhumane it is not.

Would someone please tell me why health care coverage for the uninsured in America purportedly is a crisis? Or is the real crisis the difficulty some face in terms of using this issue as a vehicle for wealth redistribution?

Posted by Benjamin Zycher at 01:47 PM | Comments (0)

November 07, 2007

The House and Senate majority leaderships announced today that negotiations continue over SCHIP reauthorization and expansion, and that efforts to forge a compromise attracting a veto-proof majority are "close." Apparently, proof-of-citizenship requirements have been the most contentious provision, and Republicans are worried about voting in opposition to their own leaderships and the white House.

So remember: It's all about the kids.

Posted by Benjamin Zycher at 06:47 PM | Comments (0)

The voters in Oregon rejected a ballot measure to increase tobacco taxes by 84.5 cents per pack to fund health care coverage for uninsured kids. The vote, in incomplete returns, was about 3:2 against. That's landslide country, folks. I wonder if the Beltway is watching in the context of SCHIP.

Posted by Benjamin Zycher at 12:25 PM | Comments (0)

November 05, 2007

The Centers for Medicare and Medicaid Services announced last week a final rule that will reduce Medicare physician reimbursements by 10.1% on Jan. 1, 2008, unless Congress acts to reverse the reductions, as reported by Congressional Quarterly HealthBeat (November 2). Under the rule, Medicare will pay $58.9 billion to about 900,000 physicians in 2008. CMS officials said that the agency "has no choice but to implement" the rule under current law.

And so just as with Medicaid, the single-payer squeeze on the providers now proceeds apace under Medicare, as politicians and bureaucrats respond to their powerful incentives to reduce budget expenditures at the expense of patients. The longer-run effect of this process is not difficult to predict: Physicians will retire earlier than otherwise would have been the case, fewer will enter medical school and generalized practice, more foreign and fewer experienced doctors will come to characterize medical practice; in short, quality will suffer. Medicare beneficiaries will find it increasingly difficult to find physicians willing to serve them. And so yet again we will come to experience the fruits of government compassion.

Posted by Benjamin Zycher at 06:03 PM | Comments (0)

The august Los Angeles Times ran an article Sunday by Charles Ornstein on his efforts to help his Mom pick a plan for her Medicare health care and prescription drug benefits, from among the thousands of Medicare Advantage plans and Medigap plans and Part D options and combinations available. The plans are characterized by significant differences in coverages, premiums, co-payments, and all the other attributes that collectively make up health insurance products for seniors.

Ornstein's exasperation is clear given the task of sorting through all the options to find the best one for his Mom. What is clear as well is the utter failure of both him and, as usual, the LA Times to see the forest for the trees: Thousands of options are available because the market---unlike the Beltway---understands and has incentives to respond to the myriad differences in preferences and conditions shaping the health-care choices of millions of American seniors. Would Ornstein be happier with one choice? Well, perhaps, if that choice just happened to be the one fulfilling his Mom's needs most fully. But what are the odds of that?

Ornstein is not alone in his failure to understand that the hassle of sorting through the offerings of the market are nothing compared with the hassle of dealing with government policies and agency bureaucrats who do not have customers to satisfy, and so whose central incentive is to cut budget costs. Would Ornstein be more pleased with a bureaucracy that simply will not spend dollars on given medical services for people older than, say, 75? Don't bet on it. But do bet on that very kind of outcome as a result of socialized health-care finance, if the U.S. ever is sufficiently misguided to adopt such a monstrosity.

Posted by Benjamin Zycher at 12:30 PM | Comments (0)

In the New York Post today, Dr. David Gratzer responds to his critics and points out that the latest data, from an unbiased source, supports his argument that U.S. patients with prostate cancer fare better than their counterparts in the U.K.

However, newer studies show a similar trend: Americans do better when diagnosed with cancer than their European counterparts. Since the publication of my City Journal essay, the prestigious journal Lancet Oncology has released a landmark study on cancer-survival rates. Its findings:

These data, recently released, are now the best available. They too confirm Giuliani's point: He was fortunate to be treated here.

Posted by Paul Howard at 09:55 AM | Comments (0)

November 02, 2007

Well, now, some unions and other pressure groups have started running ads targeting Republicans who voted against the new, improved, improved and new, old-wine-in-new-bottles version of SCHIP. "What if your daughter didn't have health coverage...? What if you had to work two jobs to make ends meet, but still couldn't afford insurance? Would you still back George Bush's vetoes?" (New York Times, November 2)

Sniff. Why, oh defenders of compassion with other people's money, is it the case that some working people cannot afford insurance? Could it be because of the regulatory mandates for this and that coverage that you have supported for years? Could it be because of the absence of interstate competition in health insurance plans, a barrier that exists because of your allies in the various state insurance regulatory commissions? Could it be because of the restrictions on underwriting and rating---the allocation of premiums in accordance with expected costs---in the absence of which insurance for most kids would be very cheap? Could it be because of "guaranteed issue" regulations---don't buy insurance until you get sick---engendering the worst kind of adverse selection problem?

Or could it be... all of the above? Well, yes. Emphatically. And have the unions and pressure groups supported all this meddling in the competitive market for health insurance? Ditto. And now they're blaming others for resisting another long step toward a system in which government pays for "coverage," squeezes the doctors and hospitals for "savings," and then squeezes patients as well with rationing, underinvestment in technologies, and restrictions on the services that patients may obtain. Anyone who actually believes that this political balderdash is for "the children" shouldn't worry too much about vetoes. The Tooth Fairy will come to the rescue.

Posted by Benjamin Zycher at 01:56 PM | Comments (0)

Last week, the House and Senate both introduced bills to create a national, government run drug plan for Medicare Part D, thus proving that there is no government program that can work so well - although Part D has had its problems - that Congress can't find ways to undermine it.

In principal, this sounds like market-friendly competition, right? After all, what's wrong with one more plan for consumers to choose from. The catch is that the government run plan will basically impose price controls on drugs - the companies are too dependent on the government for patents and FDA approval, and too vulnerable to the Congressional bully pulpit to withold drugs from a government run plan - and that will enable it to offer lower premiums to seniors.

For the industry, when the government "asks" for a price, it's an offer you can't refuse.

Over time, the Medicare run plan would siphon off seniors from privately administered plans, reducing profits to drug companies who supply vital medicines to seniors.

What's wrong with that? Lots. To start off with, it'll slow the pace of pharmaceutical innovation, leading to fewer new medicines even as tens of millions more Baby Boomers need more and better medicines for cancer, Alzhiemer's, diabetes, etc.

It may be good politics to bash the drug companies these days, but it's just plain bad for American health care. Competition works in Part D, and instead of finding ways to undermine market forces, Congress should be trying to improve them.

Posted by Paul Howard at 01:26 PM | Comments (0)

No, I'm not referring to the 80s sitcom Mork and Mindy, but to nanotechnology, the "engineering of functional systems at the molecular scale."

The Houston Chronicle reports that researchers at M.D. Anderson Cancer Center and Rice University have suceeded in using a combination of carbon nanotubes and radio waves to destroy liver cancer tumors in rabits - with no side effects.

In the experiment recounted in Cancer, the rabbits were injected with a solution of single-walled carbon nanotubes — hollow cylinders of pure carbon measuring about a billionth of a meter across — then exposed to two minutes of radio-frequency treatment. The result, researchers said, was the thermal destruction of 100 percent of the tumors.

"This is clearly a burgeoning area of research," said Dr. Len Lichtenfeld, the society's deputy chief medical officer. "Researchers still must figure out how to get nanotubes to search out and lodge in cancer cells, but this study is an interesting proof of concept."

The trick is to find a way to specifically target cancer cells, researchers explained, perhaps through bonding the tubes to "antibodies, peptides or other agents that in turn target molecules on cancer cells."

The technology has a long ways to go before it becomes primetime, but this "proof of concept" experiment shows that it is technology with a lot of promise.

Posted by Paul Howard at 01:09 PM | Comments (0)

November 01, 2007

My colleague David Gratzer has been drawn into a media fire storm over the Giuliani campaign citing a single stastic on prostate cancer survival from a long City Journal article David published last summer.

You can find the criticisms here, here, and here. David's rebuttal is here.

Clive Cook, at his Financial Times blog, takes issue both with Paul Krugman and Rudy Giuliani's ad - and his point (as David would be the first to admit) that prostate cancer care is a bad proxy for overall cancer care is well taken.

But what about David's fundamental point that U.S. cancer care is the best in the world, and well ahead of cancer care in the U.K.? Research would appear to bear him out:

Cancer Survival Rates Improving Across Europe, But Still Lagging Behind United States

New reports from EUROCARE suggest that cancer care in Europe is improving and that the gaps between countries are narrowing. However, comparisons with US statistics suggest that cancer survival in Europe is still lagging behind the United States. The reports are published online August 21 in Lancet Oncology and scheduled for the September issue.

One of the main messages from both reports is that in Europe, "for most cancers, survival has increased and between-country survival differences have decreased over time," notes an accompanying commentary by Mike Richards, CBE, from the United Kingdom's Department of Health. However, the differences between countries are not trivial, and "many more lives could be saved if the outcomes of all countries were brought up to the standards of the best" (ie, Norway, Sweden, and Finland), he comments. The United Kingdom in particular comes out badly in the tables, showing cancer survival rates that are among the worst in Europe.

I repeat: U.K. cancer survival rates are "among the worst in Europe".

Critics of U.S. health care can't have their cake and eat it too. They love to bash the U.S. system when the statistics play in their favor, even though two of their favorite statistics (infant mortality and life expectancy) are very poor standards for health system performance.

But where the U.S. excels, they ignore the evidence and attack people who point out an inconvient truth, as it were.

Still, if this debate draws more attention to U.S. standards for cancer care, more's the better.

Posted by Paul Howard at 01:07 PM | Comments (0)

The august NY Times reported yesterday that the Chinese chemical firm "Honor International Pharmtech was accused of shipping counterfeit drugs into the United States" even as it "was openly marketing its products in October to thousands of buyers [in Milan] at the world's biggest trade show for pharmaceutical ingredients."

Yeah, yeah, but so what? After all, the prices are low, and isn't that what really counts? So what's the problem? Actually, there isn't one, in the context of the long-running debate over the importation of foreign drugs subject to price controls overseas, except in the case of contagious diseases. If someone takes a fake or adulterated drug because the price looked good, well, isn't that really their problem, the issue of infecting others aside? The proponents of parallel trade in pharmaceuticals---again, importation of "cheap" drugs from overseas---fail even to consider that problem, in their rush to subsidize their constituencies at the expense of others.

More generally, they are keen to ignore all the problems---contagion, the dilution of brand-name capital and the resulting implications for trust in the health-care system, the inevitable horror stories for individual patients given adulterated drugs without any warning at all, the bonanza for the lawyers---as they pursue price "discounts" with no consideration of any adverse implications at all. And they are the ones demanding truth in advertising from everyone else. Have they no shame? That question answers itself.

Posted by Benjamin Zycher at 12:44 PM | Comments (0)

October 31, 2007

There's a rather silly article in the October 1 issue of Pharmaceutical Executive in which twelve "brandmeisters" weigh in on the issue of how Big Pharma can restore "trust" where it now is lacking or weak. The various commentaries offer the usual war-on-insomnia platitudes about not overpromising, whatever that means, constant communication, putting the customer/doctor/patient first, and blah blah blah.

Actually, competitive markets solved this problem ages ago: Investment in such assets as brand-name capital, the value of which collapses if the firm fails to live up to its promises, sends a clear signal to the market that the firm makes more money by behaving in a trustworthy fashion than the opposite. Advertising is the most obvious example, even given the constraints and mandates enforced by the FDA; that is why virtually all consumers, given a choice between a brand-name drug and its generic equivalent at the same price, would choose the former. Other examples are a long-term commitment to charitable endeavors, indicating that the firm is not a fly-by-night, construction of specialized facilities not easily transferable to other firms, etc.

And so yet again we find a reason that the political attacks on pharmaceutical marketing are mindless, even as we can be amused in supreme fashion by accusations of "misleading advertising" hurled by the permanent Beltway establishment.

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

October 30, 2007

It sounds so simple. Eliminate patents and exclusivity for new pharmaceuticals, substitute a system of government-determined prizes for innovation instead, and presto! We can preserve incentives for research and development investment in new and improved medicines, while avoiding the high prices attendant upon the patent-protected monopoly positions of drug innovators.

If only it were that simple in practice. Anything---anything---that government touches becomes politicized, and drug development is no exception. Under a proposal offered by Senator Bernie Sanders (I-Pyongyang), new drugs would be approved by the FDA and patented. But exclusivity would be a thing of the past; instead, a government board would dole out prize dollars from a fund in accordance with a list of criteria, the latter obviously subject to changes driven by Congressional whim. The criteria would include: the number of patients who would benefit from a new drug, the extra benefit compared to existing drugs, and the degree to which a drug is targeted to "vulnerable" populations, global infections, or neglected diseases.

So: No openings there for politicization of drug development, nosiree. Let's see. Who can determine, ex ante, the number of patients who would benefit from a drug? How would the extra benefit be predicted? Ex ante! What is a "vulnerable" population, and how big is it? Ad infinitum.

Follow-on drugs would get smaller prizes, apparently regardless of how much better their effects are compared to the original. Thus would the "me-too" principle be enshrined in federal law. Who would appoint the Board? How politicized would it be? And since no one product could get more than 5 percent of the fund, can it possibly be the case that the one-time prize would equal the present value of the stream of returns from a blockbuster drug?

These problems, and many more, are so obvious that it is easy to conclude that the real objective is an end to patent protection and temporary monopoly pricing, and thus a reduction in government drug spending. The obvious adverse effects on future drug development in terms of distortion and reduced returns? That's someone else's problem. Specifically, future patients, and to a far lesser degree, future policymakers. The current system, whatever its distortions and rigidities, at least is driven by market forces to some substantial degree, a highly useful condition not to be discarded too lightly.

Posted by Benjamin Zycher at 01:36 PM | Comments (0)

October 29, 2007

The U.S. government's main disaster-response agency apologized on Friday for having its employees pose as reporters in a hastily called news conference on California's wildfires that no news organizations attended.---Reuters, October 26

It really, really, really doesn't get any better than this. Among the questions posed by the "reporters" for FEMA deputy administrator Harvey Johnson was this beauty: "Are you happy with FEMA's response so far?" Well, Harvey, what say you? "[I am] very happy with FEMA's response so far."

Well, there's a shock. What is not shocking---not one iota---is the phoniness that permeates Beltway policymaking writ large, a condition far more threatening than the pseudo questions thrown at mindless bureaucrats by pseudo reporters.

Consider the ongoing debate over expansion of SCHIP. The current proposal is for extension of the program to families with incomes well over $60,000; that is, to the phony poor. There is the ongoing eligibility of SCHIP for adults, that is, phony children. There are the preposterous projections of tax revenues to be generated by the increase in tobacco taxation proposed as a vehicle with which to fund SCHIP expansion; in a phrase, phony revenues. There is the five-year projection of SCHIP budget costs, in which the projection for fiscal year 2012 is a number two-thirds lower than current spending, inserted just for purposes of making the five-years spending projection more palatable; in a phrase, phony budgeting.

And let us not forget the long-term effects of government health-care compassion, as certain as the sunrise: a degradation of quality and access, as budget pressures yield powerful incentives for rationing, underinvestment in new technologies, and the other perversities familiar in all single-payer systems. In a phrase: phony health care.

So: We have phony phoniness at FEMA, which will have no adverse effects at all, and real phoniness in health-care policy formulation, which will yield enormous costs and increased human suffering over time. Which type has drawn the attention of the Beltway? The question answers itself.

Posted by Benjamin Zycher at 11:02 AM | Comments (0)

Ladies and gentleman, we have a winner. Two of them actually. The Wall Street Journal has an entire editorial this morning devoted to my colleague Ben Zycher's study, Comparing Public and Private Health Insurance.

Enthusiasts for government-financed health care don't seem to mind playing Pangloss. All is for the best in the best of all possible systems, which would have the government as single payer, aka "Medicare for all." The frequent claim is that eliminating profits and private administrative expenses would more than pay for the cost of covering all the uninsured.

Well -- no, as demonstrated in a new study by Benjamin Zycher, a senior fellow at the Manhattan Institute and a former senior economist for the Reagan Council of Economic Advisers. He estimates that the real economic costs of moving to single payer would be at least twice those of today's semimarket patchwork.

And Investor's Business Daily has an adaptation of Peter Huber's City Journal article, Cherry Garcia and the End of Socialized Medicine:

Socialized medicine was a smart idea back when medicine was too stupid to halt infectious epidemics, discourage suicidal lifestyles or discern the perils in killer genes. ...

No two human stews are quite the same, however, and the problems they incubate are much less evenhanded than the ones spread by sewage and sneezing neighbors.

Taken together, Ben and Peter explain why there are powerful economic, scientific, and public policy rationales for more market incentives in health care.

Posted by Paul Howard at 10:22 AM | Comments (0)

October 26, 2007

Kathleen Johnson explains why the FDA is considering creating a new class of "behind the counter" drugs that "consumers could buy after consultation with a pharmacist." The practice is already widespread in Europe.

Other countries, including Britain, already use this system to dispense drugs that do not require sophisticated diagnosis and prescription.

This proposal would allow pharmacists to take on some tasks previously limited to physicians. Heavy lobbying by physician organizations at the federal and state levels has led to restrictive "scope-of-practice" rules that can't be justified on a clinical basis.

Bring it on. By moving more health care management out of expensive doctor's offices and into community settings and retail clinics, we can offer consumers more health care access at lower prices.

Posted by Paul Howard at 02:44 PM | Comments (0)

In a great Seattle Post op-ed, CMPI Vice President Robert Goldberg explains how health care competititon works for prescription drugs:

The Labor Department recently reported that the inflation rate for prescription drugs dropped to 1 percent over the past year. That's a 30-year low, well below inflation, and a salve for consumers used to price increases.

It's also no accident. Two big things changed in prescription drugs last year. One is a surge in the use of generics. The other is a fierce retail war among Wal-Mart, Publix and other retail-pharmacy giants, each seeking a bigger share of the market.

Goldberg concludes that "when competitive markets are allowed to function [in health care] -- prices respond favorably for consumers, just as they do in other sectors of the economy." The trick is getting to that point, which is what our national health care debate is all about.

Posted by Paul Howard at 02:32 PM | Comments (0)

SCHIP is back on Congress' plate, and the House yesterday passed a new version of the bill to extend schalami-schlice schocialism in health care to the middle class. Put aside the adverse implications for the budget. Put aside the adverse consequences---as certain as the sunrise---for the future quality of medical care and the advance of medical technology. Put aside the future rationing, dehumanization of the old and sick, and other blessings of government compassion.

Let us focus instead on the narrow issue of finance; whence the dollars---$20 billion of them per year---in the new bill? The proponents of SCHIP expansion claim that the increase in the tobacco tax in the bill---from 39 cents to a dollar per pack---will pay for this monstrosity. Oh, please. The resulting enhanced incentives for black-market cigarette sales, for purchases from Indian tribal lands, for internet sales, and the like will be powerful, and there is no chance---none at all---that the net revenues will prove to be those claimed. Under a broad set of assumptions, net revenues will be zero or negative, as untaxed sales reduce revenues not only from the new tax but from the existing one also. And this is true not only for federal tobacco revenues, but for state and local revenues as well, since the substitution of untaxed sales for taxed ones will affect all government budgets dependent upon the vices of smokers.

And so El Presidente W is absolutely correct to threaten a second veto over this finance issue, as well for a host of other reasons. Maybe Congress will override this time---or maybe not---but a stand for principle never hurts. In this case, if a stand against an inefficient tax intended to pay for more health-care schocialism is wrong, W shouldn't want to be right.

Posted by Benjamin Zycher at 12:59 PM | Comments (0)

There is a fascinating article on the front page of the Wall Street Journal today chronicling one doctor's rise and fall as an expert witness for plaintiffs against his fellow obstetrictians. The nub of the article hinges on the ubiquitious use of fetal heart monitors during birth, and whether misreadings of the device may cause doctors to overreact to apparent signs of fetal distress:

Obstetrics is one of the most sued medical specialties in the country, and its doctors shoulder some of the highest malpractice-insurance costs. "Fetal monitoring has become one of the tipping points in the evaluation of medical-malpractice cases," Dr. Schifrin says. "It's not the only factor." He calls his expert-witness work "the greatest education of my adult life."

Dr. Schifrin has testified against other doctors hundreds of times in the past three decades. In 2004, the American College of Obstetricians and Gynecologists censured Dr. Schifrin, for testimony he gave in a malpractice case. He later resigned from the organization.

The question the article doesn't answer is whether or not the use of fetal monitors is itself is an outgrowth of litigation pressures, i.e., whether doctors resorted to pervasive use of monitors to try and shield themselves from claims they didn't intervene soon enough when the fetus was in distress.

Now, the way our medical malpractice system works, doctors are sued when the plaintiff's counsel think they have a lucrative case, not necessarily when the doctor actually did anything wrong. For more information on how medical malpractice litigation can distort medical practice and one potential solution to the problem - dedicated medical courts - check out Philip Howard's excellent organization Common Good.

Posted by Paul Howard at 10:27 AM | Comments (0)

October 25, 2007

Like a horror-film monster that refuses to die, Congressional efforts to force Medicare to "negotiate" drug prices with the pharmaceutical producers---killed earlier this year---for the Part D drug benefit have surfaced again. In support of such efforts, Consumers Union and the Medicare Rights Center have issued a "report" finding that price discounts negotiated privately for Part D are smaller than those imposed by the federal leviathan under Medicaid.

Well, duh. The private-sector insurers and others administering the Part D drug benefit---pharmacy benefit managers---have customers who want both low prices and large formularies, that is, lists of approved drugs. The federal government, on the other hand, has not customers but instead interest groups fighting to get their snouts into the federal budget trough. And so the central incentive is to generate Part D budget savings in the here and now---applauded by other interest groups seeking increases in their favored programs---at the expense of formularies more restrictive. And if Part D patients become unhappy with that tradeoff? Go ahead: Write your Congressman. That'll show 'em.

Unlike our horror movie, in the production of which no actual humans were harmed, federal price negotiations for drugs will yield massive costs in terms of reduced life expectancies over time. Why? Because lower prices will reduce incentives for the research and development investments yielding new and improved medicines. It happens that I examined this issue about a year ago, and a conservative estimate of this adverse effect is a loss of about 5 million life-years annually. But fear not: Maybe the feds can negotiate with the viruses, cancers, and other sources of human suffering.

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

October 24, 2007

When last we checked, the advocates of expanded SCHIP eligibility to kids (and adults) in families earning up to 300 percent or even 400 percent of the poverty line were arguing that such low- or lower-middle income families simply cannot afford private health coverage.

Forget the fact that kids in the majority of such families actually do have private health coverage. Forget the fact that 300 percent of the federal poverty level is about $62000 for a family of four; and 400 percent translates to $82600.

No, what is really amazing is a letter just sent from Congressman John Dingell to HHS Secretary Mike Leavitt, in which Dingell "disputes the claim that the cigarette tax [proposed to finance the SCHIP expansion] would unfairly impact lower-income residents, citing government data finding that 60% of adult smokers have incomes above 200% of the poverty level." (The Hill, 10/24)

So there we have it. Two hundred percent of poverty is way too poor to be a cutoff for SCHIP eligibility, but at the same time is wealthy enough for a new tax. You just can't make this kind of stuff up. The Beltway is a world unto itself.

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

Duncan Currie has a good short article in the Weekly Standard today reminding his readers that America doesn't have a truly free market for health care, just a bit more room for market forces than currently exists in Europe and Canada:

To be sure, it is more market-friendly than the health regimes in Canada and Britain. But the U.S. also maintains a variety of federal and state programs-such as Medicare, Medicaid, and the State Children's Health Insurance Program (S-Chip)-to insure the elderly, the poor, lower-income children, and others. So the question is not whether Washington should introduce government management of health care, but whether it should expand government management of health care.

Traditionally, conservatives have advertised American health care as "the best in the world," and compared it favorably to Canadian- and European-style "socialized medicine." But over the past two decades, as Americans grew increasingly anxious about the cost and availability of care and insurance, Democrats proclaimed a national "crisis" and responded with sweeping reform plans. Republicans tended to deny there was a crisis, while appearing relatively comfortable with the status quo.

Currie hits the nail on the head: Republicans have been loathe to engage the Democrats directly on health care, preferring instead to snipe at their proposals from a distance. This tactic may not succeed for much longer, as middle class Americans see their paychecks squeezed by rising health care costs. Reform of some type is now an imperative.

Thankfully, as Currie notes, Congressional Republicans and their presidential candidates are finally offering serious reform plans of their own. Although it is long overdue, Americans are finally getting a meaningful debate about our national health care future.

Posted by Paul Howard at 11:48 AM | Comments (0)

October 23, 2007

USA Today reports today that both liberals and conservatives "are trying to find [state] ballot measures that will increase turnout among like-minded voters in the 2008 election," with a heavy emphasis on health care issues. So there we have it. It may be for The Children, but on the ground it's for wealth redistribution through popular majoritarian will. Is this a great country, or what? And when the economic sector represents something on the order of 15 percent of GDP, there's a lot of wealth to be redistributed and long-term damage to be done. So much for the kids.

Posted by Benjamin Zycher at 05:20 PM | Comments (0)

Derek Lowe, at In the Pipeline, blogs that the idea that pharmaceutical companies use bogus marketing to shovel me-too drugs into the marketplace was dealt a serious blow when Pfizer withdrew its inhaled insulin drug, Exubra:

The next time someone tells you about how drug companies can sell junk that people don't need through their powerful, money-laden sales force, spare a thought for Pfizer. The biggest drug company in the world, with the biggest sales force and the biggest cash reserves, couldn't move this turkey. People didn't want it, and they didn't buy it.

The flip side of this is that even the drugs that folks love to hate, the ones that no one can figure out why they do as well as they do, must be doing something for some people. Perhaps other, cheaper drugs would do something quite similar, and we can discuss cost/benefit ratios, but you couldn't sell them if people didn't feel that benefit in the denominator. Not many people felt it from Exubera.

I think the market is even more complex than that: plenty of very good brand name drugs have lost patent protection over the last few years (and many more will do so over the next few years), offering consumers increased access to very popular, and very effective, generic drugs. Consequently, they are less willing to take a bet on a new drug that may not have a clear safety or efficacy advantage over existing products.

Companies will have to combat generic competition by offering consumers innovative new products and packaging them with services that consumers need. (Think disease management programs; personalized updates on drug safety issues; or tips on how to combine medicines with diet and exercise.)

At the end of the day, using a prescription drug is about trust - trust between the doctor, the consumer, and the company making the product. In the future, building trusted brands will require companies to become more personalized and consumer-friendly, and less oriented towards the mass-market blockbuster drugs that the industry became enamored with over the last 20 years or so.

This isn't going to happen over night, but the old silos are clearly breaking down and Exubra's demise is just the tip of the iceberg in a a power shift away from companies and insurers and towards consumers.

Posted by Paul Howard at 03:16 PM | Comments (0)

October 22, 2007

The Wall Street Journal ran an article this morning ("Doctors Try Prepaid Plans") on how primary care docs are dropping out of insurance plans - both public and private - in favor of prepaid plans that offer unlimited access to basic health care for set monthly fees.

While specialists' incomes have held steady, family physicians and internists have seen their incomes shrink 10% because of flat or falling reimbursements. Over the past decade, their ranks have fallen dramatically and the number of medical students who are going into the discipline has declined by half, according to the American Academy of Family Physicians.

Prepaid plans aren't intended to replace more comprehensive coverage. Rather, physicians like Dr. Wood see them as filling an important gap in primary care. His main targets are individual patients with basic medical needs and employers who want to supplement costly, high-deductible plans.

The article could also have been titled "We're Mad as Hell and We Won't Take it Anymore." American health insurance is basically prepaid health care already, since employer-provided health insurance typically offers low-copays and deductibles for the vast majority of health care services.

But insurance companies compensate for these low usage fees by charging higher monthly premiums, squeezing doctors' fees, and policing claims ruthlessly. The outcome is a primary care system that is enormously bureaucratic and fraying at the margins.

Dr. Woods model - treating primary more care more like a gym membership - makes plenty of sense, since it focuses on inexpensive, protocol-driven care than can be offered at minimal cost while still giving patients more overall access.

What about low-income patients who might not be able to afford the $125 monthly fee? Allowing an individual tax deduction for health insurance would help make plans like this more affordable, as would giving Medicaid patients vouchers for prepaid health care, perhaps combined with a choice of catastrophic insurance plans and a basic savings account.

Who stands to lose from programs like this? Big insurance companies who don't like the competition, and speciality providers who depend on state mandates in comprehensive insurance plans (think: chiropractors) to subsidize their practices.

In any case, prepaid plans (along with retail clinics like RediClinic) are definitely a model that is worth exploring further.

Posted by Paul Howard at 03:52 PM

It's really quite amusing when you think about it. I refer to the time and effort on the part of the Beltway invested in expanding this balloon, squeezing that one, a little more on the gas here, a harder push on the brake pedal there, ad infinitum. So what is it this time? Well, Senator Susan Collins (R-Beltway) last week "introduced legislation that would prevent a scheduled $6.2 billion reduction in Medicare reimbursements for home health care services over the next four years.

"The cuts, scheduled to take effect Jan. 1, 2008, are part of a CMS restructuring plan that imposes limits on routine home health care services but increases funding for more clinically intensive home care."

So there we have it, as if it wasn't obvious all along: Single-payer health insurance leads automatically to a system in which the bureaucrats decide the correct prices for a vast array of health-care services, with unintended consequences difficult to perceive but certain to emerge. A little higher price here, a little lower one there, all in an effort to produce "efficiency," as well as wealth transfers among interest groups. There is a phrase for this: price controls. Welcome to the wonderful world of bureaucratized medicine, where even the most dedicated doctors and nurses cannot escape the Beltway's gravitational pull.

Posted by Benjamin Zycher at 03:29 PM | Comments (0)

October 19, 2007

Last week I wrote an op-ed on vaccine litigation for the Washington Post's Think Tank Town - specifically, on claims that vaccines are linked to developmental disorders like autism. The issue is a passionate one for many parents with autistic children, despite the dearth of scientific evidence supporting the link.

For anyone who wants more background on this contentious debate, the New York Times ran a terrific article on the subject in 2005. The last question in the article is the most haunting:

"It doesn't seem to matter what the studies and the data show," said Ms. Ehresmann, the Minnesota immunization official. "And that's really scary for us because if science doesn't count, how do we make decisions? How do we communicate with parents?"

The reality is that vaccine critics will probably remain unconvined by the science until there are more successful treatments for autism available. In the meantime, we must reign in the vaccine litigation juggernaut.

Posted by Paul Howard at 11:26 AM | Comments (0)

October 18, 2007

My esteemed colleague Paul Howard---man of letters, bon vivant, connoisseur of fine whiskey---notes below the supreme irony of Congressional complaints about bureaucratic meddling in medical practice, as Congress routinely passes laws forcing such meddling by the bureaucrats. Paul did not delve very deeply into the EPO case, but it is fascinating as well as instructive: Congress established overly generous reimbursement rates for EPO (anti-anemia drugs used heavily by cancer patients) use, which led to significant overuse in individual patients. And now Congress is complaining about efforts on the part of the bureaucrats to reduce this distortion. Let this be a warning of the perversities lurking behind every twist and turn were the U.S. to adopt a single-payer system of health insurance.

Posted by Benjamin Zycher at 04:01 PM | Comments (0)

See the FDA bureaucrats. See The Concern of The FDA bureaucrats. See The Concern of The FDA Bureaucrats About Safety. See The Concern of The FDA Bureaucrats About The Children. See The Concern of The FDA Bureaucrats About Safety For The Children. See The Concern of The FDA Bureaucrats About Safety For The Children Who Take Cold Medicine.

And see The Concern of The FDA Bureaucrats About Their Budgets. When it comes to Safety and The Children and Safety For The Children, nothing is too much. So we find that today begins a two-day meeting of outside medical experts addressing the crisis of cold medicine for use in kids aged 11 and under.

There is a crisis, isn't there? After all, "an analysis prepared for the meeting by an FDA medical reviewer said cold and cough products aimed at children younger than 6 has been tied to 'serious side effects, including death.'"

Wow. Really? These products have been sold for decades, with unit sales in the tens of millions or hundreds of millions each year. What sort of side effects? How many deaths? What other factors were involved? What are the implications of taking such products off the market: Would no treatment, or various home remedies, be better? Would a ban serve the interests of the kids or the lawyers?

It would seem that decades of experience and the bottom-up choices of millions of parents might provide evidence a teensy weensy more powerful than the opinions of ideologues with axes to grind, bureaucrats with budgets to protect and Congressional wrath to avoid, and newspaper editorial boards with ignorance to peddle. But... it's for The Children. And safety for The Children, a Beltway twofer if ever there was one. And that trumps everything, except the wellbeing of the kids themselves.

Posted by Benjamin Zycher at 03:14 PM | Comments (0)

Undoubtedly, there are better and worse single-payer health care systems, with varying degrees of access to private health insurance and consumer choice (i.e., France, Germany, Switzerland). But the NHS in the U.K. is in a special category all its own.

From the Christian Science Monitor:

On the eve of his election victory in 1997, Tony Blair famously declared that Britain had 24 hours to save its derelict National Health Service.

Dr. Lister says government-imposed targets have instilled a commercial culture, resulting in "perverse" imperatives like cost-control and "productivity" driving decisionmaking in hospitals. "It's the burger-bar style of efficiency – the more you can do with fewer staff the better," he says. "But patient safety seems to come at the bottom of the list.... The Hippocratic oath has gone out of the window."

It is true that cost-control and productivity are hallmarks of markets, but so are quality and customer service, two attributes that are distinctly missing from the NHS. But they have government mandates in abundance, apparently.

Posted by Paul Howard at 02:40 PM

A dispute is raging in Congress, and in the media, over a recent CMS decision that limits reimbursements for drugs that can be used to boost oxygen-carrying red blood cells in cancer patients.

Several members of Congress are floating legislation that would overturn CMS' decision, and some consumer groups, reports The Hill, are telling them - politely - to butt out.

Led by the Center for Science in the Public Interest (CSPI) and the Consumers Union, the groups on Tuesday weighed in on one of the battles being waged between lawmakers, the Centers for Medicare and Medicaid Services (CMS) and powerful interest groups. At stake are the medicines — called erythropoiesis-stimulating agents but more commonly referred to as EPO or ESAs — used to treat anemia in chemotherapy and kidney dialysis patients.

Last month, Reps. Anna Eshoo (D-Calif.) and Mike Rogers (R-Mich.) introduced legislation to overturn a CMS decision to restrict Medicare coverage of the anemia drugs. CMS's "national coverage determination" in July followed a March decision by the Food and Drug Administration (FDA) to require on the drugs' labels a strong "black box" warning about serious or fatal side effects when the drug is used at high levels.

Now, specifics aside, the irony here is thick enough to cut with a knife. Congress interferes with the practice of medicine all the time, and plenty of lobbying groups encourage them to do it. As government funding for health care grows ever larger, the temptation to micromanage health care funding in favor of one group or treatment (think generic v. branded drugs, or Congress' perennial habit of yo-yoing physician's fees in Medicare) will only increase.

Regina Herzlinger discusses this phenonomenon at length in her book Who Killed Health Care?, and it is as inevitable as the Defense Department writing endless pages of specs for defense contractors.

In the case of health care, however, the interests of patients and payers (and policymakers) don't line up nearly as well as those of soldiers and defense contractors. What is the "right" amount of EPO?

That depends on the patient, her condition, and her doctor's judgment. And no consumer group, Congressional committee, or CMS rule (no matter how well intentioned) can possibly come up a single rule that covers all particular cases.

And EPO is only the tip of the iceberg.

Posted by Paul Howard at 12:43 PM | Comments (0)

October 17, 2007

George Mason economist Tyler Cowen has a bullet point list of how to debate health care. Everyone should take notes:

1. American health care outcomes look much better once we adjust for race and other demographic factors, including violence and car crashes. Some groups -- such as Asian-American women -- have remarkably good health care outcomes.

4. America has a different structure of interest groups. and therefore a single payer system in the United States would not operate as does a single payer system in other countries. It would more likely favor the interests of doctors and insurance companies, for a start.

Tyler makes a bunch more points, and they're all worth reading. A big hat tip to Instapundit, which, as usual, gets to these things first.

Posted by Paul Howard at 04:23 PM | Comments (0)

I try to get out. And they pull me back in. Here I am in New York, minding my own business, bothering no one, tipping generously, enjoying corned beef, trying to forget for a few days the policy insanity that is The Golden State, shunting to the back of my mind, however temporarily, that former disciple of Milton Friedman, our own Arnold The Governator.

No such luck. Having vetoed the "universal coverage" bill passed by the Democratic-controlled Legislature, on the grounds that it placed too much financial burden on employers, the Legislative leaders have declared war: Arnold's proposal---to require individuals to have insurance, to establish some sort of minimum set of insurance benefits, to implement the whole panoply of credits, subsidies, and other machinations without which any such proposal would be an utter nonstarter---is dead on arrival.

Why? Because "It's not real reform, because it's requiring families to get insurance, but it's not making it affordable for them." And: "The only way you get a health care plan done in this country is making it more affordable, not less... but they chose to make sure the middle class bears the burden and not business."

Can it possibly be the case that people actually think this way? That imposing the burden "on business" will not affect employment and wages? That "universal coverage" will not lead inexorably toward restrictions, limits, rationing, and all the other tools with which big, blundering government attempts to deal with rising costs? That "affordability" for insurance premiums automatically means price controls and a gradual government takeover? Which, in turn, will lead to real fiscal ruin?

Well, apparently they do. Which is why I am enjoying my few days here in New York, where, apparently, fiscal sanity reigns supreme, where the media, the politicos, and ordinary citizens actually understand how markets work, and where such silliness would be laughed out of the room as a matter of course. Wouldn't it? I think I'll have some more corned beef.

Posted by Benjamin Zycher at 02:46 PM | Comments (0)

My colleague Ben Zycher spoke this morning at a breakfast symposium on the release of his new report Comparing Public and Private Health Insurance: Would A Single-Payer System Save Enough to Cover the Uninsured?. I'll let the report speak for itself (and let Ben's op-ed, which we've posted as this week's Spotlight speak for him), but the highlight of the breakfast forum was listening to the exchange between Ben, and his commentator, June O'Neill, former CBO director.

During her comments Dr. O'Neill pointed out that it is very difficult to measure administrative costs in single-payer systems because of price controls, i.e. the government's response to the question "how much does this cost" is basically "it costs whatever we damn well say it costs", which produces enormous market distortions - like doctors refusing to accept Medicare or Medicaid patients, or opting out of the profession altogether.

She also pointed out that physicians in Medicare have responded to price controls by gaming the system: i.e., overprescribing certain procedures to make up for the fact that they are undercompensated for their services. In other words, they make up at the back end what they are losing at the front end.

She also took issue with the metrics that supporters of single-payer systems like to say show how poorly U.S. health care does versus, say, Canada. Higher infant mortality rates in the U.S. are a factor of more teen births, which has nothing to do with health care per se.

Dr. O'Neill also noted that lower life expectancy in the U.S. is a product of many more accidents and homicides here than in other OECD nations - also not a product of the health care system. In conclusion, "health status to a large extent is due to [individual] behavior" not to the performance of the health care system.

But doesn't the U.S. spend too much on health care compared to OECD countries? It's hard to say. Other countries set caps on total spending that only rise (as in the U.K. and Canada) when the backlash against health care rationing becomes politically unpalatable. In other words, it's very likely that those countries are spending too little on health care vs. the U.S.

This mornings exchange showed that, under a full accounting, the U.S. is probably doing much better on the health care front than many critics give it credit for.

Posted by Paul Howard at 11:32 AM | Comments (0)

October 16, 2007

The National Cancer Institute released a study yesterday reporting a continued decline in cancer mortality rates. The New York Times reports:

Death rates from cancer have been dropping by an average of 2.1 percent a year recently in the United States, a near doubling of decreases that began in 1993, researchers are reporting. ...

Much of the progress comes not from miracle cures, but from more mundane improvements in prevention, early detection and treatment of some of the leading causes of cancer death - lung, colorectal, breast and prostate tumors. Years of nagging and pleading by health officials are finally beginning to pay off, experts say, in smoking cessation and increased use of mammograms, colonoscopies and other screening tests for colorectal and prostate cancer.

The report also found, however, that there were disparities in cancer mortality among certain subpopulations - due, it seems, to demographic factors and isolation from high quality health care.

This is the challenge of American health care: ensuring that the excellent care that most Americans receive is accessible to all Americans. This is one thing that all health care pundits, liberal or conservative, actually agree on.

Posted by Paul Howard at 09:35 AM

October 15, 2007

Meanwhile, on the other side of the pond, some U.K. patients have resorted to pulling their own teeth because they can't find a NHS dentist to for dental services:

More typically, a lack of publicly-funded dentists means that growing numbers go private: 78 percent of private patients said they were there because they could not find a National Health Service (NHS) dentist, and only 15 percent because of better treatment.

Overall, six percent of patients had resorted to self-treatment, according to the survey of 5,000 patients in England, which found that one in five had decided against dental work because of the cost.

Yes, but these people are missing the point: health care in the U.K. is free. Didn't they watch Sicko?

Posted by Paul Howard at 03:11 PM | Comments (0)

According to the Canadian think tank the Fraser Institute, health care wait times in Canada are at an all time high:

"Despite government promises and the billions of dollars funnelled into the Canadian health-care system, the average patient waited more than 18 weeks in 2007 between seeing their family doctor and receiving the surgery or treatment they required," said Nadeem Esmail, director of Health System Performance Studies at the Fraser Institute and co-author of the 17th annual edition of Waiting Your Turn: Hospital Waiting Lists in Canada.

The 2007 survey found the total median waiting time for patients between referral from a general practitioner and treatment, averaged across all 12 specialties and 10 provinces surveyed, increased to 18.3 weeks from 17.8 weeks observed in 2006. This was primarily due to an increase in the first waiting period, between seeing the general practitioner and attending a consultation with a specialist.

You can access the full report here. Will this affect Canadians preference for their single-payer system? Unlikely; universal health care is a point of national pride for Canadians that sets them apart (or in their view, above) their U.S. cousins.

What is ironic, however, is that the Canadian commitment to health care equality is honored more in the breach than in reality with wealthy and/or politicially savvy Canadians visiting private clinics or going abroad for treatment even as some American pundits praise health care equality in the Great White North.

Says, Jonathan Cohn in the New Republic:

One way to think of Canada is that it rations its care in a more egalitarian way than we do. It's a one-size-fits-all, single-payer system, so everybody is subject to the same limitations. Here in the United States, we have enormous disparities, where people with insurance tend to have pretty good access to care while people without have lousy access.

This is a rose colored reading of the Canadian reality, highly dubious given the growing popularity of private clinics there. But how do the U.S. and Canada fare in a head to head comparison? Unbiased reports are hard to come by, but one economist, June O'Neill, recently published a paper at NBER that found that the U.S. actually fares quite well on equity grounds with Canada, while offering superior innovation.

Every health care system has its problems, of course. And, as Cohn correctly notes, American health care is rationed by price, while Canadian care is rationed by political horsetrading (on spending) and non-price contstraints (like wait times). The question is, would Americans tolerate these kinds of constraints? The answer, I think, is no.

Posted by Paul Howard at 02:05 PM

October 13, 2007

That's the forthcoming mantra from the usual suspects: Medicare For All, as a shorthand political pitch for a single-payer system of health care socialism, oops, wealth redistribution through the health care system.

They don't know how right they are. Federal spending on Medicare, excluding earmarked payroll taxes and premium payments, now consumes 12 percent of federal general-fund tax revenues. Without any changes in tax or entitlement policies, that will rise to 21 percent by 2020---only about 12 years from now---34 percent by 2030, and almost 50 percent by 2040. That last year is about 32 years from now; does 1975 seem all that far in the past?

Maybe we can tax our way out of this fiscal mess. If the payroll tax is not increased, other federal tax rates will have to rise by 25 percent. If the payroll tax is increased, a reasonable estimate is that it would have to double or more, while other federal tax rates would have to rise by 13 percent. What would the economic consequences of such tax increases be? Anyone? Anyone?

If, on the other hand, premiums are increased to cover the rising costs of Medicare---remember, we are talking only about budget costs, shunting aside all the other perversities attendant upon single-payer health insurance---premiums would consume over 30 percent of an average retiree's Social Security benefits in 2020, and over 50 percent by 2030.

And so the "Medicare For All!" slogan is ironic indeed, as all of us in the absence of reform will suffer the economic consequences of the Medicare entitlement monster. Reform? What's that? What much of the the Beltway political class wants instead is a large expansion in health-care entitlement "coverage" and spending, so as to increase dramatically the dependence of the middle class upon government. Who will pay for that? The question answers itself. And so those who argue that America, as the wealthiest nation on earth, is morally deficient because it lacks single-payer "universal coverage," ought to recognize that those two conditions are not independent.

Posted by Benjamin Zycher at 10:39 AM | Comments (0)

October 12, 2007

The Wall Street Journal ran an article today on how some pharmaceutical companies have struck a deal with penny-pinching European governments: If you use our drugs, and they don't work, we'll refund your payments.

Johnson & Johnson has promised to reimburse Britain's National Health Service when patients don't respond to the U.S. company's blood-cancer drug Velcade, in a deal expected to start later this month. In France, J&J has made another agreement on its schizophrenia treatment, Risperdal Consta, offering to pay back the French health-care service some of the money it spends on the drug if tests don't show the injectable medication helps patients stay on regular doses.

Drug companies are offering these deals instead of simply lowering prices in part because they are fearful of setting precedents that would cause insurance payers world-wide to demand price cuts.

In theory, this is a good idea, particularly if it gives European patients more access to cutting edge medicines. In practice, European regulators are under tremendous pressure to cut health care spending and are likely to make these kinds of agreements as restrictive as possible.

Anders Sandberg, at the Center for the New Europe, put it like this:

Risk sharing and refunds seem to be the obvious approach, both to help contain costs and to stimulate better medical targeting. But it is necessary, largely as a result of the extent to which governments artificially set drug prices and create potential drug monopolies by declaring single treatments cost-effective. Since drug prices often are set more due to political reasons than actual efficiency and demand they do not accurately reflect cost-effectiveness. ...
there is a very real risk that value based pricing could become yet another area for political meddling rather than a way of paying the right price.

If this works out, I would like to propose another new policy: if government programs fail to perform as promised, taxpayers should get their money back. After all, what's good for the goose...

Posted by Paul Howard at 02:53 PM | Comments (0)

Arnold Kling has got a very interesting book review up on TCS Daily on Sharon Brownlee's book "Overtreated", where he says that the solution to poor standards in health care is not more regulation, but less:

Our system for licensing doctors, nurses, physical therapists, and so forth, makes it very hard to rationalize and improve our health care delivery system. If you wanted to make McMedicine really work at delivering quality care at low cost, you would economize on the use of highly-educated professionals. Instead, you would use technicians and trained apprentices. You would attain the trust of consumers by earning an overall corporate reputation for reliable service, not by having each employee display a sheepskin on the wall.

The point is that getting the advantages of McMedicine may not be a matter of sheer collective will, as Brownlee would have it. Instead, it might require radical deregulation of medical licensure and practice regulations.

Read the whole thing. Hat tip: Instapundit.

Posted by Paul Howard at 02:47 PM

Physicians are currently using two different drugs to treat a degenerative eye disease that commonly affects older Americans. One of the formulations has been explicitly tested for this purpose. The other is being used "off-label," i.e., based on a physician's expert judgement that the drug will be effective.

Now here's the rub: both drugs are both from the same company, Genentech, and are variants of the same active ingredient. Says the New York Times:

Lucentis is approved to treat wet age-related macular degeneration, the most common cause of blindness in the elderly. But it costs about $2,000 a dose, with treatment needed as often as once a month.

In a letter yesterday to retina specialists, Genentech said that its wholesalers would no longer provide Avastin to compounding pharmacies - companies that under sterile conditions can divide a vial of Avastin into tiny portions for use in the eye. The company said the distribution change would take effect Nov. 30.

Now, companies limiting the use of their own drugs is never a good idea, PR wise.

But criticism directed at Genentech over their pricing of Lucentis does point out a certain perversity of current FDA labeling guidelines. Companies are not allowed to advertise or otherwise encourage off-label uses of their drugs, which means that they are forgoing a certain amount of revenue.

If they want to add a new treatment indication to a drug's label, they must engage in lengthy and expensive clinical testing - and it only stands to reason that they ought to be able to recoup the costs of such testing, plus a respectable profit. Genentech followed the FDA's guidelines in this case, but are under heavy criticism for promoting Lucentis over Avastin.

The FDA's restrictions on off-label advertising put companies into a damned if you do, damned if you don't position. Off-label use is a powerful and productive way for doctors to rapidly offer new treatments to patients based on their knowledge and experience; but we would still like companies to study those off-label uses, and to help validate them.

By liberalizing the rules over off label promotion of drugs - perhaps based on a drug's mechanism of action combined with additional data collection guidelines - we can give companies a financial incentive to do more research on off-label uses and give patients and doctors more information on which make informed treatment decisions.

Posted by Paul Howard at 01:44 PM | Comments (0)

Well, now, justice strikes again, this time in the form of a jury verdict for a mere $134.5 million (for three plaintiffs) against Wyeth. Why? Its hormone-therapy drugs purportedly caused breast cancer in the three.

Now, the labels say clearly that the data show a slight increase in breast cancer incidence in women using these drugs. Does that mean that these particular cancers were caused by these particular drugs? Well, no. Cancers are caused by a broad range of factors understood poorly; that one particular theoretical source can be identified says little about whether these tumors would have occurred even in the absence of the drugs.

No matter. It's Big Pharma versus little women, and why not make the former the scapegoat for the misfortune of the latter? That's easy: We'll get a lot fewer drugs over time---and a lot more human suffering---if no good pharmaceutical innovation deed goes unpunished. Such are the adverse effects of the litigation lottery, the machinery of which truly is a wonder. So much for the children, today, tomorrow, and forever.

Posted by Benjamin Zycher at 11:21 AM | Comments (0)

October 11, 2007

There's just never enough money available when you really really REALLY need it. Exhibit numero uno is the Great State of California, where I am privileged to pay my taxes, and where Arnold the Governator has been pushing for "universal coverage," with a requirement that each individual purchase health insurance, with various taxes imposed on providers and employers and others, and with subsidies here, tax credits there, etc.: The usual stew of silliness designed to get that square peg into that darned round hole, and things would be jolly if we could just get rid of people and their narrowminded whining.

Well, Arnold's original scheme just didn't elicit enough salutes from the hordes around the flagpole, and so he now has revised it. The idea now is to finance part of the needed $14 billion per year (guaranteed to be an underestimate) by leasing the California lottery to a private firm. Except that the Governator's budget proposal for the next fiscal year already includes a sale of the lottery for the general fund; if that now is going to be earmarked for "universal coverage," then the deficit in the state general fund---already at $8.6 billion and counting---will deepen markedly.

Isn't it obvious by now that even apart from all of the predictable perversities and quality degradation inherent in "universal coverage," the basic down-to-earth problem of how to pay for it is a Gordian knot best left uncut? The taxes, subsidies, and other machinations required to get such proposals approved under democratic institutions are the source of endless economic mischief, rapidly growing costs, and permanent slowdown.

Posted by Benjamin Zycher at 06:00 PM | Comments (0)

October 10, 2007

My colleague Peter Huber has a truly visionary essay in the Autumn edition of City Journal explaining how the advent of personalized medicine will shatter government pretensions to create one-size-fits-all health care.

Huber notes that medicine is increasingly making two things crystal clear to anyone who cares to notice: First, that for the most expensive chronic diseases, personal habits (diet and exercise or the lack thereof) are the real killers, and second, that rapid advances in molecular medicine are untangling our individual risks for everything from cancer to Alzheimer's. In either case, for what Huber calls genes or "gluts", government cannot pay for, or legislate, individual outcomes.

This great etiological shift-from the medicine of us versus germs to the medicine of us versus us-upends everything. Disease and its cures now depend on factors too fragmented for conventional insurance pools to contain, too costly for public treasuries to underwrite, and too divisive for public authorities even to discuss, much less manage. The era of big government is over in medicine, too. Within a decade or two, a charismatic president will deliver on the promise to end health care as we know it. What then? Science will discover, competition will supply, patients will choose, and freedom will deliver better medicine and far better health, at lower cost, to many more people.

This doesn't mean that politicians won't cling to the nanny state as long as they can. Mayor Bloomberg has banned trans-fats in New York; if he was serious he'd ban red meat, beer, and french fries. Democratic presidential candidate John Edwards has called for mandatory preventive screening for all Americans under his plan for universal health care - he might as well try signing us all up for yoga classes and vegan diets.

Underneath the weight (pun intended) of demographic changes (an aging population with ever growing waistlines) governments have two basic choices: leave more to free markets, or rely more on regressive taxes and micromanaging the lives of the poorest and least educated among us.

Posted by Paul Howard at 09:44 AM | Comments (0)

October 09, 2007

If the only health care commentary you read is by Paul Krugman, you probably think that the only thing that health insurers do is think of new ways to offer consumers fewer benefits and higher prices for health insurance. This article, from the Hartford Courant, points out how companies and health insurance plans to improve health insurance packages, including "value-based" insurance that encourages employees to get and stay healthy by charging them less to use proven disease prevention and management strategies.

In value-based benefits, the amount employees pay for any prescription to treat certain conditions is waived or lowered to encourage them to continue taking the drugs.

Health care costs for Pitney Bowes asthma patients - the total of what they and the company paid - were 16 percent lower for a comparable group in 2004 than in 2001. Mahoney credits less hospital use. Costs decreased 8 percent for overall care of diabetics during the same period.

The problem here is that companies that have high turnover for their employees may have very little reason to embrace value-driven policies that take several years to help lower overall health care costs. But when employees own their own, portable health insurance policies - think HSAs - insurance companies have powerful, long term incentives to keep them healthy and encourage the use of more preventive and evidence based health care.

Posted by Paul Howard at 03:33 PM | Comments (0)

Forbes has an article this week (Genetics' Super Summer) on the sudden spurt in genetic tests for common diseases, and how they are helping researchers match drug treatments with the patients who are most likely to benefit from them.

Now DNA chips, tiny devices made by biotech companies Affymetrix and Illumina, allow scientists to sample the DNA blueprint for a person at 500,000 different places where differences are likely to occur, and to do so cheaply enough that tens of thousands of people can be tested. When they find a genetic variant that occurs in people with, say, multiple sclerosis, but not in those who don't, it is likely that that difference is linked to the disease. (Forbes predicted the gene data flood in May.)

Eric Topol, the chief academic officer of Scripps Health, says the string of results this summer is "unprecedented," but warns, "we've just started this whole process. There's so much more work to be done to understand cause and effect."

The field is undoubtedly in its infancy, although many more discoveries are expected in the next several years as gene sequencing technology becomes ever cheaper and faster.

Hat tip: DrugWonks.

Posted by Paul Howard at 03:17 PM | Comments (0)

Yesterday, the Nobel Prize Committee announced that two Americans and one British scientist won the 2007 Nobel Prize in medicine for developing a technique that researchers have used to study how genes effect health.

The technique, in a nutshell, allows researchers to delete or inactivate ("knockout") genes in mouse embryoes; once fully grown and bred, these "knockout mice" can give researchers powerful clues as to how specific genes affect diseases ranging from cancer to cystic fibrosis.

Companies studying drug development can also use knockout mice to locate promising targets for new drugs, or to examine how inactivating specific genes may produce unwanted side effects.

For more information on how knocking out genes can help drug development, see this article from Lexicon Genetics.

Posted by Paul Howard at 01:59 PM | Comments (0)

October 08, 2007

Everybody's a critic, but, let's face it, some critics are more equal than others. There are, after all, the critics who review such mudane tedium as movies, art, and the theatre; and then there are those who offer their measured words on happenings and machinations among the Beltway sophisticates. The latest contribution in this latter high-end criticism comes from our beloved Paul Krugman, who seems actually to believe that Reagan's heirs find it "funny... if you're poor, if you don't have health insurance, if you're sick."

No, really: Krugman believes "that the lack of empathy shown by ... Mr. Bush is genuine, not feigned."

Now, whether El Presidente W qualifies as one of Reagan's heirs is an assertion the examination of which is best left to another day. What truly is amazing is that in the Land of Krugman, skepticism about expansion of a government program---in this case, SCHIP medical schocialism---translates to a "lack of empathy." And empathy for precisely whom? The taxpayers? The children shifted from private insurance into government programs inevitably more restricted? Future patients forced to endure the rationing and all of the other perversites that follow upon the bureaucratization of medical finance and health care delviery, just as night follows day? "Compassion"---empathy---is the last refuge of modern-day scoundrels, and it is a shameful argument.

Posted by Benjamin Zycher at 07:01 PM | Comments (0)

October 05, 2007

Microsoft announced today that is is offering a free Web portal for consumers who want to save all of their health related information in one permanent, secure site.

HealthVault (healthvault.com) comes at a time when many technology companies are racing to offer electronic medical records and other online health tools.

"A lot of tech verticals that promised billions of dollars of revenue to their bottom line to have health information tools ... haven't produced," said Dr. David Brailer, former head of health information technology for the Bush administration who now leads Health Evolution Partners, a San Francisco firm that invests in medical ventures. "Many of those companies have stepped back and, in the middle of that, Microsoft steps forward and does this."

One expert said that "If Microsoft can show...that health technology cn work with consumers in control of their data, this changes everything." After having watched friends try and shuffle their health care records back and forth between different hospitals and doctors, I do think this could be a big step forward.

But what the market really needs to jumpstart health IT is for consumers to be able to shop for their own health care - which will encourage providers to invest in interoperable health IT as a selling point for their businesses. Nobody had to tell banks that they needed their ATM cards to work in New York and Hong Kong, consumers just demanded it. When consumers rule in health care, health IT will explode.

Posted by Paul Howard at 03:54 PM | Comments (0)

Americans have access to the most innovative drugs in the world - and the cheapest generic drugs in the world. This is because generic drug manufacturers don't have to duplicate the clinical trials the FDA requires of new drugs, and the lack of price controls for prescription drugs (which set both a floor and a ceiling for drug prices) encourages fierce price competition between generic drug producers. Also, patent expiration forces companies to bring innovative new products to market.

As health care costs rise across the board, payers are increasingly turning to generic drugs to help contain costs, and the FDA is helping by expediting the review of generic drug applications:

The U.S. Food and Drug Administration on Thursday said it approved one-third more generic drugs last fiscal year and said it planned to speed review of these cheaper versions of brand-name drugs.

"We had no anticipation that the number of generic applications would skyrocket as it did" in the past several years, he added.

This is all to the good. Consumers should have access to a wide range of both generic and branded drugs, at a wide range of prices.

Policymakers, take note: The prescription drug industry is one of the few health care sectors where prices, and often quality, are relatively transparent and where consumers are encouraged to compare both the price and quality of the products they routinely use. (Especially with the advent of Wal-Mart's $4 generic program.)

More, of course, could be done, but the rise in generic utilization shows that it is possible to balance incentives for innovation and cost savings, particularly when consumers have an incentive to compare products effectively.

Posted by Paul Howard at 12:10 PM | Comments (0)

October 03, 2007

This morning, my colleague Benjamin Zycher is debating the President's SCHIP veto on WNYC with Brian Lehrer. You can listen to it here on WNYC.

National Review Online has a terrific editorial explaining why the President is correct to veto the legislation.

Stay tuned for additional developments.

Posted by Paul Howard at 10:31 AM | Comments (0)

October 01, 2007

President Bush, thankfully, has reiterated his intention to veto the SCHIP monstrosity emerging from Congress, thus preserving, at least for now, some faint resistance to the inexorable advance of schalami schlice schocialism in U.S. health care.

And---it's guaranteed---the Republicans will be attacked for putting "the kids" last. As dishonest as that charge is, it is not without some indirect merit. After all, what other spending has El Presidente W vetoed? How about... none. All that pork, all those earmarks, all the spending increases for monstrous Beltway bureaucracies: All of it has been waved through for seven years. So the argument is going to be that the Republicans care deeply about the ethanol lobby and all the others, but not about The Children. And on the simplistic, sound-bite face of it, the argument is right. That's what happens when principles are defended rarely if ever.

Posted by Benjamin Zycher at 07:00 PM | Comments (0)

Ezra Klein had a well written op-ed in the Los Angeles Times on Sunday explaining why (for him, at least) the health care plans offered by Democratic presidential candidates are superior to those offered by Republicans. In a nutshell, Democrats think we have too little health insurance, Republicans think we have too much health care.

The plans offered by the Democrats differ in details and ambition but diagnose the problem in basically the same way: Not enough people have health insurance, and the fragmented, patchwork nature of our system for obtaining coverage leaves us to the not-so-tender mercies of insurers that have their best interests, rather than ours, foremost in mind.

The reforms flow naturally from that point. Clinton and John Edwards both propose an "individual mandate" to ensure universal coverage. Under their systems, every American would have to purchase health coverage, and a system of subsidies and tax credits would be constructed to make sure coverage was affordable. Barack Obama would channel healthcare through employers to the employed, but he doesn't build in mechanisms to ensure that adults outside the labor force are covered.

The (read: heartless) Republicans, on the other hand,

Their plans all proceed from the assumption that the problem in healthcare is that costs are skyrocketing because Americans overuse their doctors. This theory postulates that because Americans don't feel the cost of every individual treatment (because it is being paid by insurers and the premiums are being paid by employers), they demand more treatment than they actually need, spending too much and lifting the price of healthcare. The answer to this problem is simple: Make us pay for care directly rather than for premiums.

The hope is that this will give more Americans an incentive to buy their own healthcare, and in order to keep the maximum amount of the tax benefit (which is, remember, fixed), they will purchase cheaper plans that offer lower premiums and higher deductibles -- and thus introduce more price sensitivity. In other words, Giuliani proposes to fix healthcare by setting up a system to encourage Americans to buy less of it.

Actually, conservative policy wonks don't disagree that America's current system is expensive, fragmented, and, in many ways, regressive (for instance, America's employer tax deduction for health insurance gives bigger benefits to higher earners).

Of course, Klein's description of Republican plans is a bit of a caricature, because conservatives want more price sensitivity for routine health care costs to enourage competition and innovation - which presumably Klein wants too.

Klein must also know that "comprehensive" health insurance is a bit of a misnomer; no pricing system (that of the market or single payer) can give all things to all people. While private insurance rations by price, single-payer plans ration through waiting lists and other invisible mechanisms - as they do, for instance, in Canada and the U.K.

What is the response of consumers in these systems? Where they can afford it, they buy more health services on the "black market" (in Canada), travel abroad, or buy supplementary private insurance policies that allow them to "jump the queue".

In other words, the problems and challenges in health care are pretty universal. At the end of the day, conservatives think competition and choice in health care plans will drive innovation and help keep costs low. Targeted safety nets for low-income Americans (think vouchers) can help them buy affordable private plans. This is a "comprehensive" version of universal health care - just a market-driven one.

Ironically, all of the "serious" health care plans Klein likes play lip service to private insurance markets - even though, at heart, they yearn for a single payer system.

Posted by Paul Howard at 03:18 PM | Comments (0)

September 28, 2007

Earlier this week, Matthew Herper of Forbes magazine published a thoughtful article arguing that the passage of the FDA Amendments Act (PDUFA IV, for those of you who follow inside baseball) is the most important FDA reform in a decade because it will give the agency real powers to protect drug safety and improve transparency - thereby restoring its reputation.

Herper thinks that, in the long run, a stronger FDA is a win for industry, because when the agency's reputation is weakened its ability to approve new medicines in a timely manner declines. Herper says that:

The focus was creating a more transparent FDA with the power to better study and regulate drug safety. Legislators were probably smart, in the end, to stick with the issues they had debated the most and approve a bill that is uncontroversial now but would have seemed like a radical step three years ago.

Hopefully, the changes will strengthen the FDA, renewing the public's shaken faith in the safety of medicines. Drug makers could wish for nothing more.

I do agree with Herper that the FDA's reputation has been under fire in recent years, and that this makes the agency risk averse when it comes to approving new medicines. I also agree that the postmarket surveillance of prescription drugs was due for a significant overhaul. But I disagree that the legislation will do much, if anything, to improve the agency's standing in the public's mind, largely because of dynamics that are outside of the FDA's control.

As the Avandia crisis has shown, the FDA's ability to adjudicate drug safety data has been preempted by outside analysts and medical journals (think: New England Journal of Medicine) with their own regulatory agendas.

For the FDA, the new environment can be summed up in five words: "if it bleeds, it leads." In other words, the FDA has been put into a reactive mode by outsiders who aren't going to wait for the FDA to parse complex data before crying wolf to the media and Congress. As a result, the FDA will be under intense pressure to make drug safety decisions before the whole picture is really available.

Nothing in today's legislation is going to fix that. If anything, the new labeling powers, powers to require Phase IV clinical trials, and new clinical trial database will put even more pressure on the agency to preempt potential safety problems by ratcheting up regulations and reporting requirements.

For a counterpoint to Herper's article, take a look at this incisive essay by John Calfee, a senior fellow at the American Enterprise Institute. Calfee argues that,

[The new legislation] will increase FDA power, extend its reach beyond normal bounds, and expose FDA personnel to yet more scrutiny and criticism for safety problems no matter how unpredictable. There will be no tests or benchmarks for how well this new regime will work. In a world of ever more extensive post-approval clinical trials and database dredging, there is no reason to think drug safety data will become more reassuring or less alarming as time passes. The FDA will find it very difficult to retreat from any sort of regulatory expansion.

Hopefully, new scientific advances will help make this top-heavy, cumbersome regulatory structure obsolete. In the meantime, I agree with Calfee - we can expect new drug approvals to get worse before they get better.

Posted by Paul Howard at 03:09 PM | Comments (0)

September 27, 2007

The vaccine industry has been under siege in recent years, haunted by accusations that a mercury-based preservative (thimerosal) used in childhood vaccines may have contributed to rising rates of autism and other developmental disorders.

There seems to be no evidence (beyond the theoretical) supporting the accusation. Study after study (both in the U.S. and abroad) has failed to find any link between thimerosal and autism, although that has not stemmed a rising tide of lawsuits against vaccine manufacturers.

Today, the CDC released yet another study, reinforcing previous findings:

Federal researchers said they found no link between a vaccine preservative containing mercury and mental acuity and behavioral problems in children immunized in the 1990s -- findings that aren't likely to end parental fear that mercury has caused childhood disorders.

Anne Schuchat, an assistant surgeon general with the CDC, called the results of the new study "very reassuring for parents" whose children were immunized in the 1990s. The government asked manufacturers to remove thimerosal from vaccines in 1999, after the public bombarded federal offices with complaints.

Saying that the CDC study isn't "likely to end parental fear" is a monumental understatement. Very little is actually known about the underlying disease mechanisms of autism, and until more is known thimerosal - and pharmaceutical companies - are a convenient scapegoat for a trial bar that preys on parents' fears and frustrations.

Posted by Paul Howard at 11:47 AM | Comments (0)

In the Wall Street Journal today, Richard Miller (CEO of Pharmacyclics and an adjunct professor at Stanford) argues that terminally ill patients are being denied promising treatments by the FDA:

In recent years, the FDA has made it increasingly difficult for terminally ill patients with cancer and other deadly diseases to gain access to new but promising drug treatments even after testing in large clinical trials. The FDA has rejected five promising cancer drugs this year alone. Why should the FDA block approval of new lifesaving drugs based on different standards than are currently employed by physicians when prescribing drugs for "off-label" uses?

Terminally ill patients may not have a constitutional right to choose experimental drugs, but the FDA does have a legislative mandate to grant accelerated drug approval based on limited but promising clinical data. We need the FDA to utilize the regulations promulgated as a result of the AIDS epidemic to give patients the right to choose these treatments while more lengthy definitive trials are undertaken. This in turn will spark greater private-sector investment in breakthrough drugs that will further improve the quality of health care.

Miller's underlying point is that the FDA's gatekeeper role is schizophrenic: once drugs are approved by the FDA physicians can employ them in any manner they see fit, and they do. This means that clinicians often make important new discoveries along the way, particularly in the treatment of complex illnesses like cancer. In fact, Miller estimates that up to 60% of all cancer treatments are used "off-label", i.e. for indications that weren't originally approved by the FDA.

So if doctors can use "experimental drugs" like these, perhaps the FDA should view its role not as a binary (pass/not pass) gatekeeper for drugs but as an informational resource that can help physicians find the best ways to use new medicines.

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

September 26, 2007

While Congress celebrates the renewal of the Prescription Drug User Fee Act, the 800 pound gorilla in the room is whether or not the FDA and industry can work together to shorten drug development times in a regulatory and political environment where safety concerns seem to trump all other values.

One mechanism for rebalancing safety and innovation will be new scientific tools that give the FDA more comfort in moving new medicines from the lab bench to the bedside faster, particularly what are known as biomarkers.

Biomarkers should, at least in theory, allow companies and regulators to zero in on promising treatments earlier in the development process, shaving years and millions of dollars off of the normal development process.

This article, from Drug Discovery and Development magazine, describes how the hunt for cancer biomarkers is progressing - and why validating them is the real challenge.

Posted by Paul Howard at 11:25 AM | Comments (0)

September 25, 2007

The man who channeled the thoughts of a deceased child for the benefit of a jury in a civil lawsuit now is running for President. One would think that he might channel the thoughts of Ronald Reagan, or JFK, or Give-'Em-Hell Harry Truman. Or Scoop Jackson, or someone.

And one would be wrong. Instead, the good Senator channeled himself, and his campaign consultants, at a forum organized by our dear friends at Families USA and the Federation of American Hospitals.

First on the agenda was the issue of limiting "medical malpractice lawsuits without merit." Edwards noted helpfully that "the bulk of the problem is created when cases are filed... that should never be filed," and that "a lot of that responsibility goes to the lawyers."

Wow. Is the good Senator about to slam his buddies in the plaintiff's bar? Well... no. Instead, sayeth John Kerry's running mate, attorneys who seek to file malpractice lawsuits should have to obtain certification by two experts to prove that their cases have merit. And precisely what does "merit" mean, anyway? Well, no one knows. And how difficult would it be to find a couple of hired guns with M.D. after their names to certify "merit"? Everyone knows the answer to that: It would be trivial, as the recent scandals with asbestosis and silicosis lawsuits demonstrate plainly. Would the experts be under oath? Would the cases have to be tried, or at least go through discovery anyway, merely to establish "merit"? No one at the "forum" seems to have asked. What is clear is that this "reform" is as phony as they come, so transparently so that one wonders why Edwards even bothers.

And then there is AIDS. Edwards proposes, among other things, that WHO standards rather than those of the FDA be used to allow new AIDS drugs to reach the market earlier than otherwise would be the case. Why should only AIDS patients be given this benefit? On that as well the forum was silent.

And on overall health care reform, the good Senator solemnly informed all that it is essential to make clear "the rightness of the substance of what you want to do," adding "And that's the way we drive through the entrenched interests of insurance companies and drug companies and lobbyists..." And "rightness" waits for no man: Edwards said that as president he would submit a health care proposal to Congress on his first or second day in office. Well, thank the Lord for that; for a minute there, I thought that the crisis might get out of hand.

Posted by Benjamin Zycher at 04:14 PM | Comments (0)

September 24, 2007

Well, Congressional negotiators agreed last Friday on a compromise proposal to reauthorize SCHIP, and---surprise, surprise---"compromise" inside the Beltway means adding Christmas Tree ornaments to a bill already bloated and representing yet another long stride toward a system of medical Schocialism. So here are the goodies, which somehow have been lost in the public discussion over ensuring that The Children get needed health care, as if children in the U.S. go without. The compromise:

1. Requires that all kids in the program get dental benefits as well as "mental health services on par with medical and surgical benefits."
2. Allows states to enroll pregnant women in SCHIP.
3. Revises the CMS regulations requiring that most poor kids be enrolled in SCHIP first, before states can extend participation to the middle class so as to garner even more federal money.
4. Offers states assistance in the implementation of "best practices" to reduce the substitution of private coverage with government coverage.
5. Provides funding to expand participation.

So there we have it. The Children have little to do with this expansion of the welfare state. The real goal is schalami schlice schocialism in American health insurance, with all of the perversities that inexorably will accompany it. And when costs grow and spending controls take the form of ever-tighter limits on provider reimbursements, yielding a shrinking supply of services to The Children, we will discover the eternal truth that the expansion of government coverage is the opposite of health care.

Posted by Benjamin Zycher at 05:10 PM | Comments (0)

September 21, 2007

Congress will soon send an Schip renewal bill to the President that basically accepts that Senate version of the bill (offering a $35 billion increase for the program, rather than the $50 billion increase originally approved by the House) - which the President has threatened to veto.

The New York Times reports on the struggle here.

The dispute is not over whether or not children should have access to affordable health insurance, but how that goal should be accomplished. Schip reauthorization in its current form will extend the program into a middle-class entitlement, and weaken private health insurance coverage.

Rather than throwing money at the problems driving up health insurance premiums, Congress should try and fix them at their root.

Posted by Paul Howard at 11:15 AM | Comments (0)

September 20, 2007

MI senior fellow and practicing Canadian physician David Gratzer has an interesting and wide ranging interview in Front Page Magazine today where he discusses Sicko, Hillary's new health care plan, and why health care costs are coloring Americans' view of the economy (Answer: rising insurance premiums are biting into paychecks).

Gratzer's plans for reform:

Foster competition. American health care is the most regulated sector in the economy. The result? A health insurance policy for a 30-year-old man costs four times more in New York than in neighboring Connecticut because of the multitude of regulations in the Empire State. Americans can shop out-of-state for a mortgage; they should be able to do so for health insurance.

Revisit Medicare. Back in the late 1990s, a bipartisan commission approved a reasonable starting point for Medicare: junking the price controls and using the Federal Employees Health Benefits Plan as a model giving elderly Americans a choice among competing private plans. The time is right to experiment with this idea.

In a nutshell, Gratzer recommends making health care more like the rest of the economy, where vibrant competition and consumer choice spur innovation and help to contain costs.

Full disclosure: he also includes a very kind reference to my recent op-ed in the New York Post.

Posted by Paul Howard at 10:29 AM | Comments (0)

Also on the Journal op-ed page today, AEI senior fellow and physician Scott Gottlieb criticizes Congress for slipping a rider into vital funding legislation for the FDA that would greatly expand the tort bar's ability to second guess warning labels for drugs and sue drugmakers:

The furtive give-away is buried in the Food and Drug Administration Revitalization Act (FDARA), a funding bill that needs to pass this week if the agency is to avoid a budget crunch that could force it to fire its drug reviewers. If drug safety is so critical, why would Democrats risk issuing pink slips at the FDA? The provision raises the question of whether the hyperbole and hearings over drug safety these past several years was about improving public health, or merely paying off the lawyers.

Companies and the FDA (under both Republican and Democratic administrations) have argued that when the FDA specifically addresses a safety issue -- often telling companies that they can't include certain warnings in drug labeling because it's not scientifically justified -- state courts are "pre-empted" from and have no business substituting their judgment for the agency's expert finding. Otherwise, drug labeling -- which is an important public health tool -- would get cluttered with dubious and confusing warnings aimed at only shielding firms from lawsuits.

This is a problem not just for companies but for patients; the only way for corporations to defend themselves from these kinds of suits is turn drug labels into a veritable litany of horrors, frightening patients and confusing everyone about what the real medication risks are. This is one area where federal preemption is desperately needed.

Posted by Paul Howard at 10:01 AM | Comments (0)

For those of you wondering exactly how Senator Clinton's new health care plan, which features an individual mandate, differs from the plan that Mitt Romney created while governor of Massachusetts, which also featured an individual mandate, the wait is over.

Governor Romney defends his own health care record - and takes on Senator Clinton's new proposal - on the Journal's op-ed page today:

Let's be clear here: My plan in Massachusetts worked very differently than Sen. Clinton's plan would. First, we worked to reduce the burdens of regulation. The legislature insisted on more coverage mandates and regulation than I would have liked, but even so, less regulation has resulted in much lower premiums.

I like the plan I put forward in Massachusetts. But even so, I wouldn't do what Sen. Clinton does -- impose my way on every other state. Other states may borrow from what we did. Some will surely improve on it. But let's keep faith in federalism, in private markets and in individual responsibility.

Posted by Paul Howard at 09:54 AM | Comments (0)

September 18, 2007

I'll have much, much more to say about HillaryCare II over the coming days, but one question comes immediately to mind: How will Governor Mitt Romney attack HillaryCare II if he winds up with the Republican nomination? Hillary now advocates mandatory coverage for all, required contributions by large employers, tax subsidies for individual insurance premiums, guaranteed issue by insurers (that is, cross-subsidies from the young and healthy to the old and ill), and expansion of federal insurance programs for the uninsured, for the "underinsured," and for poor adults not now eligible for Medicaid.

So: How, precisely, does this differ from the Romney Massachusetts plan? And how will he argue against it? After all, if it's good enough for Red Sox fans, why not fans of the Cubs, oops, Yankees? And Dodgers and Giants and Rangers and everyone? Lots of luck, Mitt; that's what happens when you sacrifice principle for short term political advantage.

Posted by Benjamin Zycher at 04:27 PM | Comments (0)

September 17, 2007

News reports today suggest that the House leadership essentially will give up on its own efforts to expand SCHIP to the middle class, endorsing the Senate version of the legislation instead. One little item seems not to have been noticed by our crack media watchdogs: The House version reversed some serious planned cuts in Medicare reimbursements to doctors and hospitals, while the Senate version does not. And so, unless more legislation is passed later this year, the planned cuts will take place at the beginning of 2008.

And so the inevitable continues: Medical socialism, driven not by patients but instead by interest groups, will continue to put the squeeze on the providers. And as day follows night, providers will be led to shun Medicare patients---just as the case has been for Medicaid---proving yet again that government health insurance coverage is the opposite of health care.

Posted by Benjamin Zycher at 07:35 PM | Comments (0)

U.S. Senator Hillary Clinton (D,NY) is expected to unveil a health plan today that will endorse mandatory insurance coverage for individuals, pay-or-play for employers, and community rating for insurers (companies must charge older and sicker policy holders the same price as younger, healthier policy holders):

Senator Hillary Rodham Clinton on Monday will lay out a plan to secure health insurance for all Americans while severely limiting the ability of insurers to deny coverage or charge higher premiums to people with chronic illnesses and other medical problems, her aides and advisers say.

But advisers to Mrs. Clinton, a Democrat from New York, said Saturday that she would try to avoid the perception that she was advocating a bureaucratic, big-government solution. That perception, promoted by conservative Republicans and the insurance industry, sank the Clinton plan in 1994.

While Senator Clinton may be presenting this plan as a scaled back, more market-friendly, version of her 1993-94 efforts, it is apt to actually undermine private health insurance through community rating -which tends to price younger, healthier buyers out of insurance markets, leaving companies burdened with more expensive patients.

Saying that insurance would be "mandatory" under her plan may not do much to obviate this problem, since healthy consumers can always opt not to buy a private plan and pay any residual penalty. The alternative that is likely to emerge are cheap, government subsidized plans that will underprice the private market (where plans will be loaded with expensive coverage mandates for chiropractors et al) and lead to long term government consolidation of health care markets.

This is not to say that some combination of insurance market deregulation, targeted subsidies, and individual mandates might not work - as has been proposed by Stuart Butler, Regina Herzlinger, and others. And the next president - no matter what their party affiliation - will find themselves making tough compromises to get needed health care reforms passed.

But Clinton's plan, at least as it is outlined now, is more apt to undermine private insurance markets through yet more burdensome regulations rather than strengthen them.

Stay tuned for more details as they emerge.

Posted by Paul Howard at 11:36 AM | Comments (0)

September 14, 2007

Does universal health insurance automatically equal better cancer care? In the Wall Street Journal today, Betsy McCaughey argues that it doesn't. McCaughey notes that while the U.S. doesn't have universal health insurance, it still leads the world in cancer survival rates.

Last month, the largest ever international survey of cancer survival rates showed that in the U.S., women have a 63% chance of living at least five years after diagnosis, and men have a 66% chance -- the highest survival rates in the world. These figures reflect the care available to all Americans, not just those with private health coverage. In Great Britain, which has had a government-run universal health-care system for half a century, the figures were 53% for women and 45% for men, near the bottom of the 23 countries surveyed.

A 2006 study in the journal Respiratory Medicine showed that lung cancer patients in the U.S. have the best chance of surviving five years -- about 16%. Patients in Austria and France fare almost as well, and patients in the United Kingdom do much worse with only 5% living five years. A report released in May from the Commonwealth Fund showed that women in the U.S. are more likely to get a PAP test every two years than women in Australia, Canada, New Zealand and the U.K., where health insurance is guaranteed by the government. In the U.S. 85% of women ages 25-64 have regular PAP smears, compared with 58% in the U.K.

Critics argue that universal health insurance would mean that more Americans would get routine preventative care that would help reduce cancer mortality. But it is more likely that efforts to ration expensive diagnostics and drugs would leave many cancer patients worse, not better off under a universal health care program.

It is also difficult to compare the U.S. to small, high performing countries like Austria or Sweden, which are less economically and racially diverse, and thus present a different disease mix.

All told, the U.S. does extraordinarily well in cancer care, and while we should work to make health insurance more affordable and accessible, we shouldn't move to any system that jeopardizes the U.S.'s commitment to cancer innovation.

Posted by Paul Howard at 11:34 AM | Comments (0)

September 13, 2007

To date, the only marketed cancer vaccines are those that combat viral infections associated with cervical cancer (HPV) and liver cancer (hepatitis B).

However, for the past several years researchers have been struggling to create vaccines that could help the human immune system recognize and attack tumor cells after the disease has become clinically apparent. Unfortunately, this task has proven to be incredibly difficult, as cancer cells actually hide from the immune system.

Still, after a series of disappointing efforts, a handful of companies are moving their products into late stage clinical trials:

Glaxo in June said it will recruit more than 2,000 patients for a Phase III study of the lung-cancer vaccine MAGE-A3, which it bought from the U.S.'s Ludwig Institute for Cancer Research in 2000. Merck KGaA also is in the process of recruiting more than 1,300 patients for a Phase III study of its lung-cancer vaccine Stimuvax, bought from Canada's Biomira Inc.

Unlike other cancer treatments, which can cause hair loss, infections and vomiting, scientists believe the vaccines won't have any notable side effects because very few problems have been reported thus far in trials.

Here's hoping the technology finally bears fruit.

Posted by Paul Howard at 02:15 PM | Comments (0)

On today's Wall Street Journal opinion page, John Stossel criticizes filmmaker Michael Moore for putting emotion ahead of sound science in his "mockumentary" film Sicko:

In Michael Moore's movie "Sicko," a widow named Julie Pierce tells a tearful story: Her husband died of kidney cancer after their health-insurance company denied payment for a bone-marrow transplant that might have saved his life. Ms. Pierce's rage is palpable as she repeats the word her insurers used in response to her husband's request. "They denied it," she sneers. "Said it was 'experimental.'"

The sad truth is that the treatment isn't effective. When researchers released the results of their clinical trials to the American Society of Clinical Oncology in 1999, they showed that the treatment offered no benefit. Worse, it often killed women faster than their cancer, and caused them unnecessary pain. At a time when their health was at its greatest risk, more than 30,000 women were exposed to an invasive, harmful and ultimately useless treatment that the National Institutes of Health no longer recommends. But only one state legislature has repealed its law requiring insurance companies to pay for the treatment. Some doctors believe bone-marrow transplants might help kidney cancer patients, and the NIH is conducting clinical trials to find out. Until the treatment has been shown to do more good than harm, insurers are reluctant to pay for it.

Stossel's point is that government run health care is driven more by fads and headlines than it is by sound science. The reality is that U.S. health care (which is mostly privately financed - at least for now), provides more innovative care for Americans than is available to most patients in other developed countries with government controlled health care.

Says Stossel: "People diagnosed with cancer in America have a better chance of living a full life than people in countries with socialized systems. Among women diagnosed with breast cancer, only one-quarter die in the U.S., compared to one-third in France and nearly half in the United Kingdom."

Read the whole thing.

Posted by Paul Howard at 01:59 PM | Comments (0)

CongressDaily reported yesterday that polls and focus groups show swing voters to be concerned about "government-run health care," and that "People don't want the government or bureaucrats to be involved in their healthcare decisions."

So: The good sense of the American people, who---thankfully---are not economists, emerges yet again. At some intuitive level, Americans seem to understand something that the journalists do not: There is no such thing as complete coverage in a world in which resources are limited; and even, or especially, government health insurance or health care delivery inexorably must contain spending by rationing care. The only question is who decides: patients and their doctors, or Congress and the bureaucracy?

Posted by Benjamin Zycher at 10:41 AM | Comments (0)

September 12, 2007

The Office of the Inspector General of the Department of Veterans Affairs announced yesterday that the DVA "consistently understated the wait times for veterans seeking medical care and in some cases made seriously injured veterans wait more than 30 days for an appointment, a violation of department policy..."

Can this possibly surprise anyone? Government health care means rationing---it cannot mean anything else in a world in which resources are limited---and queuing is one of the most obvious forms of rationing available. It imposes no direct measureable costs on the government budget. The patients are captives of the system; and, anyway, all they can do is write their Congressman.

Let me predict here and now that the ineffable Paul Krugman will cite this report not as an indictment of the concept of government health insurance, but instead of the Bush Administration's purported indifference to the needs of injured vets. Please. This outcome---it cannot be repeated too often---is inevitable regardless of who occupies the White House. And it is a harbinger of what awaits all of us if the U.S. chooses the path medical socialism.

Posted by Benjamin Zycher at 09:01 AM | Comments (0)

Well, now. The American Cancer Society, no longer content with its role of lecturing adults about the risks that they should (not) take, dietary and otherwise, now has announced that it will devote its entire advertising budget next year to promotion of a single-payer system for U.S. health care.

Maybe they've decided that their central message---don't smoke, get mammograms, and watch your weight---has outlived its usefulness. Or maybe everyone already knows those things. No matter. Or maybe they recognize that their institutional need is for more cancers, not fewer, as that would be the inexorable outcome of a single-payer (i.e., government) system. The Beltway has interest groups, not patients. The Beltway faces intense competition for budget dollars. And so single-payer systems, as day follows night, must impose rationing of care over time, meaning in the context of cancer that less treatment, not more, will be the actual outcome under a system that "covers" everyone.

And so voila! Less treatment, less preventive care, fewer new medicines allowed, etc.: Higher cancer death rates will be the order of the day. Who says that the do-gooders have no sense of irony?

Posted by Benjamin Zycher at 08:19 AM | Comments (0)

September 11, 2007

Last Friday, John Stossel (ABC News 20/20) challenged Michael Moore on his depiction in Sicko of the Cuban health care system as offering better care than that found in the U.S.

Said Moore:

"All the world health organizations or whatever have confirmed that if there's one thing they do right in Cuba, it's health care...And there's very little debate about that."

Stossel, however, made the cogent point that the only data anyone has on Cuban health statistics are those provided by the Cuban government - which isn't exactly a bastion of free inquiry.

George Utset, who runs the anti-Castro Web site called therealcuba.com, says Moore's group didn't "go to the hospital for regular Cubans. They go to the hospital for the elite and it's [a] very different condition."

Darsi Ferrer, a human rights advocate in Cuba, issued an SOS via telephone, wanting the world to know that ordinary Cubans are "crazy with desperation" over the horrendous state of their health care.

The interview is available on YouTube.

Posted by Paul Howard at 03:15 PM | Comments (0)

"We're from academia, and we're here to help you." No, I am not kidding. News reports yesterday inform us that "academic detailers" have begun visits to doctors' offices for the purpose of countering the information and goodies offered by pharmaceutical firms in efforts to expand the market for their medicines.

The "academics," by the way, actually are pharmacists and nurses, but never mind. The brainchild of this mindless scheme is Jerry Avorn, a professor at the Harvard Medical School and "drug-safety expert," who claims to know that the prescribing habits of physicians are influenced negatively by the blandishments of the drug companies, and that his army of academics or pharmacists and nurses---take your pick---will provide doctors with "nonindustry-based information about the benefits, risks, and costs of various treatments."

Precisely how does the good professor know that physicians are influenced in unproductive ways by those nefarious drug producers? Sorry: That's top secret. How do the blandishments of the drug company representatives get around FDA regulations about what can be claimed about a given drug? Ditto. What is the source of the "nonindustry-based" propaganda, oops, information to be flaunted by the academics? Since they are very unlikely to have conducted their own Phase I, II, and III testing protocols---trust me on this one, Jerry, your people cannot afford them---that too remains entirely obscure.

No, my friends, this effort to provide "objective" information to doctors is a rather obvious ideological campaign to delegitimize the provision of information by the private sector instead of government bureaucrats. Would Professor Avorn welcome into his classrooms individuals pointing out his own biases and errors? The question answers itself.

Posted by Benjamin Zycher at 11:24 AM | Comments (0)

Companies and researchers are making slow but steady progress in deciphering how individual genetic variations can affect how our bodies process many commonly prescribed drugs for cancer, stroke and even depression. In fact, several genetic tests and diagnostics are on the market already:

The FDA called attention in August to three such diagnostic tests that detect differences among patients that might change their responses to drugs. One test identifies rapid drug metabolizers. Another spots a potentially fatal sensitivity to a commonly prescribed blood-thinning drug. A third test indicates which HIV-infected patients are most likely to benefit from a new drug. Monogram Biosciences Inc. of South San Francisco sells a commercial version of the HIV test.

Ideally, patients would receive the treatment best matched to the idiosyncrasies of their own DNA. Drugs could also be chosen based on the genetic characteristics of an individual's mutated tumor cells, or of the microbe causing an infection.

Ideally, genetic testing will help "target" drugs at smaller patient populations who are most likely to benefit from their use. It should also (over the longer term) lower drug prices by reducing the time and costs required for companies to bring new drugs to market.

Posted by Paul Howard at 09:00 AM | Comments (0)

September 10, 2007

Psychiatrists weighed in again on Sunday on how warnings about suicide risks may have scared parents and teens away from using antidepressant drugs - leading to recent spike in adolescent suicides.

Reuters reports:

While the U.S. Food and Drug Administration's "black box" warnings on antidepressants were not recommended until late 2004, they were preceded by a series of public health warnings in both the United States and Europe.

"Pediatricians became very wary of this and many opted not to prescribe antidepressants anymore," Kraus said.

The article also notes that trial lawyers "were almost advertising themselves" at the FDA hearings on antidepressant drug safety in 2004, perhaps leading primary care physicians to stop prescribing the drugs out of fear of lawsuits.

Concludes Dr. David Fassler, from the University of Vermont: "If we saw an increase like this in the death rate for cancer in a single year, there'd be a public outcry."

Indeed.

Posted by Paul Howard at 04:15 PM | Comments (0)

On Saturday the New York Times ran an interview with Daniel Vasella and asked him about the rise of obesity and aging in the U.S., drug prices, and decliing industry productivity.

Q. Is the pharmaceutical industry part of the cure or part of the problem?

Having said that, the prices have increased significantly. People are starting to ask, "Is it too expensive?" There are, of course, internal costs which one has to take into account. We have invested 17 percent more, year after year, in the past six years for research and development. Externally, clinical studies have become longer and more difficult. And regulatory authorities, especially the F.D.A., have become extremely risk-averse, increasing the risks of research dramatically. That is all contributing to the cost of pharmaceuticals.

Vasella also notes, correctly, that eliminating pharmaceutical industry profits and setting price controls for drugs would not solve our health care woes. Overall, drugs are only a tiny fraction of U.S. health care costs - "a drop in the sea" of the U.S.'s $2 trillion health care economy.

Posted by Paul Howard at 02:40 PM | Comments (0)

Last Friday, David Brooks weighed on the need for a new - and uniquely American - social contract for health care. In developing a vision for that contract, Brooks draws on the work of Stuart Butler, a health policy researcher at the Heritage Foundation:

First, [Butler] would create tax-exempt "insurance exchanges." These would be sponsored by trusted agents - unions, churches and other social groups. Organized like the Federal Employees Health Benefits Program, they would offer menus of coverage choices and create diverse risk pools.

Third, Congress would offer a health care tax credit to families mkaing up to 200 percent of the poverty level, and would tighten benefits for the affluent. Fourth, states could come up with their own ways to regulate this system.

A full description of Butler's plan can be found at the Hamilton Project.

Posted by Paul Howard at 02:12 PM | Comments (0)

One would think that the august New England Journal of Medicine, whatever its other myriad failings, would be able to recognize obvious inconsistencies in its own arguments. And one would be wrong. So very very wrong. I refer this time to the editorial in the September 6 issue, in which John K. Iglehart summarizes the state of play of the battle in Congress over SCHIP reauthorization.

Iglehart notes in several places the issue of precisely what income level would cap the elgibility of families for SCHIP "coverage," never asking precisely what government-funded health insurance "covers." Everything? Not in this world, a reality with respect to which Iglehart is oblivious, particularly when he refers to a provision in the House bill that "would repeal the sizable reductions (10 percent in 2008 and 5 percent in 2009) in fee-for-service payments to doctors that Medicare is scheduled to implement on January 1." This obviously is an attempt to buy political support for the House bill.

But does Iglehart, or anyone at the NEJM, recognize the deeper point, to wit, that the expansion of government funding inexorably expands also the imposition of price controls as a means of "cost" (i.e., spending) control? Apparently not; and that is the real manifestation of myopia, as government "coverage" of children or anyone is nothing of the kind, as "cost control" today necessarily yields rationing and a long term decline in the supply of medical services and technology. There are no free lunches in the Beltway or anywhere else.

Posted by Benjamin Zycher at 09:06 AM | Comments (0)

September 07, 2007

The FDA has detected a safety signal - in this case, a rise in suicides linked to a decline in antidepressant prescriptions. The twist this time? The jump in adolescent suicides coincides with the FDA's use of a "black box" warning for the drugs:

Suicide rates for preteens and teenagers increased sharply when the Food and Drug Administration slapped a "black box" warning on anti-depressants and doctors started writing fewer prescriptions for young people, according to federal data released Thursday.

In 2004, the number of 10- to 24-year-olds taking their own lives rose by 8 percent, the Centers for Disease Control and Prevention reported. Over the previous 14 years, suicide rates had fallen 28.5 percent in that age group.

Admittedly, statistics are a very imperfect science. But it seems highly troubling that for the decade-and-a-half prior to the FDA's black box warning teen suicides declined, and that the year the warning label went into effect, suicides rose.

It is also notable that if the FDA's underlying logic was correct, the number of teen suicides should have declined after the label went into effect

The FDA is showing caution before it reacts to the new data - no doubt hoping that its rule will turn out to be justified. Ironically, that cautious approach to rule making was absent when the agency implemented the warning in the first place.

Posted by Paul Howard at 04:00 PM | Comments (0)

September 06, 2007

I've gotta be honest: Senator Clinton has produced a work of art so perfect, so utterly complete in every dimension, that I can only pray someday to achieve such artistic talent. I refer to her speech on health care issues last Tuesday, in which she promised to:

1. Reduce the cost of long-term care;
2. Enable seniors to file lawsuits against the providers of long-term care insurance;
3. Implement direct negotiation of drug prices by the federal government with the pharmaceutical producers; and
4. Allow U.S. residents to import Canadian drugs subject to price controls.

And her proposal "reduces costs for everybody, improves quality for everybody, and covers everybody." So there we have it: Lower costs and more litigation. Direct price negotiations and higher "quality," that is, no reduction in drug formularies (lists of approved drugs). More price controls, presumably with no adverse effect on innovation. More "coverage," and lower costs.

It's amazing. Why has no one thought of any of this before?

Posted by Benjamin Zycher at 08:19 AM

Well, now, the august editorial board of the New York Times has issued a report card, and we'd better butter Daddy up before we show it to him. Yes, the new Medicare Part D drug benefit has reduced the percentage of older Americans without drug coverage. But many enrollees are "less protected against high drug costs then their counterparts in other plans." The Times' explanation? Part D is insufficiently generous.

It's really quite amazing. In other contexts, the Times opposes increases in the federal budget deficit; so from where would the additional Part D spending come? On that question, the Times offers... silence. A nice tax increase, perhaps? How about allowing the federal behemouth to impose price controls on the drugs it purchases? Does the Times believe that there is a free lunch awaiting us amid the low-hanging fruit? Please, oh Times editorial board: Tell us the answer.

Posted by Benjamin Zycher at 05:30 AM | Comments (0)

September 05, 2007

The ineffable Professor Paul Krugman in his NY Times column last Monday draws an analogy between guaranteeing health care "coverage" for every child and a similar guarantee of an education for every child also. It's all a matter of fairness, you see. Nowhere in this missive does Krugman stop to consider the awful performance of American public schools, with the obvious implications for a government-financed or operated health care system. Or the central reality that "coverage" is not the same as health care, particularly when budgets get tight and bureaucrats and polticians have to make choices about priorities amid a life-or-death tug-of-war by interest groups over shares of the government budget. Etc. In Krugmanland it's always the heartless conservatives against the forces of humanity led by... Krugman. How clever.

Posted by Benjamin Zycher at 06:08 PM | Comments (0)

As Congress returns from August recess and moves to reconcile the House and Senate bills renewing and expanding SCHIP, they first ought to take a close look at research highlighted in this month's NBER Digest by economists Jonathan Gruber and Kosali Simon on the effect that public insurance expansions have had on private insurance markets. Their topline finding: "For every 100 children who are enrolled in public insurance, 60 children lose private insurance."

As I mentioned in an op-ed last month, expanding insurance access to low-income children is a noble goal, but it is best accomplished by making private insurance more affordable and accessible.

Posted by Paul Howard at 11:33 AM | Comments (0)

John Goodman, president of the National Center for Policy Analysis, offers praise for MI-senior fellow and HBS professor Regina Herzlinger's latest book, Who Killed Health Care?

Harvard Business School Professor Regina Herzlinger has written a must-read book, "Who Killed Health Care?". It is written in the style of a murder mystery. The puzzle to be solved: Who killed Jack Morgan, (a patient who dies while awaiting a kidney transplant)? Like Murder on the Orient Express, there is not one killer here but many: health insurance companies, hospitals, employers, the federal government and even academics.

For more of Regina's work, see her scholar's page here.

Posted by Paul Howard at 11:26 AM | Comments (0)

September 04, 2007

Democratic presidential candidate and former U.S. Senator John Edwards has come out in favor of "mandatory" preventive care:

He noted, for example, that women would be required to have regular mammograms in an effort to find and treat "the first trace of problem." Edwards and his wife, Elizabeth, announced earlier this year that her breast cancer had returned and spread.

"The whole idea is a continuum of care, basically from birth to death," he said.

An apple a day may keep the doctor away, but what could it possibly mean to make preventive care "mandatory"? Does Edwards mean to fine women who don't get mammograms once a year? How about colonoscopies for men over 50? Will chiropractic care be covered? Will it be mandatory for Americans to eat their vegetables and floss their teeth, among other prevention measures?

Creating a system that offers universal mandatory screening (for 300 million Americans) will only lead to enormous increases in health care costs, rationing, and longer waits for covered services.

"Mandatory preventive care" sounds appealing on the surface - who doesn't want less death and suffering? - but in reality it is an ill considered soundbite.

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

A little over three years after it was launched in 2004, Deputy FDA Commissioner and Chief Medical Officer Dr. Janet Woodcock reflects on what the Critical Path Initiative has achieved:

Since the initial report, we have broadened our thinking about the Critical Path Initiative to include veterinary medicines, generic drugs, and even foods. For all product areas, the basic idea is to reduce uncertainty about product performance throughout the product life cycle through scientific research. We have set up a large number of collaborations with partners to get this research done, in areas as disparate as drug manufacturing and clinical trial design.

Thanks to the efforts of many within FDA – and our partners in academia, the non-profit sector, and industry – the Critical Path initiative is off to a very good start. What is perhaps the most remarkable aspect of this initiative is that our progress to date has been achieved by drawing on existing financial resources, collaborative relationships, and the considerable efforts of many dedicated FDA employees. I hope that our efforts will continue to receive support, because the Critical Path truly holds the potential to usher in a new era of certainty and predictability in the development and performance of products that we regulate. The ultimate beneficiaries of our efforts will be the public that we serve.

The FDA has accomplished some signficant progress on the Critical Path agenda on a shoestring budget, but this also begs the question of whether or not another regulatory model might fit the emerging science - i.e., is the FDA the only agency or entity than can validate new scientific standards for, say, biomarkers?

Hat tip: Eye on FDA.

Posted by Paul Howard at 12:50 PM | Comments (0)

August 31, 2007

Cancer docs appealed to Medicare this week to relax controversial rules that limit their ability to prescribe anemia drugs to their patients:

An official with the American Society of Clinical Oncology, a powerful lobby of cancer doctors, said they will formally ask that the U.S. Centers for Medicare and Medicaid re-open a final rule issued last month tightening usage and dosing for the drugs.

"The proposal is unworkable and there is no evidence to support it at all," said Joseph Bailes, chair of the government relations panel at the American Society of Clinical Oncologists and a medical oncologist practicing in Houston.

This illustrates why, as Regina Herzlinger argues, Uncle Sam makes a bad doctor: federal agencies are driven to make knee jerk, cookie-cutter decisions that distort health outcomes.

Posted by Paul Howard at 11:52 AM

August 30, 2007

The Times details a new trend in health care: zero interest financing for (what seems to be) mainly cosmetic procedures.

Zero-interest financing, a familiar sales incentive at car dealerships and furniture stores, has found its way to another big-ticket consumer market: doctors’ and dentists’ offices.

But as the price of health care continues to rise and big lenders pursue new areas for growth, this type of medical financing has become one of the fastest-growing parts of consumer credit, led by lending giants like Capital One and Citigroup and the CareCredit unit of General Electric.

To which we have to say: Bring it on. Increasing price transparency in health care, and availability of credit, will help to make health care (slowly and piecemeal) more like a functioning market.

While insurance will still offer protection from catastrophic injuries and conditions, this burgeoning health care market for routine and optional treatments should help to control costs and offer consumers a broader range of affordable services.

After all, if you can get a zero-interest loan to buy a car, why not for lasik surgery?

Posted by Paul Howard at 02:24 PM | Comments (0)

USA Today chronicles Arnold's proposal for health reform in CA, which includes a tax on businesses and a mandate for individuals to buy health insurance, which looks at first glance like the plan Massachussetts passed last year.

The problem is that, relatively speaking the Bay State had it easy, with far less than a million uninsured residents. California has close to 5 million.

Still, before implementing billions in new taxes and new regulations, why not try inexpensive, incremental reforms like insurance deregulation and empowering consumers to purchase their own care from out of state?

The governor and the legislature can always build a big government health care program if that approach doesn't work. But ending such a program after the fact, no matter how dysfunctional, is nearly impossible.

Posted by Paul Howard at 11:54 AM | Comments (0)

In a Wall Street Journal op-ed today, Dr. Scott Gottlieb criticizes several recent government studies that purport to show that older, generic drugs are just as good as their newer, and more expensive, competitors:

The $725 million Women's Health Initiative was rooted in some good intentions, but was set against a backdrop of fiscal and political bickering over the efficacy of the costly drugs. Unfortunately, this influenced not only how the findings were computed but also how they were received. As this newspaper's Tara Parker-Pope first reported in July, when initial results confirmed populist refrains that the drugs were being overused, the data were rushed to print with a carefully orchestrated PR blitz, while subsequent efforts to test the initial conclusions were sluggish.

And unless something is done to make sure that data is shared, there will be many similarly flawed government studies to test the efficacy of drug treatments, especially the politically popular "comparative" studies that pit expensive new medicines against older, cheaper alternatives with the aim of cutting health-care spending.

The government's temptation to push cheap generics ahead of branded drugs is nearly irresistable, since there are many other competing interest groups (doctors, hospitals, et al) that stand to benefit from reallocating funds from prescription drugs to other services.

Still, some comparative effectiveness studies are undoubtedly worth doing and can help improve patient care, but we agree with Gottlieb that government studies have to be very carefully designed and should offer the same data transparency that policymakers routinely demand from industry funded studies.

Posted by Paul Howard at 09:41 AM | Comments (0)

August 29, 2007

Boston University economist Laurence J. Kotlikoff had an op-ed in the Boston Globe yesterday on health care reform that is eminently worth reading and considering. His answer in a nutshell: vouchers.

My solution is called the Medical Security System. It would eliminate Medicare, Medicaid, and (by dropping the tax breaks) employer-based healthcare. The government would give everyone a voucher each year for a basic health plan. The size of the voucher would be based on one's health status. Those in worse health would get bigger vouchers, leaving insurers no incentive to cherry-pick. Furthermore, insurers would not be permitted to refuse a voucher or otherwise deny coverage.

This is not a French, British, or Canadian solution. It's an American, market-based solution that Republicans should love. It's also a progressive solution that Democrats should love. (Democratic presidential candidate Mike Gravel has endorsed it.) The poor, who are, on average, in worse health, will receive, on average, larger vouchers. The rich will lose their tax breaks.

Posted by Paul Howard at 10:58 AM | Comments (0)

The National Cancer Institute recently released a new study showing that it is possible to cut development times for cancer drugs by using so called "Phase 0" testing, where a drug's mechanism of action is tested in patients using a biomarker to evaluate efficacy.

Translation: this new type of testing can cut 6-12 months from the time needed to move a drug from the lab bench to a patients bedside. And, when it comes to cancer, every month counts.

Instead of being tested in the traditional phase I clinical trial, which explores drug safety and tolerance, ABT-888 was tested in a new type of study called an early Phase I trial (also sometimes called a Phase 0 trial). Conducted as part of the pioneering NCI Experimental Therapeutics (NExT) program, this early phase I trial shows that using an approach that adds a focus on the mechanism of action (the specific target in a cell that the drug attacks) can reduce the number of patients required for an early clinical study, and the time necessary to gather critical information for development of the drug.

"The time from initiation of the trial to the analyses of the data that provided proof-of-concept was less than six months," said Shivaani Kummar, M.D., NCI Center for Cancer Research (CCR), who led the trial.

More, and better, drugs to cancer patients, faster. That's a recipe for success.

Posted by Paul Howard at 10:40 AM | Comments (0)

August 28, 2007

Last week, IBD ran an editorial on "what life under a nationalized [health care] system would be like" based on an article in London's Daily Mail.

In our continuing effort to reveal what life under a nationalized system would be like, we offer yet another set of illuminating examples, starting with the story of a baby born in the restroom of a British hospital.

Had this happened in a U.S. hospital, Michael Moore would have played it up in his film "Sicko." More proof, Moore would have huffed, that uncaring corporations and the free market that lets them run wild were ruining health care in this country.

Read the whole thing.

Posted by Paul Howard at 04:42 PM | Comments (0)

The idea that - like in every other industry - profits drive innovation in health care is practically heresy in certain quarters. But that doesn't make it any less true. Take this article in yesterday's New York Times, "Vaccines and Their Promise Are Roaring Back."

THE prospect of profit drives innovators, perhaps as much as solving the technical problems that make innovation possible.

This truism is gaining new currency among innovators in the once-legendary field of vaccines.

Actually, it's gaining new currency among payers - including governments - that once viewed vaccines as cheap commodities and paid companies accordingly. But as vaccine technology has improved, companies are now demanding a premium for their products, and generally getting it. Here's hoping that this trend continues.

Posted by Paul Howard at 04:35 PM | Comments (0)

August 27, 2007

Actually, truth be told, very stupid. Very, very stupid. Unbelievably stupid. Incredibly stupid. Amazingly stupid. Look-up-stupid-in-a-dictionary-and-you'll-find-these-guys'-photos stupid.

I refer to the geniuses at the California Restaurant Association, formerly opposed, as in 2004, to proposed California laws forcing employers to provide health insurance for their employees. After all, they are the ones who would have to pick up the tab for a system of medical socialism that would not and cannot "cover" everyone, in the relevant sense that not all medical demands can be accomodated, even by government, in a world in which resources are limited always and everywhere. No, costs would skyrocket and ubiquitous rationing would replace the system that we have now, as more government meddling would be called upon to fix the problems that government policy has created already.

That was then. Imminent legislative action on Arnold The Governator's health insurance proposal is now. And so the CRA has endorsed a sales tax increase to finance health care for the uninsured, and might consider support for a small payroll tax if that proved to be the only way feasible politically to forge a coalition on the issue. After all, says the CRA President Jot Condie, "We can't just continue to say no."

And why not, precisely? Well, sayeth Comrade Condie, they worry about what might happen if a Democratic governor succeeds Arnold in 2011: "You just don't know what you're going to get in four years under a different governor."

Well, Jot, actually we do. If it is a Democrat, as it almost surely will be, then he/she and the Democratic legislature will call your bet and raise, big time. A sales tax will become bigger and a "small" payroll tax suddenly will balloon. After all, once you give up the principle---if we want real reform, the market should be allowed to work, with some targeted provisions for the poor---and accept an employer mandate, then there is no limit in principle to the coverage that employers should be required to offer their employees. And if you can live with "small" tax increases, then you're just negotiating the price, as the old joke goes, and the sky is the limit when you're not one of the constituencies that the Legislature and (future) governor care about.

By the way, Jot, the decision last year by you and the Chamber of Commerce and the Business Roundtable and most of the other usual California business community suspects simply to enjoy Arnold's reelection---and not do very much at all to help the down-ballot Republican candidates---isn't looking so shrewd anymore, is it?

And speaking of constituencies, precisely what crisis here rationalizes higher taxes? The poor have Medicaid. The children of the near-poor have SCHIP. We are talking disproportionately about the young and the healthy and the middle class who are without "coverage" either temporarily or by choice, as they do not view health coverage as worth the cost. And why---precisely why---should anyone be forced to take part of their compensation in the form of health insurance anyway? And who in California cannot obtain needed health care? Actually, few if any, as anyone can get care at an emergency room, which may not be very convenient or very efficient, but which is world-class care nonetheless.

Actually, there is a class of people in California who find it increasingly difficult to get care: Medicaid beneficiaries, who are having more and more difficulty finding even primary-care doctors willing to treat them, let alone specialists, because government, which has interest groups rather than customers, always has powerful incentives to squeeze payments to providers at the expense of patient care. Do you think, Jot, that a system of "coverage" for all, mandated by Sacramento politicians, will be any better? If you do, you're even stupider than I thought. Obviously---obviously---price controls will be imposed upon the insurance "coverage" that everyone is required to carry, which means that payments to the doctors and hospitals will be squeezed, and so everyone will be forced into the nirvana that Medicaid recipients already are forced to confront.

Anyone with eyes to see knows that the health care crisis is a creation of government, with the federal tax subsidy for employer-provided health insurance the first culprit among equals. And what about all those state insurance regulatory mandates---California is no slacker in this context, Jot---that drive up the cost of coverage? Why don't you throw your weight behind doing something about that? Specifically: Allowing Californians to buy insurance from insurers in other states? That would be smart, not only for Californians generally, but also for the members of your association. A lot smarter than trying to do a deal with the Sacramento devils. Stupid is as stupid does.

Posted by Benjamin Zycher at 10:18 AM | Comments (0)

August 24, 2007

It just doesn't get any better than this. Today's Washington Times reports that Dr. Hillary Rodham Clinton (M.D., Beltway University School of Medicine; internship, Rose Law Firm Clinic; Residency, White House Travel Office Hospital) "promised yesterday that as President she would improve health care quality by raising standards for providers, educating patients and requiring insurers to reward innovation."

Now, this is rich on so very many levels. Federalism? Fuggettaboutit. The feds now will formulate "quality" standards for the delivery of health care services, a preposterous notion on the face of it in that much of the quality (or "art") dimension of medical care cannot be quantified, and so federal bureaucrats issuing edicts from the Beltway will have not a clue as to how to define, measure, or enforce such standards. Hillary is running on the basis of her "experience," in part, and this little window into her thinking (if it can characterized as such) reveals much about that purported experience, and it is not flattering.

Educating patients? About what, precisely? Will there be mini-me School of Medicine coursework on the HHS website? Or is it far more likely that patients will be admonished with such gems as "Be sure to turn your head before you cough," or "Don't pick a doctor at random," or "Generic drugs save big bucks," or "Brush your teeth at least twice a day."

Will Dr. Hillary become a sidekick for Dr. Isidore Rosenfeld Sunday mornings on Fox News? Or will she have her own "Ask Dr. Hillary" newspaper column? The point is that the potential for the infantilization of Americans is enormous when the Beltway takes on the task of "educating" us, an outcome as assured as it is appealing for those like Dr. Hillary who view the American people as children.

As for requiring insurers to "reward innovation," what happened to cost (i.e., spending) control? Will Dr. Hillary endorse high incentive payments for, say, new drugs? Not bloody likely, as my British friends say while idling their time on endless waiting lists in vain hope for the kind of care that medical socialism cannot deliver. The kind that HillaryCare would have promised for all of us.

I think that Dr. Hillary is about to learn the self-destructive properties of a lack of respect for Americans and the choices that they would make freely if only the Dr. Hillaries of the world would butt out. Because the ongoing attempt to talk down to everyone leads inexorably to a tendency to talk down to oneself. Does Hillary actually believe that the federal behemouth can measure medical quality, design a system of incentives yielding an increase in it, "educate" a population that cannot be induced to diet, and "reward" innovation while attempting to squeeze budget savings? Or does she not believe it, preferring instead to engage in the cynicism for which the Clintons are so renowned in matters large and small? It is far from clear as to which would be worse.

Posted by Benjamin Zycher at 10:56 AM | Comments (0)

The Wall Street Journal reports that Mitt Romney, former Massachusetts governor and current Republican presidential candidate, will lay out his vision for national health care reform today in a speech before the Florida Medical Association.

Romney's plan is expected to pursue deregulation and tax reform, rather than the insurance mandate program that he helped to enact while governor:

Mr. Romney plans to focus on tax breaks and streamlining regulations, policies his advisers say would essentially create a new, freer market for health insurance, driving down costs and providing incentives for individuals to buy their own plans. It is an approach President Bush and many Republican economists have embraced.

In today's speech, Mr. Romney will nod to his 2006 success in the Northeastern Democratic stronghold, aides say. But he will also aim to reassure conservatives by saying that a "one size fits all" solution isn't right for the 50 states. As for why he would use a different philosophy as president than as governor, they say he would have greater powers in the White House. "Massachusetts didn't have the federal tax code to play with," said Glenn Hubbard, a former Bush administration chief economist, now advising the Romney campaign.

The New York Times also offers its own description of the plan.

You can find more information on Hubbard's views on health care reform here: Healthy, Wealthy and Wise: Five Steps to a Better Health Care System.

The Council for Affordable Health Insurance has also (just this month) released a helpful primer on all the candidates health reforms plans, at least as they are known today.

We'll return to this topic in future posts, as more details become available.

Posted by Paul Howard at 10:44 AM | Comments (0)

August 23, 2007

If it is a truism that "no good deed goes unpunished", it should also be noted that no innovative health care service will go unchallenged by regulators.

The power of state and federal regulators to determine what health care services can be offered, how they are offered, and often even what price they may be offered at, provides many opportunities for anticompetitive behavior in health care markets.

This includes hospitals using certificate of need (CON) certification to protect themselves from comptition, hospital associations attacking physician-owned clinics (and successfully lobbying for a federal moratorium on such clinics), and - most recently - some physician groups criticizing convenient care clinics and calling for regulators to take action against them.

See, for instance, this story from the New York Times :

With demand for primary care doctors surpassing the supply in many parts of the country, the number of these retail clinics in drugstores has exploded over the past two years, and several companies operating them are now aggressively seeking to open clinics in New York City.

"We’ve got big problems in health care, and this is not the answer," said Dr. Rick Kellerman, president of the American Academy of Family Physicians. "They are a response, they are a niche market and an economic opportunity, but we still have an underlying primary care crisis in this country."

In New York state, for instance, regulators say there may be "possible violations of state law prohibiting unauthorized corporations like pharmacies...from delivering medical care."

In other words, the state has set up a barrier to entry into the market for health care services, thwarting competition with doctors offices. How convenient for doctors.

And all of this anticompetitive, cost-raising, innovation-choking regulation is justified in the name of protecting consumers. Which is the sheep's clothing in which all anticompetitive behavior is perennially cloaked.

Of course, as regulations drive up health care costs, those costs are then cited by proponents of single-payer health care that the market has "failed" and that consumer driven health care is an oxymoron.

But the correct observation is that a true market for health care services and insurance does not exist, so it cannot have failed.

Hopefully, consumer sentiment will check reguators "scrutiny" of convenient care clinics - and lead to more innovation in health care services for consumers.

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

Reputations lag far behind realities, and nowhere is that eternal truth illustrated better than in the august pages of the New England Journal of Medicine. Formerly a repository of scientific findings on the benefits of alternative treatment protocols and the like, the NEJM has evolved into a vehicle for the promotion of agitprop favoring single-payer socialism in medical insurance.

The latest example of such non-science gracing the pages of the NEJM is an editorial by Jacob B. Hacker, a political science professor at Yale, published in the August 23 issue. What is the source of the inefficiencies and the other obvious problems afflicting the U.S. health care system, and the difficulty of forging a consensus on reform? Is it the heavy tax bias toward employer-provided health insurance? Is it the erosion of discipline in the consumption of health care resources caused by third-party payment? Is it the obvious problems manifest in single-payers systems overseas, from which patients come to America for treatment?

Well, no. It is instead fear: The fear of the unknown by those who realize that current arrangements are highly problematic, but who simply do not understand the "a single public insurer is the only hope."

So there we have it. The public is dumb and trapped in a marriage with the devil it knows, and salvation lies with an extension of Medicare to all, "our country's most popular and successful public insurance program."

This editorial is so infantile that only the NEJM is worthy of it. The long-term fiscal implications of Medicare for all? Hacker has not a clue. The inevitable rationing of care as budget pressures force public officials to make choices on which treatments will be covered and which not? Hacker never heard of it. The inexorable squeeze on payments to doctors, hospitals, and other providers, as the bureaucracy in the here and now mandates "savings" from providers who are stuck in the system, at the expense of less supply over the longer term? Don't listen to those uncaring economists.

That the NEJM finds such drivel publishable truly is amazing, and, sadly, is an indicator of the politicized depths to which the journal has sunk.

Posted by Benjamin Zycher at 11:18 AM | Comments (0)

August 22, 2007

Just when we thought it was safe---just when the arguments in favor of extending a SCHIP program explicitly intended for poor children not eligible for Medicaid---were on the verge of self-inflicted collapse, the medical schocialism blob strikes back.

First, we have Ms Judith Stein, Esq., (a nice touch, that) in the letters section of the Wall Street Journal (August 17): "The... bill passed by the House of Represnetatives protects Medicare by reducing outlandish overpayments to private [Medicare Advange] plans that threaten the future of the entire Medicare program."

So there we have it: It is the monopoly position of the Medicare program that matters, rather than the individualized needs of actual patients. And because of "windfall subsidies, the number of private Medicare plans is increasing across the country... [but] that does notmean that there are more doctors in rural areas {or] more hospitals for low-income people..."

And that argument reveals so very much: Patients are idiots. They will sign up for (subsidized) Medicare Advantage plans even though no increase in access to actual medical care will result. And it is not the $75 trillion or so of unfunded liability that threatens Medicare; no indeed, it's the subsidies for Medicare Advantage! How can I say this gently? Only a lawyer could make an argument so utterly dumb.

And then there is Karen Lashman, Policy VP of the Children's Defense Fund, who argues (same day, same paper, same letters section) that "nearly nine million children are suffering without health insurance."

Oh, please. No one---no one---is denied needed health care in the U.S. because of a lack of financial resources; that is the fundamental meaning of the 1986 COBRA requiring emergency rooms to take all comers. It may not be very convenient. It may not be very efficient. But it is the highest-quality health care in the history of man, and the argument that "nine million children" (a phony number) "are suffering" is an appeal to the basest of emotional obfuscation.

That apparently is what the Children's Defense fund does best. Second on the list is the presentation of arguments in favor of subsidizing the middle class at the expense of poor seniors, a topic that we have visited here before. Is there an honest argument left anywhere in the Beltway?

Posted by Benjamin Zycher at 05:36 PM | Comments (0)

The FDA is leery about criticism that it isn't policing drug advertising enough, and some policy experts are concerned about drug spending. What to do? Apprently, make sure consumers don't have warm, fuzzy feelings about their meds.

Federal regulators plan to study whether relaxing, upbeat images featured in TV drug ads distract consumers from warnings about the drugs' risks.

The FDA says it plans to study how 2,000 people react to television drug ads to determine whether they have an overwhelmingly positive impression of products despite audio warnings about potential side effects.

The article goes on to say that "critics charge that images of smiling and relaxed couples and families featured in ads overshadow audio warning about possible complications."

This is laughable, and wrongheaded. First of all, prescription drugs are not available without seeking the advice and guidance of a physician - who is deeply learned about the risks of medicines. Second, statistics seem to show that many, many more Americans are undertreated for chronic ailments like depression, diabetes, and heart disease. Insofar as positive advertisements get people to consult their doctors they are a boon.

Last but not least, it is a bad idea to "balance" risks and benefits in advertisements, which could leave consumers under the unhelpful and untrue impression that the drugs they may take to treat illnesses are as dangerous as the illnesses themselves.

Consumers should certainly be educated about the risks and benefits of prescription drugs. And there is a real moral hazard associated with insurance coverage that may lead to some overconsumption of medical goods and services, including branded prescription drugs.

But we cannot expect consumer advertisements to become drug labels, especially since expert advice and alternative sources of information (from Consumer Reports and WebMD) are widely available.

Posted by Paul Howard at 03:51 PM | Comments (0)

August 21, 2007

Today, the London Telegraph runs yet another story on the United Kingdom's poor cancer survival rates:

Cancer survival rates in Britain are among the lowest in Europe, according to the most comprehensive analysis of the issue yet produced.

Survival rates are based on the number of patients who are alive five years after diagnosis and researchers found that, for women, England was the fifth worst in a league of 22 countries. Scotland came bottom. Cancer experts blamed late diagnosis and long waiting lists.

And which country tops the list in survival rates? Do you even need one guess? The U.S.

A second cited article notes that "countries that spent the most on health per capita per year had better survival rates."

More spending, of course, isn't always the answer. But besides leading the world in cancer survival rates, the U.S. also produces the lion's share of medical innovations on which other countries "free ride" through price controls and other restrictions.

So if the U.S. embraced market restrictions used in many other countries - like the U.K. and Germany, for instance - not only would U.S. health care innovation decline, but global health care innovation would falter.

Posted by Paul Howard at 06:36 PM | Comments (0)

"Rules May Limit Health Program Aiding Children." Yes, that modest headline sits atop today's New York Times, front page, column six, Robert Pear reporting, all hands on deck. The Bush administration is attempting to stop, or limit, the efforts by a number of states to extend SCHIP to children (and, by the way, adults) in families earning more than 250 percent of the federal poverty level, for the obvious reason that such expansions will move millions of kids with private insurance onto the government dole, with all of the privileges and perversities thereto pertaining.

Let us note for the record that the CBO reports that 80 percent of kids in families earning 200-300 percent of the poverty line have private health insurance. For kids in families earning 300-400 percent of the poverty line: 90 percent.

No matter: The compasschion of the annointed knows no bounds. And so some bureaucrat in New Jersey is aghast: "It will cause havoc with our program and could jeopardize coverage for thousands of children." A California bureaucrat: "[This policy is] much more restrictive than what we want to do." And then there is the fair Rachel Klein of Families USA, with whom I had the pleasure of a recent radio give-and-take on August 13 (see the "Fish In a Barrel" post below), quoted in an AP story Monday: "The effect of this policy is to have more uninsured kids."

Uh, no, my friends. The effect of shifting more people out of private coverage into government insurance, over time, will be increasing price controls, utilization constraints, and all the other perversities so familiar to those condemned to government health insurnace overseas, because government has interest groups rather than patients. Thus will increasing government"coverage" lead inexorably to less actual health care; this is obvious in the state Medicaid programs, which are experiencing ever-greater difficulty finding doctors willing to accept Medicaid patients due to low reimbursement schedules.

And by the way: If the fair Rachel and all the others are so passionate about being compassionate, why don't they advocate state implementation of their own respective versions of SCHIP, with their own eligibility rules and... their own tax dollars. That's right: No federal dollars, no federal rules, and no federal interference with compassion for the kids in the state capitals. Win-win! Well, not so fast. Our own tax dollars? Surely you (well, I) jest! Somehow, I have a vague sense that if the state advocates of government insurance for all kids had to raise the tax dollars locally, the enthusiasm for 300 percent or 400 percent of the federal poverty line would diminish sharply. But that's just me.

Posted by Benjamin Zycher at 05:59 PM | Comments (0)

August 20, 2007

Policy pundits who endorse a single-payor health care system for the U.S. like to laud Canada's system as fairer and better run - but they discount or ignore that country's health care woes.

A good corrective is to read this article from the Buffalo News on one patients attempt to get the Canadian government to pay for his cancer care - which he had to buy out of pocket in the U.S.

After battling brain cancer, Lindsay McCreith is ready for his next fight: He's taking on the Canadian health care system.

In Canada, McCreith's story reflects a debate, intensified by the long waiting times, between those who want more for-profit, private care and those who fear the rise of two-tier medicine that undermines the public system.

Critics of the U.S. system are right to point out that health insurance is unafforable or unaccessible for millions of the uninsured; but they forget that "two tier" health care regimes exist in public programs like Canada's Medicare, where some patients buy their way out of public queues, or are better equipped to navigate the system to find critical care.

The mistake is to think that the choice for U.S. voters is between the status quo and Canada. Market-driven policy fixes for the U.S. health care system can improve health care coverage without sacrificing innovation or leading to a government take over.

Posted by Paul Howard at 02:30 PM | Comments (0)

Helena, Montana---A 35-year-old Canadian woman has given birth to rare identical quadruplets... at a Great Falls [Montana] hospital....---Associated Press, August 16.

Well, now, a hearty Mazel Tov to J.P. and Karen Jepp of Calgary, where the "hospitals were at capacity." Imagine that: The single-payer Canadian medical care system so beloved by the likes of the ineffable Krugman and various politicos inside the Beltway---always determined to demonstrate their compassion by spending other people's money---couldn't handle the surge. And so for Canadian patients in need of medical care, it is the Great Satan that provides the safety valve. I'm surprised that Michael Moore didn't cut his workout short so as to fly the Jepps to Havana on his private jet. What is not surprising is that a government system driven by interest group demands rather than the needs of patients was found to be---what's the courteous phrase here?---a little short that day. And the day before and the day after and the day after that ad infinitum. "Coverage" is not health care and government coverage inexorably becomes a death sentence for some as rationing becomes the fallback position in light of the eternal truth that resources are limited always and everywhere. That is the reality into which the Jepp babies were born, and as they will be a blessing for their family for many, many years, may we Americans not find ourselves blessed with the compassion of the bureaucracy.

Posted by Benjamin Zycher at 02:27 PM | Comments (0)

August 17, 2007

There is a nice article in the August 15 issue of JAMA by Dr. Avery Tung, discussing the agony, doubt, and pain of deciding on the proper course of treatment---or nontreatment---for a loved one suffering from a terminal disease. It can be found here. In particular, he notes that "a world where intuition always agrees with statistical reality, and where convincing families to withdraw care is easy, may just be a little bit colder than the one we live in."

Yes, indeed: Families often know more than the professionals. And, particularly in a world in which they bear the cost of decisions in favor of expensive treatment (or the past cost of insurance covering such treatment), it is wholly appropriate that such care be given. And so let us ponder the future world that many wish for all of us, in which government picks up the tab and so calls the tunes. Can anyone believe that the preferences of families will count for much in that world? The question answers itself. And so yet again the nature of government compassion is not too difficult to predict.

Posted by Benjamin Zycher at 08:36 PM | Comments (0)

August 16, 2007

The august NEJM today published an editorial by one Jerry Avorn, M.D., and all you need to know about it is the opening sentence: "In many sectors of American life... the government stands poised between powerful industry groups and the needs of the citizenry."

Thus began "Keeping Science on Top in Drug Evaluation." Yes, Dr. Avorn actually believes that government bureaucracies have both the information and the incentives needed to protect helpless consumers. Is there any hint at all in this missive that the FDA might have political incentives to keep drugs off the market too long? Well, no.

More to the point, the "science on top" mentality is fundamentally wrong, because "science" cannot tell us the correct tradeoff between safety, effectiveness, adverse effects for given patients, etc. That sort of evaluation is impossible for a top-down regulatory system; only individuals can know what tradeoffs they are willing to accept. But that is no matter for the likes of Dr. Avorn: Citizens are children and Science and Big Government are Mommy and Daddy. Or is it Daddy and Mommy? I doubt that Avorn realizes that Big Government is always the Daddy in a family in which abuse is the norm rather than the exception. Precisely what is it about medical training that yields expertise in policy analysis?

The end of the article notes that Avorn has been a pro bono expert witness for plaintiffs in Vioxx lawsuits. That speaks so very loudly.

Posted by Benjamin Zycher at 06:27 PM | Comments (0)

August 15, 2007

It seems that the Congressional supporters of SCHIP expansion---let me be blunt, the Democrats---now are running ads in the districts of Republican opponents, arguing that "Republicans who continue to vote... against children and seniors in their districts will be held accountable."

So: Will such crude agitprop succeed in holding anyone accountable? I rather doubt it, particularly given that the truth about the proposed SCHIP expansion is easy to explain in a soundbite: It is intended explicitly to subsidize the middle- and upper-middle classes by reducing subsidies for poor seniors in Medicare Advantage programs. And, again explicitly, it is intended to shift millions of middle-class kids and adults out of private health insurance and into a government system.

That the Dems actually seem to believe that these goals are a political winner speaks volumes about their political judgment. And, oh, by the way: How come advertising is OK for them but not for drug companies? Just asking.

Posted by Benjamin Zycher at 10:30 AM | Comments (0)

August 14, 2007

Ah, democracy. Old Glory. Hot dogs, balloons, and parades. Wet kisses lingering on the faces of helpless infants. And now... "Walk A Day In My Shoes."

You just can't make this kind of stuff up. Senator Hillary Rodham Clinton yesterday spent two hours "shadowing" a nurse---Michelle Estrada, chosen, of course, at random---in a ward at a hospital in Henderson, Nevada. According to USA Today, "Nurses often have five or six patients per shift, but Estrada on Monday had only four patients to accomodate the newspaper reporters, television crew, and Secret Service agents that followed Clinton."

So once again, Hillary's involvement, so very representative of government, leaves some patients out in the cold. Or are other nurses required to pick up the slack? Did Hillary, or anyone, walk in their shoes?

That question answers itself. The "Walk A Day In My Shoes" gambit is sponsored by the Service Employees International Union, which has announced that "presidential candidates must participate in the program to be considered for an endorsement from the union." So forget the patients or the nurses or any of the little people; it's when the union says "jump" that Nurse Hillary begins to do her dance.

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

August 13, 2007

Just finished a radio debate on SCHIP expansion with the fair Rachel Klein of Families USA, who tried to argue that the additional $50 billion in SCHIP funding now advocated by the Congressional Democrats is not aimed at moving the middle class from private to government health insurance. Nosiree. All they want is coverage for the "9 million" (a phony number) kids now without coverage, about "two-thirds" (actually, three-quarters) of whom already are eligible for Medicaid or SCHIP.

No, really: That was her argument. And what about the attempt to expand eligibility to kids in families earning 300 percent of the federal poverty line ($62,000) or 400 percent ($82,600)? Of the kids in families earning 200-300 percent of the federal poverty line, 80 percent already have private health insurance. For kids in families earning 300-400 percent: 90 percent. So, in no way are the Democratic proposals really aimed at shifting people out of the private sector and onto the government dole. Nope. No way. No, ma'am. Get out of here.

And the fair Rachel had nothing to say about the attempt to fund the $50 billion by gutting Medicare Advantage, that is, to subsidize the middle class by sticking it to poor seniors. Nor was she aware, apparently, that most SCHIP programs pay doctors and hospitals at Medicaid rates, a system of price controls that has yielded real problems for the poor in terms of finding doctors generally---and specialists in particular---willing to see them.

I'm amazed that she failed to pull out the "compassion" argument; you know, the one under which those willing to spend unlimited amounts of taxpayer dollars are compassionate, while the green-eyeshade types among us are heartless, cold, uncaring, immoral.

It should always be this easy.

Posted by Benjamin Zycher at 12:55 PM | Comments (0)

August 10, 2007

The Court of Appeals for the D.C. Circuit ruled earlier this week that terminally-ill patients do not have a constitutional right to potentially life-saving drugs, notwithstanding the utterly clear language of the Fifth Amendment: "...nor [shall any person] be deprived of life, liberty, or property, without due process of law..."

Judge Thomas Griffith, writing for the majority, argued that "Terminally ill patients[']... deaths can certainly be hastened by the use of a potentially toxic drug with no proven therapeutic benefit."

So: The right to life and to self-defense is trumped by the risk/benefit analysis driven by the political imperatives of the FDA. And Judge Griffith apparently believes, in all seriousness, that to be a constitutional principle! Government simply can deny potentially life-saving treatment by regulatory fiat, and that qualifies as due process.

It really is quite amazing, even as it is utterly depressing. A full disclosure: I was one of five scholars who filed an amicus brief in the case, which can be found here.

Let us pray that the Supreme Court grants certiorari in this case, and that five justices can be induced to understand that the regulatory state does not trump the constitution.

Posted by Benjamin Zycher at 02:49 PM | Comments (0)

August 09, 2007

Sigh. When last we looked to the southeast, we found Publix Super Markets offering "free" 14-day prescriptions for a number of commonly-used antibiotics. And Florida Governor Charlie Crist was very happy to help Publix make the announcement, with the television cameras only a few feet away.

That was a couple of days ago. Publix announced yesterday that, yes, their offer of free antobiotics stands, like Stonewall Jackson at the the Battle of Chancellorsville (until night fell, anyway), but their practice of matching Wal-Mart's $4 price for many generic medicines now is, as the oldtimers used to say, inoperative.

And let me say that I am shocked, shocked, to find Governor Crist nowhere in the general vicinity of this latest announcement. Maybe today is Prius appreciation day in politically-correct Tallahassee. No matter. Publix' version of Emily Litella's "Never mind" reminds us that no free lunches are to be found; we can pay now or pay a lot more later. Publix ultimately has to satisfy not the editorial writers or even Governor Crist, but instead that big booming capital market, in which investors are a good deal more interested in doing well rather than good. And let us not forget that ultimately it is capitalism and the wealth that it generates that enables any society to display the compassion---the moral obligation to those less fortunate---for which the political class applaudes itself as it spends other people's money.

Posted by Benjamin Zycher at 06:19 PM | Comments (0)

The U.S. Court of Appeals for the Federal Circuit has upheld a lower court invalidation of the District of Columbia law imposing price controls on drugs. That law proscribed prices that are "excessive," whatever that means. In any event, the lower court had ruled that the patent laws preempt efforts by the D.C. government to steal intellectual property. A small news item on page B37, a giant leap for efforts to prevent legalized theft. Who says there's no good news?

Posted by Benjamin Zycher at 12:44 PM | Comments (0)

Yes, I admit it: The phrase "free lunch" is a bit slanted, however useful. Also useful is a NY Times column by David Leonhardt on the topic of preventive care and cost savings, which can be found here.

Posted by Benjamin Zycher at 08:16 AM | Comments (0)

August 08, 2007

A new study reveals that "for children whose health insurance doesn't cover newly recommended shots, it is better to have no insurance at all." After all, "free vaccines are available to children who are uninsured or qualify for public insurance."

Oh, dear. The list of medical goodies that health insurance policies could cover is infinite, and someone would have to pay for such coverage. And someone has to pay for the "free" vaccines offered to the kids who are uninsured privately. And so it is clear that this "study" fails to address the fundmental question: Is the central purpose of insurance risk-pooling and avoidance of heavy financial losses? Or is it pre-payment for most health care services? Why not insurance for, say, groceries?

The news reports note that "parents would have to pay $400" for a group of five vaccinations; is that really too much for parents not poor? Precisely who is it buying all those flat-screen TVs, anyway? The study's lead author, Grace Lee of Harvard Medical School goes on to observe that "health-insurance plans are not necessarily keeping up with the new vaccines, posing significant ethical dilemmas to public health clinics." Uh, no. The ethical failing is that of those parents for whom $400 or even $1000 is too much to spend for their kids' wellbeing. Even given multiple children, those sums simply are not all that much, particularly if spread over, say, a year. And the more that government is called upon to serve as the substitute parent, the more our liberty will be eroded generally, and the more prices will be squeezed and innovation dampened. So much for the children.

Posted by Benjamin Zycher at 02:55 AM | Comments (0)

August 07, 2007

Publix supermarket chain said today it will
make seven common prescription antibiotics
available for free...
---News Report, South Florida Sun-Sentinel,
August 7

Well, isn't this just dandy? Florida Governor Charlie Crist certainly thinks so, so much so that he "went to a suburban Fort Meyers store to help the company make the announcement..." Now, it's not quite clear what kind of "help," precisely, was needed by Publix in an announcement of free pills, but never mind. Crist is hardly the only politico known to take credit for the generosity of others, but---let me be blunt--- his observation that "It can't be any more affordable than free" is infantile even by normal political standards.

But never mind that either. Let us consider instead a few implications of "free" antibiotics less than entirely salutary. Since the usual suspects love to assert that drug advertising leads patients to pressure their doctors for inappropriate prescriptions---a claim far from obvious and not consistent with the available evidence---it follows that free antobiotics will lead to overuse, increasing drug resistance for various pathogens, and thus medium-term outcomes for which neither Crist nor any other politician will be anxious to claim credit. At a minimum, it is not hard to predict that both doctors and patients, given a choice among alternative antibiotics available to treat a given condition, will be led to try the freebies first, thus skewing the mix of medicines used and so increasing the resistance problem.

And if commonly-used antibiotics can be free, why not other drugs as well? Thus will this little foothold lead to political and other pressures for things bigger, which might be applauded by such as Governor Crist, but which promise only increased sufferings over time as pharmaceutical prices are squeezed and the future development of new and improved medicines is reduced. So much for the children.

Nothing is free. The only question is which economic and social arrangements yield the maximum benefits for mankind over time. This particular "free antibiotics" stunt by a business firm is voluntary, that is, not imposed by government, and so is wholly defensible on its own terms, but that does not answer the larger problem of the use of political and regulatory processes to demonstrate "compassion" by spending other people's money. That is the larger implication of Governor Crist's enthusiasm for taking credit where he has earned none, and it is very unlikely to prove a happy one.

Posted by Benjamin Zycher at 01:07 AM | Comments (0)

August 06, 2007

Back from a week-long vacation. Tanned. Rested. Ready. Overflowing with vim and vinegar. Anxious to get back to work fighting for market competition in health care.

And now... depressed. Why, you ask? Because only minutes after returning to my desk, I am shocked to learn that I am utterly "immoral," in that I intend to "[steal] healthcare from babies."

No, I am not kidding. And it must be true, as these charges appear in the august pages of, respectively, the New York Times and the Los Angeles Times, giants of traditional journalism, on the op-ed pages of which appear the above measured words of the ineffable Paul Krugman and Ronald Brownstein, true giants of the trendy cocktail-party circuit. They are the ones who have informed me of this perfidy, with respect to which Yom Kippur cannot come too soon and no amount of fasting will be sufficient for purposes of atonement.

So: Precisely what have I done this time to earn such opprobrium? Well, it appears that Congress is on the verge of passing a massive increase in government health insurance "coverage" for poor children not eligible for Medicaid. And I oppose this! Motherhood, apple pie, and health care "coverage": Is there no limit---any at all?---to the depths to which I am willing to sink?

Now, to be fair---not that I deserve any such consideration---many of the newly eligible under this expansion of SCHIP will be neither poor nor children. And then there is the small matter that "coverage" is not health care, as anyone forced to endure the inexorable rationing rampant under such single-payer systems as those observed in Canada and the UK knows all too well. And, oh, by the way, have Krugman or Brownstein heard about the increasing difficulties encountered by Medicaid patients in efforts to find a physician actually willing to see them under the fee schedules imposed by the state governments? Well, I am certain that they have, but such details tend to disappear down the memory hole when opportunities to unleash "immorality" accusations and references to "babies" emerge. Yes, the schalami-schlice schocialism in health care attendant upon the proposed expansion of SCHIP promises---no, guarantees---a price squeeze on doctors and hospitals, with all the adverse implications obvious in terms of the long term impact on the supply of medical services and the development of medical technology. This, by the way, is what passes for "compassion" among the self-appointed guardians of morality, babies, kittens, and puppies, whose favored nostrums are utterly destructive no merely as a matter of principle, but as a matter of empirical truth.

Nor do Krugman and Brownstein bother with the eternal reality that resources are limited always and everywhere, so that the expanding costs and pressures engendered by their version of "compassion" lead to government choices---make that political choices---about who will be allowed to obtain what services. Krugman, by the way, in a rare moment of candor admitted this explicitly in an op-ed column in the NYT published December 26, 2005; perhaps he now believes that resources have become infinite in the last year and a half. And then there is the crowding out problem: Why should employers and employees pay for private insurance when the feds will provide it courtesy of taxes paid by that other guy behind the tree?

Yes, I could go on. But it would be wrong, and haven't I done enough wrong already? I guess vacations now are out---my wife is not going to be happy about this---and I will not be able to live with myself unless I somehow can earn back the trust, respect, and lofty opinions of Krugman, Brownstein, and other such defenders of morality in public finance. No more time off and no more baby killing for me: Idle hands indeed are the work of the devil. 666.

Posted by Benjamin Zycher at 12:56 PM | Comments (0)

August 03, 2007

As reported by the New York Times, the Senate voted last night (by an apparently veto-proof majority) to approve $35 billion in new funding for the State Children's Health Insurance Program:

The House passed a much larger bill on Wednesday, presenting negotiators with a formidable challenge in trying to work out differences between the two measures.

If Mr. Bush vetoes the bill, the future of the program would quickly become an issue in 2008 campaigns for Congress and the White House, in the context of a broader debate about universal coverage for health care.

Ben and I have blogged quite a bit on this topic, so I'll leave it at saying that the Times is correct: this is just a preliminary skirmish over the Presidential health care debate in 2008.

Posted by Paul Howard at 12:01 PM | Comments (0)

August 02, 2007

The Journal (what can I say, the editors run interesting stories) has a fascinating article today on an emerging dispute between cancer drug companies and the FDA over what standards should be used to approve drugs based on cutting edge science. The argument is that some treatments may not fit easily into the FDA's existing regulatory structure. Read the whole thing and make up your own mind.

But the thing that struck me was the following, from the FDA's director of medical policy, Dr. Robert Temple:

FDA officials defend the current approval standards, saying it is better to delay a new drug until there is definitive proof it works. "I don't think you want the FDA to approve a drug saying there's a chance this works. I think you need to know the therapy works," says Robert Temple, director of the office of medical policy at the FDA.

"If somebody uses a vaccine that doesn't work, they will be forgoing something else," Dr. Temple says. While he recognizes that some patients have "no options left," he says the best route for them is to appeal to the FDA and to drug manufacturers for permission to use experimental medicines.

I understand Dr. Temple's point, but I would also reply that most drug treatment is "experimental" in the sense that physicians often don't know - especially in complex diseases like cancer - whether or not a therapy will work in a specific patient before they try it.

Many drugs work only in a relatively small subset of the population (with exceptions, of course) and so most of the time physicians are trying a "let's do this and see if it works" approach. (There's nothing wrong with this, it just reflects the state of our medical knowledge.) But this also means that every time you try a new treatment you're forgoing the use of some other treatment that might work better. For most of us, failure just means switching to a different painkiller or statin. But the stakes are much higher in cancer, when lives can be measured in months.

Now, Dr. Temple can argue that our degree of confidence that a given cancer drug works ought to be very high, but individual clinicians and patients are going to disagree with him because their individual tolerance for risk or uncertainty is going to be different.

And the drug discovery process is also iterative. Doctors expand our knowledge of effective treatments by using them in ways companies and the FDA would never predict; indeed, as I understand it, close to half of all cancer drugs are used "off-label", i.e. for some other indication than is listed on the FDA-approved label. So there is plenty of drug "R&D" going on outside the FDA's purview just in the normal course of physician practice.

From my perspective, the question is is there another way of approving medicines based on novel mechanisms (like the cancer vaccines discussed in this article) that would help lower the costs and time required to get promising new treatments to patients? Former FDA Commissioner David Kessler says that "we have to find creative ways of getting cancer drugs to patients even if we end up being wrong a few times." I agree wholeheartedly.

Posted by Paul Howard at 02:14 PM | Comments (0)

RediClinic CEO Web Golinkin has an op-ed in the Wall Street Journal today that explains the function of convenient care clinics and how they fit into America's health care markets:

Convenient care clinics are small health-care facilities with new brand names like RediClinic, MinuteClinic, and Take Care Health Clinics. Most are located in high-traffic retail outlets with pharmacies, such as Wal-Mart, CVS and Walgreen stores. Regional health-care systems have also opened retail-based clinics in their service areas, either directly or in partnerships with independent operators. These clinics generally are staffed by certified nurse practitioners who diagnose, treat and prescribe medications for a limited set of common ailments, such as strep throat and ear infections. They also administer health screenings, medical tests, immunizations, basic physical exams and other preventive care.

Convenient care clinics have been embraced by consumers, who give them consistently high marks for patient satisfaction: 97% of the more than 4,000 RediClinic patients surveyed this year said they would recommend RediClinic to their relatives and friends. This is because the clinics are delivering something that is all too rare in our system -- convenient and affordable health care.

Convenient care clinics are emerging as valuable health care providers, helping to alleviate overcrowding in hospital emergency rooms and doctor's offices. They do this by taking relatively simple cases, where care protocols are very well established, and treating them in low-cost, high turnover environments. And, in the process, they are helping physicians focus their time and energy on the most complex, high need cases.

Posted by Paul Howard at 01:28 PM | Comments (0)

August 01, 2007

There are dueling perspectives on the FDA today in the Boston Globe and the Wall Street Journal. Susan Woods and David Michaels argue in the Globe that the FDA's ability to assess the risks of new drugs and devices has been undermined by user fees and conflicts of interest on advisory committees:

The FDA's ability to identify the adverse risks of approved drugs is further limited by the Prescription Drug User-Fee Act, which became law in 1992. The law directs the agency to collect user fees from drug manufacturers for the purpose of speeding up the review process, and it limits how the agency can spend the funds. As it has turned out in practice, this system has also drawn funding away from other critical FDA functions, including inspections, oversight of advertising, and the scientific infrastructure of FDA. A similar law created user fees for medical devices. This also focuses on quick approvals rather than inspections, long-term safety studies or other safeguards.

User fees appear to save the taxpayer money, but the cost to the public is unacceptable. More medical products are approved more quickly, but with less information about their dangers. But the efficient review of applications for new drugs, vaccines, and devices does not have to conflict with improved safety analysis and monitoring. With adequate support, we can develop a system that maximizes both.

On the other hand, Richard Miller, writing in the Journal, argues that the FDA is rolling back the clock on regulations and slowing access to new cancer therapies:

Current FDA policies are discouraging the development of groundbreaking treatments for cancer and other killer diseases, turning the clock back on hard-won regulations put in place in response to the AIDS crisis that allow patients faster access to new drugs. Case in point: This week, facing rejection by the Agency, GPC Biotech withdrew its New Drug Application (NDA) for Satraplatin, a drug to treat prostate cancer -- despite data from a large controlled clinical trial showing the drug delayed tumor growth in patients where the disease is widespread.

Sadly, far from being an aberration, Satraplatin is the fifth promising cancer treatment set back by the FDA this year.

I tend to agree more with Miller's critique than with Woods and Michaels. Just because we are detecting more high profile drug risks doesn't necessarily mean that the background rate has changed.

The new 24 hour media environment, concerns over health care costs, more treatments for chronic disease, massive electronic databases that are open to search (and conflicting interpretations) all combine t0 generate controversy and a feeling of crisis at the FDA when a safety signal is detected, even though the agency might actually be doing as good - or better - a job as it has ever done. (This analysis from the Milken Institute is very much worth reading on the relative trade-offs of speed and safety. Note: registration required.)

There is no similar hue and cry if the FDA declines to approve a drug that was, in fact safe and effective.

Also, blaming PDUFA restrictions for the FDA's budget woes is unfair. The NIH's budget has seen a vast increase in recent years, while the FDA's has been basically flat. If Congress wanted to give the FDA substantial new funds to improve drug safety tools it could have. I also think that Woods and Michaels are alarmist about conflict of interest rules - as John Calfee argued on MPT last year.

Having said that, Woods and Michaels do raise very important points. They are correct that the agency needs new resources and tools to help improve postmarket surveillance. And it should look for new tools to streamline and improve pre-market testing, through substantial new funding for the Critical Path.

My vote would be to use technological tools to speed more new drugs to market at less cost in return for enhanced post-market surveillance. This would maximize innovation and improve safety - and reconcile the goals of (nearly) all the FDA's critics.

Posted by Paul Howard at 12:17 PM | Comments (0)

Derek Lowe's outstanding blog "In the Pipeline", had a great post Monday on the Avandia hearing which I am (sadly) just getting around to reading now. But it well worth reading in its entirety:

I have to say, I think the FDA vote on Avandia (rosiglitazone) was well done. As those following the story know, David Graham at the agency had been pushing to have the drug removed from the market, but a panel just voted 22 to 1 to keep it, albeit with warning labels and stricter standards for use.

Avandia may well be taken off the market when more data come in. And if that happens, then we'll know that it was the right decision. But we don't know that yet. How, I wonder, will this vote affect the lawsuits that are already being prepared? Can you sue for being (allegedly) harmed by a drug the FDA just re-reviewed and decided to keep?

I think the answer to Derek's last question is: Yes, and we'll see them coming by the bushel soon.

Posted by Paul Howard at 10:30 AM

July 31, 2007

Yesterday, after a contentious FDA advisory panel meeting that underlined divisions within the agency over the safety of Avandia, the panel voted overwhelmingly to keep Avandia on the market, albeit with an increased warning about a potential heart attack risk:

Panel members said that studies concerning Avandia were too murky to merit drastic regulatory action and that other diabetes medicines might have similar risks.

The votes — 20 to 3 on the heart attack risk and 22 to 1 on the marketing — were cast after an extraordinary meeting in which officials from the Food and Drug Administration, which brought the committee together, openly disagreed with one another on the course to take.

So what is the "take away" message here? How about that we need more "me too" drugs. Although critics attack the idea that drugs with similar efficacy mechanisms may have different safety and efficacy profiles (think Vioxx v. Celebrex), several recent safety disputes facing the agency - for SSRIs, COX-2 inhibitors, and now Avandia, have all underscored how risks and benefits within drug classes can vary.

We are also learning that the translation of safety signals from clinical trials to "real world" use can be incredibly complex, and that the FDA is only beginning to learn how to interpret masses of data streaming in from multiple sources.

For instance, at the Avandia hearing, the Times reports that "executives from Tricare, a managed care company that serves active and retired military personnel, and WellPoint, a huge health insurer, said they had found no evidence in their records that patients given Avandia had suffered more heart attacks."

The data is murky, and the FDA should invest significantly in additional post market safety sureillance tools to help physicians and patients navigate these kinds of tricky questions. But, at the same time, the agency should continue to rapidly approve new medicines to ensure that patients have many effective therapeutic options to choose from.

Posted by Paul Howard at 04:50 PM | Comments (0)

The Kaiser Family Foundation has posted a helpful round-up of SCHIP bills in the House and Senate, along with financial scoring from the CBO. Enjoy.

Posted by Paul Howard at 04:31 PM | Comments (0)

While the debate over introducing genetically engineered animals into America's food chain has yet to be resolved, it seems that we are somewhat closer to having products from transgenic animals in our medicine cabinets, at least according to the New York Times:

A herd of goats engineered to produce a therapeutic human protein called antithrombin in their milk live on a farm in central Massachusetts. The animals are owned by a company called GTC Biotherapeutics, which extracts the protein for use in treating a human hereditary condition in which people lack antithrombin, which helps keep blood from clotting.

Pharming Group, a Dutch company, has applied for European approval of a drug made in the milk of transgenic rabbits. Pharmathene, based in Annapolis, Md., is developing transgenic goats whose milk produces an antidote to nerve gas.

Now, does this mean that the Department of Homeland Security will eventually start running "Got Milk?" ad campaigns?

Posted by Paul Howard at 04:02 PM | Comments (0)

July 30, 2007

Well, isn't that convenient? It allows Professor Krugman to abuse and distort the arguments of his intellectual opponents without ever actually confronting them.

In today's column, "An Immoral Philosophy", Krugman argues that what motivates the President to oppose a massive expansion of the State Children's Insurance Program (SCHIP), is that the President, and by extension anyone who opposes SCHIP expansion, just doesn't want the government to do anything "good":

And here you have the core of Mr. Bush's philosophy. He wants the public to believe that government is always the problem, never the solution...So his philosophy says that the government must be prevented from solving problems, even if it can.

Does Krugman not know - or not care - about the phenomon of government insurance "crowd out", widely documented by the GAO, CBO, and respected economists like Jonathan Gruber?

The genuine free market criticism of SCHIP is that it has mutated away from its original purpose as a targeted safety net for poor children. The CBO pointed out this year that the year the program started (1997) 60% of the children who enrolled had been previously covered by private insurance, and that for every 100 new enrollees between 25 and 50 are dropping private coverage.

Furthermore, the vast majority of the children who would be covered by the proposed expansions already have private health insurance. The SCHIP debate then is, at root, not about insurance, or compassion, but whether we should be shifting families and children from private insurance to public insurance as a new middle class entitlement.

Professor Krugman favors univesal, government run health care, so he likes this idea. But it has nothing to do with morality. It is an arugment about means (what is the best way to insure the uninsured?), not ends (conservatives do, in fact, support a safety net for poor, uninsured children).

Krugman says to his readers that his charges against conservatives "sounds like a caricature". That is because it is a caricature, a shrill parody that uses strung together quotes meant to inflate his views beyond debate or criticism.

Posted by Paul Howard at 02:20 PM | Comments (0)

The New York Times ran a very good article yesterday on U.S. cancer care, which is generally excellent but also widely uneven.

Similar concerns can also be raised for other complex, chronic illnesses where it is important for patients to be treated by physicians who have lots of experience treating the disease and who are best equipped to produce better outcomes for patients. However, in our fragmented, third-party system, it can be very hard for "average" cancer patients to access the best care at places like M.D. Anderson or Memorial Sloan.

What can we do to improve the situation? Empower patients by letting them control more of their own health care spending, and deregulate health care providers, making it easier for doctors to form what Regina Herzlinger calls "focus factories".

Already, however, companies like Best Doctors are helping ordinary patients navigate the health care system and access the highest quality care. When companies and doctors are allowed to innovate - and there are many regulatory forces inhibiting health care innovation - the market can accomplish extraordinary things.

Posted by Paul Howard at 12:00 PM | Comments (0)

July 27, 2007

If you want to find out what's really going on, ignore the front pages. Turn instead to page B37, where the little land mines being buried by the Beltway geniuses are noted for the record, and for the amusement of such antisocial types as, well, the Beltway writ large, which believes with all its heart and soul---or as much heart and soul as it actually can muster---that the economy, the Nation, the Planet simply cannot be saved unless others are forced to sacrifice.

So what is it this time? Well, the health care legislation introduced on Wednesday in the House Energy and Commerce Committee has a provision (Section 651) prohibiting doctors from referring patients to hospitals in which they have an ownership interest.

This stroke of genius, you see, purportedly will prevent conflicts of interest. Or something. Au contraire, my friends: It will prevent physicians from diversifying their activities in a world in which they face price controls at every turn, thus reducing the long run provision of medical services. And the conflict-of-interest argument is simply wrong: Uncompetitive prices at the hospital will reduce earnings at the pre-hospital stage of physician service, because it is the package of medical services that patients actually are buying, either directly or through third-party payment. Do the politicians actually not understand something so straightforward? Well, apparently not. They must read the front pages.

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

CNN reports on a study finding that doctors get better with practice (pun intended).

They tracked success rates of a procedure to remove the prostate gland in men with prostate cancer and documented the "learning curve" doctors face as they perform operations over and over.

"The learning curve for prostate cancer recurrence after radical prostatectomy was steep and did not start to plateau until a surgeon had completed approximately 250 prior operations," the researchers wrote.

For more tips on how to find the right doctor, check out Jerome Groopman's excellent new book, How Doctors Think.

Posted by Paul Howard at 03:55 PM | Comments (0)

Dr. David Gratzer, an MI senior fellow and practicing Canadian physician, had an op-ed in Investor's Business Daily yesterday on the perils of socialized medicine.

Consider the recent British controversy over a cancer patient who tried to get an appointment with a specialist, only to have it canceled - 48 times. More than 1 million Britons must wait for some type of care, with 200,000 in line for longer than six months. In France, the supply of doctors is so limited that during an August 2003 heat wave - when many doctors were on vacation and hospitals were stretched beyond capacity - 15,000 elderly citizens died. Across Europe, state-of-the-art drugs aren't available. And so on.

For more of David's thoughts on health care, check out this interview on Instapundit.

Posted by Paul Howard at 02:18 PM | Comments (0)

An FDA advisory committee will meet on Monday to evaluate evidence of an increase in heart attack risk for patients taking the diabetes drug Avandia. The Times reports today that a preliminary report by FDA reviewers seems to reinforce concerns:

Patients who take Avandia, a popular diabetes medicine, face an increased risk of heart attacks while those who take Actos, a similar drug, do not, federal drug reviewers conclude in a new report.
Avandia, made by GlaxoSmithKline, is particularly dangerous to patients who take insulin, the review found, a risk not found with Actos, made by Takeda.

The drugs, which increase the body's sensitivity to insulin, were each taken by about one million patients last year. The Food and Drug Administration should issue strict warnings about Avandia's heart attack risk, the reviewers concluded. On Monday, the agency is planning to ask an independent panel of experts whether they agree with stronger warnings or want the drug removed from the market.

"A critical question to be resolved in determining appropriate regulatory action is whether the anticipated therapeutic benefit of rosiglitazone outweighs the demonstrated cardiovascular risk," one agency reviewer concluded, referring to Avandia by its generic name.

The only certainty at this point is that plaintiff's lawyers are lining up clients to sue GSK - and that the FDA's reputation is taking another blow at a time when it can ill afford it.

Posted by Paul Howard at 12:01 PM | Comments (0)

You'd think that he'd want to take a little time off. I refer to Senator David Vitter, of recent D.C. Madam fame, who, unsurprisingly anxious to change the subject, has proposed a one-year extension of the program that allows Americans to bring home prescription drugs subject to price controls in Canada.

Let us shunt aside the issue of counterfeit and adulterated drugs ostensibly from Canada but possibly produced in such bastions of quality control as rural India. Let us ignore the implications for treatment of contagious diseases, for kids who cannot control the risks that they face, and for pharmaceutical producers interested in protecting the values of their brand names. Let us assume instead that the Canadian drugs are genuine; does Senator Vitter believe that the importation of price controls imposed overseas would have no effect on the research and development of new and improved medicines over time?

There is a reason that U.S. law frowns upon foreign machinations designed to steal the market value of intellectual property: Everyone loses over the longer term. Yes, that means The Children too, even though it is in the name of The Children that the Beltway political establishment makes excuses for its endless attempts to use regulation as a form of taxation. Perhaps if Senator Vitter spent more time working, and less in bawdy houses, he might come to understand that. Or maybe he does understand, and just does not care.

Posted by Benjamin Zycher at 01:13 AM | Comments (0)

July 26, 2007

Time magazine has an interesting column by Dr. Scott Haig, where Dr. Haig complains about the movement in medicine to refer to patients as customers, a trend that fills him with unease:

Patients are those for whom good, young doctors forgo happy nights of beer and dancing. Patients are the ones great nurses worry about, sit up with and linger to take care of, when they could be home with their kids. We continue to study the journals and the books for patients, even when we're 60 and can barely see the words on a page anymore. We take them on knowing they won't pay a dime, knowing they're going to complain, knowing their prognosis stinks. We know how vulnerable patients are — that they literally lie open to us — and that our oath is to do for them what is best. And the best is often not that which "satisfies." To stop giving a narcotic, to do the bigger operation, to deliver devastating news — none of that is satisfying. It is not exactly a good business, selling painful best choices to customers. But it can be the best medicine. The great physician will often prescribe what's unsatisfying, looking farther down the road past "customer satisfaction" to patient well-being.

In a land ruled by the dollar bill, it's perfectly fine to advertise to customers and attempt to take them for all they're worth. Everyone knows that marketing — the ads, commercials, T-shirts and arthritis talks in the backs of diners — is designed to get money from customers. The conventional lie is that marketing informs. Maybe it does, peripherally. It's really done to persuade. But is it fine to persuade patients, so you can squeeze more money from them? Is it fine to scare patients into tests and iffy treatments, to persuade people who aren't sick — who are not patients — that they need treatment anyway? It is far from fine to treat patients like customers.

I disagree. Customers have power, are informed, and make choices. In markets where customers rule, providers are driven to offer better and cheaper services. This should be no less true in medicine.

Doctors who treat patients paternalistically are apt to treat them less well than those who see their job as that of guiding an informed patient through the health care system. I understand his point of view, but I think it neglects the reality of modern medicine where patients are becoming, and will continue to become, co-managers of their own care.

There is plenty of room for charity and altruism in consumer health care - just as there is room for philantrhopy in other markets. Far from demeaning patients and doctors, health care markets will empower them.

Posted by Paul Howard at 05:15 PM | Comments (0)

July 25, 2007

And I mean big time. I refer to the proposal for a sharp increase in the federal tobacco tax---from 39 cents to $1 per pack---as a revenue source for the $35 billion increase in SCHIP funding over the next five years.

Let's take a deep breath here, shall we? Have the geniuses on Capitol Hill ever heard of the internet? Of Indian tribal lands? Of the Mexican and Canadian borders? Ad infinitum: The means by which such increased taxes can be evaded are limited only by the human imagination, which is to say, not at all. As the tobacco tax rises, the gap between total and taxed sales of cigarettes will grow, meaning that even the existing lower tax will not be collected on illicit sales. And that is why it is wholly plausible, even if not probable, that the proposed increase in the tobacco tax might actually lose revenue. What is implausible is the notion that the tax will raise the revenues claimed over time, because time will allow the market to find more and more ways to evade the tax.

The experience at the state and local levels with respect to sharp increases in tobacco taxes is not encouraging; the net revenue increases never materialized in the amounts claimed. The feds have more monopoly power than states and localities---cigarettes trucked from North Carolina to New York cannot avoid the federal tax---but it remains the case that the all-knowing, all-seeing federal government cannot keep narcotics out of the country, or, for that matter, poor workers. Indeed, we cannot keep narcotics out of prisons. Can the bureaucracy keep cigarettes out of the country? Please.

But it will try. And so, like the proverbial bull in a china shop, it will step on toes and destroy businesses and shatter glass in a futile effort to do so. Thus will a legislated increase in the size of government lead inexorably to more power grabs as a means of preventing the erosion of yet another federal claim on private-sector resources. And it will do so in the name of SCHIP for the children. This is what passes in the Beltway as "compassion."

Posted by Benjamin Zycher at 11:54 PM | Comments (0)

There have been several eye-opening articles over the last two days chronicling the many pressures driving primary care physicians out of the profession.

Leading the roll today is Regina Herzlinger's op-ed in the Washington Post "Who Killed U.S. Medicine?". Herzlinger, also a senior fellow at the Manhattan Institute, argues that doctors' wages, prices, and services are being micromanaged by private and public insurers who are bent on managing costs, not improving care:

Physician incomes, when adjusted for inflation, declined 7 percent from 1995 to 2003, while those of professional and technical workers rose. But unlike other professionals -- lawyers, architects, authors and economists -- doctors' work is dictated by the policies of insurers and governments. Increasingly, independent physicians, accountable only to their patients and the Hippocratic oath, have been replaced by salaried doctors who are accountable to the hospitals or insurers that employ them. Salaried physicians are closely policed for productivity, leading to ever-shorter and more numerous appointments per day. ...

Small wonder that applications to medical schools have declined by nearly 20 percent in the past decade. When I ask the many physicians who are enrolling at Harvard Business School for an MBA degree about their decision to switch occupations, they frequently answer, "I can no longer practice medicine." You might expect that the AMA would fight the insurers, hospitals, government bureaucrats and ivory tower academics who have diminished physicians' incomes, besmirched their ethical reputations and compromised their professionalism -- but you would be wrong. No, instead, at its annual meeting last month, the AMA declared war on retail medical clinics, located in places such as CVS and Wal-Mart.

Read the whole thing.

The Wall Street Journal echoes Herzlinger's argument with an article in its Marketplace section on "Doctor Shortage Hurts a Coverage-for-All-Plan". Even as Massachusetts moves nearly 600,000 new patients into state-subsidized insurance plans (as mandated under its new universal coverage plan) there is a critical shortage of primary care doc's in the state.

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.

Adding to the stresses facing the state's primary providers: Doctor's who participate in the new subsidized plans will be reimbursed according to state Medicaid rates, which are substantially less than those offered by private plans and Medicare.

Private plans, unfortunately, are using similar tactics to squeeze provider salaries. In Califorinia, the L.A. Times reports that Blue Cross of California is slashing reimbursements for many physician services:

The state's largest for-profit health plan is set to roll back its payments for about half the services and procedures provided by physicians next month.

"I don't know how anybody can afford to stay in practice and accept Blue Cross rates," said Dr. Charles Fishman, a San Luis Obispo dermatologist who sent a letter telling Blue Cross he would drop its contract if his rates were not improved.

In short, public and private insurers today are primarily in the business of managing costs, not improving care for patients.

This isn't because, as some critics argue, health care markets don't work, but because state and federal regulations (and the federal tax code) heavily discourage insurers and doctors from offering new services and products directly to patients at competitive prices.

Until we have true consumer driven health care, doctors and patients will find themselves squeezed by misguided cost control initiatives.

Posted by Paul Howard at 01:49 PM | Comments (0)

July 24, 2007

Of course you remember Stir Crazy, that classic starring Gene Wilder and Richard Pryor, in which our two heroes, falsely accused of bank robbery and sentenced to 100+ years, face prison in sheer terror at the prospect of dealing with the various predators awaiting them. And so upon arriving at the hoosegow, they decide to feign their own brand of machismo by strutting in front of the assembled killers while announcing loudly, "Yeah, that's right, we bad!"

And so we were treated yesterday to the spectacle of the Democratic candidates for the Presidency imprisoned in a pseudo-debate sponsored by CNN and YouTube. Well, if you're Hillary or Obama or Big John or any of the others, you can't just fail to show up; nope, you've got to be there, and the participation of YouTube means automatically that your stance has to be something along the lines of "Yeah, that's right, we cool." Well, "I'm" cool, go the implicit messages, but these other clowns are not.

Or something. Forget cool, YouTube youth, edginess, and all that stuff: The sound bites were ready on a hair trigger, and the stupefying, mind-numbing predictibility of it all was really what would make anyone stir crazy. Big John: "The only way to provide universal coverage is to mandate that everyone be covered." Obama: My plan "absolutely" provides universal coverage. Hillary: More important than having a plan for universal coverage is a "sense of national commitment that universal health care is an American value." Chris Dodd: My plan will cover all U.S. residents including undocumented immigrants. Bill Richardson: "Every American deserves the right to the best possible quality health care."

Please, oh please, Lord: Take me now. Well, wait; my wife wants to make sure that the life insurance premium has been paid. Anyway, there we have it: Cool, schmool, YouTube added nothing of actual value to the policy debate over health care reform. Nothing about the cost of "universal" coverage. Nothing about the implications for rationing and other parameters of universal coverage. Nothing about the experience of other nations that have attempted to show their compassion by spending other people's money. Nothing about the mirage that univeral coverage is and always must be in a world in which resources are limited always and everywhere. A "debate," in short, that enlightened no one about anything.

The problem is not that the questions that could be expected from the blogosphere are likely to be worse than those that mainstram journalists can be predicted to ask; they really can't be. The problem is that they are unlikely to be any better. Guilty or not, we're all in sound-bite prison, a reality that bodes ill for the course of public discourse.

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

Yesterday I attended a great briefing in D.C. on chronic care management co-sponsored by the Council on Affordable Health Insurance .

The burgeoning interest in chronic care management, roughly speaking, is based on Pareto's 80/20 rule - which in this case translates into the fact that (roughly) 80 percent of U.S. health care costs come from 20 percent of the patients, primarily patients with one or more chronic conditions (obesity, diabetes, heart disease, cancer).

Today, our health care system is based on fee-for-service payment, which tends to produce very good acute care, but very poor preventative care or management of chronic diseases. In other words, if you have a heart attack cardiologists and hospitals will bill your insurer (Medicare, Medicaid, private insurance) lots of money to save your life.

But the same insurers pay your primary care physician a pittance or nothing to help you lose weight, manage your cholesterol, or control your diabetes. Instead, public and private insurers focus on negotiating the lowest possible reimbursements to providers in order to control costs. They ignore Pareto's Rule, even though they know it's true.

CAHI's briefing focused on the importance of chronic care management, but lurking behind this problem is a web of state regulations that hamstring doctors and insurers from offering more innovative wellness and prevention programs to consumers.

The bottom line is that in a true consumer driven health care market, insurers would market many, many more plans with high-deductibles but little or no copayments for wellness and preventive services to keep consumers healthy (think free generic drugs). These plans would save consumers money, lower health care costs, and improve health.

There are two things that we could do tomorrow that would spur a revolution in chronic care services and insurance:

1. Equalize the tax treatment of health insurance regardless of how it is purchased (i.e. by an individual or an employer)
2. Allow the interstate sale of health insurance

In a national market where consumers could pick their own insurance coverage, competition and consumer choice would drive companies and doctors to offer consumers a wide mix of new insurance products and health care services that would be designed to meet the needs of patients with chronic illness.

Posted by Paul Howard at 12:40 PM | Comments (0)

July 23, 2007

It's all about the children. Except when it isn't. The Beltway catfight over the prospective expansion of SCHIP---health insurance for kids in lower-income families earning too much for Medicaid eligibility---is attracting millions of dollars in lobbying expenditures by various groups truly passionate in their concern for the kids.

Except that some of the K Street/media/fancy lunch/campaign dollars are being spent in favor of a vast expansion of SCHIP, while another part is opposed. So: Who could possibly be against The Children? Well, a lot of people, as it turns out.

The administration of El Presidente W loves, just loves, children, but is uncomfortable with the proposed increase in spending---from $25 billion over five years to $50 billion or $60 billion, depending on who is screaming most loudly at the moment---and who would have predicted that given the administration's record on spending since 2001? Then there is the small matter of this expansion of SCHIP representing a huge step forward (or backward) in the advance of schalami schlice schocialism in the U.S. health care system. The administration is opposed, with very good reason, but just try to explain why in a 30-second sound bite.

The American Medical Association just loves the kids; and, oh, by the way, it also loves the provision that eliminates a 10 percent cut in Medicare reimbursment rates due to take effect January 1. The AARP loves the kids too, as well as the proposed reduction in payments to Medicare Advantage Plans, one result of which would be a withering away of such private-sector plans and thus more political power for the AARP.

The unions just love the children, and since expansion of SCHIP has and will continue to enroll more and more adults---we're all children now---health care increasingly will be financed by taxpayers and thus taken off the table in negotiations with employers, yielding higher pre-tax wages, and what could possibly be better for the kids?

The health insurance industry loves the kids more than anyone. And what could be worse for the kids than a cut in payments for Medicare Advantage plans (see above), and so the insurance industry is going to spend some bucks on political ads too.

And then there is Big Phrma. You'd think that it is hard enough dealing with the FDA and fighting Congressional attempts to impose price controls on medicine without getting sucked into yet another battle, and you'd be right: Phrma supports SCHIP---we're talking about the kids here, buddy---but doesn't seem to know whether it wants a slightly bigger SCHIP (El Presidente W) or a vastly bigger one (the Beltway Establishment).

Let's face it: When it comes to The Children, all voices should be heard, no argument is too disingenuous for a respectful hearing, and all roads lead toward a world in which the elites transform all of us into Beltway supplicants, which is to say, children. It's enough to make me cry.

Posted by Benjamin Zycher at 10:43 AM | Comments (0)

July 20, 2007

It's just shameful. People---their Brothers' Keepers all---insist on finding ways nonetheless to force others to pay for their medical care. Strenuous efforts those are indeed, as employers look to employees, patients look to insurers, and insurers look to anyone they can find. And these efforts---one component of running the system writ large---are costly. If only we could find a way to put everyone in the same boat. Everyone would row, no free rides here, nosiree, and all those wasted resources would become available for the delivery of actual health care services. Another beautiful day in Mr. Krugman's neighborhood. Single-payer nirvana: It sings.

And so it is disorienting to find in the pages of the Memphis Commercial Appeal a report (July 19) to the effect that the state of Tennessee is going to fight tooth and nail against federal payment ceilings for Tennessee hospitals, as such payment caps "could cost Tennessee up to $400 million over the next three years."

So let's see here. Even in Krugmanland, the feds are trying to shift costs to state taxpayers, the state politicians are trying to shift costs to federal taxpayers, the patients couldn't care less who pays the bills as long as it's not them, and so on. But just wait a darned minute here. THIS IS KRUGMANLAND. This is not supposed to happen. It is only in that evil, selfish, uncompasionate, Hobbesian world of private-sector multiple payers that such shameless behavior is to be observed. Right?

Well, maybe the problem is that the feds and the states are different entities; if the Beltway ran everything, holistically as the New Age types might say, we wouldn't have to ask "Can't we all get along." Well, not quite. Someone still is going to have to decide who bears what proportion of the tax burden; and because resources are limited always and everywhere, some patients will get the services that they want, and others will not. "Universal coverage" is a mirage. And so cost-shifting in the larger analytic sense will be with us as a matter of first principle as long as third-party payment remains the elephant in the waiting room, private, public, or any combination you want. But don't tell Comrade Krugman: His system might not be able to take the shock. And I don't want to have to pay for that.

Posted by Benjamin Zycher at 05:43 PM | Comments (0)

Yesterday the Wall Street Journal ran a front page article on a phenomenon that has been long noted in the policy community: many doctors refuse to accept Medicaid paitents because of the abysmally low reimbursement rates they receive from the program.

"You feel so helpless thinking, something's wrong with this child and I can't even get her into a doctor," says Jada's mother, Nicole Garrett, who enrolled her three teenage daughters in Medicaid after they lost private coverage. "When we had real insurance, we could call and come in at the drop of a hat."

That's because many Medicaid programs, straining under surging costs, are balancing their budgets by freezing or reducing payments to doctors. That in turn is driving many doctors, particularly specialists, out of the program.

This problem is endemic to government funded health care problems. As the government expands services that appear to be free to the end-user, there is overuse of the system and rising costs. To contain those costs, government squeezes reimbursement to providers and rations access to more expensive, hi-tech care.

Medicaid reimbursements are lower than Medicare reimbursements, which are in turn lower than what private insurers pay for their own patients. (Check out the helpful panel on fee disparities in the WSJ article.) Indeed, physicians refusing to accept new Medicare patients is a problem all its own.

States that are rushing to expand eligibility for their own Medicaid programs (that claim to cover everything) to higher and higher income levels are basically trading expanded insurance coverage on paper with paper thin access to health care.

Is there a better solution? For starters, give poor Medicaid participants vouchers to purchase their own health insurance on the open market, complete with a health saving account to roll-over any savings after premium payments. Florida and other states are currently experimenting with programs like these.

Universal "free" health care may sound attractive in the abstract, but the rationing and restrictions that come with expanded government programs are often not what their advocates hoped for, particularly for the poorest and most vulnerable patients.

Posted by Paul Howard at 12:30 PM | Comments (0)

July 19, 2007

It just doesn't get any better than this. A bunch of Beltway politicians---get this---are accusing others of misleading advertising. I refer, of course, to advertisements for new drugs---"Ask your doctor!"---which somehow now are viewed as suspect in the first three years after a drug is approved because patients don't know the risks and doctors are being pressured and we all are children who ought to spend more time hiding behind Congressman Henry Waxman's apron strings.

Well, now. It is far from clear that the provision of information to adults yields adverse effects, in that drugs, whether new or not, offer both benefits and risks. In the view of Congressman Pete Stark, however, only the risks are visible, and so the benefits of new medicines---in many cases, perhaps life itself---are a consideration to be ignored. Thus would an advertising moratorium exacerbate the too-familiar bias of the FDA: The adverse effects of approved drugs are highly visible, while the forgone benefits of drugs held off the market too long are hidden. And so, notwithstanding the usual gibberish about how the FDA is a handmaiden to Big Phrma, the reality is that the FDA has overwhelming political incentives to delay approvals too long. When the bureaucrats announce with pride that a newly approved drug will save, say, ten thousand lives per year, perhaps one of our crack reporters might point out that a direct implication is that the extra years of delay consumed in efforts to jump through all the regulatory hoops condemned many tens of thousands to early graves.

Back to advertising. The research literature shows that health outcomes are improved by advertising, and that inappropriate prescriptions are not an important outcome. And neither finding is very surprising, except to a political class that views citizens as subjects: Adults in consultation with their physicians are perfectly capable of making informed decisions about the benefits and risks of new medicines. As for the Beltway, it's the Flying Circus, today, tomorrow, forever. I need an aspirin.

Posted by Benjamin Zycher at 02:28 PM | Comments (0)

July 18, 2007

In his Monday, July 16th column on health care ("The Waiting Game") Paul Krugman argued that "The bottom line is that the opponents of universal health care appear to have run out of honest arguments. All they have left are fantasies: horror fiction about health care in other countries, and fairy tales about health care here in America."

Really?

Well, here are some stories from mainstream publications in the U.S., Canada, and the U.K. that professor Krugman apparently categorizes as "horror fiction":

Waiting for Wait Times, National Post
As Canada's Slow-Motion Public Health System Falters, Private Medical Care Is Surging, New York Times
Nursing shortage hurting mat wards, Edmonton mother complains, CBC News
Team to tackle NHS waiting lists, BBC News
Probe into 'hidden' waiting lists, BBC News
Cancer survival rates worst in western Europe, London Telegraph
Stroke patients at mercy of postcode lottery, London Telegraph
Now Labour tries to spin out of MRSA crisis, London Telegraph
Canadian Health Care In Crisis, CBS News

Sarcasm aside, the point is not that universal health care systems are universally bad (pun intended) or that America's own health care system is pristine. On the contrary, our system has serious problems, the foremost of which is that millions of Americans - many of them solidly middle class - find health insurance unaffordable.

Indeed, my colleague Regina Herzlinger has written a terrific - and somewhat harrowing - critique of American health care.

But free market advocates argue that the solution to America's woes is not centralizing health care under a single payor, but injecting more consumer control, choice, and competition into health care markets.

Or to paraphrase Dr. David Gratzer, let's make health care more like the other four-fifths of the economy, where quality is rising and costs are falling.

There is a real debate to be had about what the best mix should be between market forces and subsidies for poor Americans or uninsurable patients with expensive chronic illnesses.

We wish that Professor Krugman was willing to engage in that debate, rather than dismissing those who disagree with him as dishonest and mean spirited.

Posted by Paul Howard at 04:15 PM

July 17, 2007

As they say, that particular thoroughfare is paved with good intentions, not least of all by government policymakers, and, yes, environmental activists. National Geographic reports that the overzealous DDT ban, in the wake of Rachel Carson's Silent Spring, may have condemned millions of children to death by malaria:

Soon after the program collapsed, mosquito control lost access to its crucial tool, DDT. The problem was overuse-not by malaria fighters but by farmers, especially cotton growers, trying to protect their crops. The spray was so cheap that many times the necessary doses were sometimes applied. The insecticide accumulated in the soil and tainted watercourses. Though nontoxic to humans, DDT harmed peregrine falcons, sea lions, and salmon. In 1962 Rachel Carson published Silent Spring, documenting this abuse and painting so damning a picture that the chemical was eventually outlawed by most of the world for agricultural use. Exceptions were made for malaria control, but DDT became nearly impossible to procure. "The ban on DDT," says Gwadz of the National Institutes of Health, "may have killed 20 million children."

(Hat tip: Instapundit.)

Posted by Paul Howard at 07:14 PM | Comments (0)

The AP reports on a study in the Annals of Internal Medicine that argues that "older, cheaper diabetes drugs are as safe and effective as newer ones."

They may very well be, on average. But this is not an argument for having every diabetic in America suddenly switch to Metformin. There is no cookie-cutter recipe for diabetic care, and some patients may do better on newer medicines or experience fewer side effects.

What is the right mix of branded and generic drugs? Let the market decide.

In a consumer driven system, where consumers have more "skin in the game", patients will have powerful incentives to become smart shoppers among competing insurance offerings. Some insurers will offer more expensive plans with broad access to new medicines; others will offer low-cost plans that focus on cheaper generic drugs and wellness programs. The bottom line is that every consumer should be able to find a plan that fits their budget and medical needs.

Medicare Part D is an excellent example of the benefits of choice and competition in health care markets. Seniors can choose from a wide variety of prescription drugs plans, and the competition between plans has helped to keep premiums low. And many seniors have, in fact, chosen lower-cost plans that encourage greater use of generic drugs. Targeted subsidies for low-income seniors ensures that they too have access to good prescription drug plans.

At the same time, by eschewing price controls, Medicare Part D leaves significant financial incentives in place for pharmaceutical companies to innovate and bring new medicines to market that offer new (and hopefully improved) choices for consumers.

Posted by Paul Howard at 06:45 PM | Comments (0)

"It's a beautiful day in this neighborhood, a beautiful day for a neighbor. Would you be mine? Could you be mine?"

Ah, yes, such lovely thoughts for the children. And so I am led to dream of Mr. Krugman's neighborhood, where, when last we visited (yesterday), the U.S. Medicare program limited to seniors offers superior service in terms of hip-replacements relative to that observed under the universal Canadian single-payer system, an observation that by some form of Krugman alchemy provides evidence of a need to move toward a universal single-payer system for the U.S.

No, really: Krugman's ability to marshall such analytic insights along with the available evidence truly is inspiring. So let us search for other nuggets in Krugman's op-ed column in yesterday's New York Times.

OK, here's one: Krugman complains that the White House has announced its intention to veto an expansion of SCHIP---a program for children from lower-income families not eligible for Medicaid---to families with incomes up to 400 percent of the federal poverty level, or $82,600 for a family of four. Krugman states that 4.1 million such kids are "currently uninsured," the precise meaning of which remains a good deal more obscure than Krugman suggests. For how long are they (that is, their families) uninsured? Are they uninsured because of temporary changes in employment status? Are they uninsured because such insurance is more costly than it is perceived to be worth, particularly given the various laws and regulations that make insurance a good deal more expensive than otherwise would be the case? Alternatively, is it really the case that families with incomes of, say, $50,000 cannot afford "regular checkups and preventive care" for their kids? (Who is buying all those flat-screen TVs, anyway?) After all, insurance for most kids remains exceptionally cheap; for the vast preponderance of them, only vaccines, an annual checkup, and occasional stiches are needed. And Krugman's sneering reference to emergency rooms as a form of insurance for all is rather misplaced: For all of the waiting and other inefficiencies of such last-resort care, U.S. emergency rooms offer a standard of medical care far superior to that available to the masses in most of the rest of the world, yes, including emergency facilities in wealthy western economies with the single-payer systems worshipped by Krugman.

What really bothers Krugman is the prospect that a veto of a massive expansion of SCHIP will blunt the ongoing drive to achieve a single-payer system---with all of its perversities---in stages. That is why several states now allow adults into this program intended for kids, and that is why the Beltway advocates of medical SCHIP schocialism now are singing their own version of "Welcome, neighbor, to my neighborhood, where you will be mine." For Krugman and his allies, all of us should be children dependent upon Washington entitlements. And thus would a proud and independent citizenry become increasingly enfeebled by such welfare, and made infantile by being forced into supplication to the Beltway.

Posted by Benjamin Zycher at 10:55 AM | Comments (0)

July 16, 2007

Over the weekend, the New York Times ran a very interesting article on how some drug companies are offering European governments money-back guarantees on expensive drugs for cancer and multiple sclerosis.

"Drug companies like to say that their most expensive products are fully worth their breathtaking prices. Now one company is putting its money where its mouth is - by offering a money-back guarantee. Johnson and Johnson has proposed that Britain's national health service pay for the cancer drug Velcade, but only for people who benefit from the medicine, which can cost $48,000 a patient. The company would refund any money spent on patients whose tumors do not shrink sufficiently after a trial treatment."

The Times suggests that this a harbinger of a "new pay-for-performance paradigm" - and it may very well be, in a certain sense. Many new cancer drugs, like Herceptin for breast cancer, are targeted only at cancer cells with certain molecular biomarkers (in this case, the HER/neu protein expressed in about 20-25% of breast cancers).

Genetic tests linked to these biomarkers can help doctors match these drugs with the patients who are most likely to benefit from them. Patients benefit from improved treatments and insurers benefit by not spending tens or hundreds of thousands of dollars on drugs that are probably not doing patients much good.

But the field is still very, very, young and good biomarkers don't exist for the vast majority of medicines. Many more biomarkers will develop over the next decade or two, but in the meantime "pay for performance" may hurt patients and slow drug innovation.

The problem is that while insurers and governments in Europe are trying to shrink the number of patients receiving expensive treatments, companies may find themselves with very restrictive definitions of effectiveness for reimbursement purposes.

Companies who agree to "pay for perfomance metrics" can, of course, charge higher prices in smaller patient populations in order to recoup their investments and compensate for their greater risk exposure - but this is a shift that governments are very unlikely to accept. This impasse could lead to frozen prices and declining revenues, a clear signal to the market that drug innovation is a poor investment.

There are a couple of wild cards here. Jack Calfee, at the American Enterprise Institute, has written that European countries are paying U.S.-level prices for new biotech medicines, suggesting that the industry may have more pricing power for those medicines than for traditional pharmaceuticals.

Also, the U.S. has thus far resisted price controls on pharmaceuticals and "cost benefit" analyses like those embraced by many European countries. As long as the U.S. does this - thus generating the lion's share of industry proftits - companies can afford to make more concessions to European payors, i.e. "it works or you get your money back."

But if the U.S. was to embrace the European approach to drug pricing global drug development would slow to a crawl.

In the long run, the market is surely moving to a "pay for performance" paradigm for drugs and other medical services, which is all to the good. In the meantime, however, that process should not be dictated by government payors whose primary interest is not in improving care (or attracting customers), but in containing spending.

Innovation, after all, often begins with lots of hit-or-miss experiments (think: off-label drug use), rather than guaranteed success.

Posted by Paul Howard at 08:38 PM | Comments (0)

Let's face it: You try to do too much, you get sloppy. The latest manifestation of this eternal truth is today's New York Times column by Paul Krugman, a treasure trove of non sequiturs, silliness, and crass dishonesty shameless even by Krugman standards. An entire paper could be devoted, easily, to a systematic dismantling of this op-ed, which throws everything including the proverbial kitchen sink at those of us who oppose a single-payer health-care system for the U.S.

Alas, time today does not permit such an essay, although I will return here to this Krugman op-ed several times in the days to come. For now, let us consider just one of the many chestnuts promoted by Krugman, to wit, his argument that, yes, "it's true that Americans get hip replacements faster than Canadians." But that is because "the large majority of hip replacements in the United States are paid for by, um, Medicare... [which] has more lavish funding."

So, let's see here: In Krugmanland, the superiority of a single-payer system limited to seniors over a single-payer system imposed upon all is an observation supporting a single-payer system to be imposed upon all! And, by the way, about that "more lavish funding" characterizing Medicare: Is that an accident, or does it tell us something about the prospective effects upon funding as a single-payer system is expanded to greater proportions of the population? The 2007 Medicare Trustees' Report informs us that the present value of unfunded Medicare obligations for the next 75 years is almost $34 trillion; and over $74 trillion for an infinite horizon. So, please, Paul: Tell us more about that "lavish funding" were Medicare to be expanded to all Americans.

Well, one searches in vain among Krugman's missives for answers to such questions. But what is obvious is Krugman's desperation to cough up arguments that, however spurious, allow him to masquerade as a man of compassion. He needs some time off.

Posted by Benjamin Zycher at 03:45 PM | Comments (0)

July 13, 2007

My esteemed colleague, Ben Zycher, forgot to tally up the bill for SCHIP expansion - quoted by the Washington Times at $35 billion in new SCHIP funding to cover an additional 2 million uninsured children.

For those whose calculators can hold that many zeros, that amounts to $17,500 per child covered. According to the Kaiser Family Foundation, in 2006 employer-based health insurance coverage for a family of four cost $11,500, or about 30% less.

Even this comparison is deceiving, because employers are covering many, many more services for families than would be needed to cover children, whose health care needs are typically much cheaper (think: vaccines).

The bottom line is that spending $35 billion to cover 2 million children is the equivalent of the Pentagon paying $200 for a toilet seat cover.

But Ben is certainly right about one thing: the President should veto any bill with significant new SCHIP funding that does not include equally substantial reforms of the free market variety. After all, the President's approval rating is low right now, but Congress' is lower.

If Democrats want to take credit for accomplishing "something" in health care going into the '08 elections, the President should make sure he gets an individual tax deduction or tax credit out of it - combined with a cap for employer provided health insurance - thus equalizing the playing field between employer-based and individually purchased health insurance.

This would make it possible for millions more Americans to purchase private health insurance for themselves at zero cost to the federal treasury.

That's a win-win for Congress, the President, and the uninsured.

Posted by Paul Howard at 03:28 PM

When last we visited the Land of SCHIP Medical Schocialism (SMS, July 11), we oberved the latest in Beltway free-lunch fantasymaking: Merely by increasing the federal tobacco tax to $1 per pack, an additional $35 billion for SMS could be spent over the next five years. Put aside for the moment the harsh reality that the tobacco tax will not and cannot raise the advertised revenues. Forget the fact that Congress cannot be forced to spend any additional tobacco revenues on any given program; there is no SMS trust fund, so that the revenues analytically are identical to any general fund receipts, to be used as Congress in its election-year wisdom deems appropriate. Ignore the obvious truth that the costs of SMS expansion inevitably will be greater, perhaps substantially so, than projected by the proponents of SMS and their staffs and interest groups in full applause mode.

Yes, dear Reader, ignore all that. Marvel instead at the preemptive surrender now urged upon the Administration by those good Republican burghers, Senators Charles Grassley (R-Beltway) and Orrin Hatch (R-Beltway), who urge El Presidente W not to veto this classic tax-and-spend SCHeme eliciting the joyous shouts now heard from armies of aspiring bureaucrats. Their argument is that this bill includes a few reforms: income limits for child eligibility, a cutoff of eligibility for additional adults, and a few other odds and ends. And who know what mischief might emerge in the wake of a veto from "the Democratic-controlled Congress," "such as waivers for childless adults and coverage for higher-income kids."

Of course, those things can be vetoed too. More to the point, to say that small capitulations now are better than big ones later is far from obvious, in that the list of possible small capitulations is endless; if the political left is going to saddle the economy with schalami-schlice SMS, let them be saddled with responsibility for the inexorable disasters to follow, both fiscal and political. And why not demand some real reforms as a price for small capitulations? Tax deductibility for all health insurance rather than only that arranged through employers. Expansion of Medicare Advantage, that is, private competition in the delivery of comprehensive health care coverage. Creation of a national market---interstate sales---for health insurance policies. And so on. Grassley and Hatch and others may believe sincerely that their tactical maneuverings are clever, but in reality they are, as the Brits say, too clever by half. Even for career politicians driven by the dynamics of the next election and little else, a little strategic thinking would go a long way.

Posted by Benjamin Zycher at 12:32 PM | Comments (0)

In today's Wall Street Journal, Dr. Paul Offit points out that pharmaceutical companies are responsbible for eliminating or reducing untold human misery - literally saving tens of millions of lives every year, particularly through vaccines.

And yet the companies that make lifesaving medicines are held in contempt by many in the media and policy communities, a trend that continues in Michael Moore's Sicko.

Offit writes that:

"During the past century the lifespan of Americans increased by 30 years, and almost all of that increase was due to one class of medical products: vaccines. Children today receive 14 different vaccines by the time they are two years old. Although people don't know it, nine of those 14 vaccines -- which save about 8 million lives a year -- were made by one man. And that man, Maurice Hilleman, spent much of his career at Merck. If he hadn't -- if he'd stayed in academia -- he would never have been able to convert his dedication and brilliance into the products that save our lives."

It is also worth considering why the reputation of the industry is in decline when so many Americans benefit from its products every day. Undoubtedly, this is partly because prescription drugs are less insured than many other types of medical goods and services. Thus consumers spend more money out-of-pocket on drugs than they do on, say, doctor's office visits. Consequently, it is easy for politicians and plaintiff's lawyers to to vilify them.

I would also argue that there is another subtle factor at work here: the disdain for the profit motive in medicine. Doctors and other medical professionals often have little or no training in economics, and little experience in how drugs and medical devices actually get developed. In short, they take the pharmaceutical industry completely for granted.

As a result, they reflexively assume that the interests of patients and profit seeking businesses are at odds, and this bias reflects itself in medical journals and in the media at large.

But, as Dr. Offit argues, this is a dangerous bias. Without men like Maurice Hilleman, and companies like Merck, the world would be a far, far more dangerous place, particularly for children.

For more on the life of Maurice Hilleman, and the history of vaccine development in general, see Dr. Offits excellent book Vaccinated.

Posted by Paul Howard at 12:12 PM | TrackBack (2364)

July 12, 2007

Today in The New York Times: Some Chronically Ill Adults Wait for Medicare

When uninsured adults with common chronic illnesses became eligible for Medicare, they saw doctors and were hospitalized more often and reported greater medical expenses than people who had had insurance. And their increased use of medical services continued at least until at least age 72, researchers are reporting today. . .

Duh -- Of course uninsured people get more care when they are insured! But is the extra care better for their health? Is it worth the money spent for insuring all these people -- most of whom are not chronically ill?

The key problem is that care for chronic diseases is fragmented and is not as effectual as it should be. Even fully insured Medicare recipients do not get simple sugar level and other tests they need. So insurance may be helpful for some; but the real reform we need is in the way we pay the health care system.

Right now we pay for procedures; we should paying for creating health.

Posted by Regina Herzlinger at 04:21 PM

You learn something new every day. The ineffable New York Times reports today that some people lacking health insurance---that is, who would have to pay their medical bills out of their own pockets---consume more health care services when they become eligible for Medicare, when the taxpayers pick up most of the tab.

Whodathunkit? People demand more when the costs that they face decline! For the NYT, this is News Fit To Print! And some of those newly demanded services actually yield medical benefits, which may come as a surprise to those now enamored of the argument that U.S. spends more on health care with little measurable benefit, or something like that.

Well. Will the NYT now argue that the public policies driving up the cost of insurance coverage be reformed? Don't bet on it. And will the NYT next report on the implications of expanded government "coverage," that is, spending on such public insurance programs as Medicare? Don't bet on that either. As day follows night, increasing costs will yield increasing restrictions on what services are allowed and on who may obtain them, because even in the Beltway, not to mention the upper west side of Manhattan, resources are limited always and everywhere. Those in need of the services not approved, and, for example, the elderly for particular services, are not "covered," emphatically. Thus will universal "coverage" prove to be a mirage, like so very many of the other statist nostrums of the past still beloved of the sophisticates. And the human suffering that results? That must be the product of private-sector greed.

Posted by Benjamin Zycher at 01:50 PM | Comments (0)

July 11, 2007

If you only go by the media headlines on drug side effects, you might think that prescription medicines do more harm than the diseases they are meant to treat and prevent. But this impression is only driven by the headlines - not by the facts.

Today, the Manhattan Institute published a new report by Frank Lichtenberg, a health economist at the Columbia University Graduate School of Business, that found that medical innovation - as measured by access to newer drugs in Medicare and Medicaid formularies - was primarily responsible for substantial gains in U.S. longevity from 1991-2004.

In other words, states that offered patients in these programs greater access to newer medicines also tended to have faster gains in life expectancy.

Contradicting a commonly held belief, Dr. Lichtenberg also found that states that used more newer drugs did not tend to have above average increases in annual health care costs.

An op-ed by Dr. Lichtenberg recounting the report's central findings also ran in the Washington Post today.

Read the whole thing.

Posted by Paul Howard at 08:06 PM

Well, someone is smoking something, and this time they're inhaling big time. I refer to the agreement anmong the politicos of both parties in the Senate Finance Committee to increase the tobacco tax from 39 cents per pack to $1 in order to finance a $35 billion increase in SCHIP spending over five years.

First, the tax will never raise the claimed revenues because of increased incentives for internet sales of cigarettes from Indian reservations and from overseas, and old-fashioned smuggling through innumerable ports. Second, the existing tax of 39 cents will not be collected on such sales designed to evade the tax, so that the net effect in terms of increased revenues actually could be negative; and the same principle applies to the state taxes now collected on tobacco sales. The states will demand compensation from the feds for the lost revenues, so that the net federal take will be even smaller. Third, to the extent that smokers bear the economic burden of the tax in the form of higher prices for cigarettes actually subject to the tax, the old Beltway game of Free Lunch will manifest itself; so why not expand SCHIP even more, requiring more new revenues from somewhere, and ad infinitum? Thus we will find ourselves enveloped in yet another Beltway perpetual-motion machine.

This proposal takes from smokers---as a crude generalization, lower- and lower-middle income individuals---in order to expand SCHIP to the middle class and above. So much for "fairness." And precisely why should smokers be the ones paying for others' health care? That is far from obvious, in that the health problems attendant upon smoking are not contagious, and smokers as a group already provide a large fiscal subsidy to everyone else through the Social Security system precisely because they die sooner and thus collect Social Security benefits for fewer years.

So let us hear no more balderdash about public health and the children and all the other nostrums beloved in the Beltway. This is pure wealth redistribution from a group politically unpopular to the middle class, notwithstanding all the highminded rhetoric. That expansion of SCHIP is medical schalami schlice schocialism on the move, with all of the perversities that inexorably will follow is not likely to prove salutary. So go ahead: Applaud the hit on Big Tobacco all you want. The future destruction we will wreak will be ours to treasure.

Posted by Benjamin Zycher at 08:51 AM | Comments (0)

July 10, 2007

Oh, dear: My self-esteem once again has taken a hit, and I just don't know if even the powers of Dr. Phil or Oprah or Maury or anyone else are going to be able to brighten the darkness for me. Why? Well, Paul Krugman has just announced that "terrorism is the first refuge of scoundrels," referring to the argument that "universal health care promotes terrorism."

Now, Krugman's characterization of the argument is a crass distortion shameless even by, well, his standards. It is not health care but the socialized version of it that inexorably must squeeze the salaries of doctors. As day follows night, this results in earlier retirements and less training of domestic physicians, and thus the employment in increasing proportions of foreign doctors, at least some of whom inevitably will come from Islamic societies. And some fraction of them will be radicals. This is as obvious as the sunrise, which as good a theory as any as to why Krugman denies it.

He goes on to sing praises for medical socialism as a moral choice, notwithstanding the hard realities of demands and costs and inevitable rationing; and Krugman apparently believes that Michael Moore's Sicko is devoid of factual errors. My favorite is Krugman's reference to "a child who dies because an emergency room that isn't a participant in her mother's health plan won't treat her." Really? Whatever happened to the federal legal requirement that any emergency room offer all care deemed medically necessary? Who knows, in Krugman's world? But, then, so much for Krugman's prior arguments that the uninsured must go to emergency rooms (!), which raises costs unnecessarily for everyone else. And let us not spoil everyone's dinner by delving in to the experience of emergency rooms in, say, Canada.

Back to my self-esteem, a small matter for Krugman, but of vital interest to me. I noted here in a post the other day that the presence of Islamic terrorists among the medical personnel in the UK National Health Service is a direct and predictable result of the existence of the NHS. Silly me: It's really the result of the cruelty of capitalism. Or something. When you read Krugman, you learn something new every day.

Posted by Benjamin Zycher at 01:55 AM | Comments (0)

July 09, 2007

Today's Wall Street Journal has two excellent articles in its Marketplace section that nicely illustrate the contrast between how studies from industry are perceived in contrast to those conducted by government.

In the first article, an interview with GSK CEO Jean-Pierre Garnier, Garnier defends his company's research on its diabetes drug Avandia amid suggestions that it may cause an increase in heart risk for some patients. GSK is on the defensive, and will undoubtedly spend millions of dollars defending itself from Avandia litigation even if its interpretation of the data is eventually vindicated.

In the second article, How the NIH Misread Hormone Study in 2002, reporter Tara Parker-Pope describes how recent revelations regarding the 2002 Women's Health Initiative study make clear that its initially reported findings "were either misleading or just wrong".

Pope's article is disturbing because it appears that government investigators deliberately framed the study's initial findings in such a way as to push pre-conceived conclusions.

Pope quotes one of the lead investigators in the study, Jacques Rossouw, as saying that "Our main job at the time was to turn around the prevailing notion that hormones would be useful for long-term prevention of heart disease. That was a worthy objective that we achieved."

This "worthy objective" led some women who were taking hormones and were benefitting from them to stop taking them as a result of the study's draconian - and since refuted - findings that were heavily biased against hormone treatments. As a result, some women who were benefitting from the hormones probably had heart attacks or even died.

If a pharmaceutical company had behaved this way, there would be immediate Congressional hearings and an avalanche of lawsuits.

Where's the outrage?

Posted by Paul Howard at 04:13 PM

And so the inevitable unfolds before us, like the most wrenching of the Greek tragedies. I refer to the recent proposal by the Centers for Medicare and Medicaid Services for a 9.9 percent reduction in Medicare physician payments in 2008. This proposal, of course, will be made in an effort to "improve the quality and efficiency of care in a way that is cognizant of the costs to taxpayers and to Medicare and its beneficiaries."

Well. Unless there is evidence that under current payment levels, doctors are clamoring for new Medicare patients---trust me on this one, such evidence is absent, utterly---it is far from clear how cutting such compensation for services rendered will improve quality. As for "efficiency," it is unclear as to how CMS prefers to define that term, but it must encompass some measures of both quality and cost. But government bureacracies by their nature cannot measure quality very well, and have few incentives to do so in any event; and so "efficiency" inexorably will tend over time to be defined in terms of budget savings, particularly since CMS faces pressures from interest groups rather than customers. Yes indeed, the "costs to taxpayers" will assume an overwhelming position as an "efficiency" criterion; but the meaning of "costs to Medicare and its beneficiaries" remains entirely obscure.

Perhaps the Beltway writ large views itself as one vast ocean of blue blood: This proposal by CMS puts the U.S. on the same path as that followed by our friends in the UK: Less physician compensation means less investment in medical training by U.S. citizens, and a gradual replacement of U.S. medical personnel by third-world doctors for whom even the low compensation paid by CMS is attractive. As in the UK case, some of those doctors will be terrorists. But that is fine: It's efficient.

Posted by Benjamin Zycher at 03:42 PM | Comments (0)

July 06, 2007

Sigh. The ineffable editor of the New England Journal of Medicine, Dr. Arnold Relman---last seen campaigning to be the FDA Commissioner after the next election by publishing editorials in opposition to Rosiglitazone, based upon a deeply flawed "meta analysis" of numerous statistical studies---now has spoken again. "We need a single-payer system of health care that covers everyone, like Medicare for the elderly." (Chicago Tribune, July 1, 2007)

So it now is clear that Dr. Relman is far, far more than a mere doctor: He is an economist and public policy expert as well. Whether even more expertise yet to reveal itself lies resting in his Walter Mitty mind is unknown; but what we do know is that Dr. Relman apparently has given no thought---none at all---to the implications of a "single-payer system" for health care, for the elusive goal of "cover[ing] everyone, or for the implications of "Medicare for All" for the fiscal position of the federal government (that is, the taxpayers) or for the longer-term goal of individual liberty.

In brief: The prospective single-payer is the federal government, which has powerful incentives to achieve short-term budget savings at the expense of patients, because the feds have not customers, but instead interest groups. Or is Dr. Relam simply ignorant of the vast literature on rationing in other advanced economies with single-payer systems? Nor is "covering everyone" even possible: As demands and costs skyrocket, some medical services will be covered and others not, and the patients seeking the latter will not be "covered," regardless of what the politicans say. As for fiscal issues: The present value of the future Medicare deficit already is in the tens of trillions of dollars, and an expansion of Medicare to everyone will reduce the U.S. economy to those of Europe, that is, high-tax, high-regulation, high-expenditures, low-growth. Quite a bargain, don't you think? And how long will it be---well, actually not long at all, as we already are observing it---before a government that provides for our health care assumes the power to tell us what to eat, what risks to take, ad infinitum? And so a single-payer system will reduce all of us to children, as the welfare state enfeebles and infantilizes all. Economists do not perform surgery, except perhaps upon the silly arguments of others. Relman would do well not to attempt public policy analysis.

Posted by Benjamin Zycher at 09:17 AM | Comments (0)

July 05, 2007

Well now, it appears that at least six of the suspects in the London and Glasgow car-bombing plot were foreign doctors or medical personnel working for the National Health Service. Yes, yes, they are mere "suspects" at this stage, and yet "the majority were known in some form to the intelligence community, and were tracked down through cellphones" (LA Times, July 4). Let me venture a guess: They are guilty indeed of involvement in this muderous scheme, and they associate with others less than enthusiastic about western culture.

But why doctors? It is easy to hypothesize that medical socialism--- the UK National Health Service---is one important factor, as the administrative bureaucracy has powerful incentives to achieve budget savings by squeezing the salaries of physicians and other medical personnel. Those workers have few attractive alternatives in the short run---their medical training and its attendant costs are in the past---and driving a taxi may not appeal to people used to wearing white coats and stethoscopes. But what about waiting tables, Hollywood-style? Sorry: It's one thing to tell the party of six that you're an actor and that your show is on hiatus, but quite another to say that you're a doctor and the pay is lousy. So, the doctors are stuck with whatever the bureaucrats agree to pay them. In the U.S., physician earnings are well above $200,000---often far above that, depending on the particular specialty---while in the UK, NHS salaries are in the $100,000-$200,000 range (loosely, depending on exchange rate issues), for work in a country with a cost of living far higher than in the U.S.

The bureaucracy always lives in the short run, so squeezing salaries is as natural as breathing. And the longer term effects on the supply of medical personnel? That will be someone else's problem in ten or twenty years. But if you're a physician from the third world, salaries under medical socialism in the UK may not look bad at all. And so it is utterly unsurprising that the UK imports a substantial amount of medical personnel, and by the ordinary laws of probability, it is inevitable that some of them come from foreign population groups less than enamored with miniskirts and other manifestations of the British system of boys meeting girls. And some proportion of those people, again inevitably, will prefer to take action against the infidels, of a sort that produces destruction and worse.

And so yet again, in a way highly subtle, government compassion yields destruction and death.

Posted by Benjamin Zycher at 05:23 PM | Comments (0)

On Tuesday, the Science Times section of the New York Times published a column (op-ed?) by Denise Caruso, who argues that a recent finding by the National Genome Research Institute should cause us to rethink how we regulate products produced through biotechnology.

It is a thoughtful piece and worth reading in full:

"Last month, a consortium of scientists published findings that challenge the traditional view of how genes function. The exhaustive four-year effort was organized by the United States National Human Genome Research Institute and carried out by 35 groups from 80 organizations around the world. To their surprise, researchers found that the human genome might not be a 'tidy collection of independent genes' after all, with each sequence of DNA linked to a single function, such as a predisposition to diabetes or heart disease.

Instead, genes appear to operate in a complex network, and interact and overlap with one another and with other components in ways not yet fully understood. According to the institute, these findings will challenge scientists 'to rethink some long-held views about what genes are and what they do.'

Biologists have recorded these network effects for many years in other organisms. But in the world of science, discoveries often do not become part of mainstream thought until they are linked to humans.

With that link now in place, the report is likely to have repercussions far beyond the laboratory. The presumption that genes operate independently has been institutionalized since 1976, when the first biotech company was founded. In fact, it is the economic and regulatory foundation on which the entire biotechnology industry is built."

Caruso also goes on to say that "evidence of a network genome shatters the scientific basis for virtually every official risk assessment of today's commercial biotech products, from genetically engineered crops to pharmaceuticals."

I must disagree. Until recently, scientists did not understand in depth (and may still not) how many commonly available drugs - from aspirin to oral contraceptives to antidepressants, affect every function of the human metabolism.

And we continue to make additional findings regarding the efficacy and safety of many old and new medicines that were not predicted in advance by scientists or manufacturers. And yet no one would seriously advocate that we do away with these interventions until our knowledge of them was perfect and complete.

While the reductionist view of gene action may be simplistic, it does not follow that we should abandon the intellectual property rights regime that spurs research into gene function, or embrace a precautionary principle - as Ms. Caruso seems to - that we shouldn't market any of these medicines until we have a complete understanding of their effects on the entire human genome.

(Her example of unintended consequences is that of antiobiotics, which have been widely overused, leading to drug resistant organisms -but that development is a social failing of our health care system, not of the medicines themselves or the regulations under which they were approved. Arguably, the shortage of new antibiotics is actually a product of perverse regulatory incentives.)

Caruso's argument is tantamount to saying that we ought not to approve the internal combustion engine, or voting rights for women, until we have a full and complete understanding of their effects on human society and the environment, their net risks and benefits.

The FDA has approved medicines for decades without recourse to sophisticated genome scans, using science that was, by today's standards, relatively primitive. We do not ask for complete safety for our medical products or, for that matter, for any products. We only ask that the risk be reasonable given the use of the product. In this sense, our regulatory system has been remarkably effective.

Of course, the law of unintended consequences remains in effect - as much for biotechnology as for politics or for government regulation. But we shouldn't inhibit innovation out of an excess of caution, like sailors who refuse to voyage into new terriotory because of the monsters that lurk there.

Posted by Paul Howard at 10:10 AM

July 03, 2007

Kurt Loder, a long time MTV personality, has penned a scathing review of Michael Moore's "documentary" Sicko on the MTV website. For what is ostensibly a movie review, Loder offers plenty of astute policy analysis.

"His cherry-picked facts, manipulative interviews (with lingering close-ups of distraught people breaking down in tears) and blithe assertions (how does he know 18,000* people will die this year because they have no health insurance?) are so stacked that you can feel his whole argument sliding sideways as the picture unspools. The American health-care system is in urgent need of reform, no question. Some 47 million people are uninsured (although many are only temporarily so, being either in-between jobs or young enough not to feel a pressing need to buy health insurance). There are a number of proposals as to what might be done to correct this situation. Moore has no use for any of them, save one."

Loder's review is refreshingly thoughtful and cogent and it is a tribute to him that he doesn't give the film the free pass on the facts that so many other reviewers have.

Read the whole thing.

Posted by Paul Howard at 03:32 PM

There is a useful shorthand description of medical care increasingly bureaucratized directly by government or indirectly by private providers and insurers constrained by the rules and incentives created by, well, government: One size fits all. In reality, of course, the inevitable attempt by government to achieve illusory efficiencies by adopting one-size-fits-all mandates yields a one-size-fits-all system that actually fits virtually no one, but that inexorably will prove fantastically expensive over time.

Humanity, however, does have a remedy for such perversity: the profit motive. Notwithstanding the assumption on the part of many that "profit" is a dirty word, it is the case that the pursuit of profit leads producers to find approaches and solutions yielding many sizes fitting many. Only those who disparage the preferences of others can object. And so despite the massive constraints and roadblocks that have emerged in American medical care as an outcome of perverse tax policies and political/bureaucratic incentives, opportunities for profit---that is, opportunities to produce things that others value---emerge. The growing presence of walk-in clinics and the like is only one manifestation of this dynamic. Another is the increasing specialization on the part of market players---specialization that is, as we learn in Econ 101, productive---pursuing profitable opportunities to serve particular market segments. An example reported today is the purchase of Option Care, a provider of specialized medical care/pharmacy services for patients in need of drug therapies requiring administration by medical professionals, by Walgreens. This is one example among many; the larger reality is that "reforms" yielding greater centralization of medical care policy inside the Beltway inexorably will constrain such productivity. If we care about actual patient wellbeing, that is not a good thing, as Martha might say. On the other hand, for those who care more about wealth redistribution, patient wellbeing is a bit like profit: not high on the priority list.

Posted by Benjamin Zycher at 09:04 AM | Comments (0)

July 02, 2007

In today's Wall Street Journal, Ronald Cass takes issue with a number of Congressional Democrats who issued a letter chiding the U.S. Trade Representative for putting Thailand on a list of IP infringers.

Cass says that:

"Henry Waxman and 34 other House Democrats wrote a letter to U.S. Trade Representative Susan Schwab late last month demanding that she rescind her decision to put Thailand on the "Special 301" Priority Watch List of nations violating intellectual property rights.
Their protest demonstrates an uncanny instinct for getting things wrong -- reducing important protections for trade and intellectual property on behalf of an authoritarian government installed by military coup, meanwhile damaging American companies working to cure HIV/AIDS, coronary-artery disease and other threats to world health. If their intervention is not rebuffed, it would also undermine the rule of law."

Cass' points are well taken. The protection of intellectual property rights encourages innovation in knowledge-intensive industries like pharmaceuticals where barriers to market entry (i.e, FDA regulations) are severe and the costs of developing new products are high. Without the guarantee of a substantial period of monopoly protection (and high initial prices) for their products, companies would be unable to attract the investors and capital required to create new pharmaceuticals.

If policymakers and philanthropists are concerned about poor countries being able to afford new medicines (like AIDS drugs) the Gates Foundation and the President's Emergency Plan for AIDS Relief -or the Open Society Institute - can step in to buy drugs on their behalf.

Sabotaging intellectual property rights in middle-income countries like Thailand sends a signal to investors that the returns on their investment in new medicines will be limited by political expedience. Fewer new medicines tomorrow will hurt poor nations and rich nations alike - surely not an outcome that Congress intends to promote.

Posted by Paul Howard at 05:58 PM

It appears that hotel rates in Beijing next year during the summer Olympics are high and rising, as the old-fashioned forces of supply and demand work their magic. "Beijing will not intervene in the pricing of hotel rooms during the 2008 Olympic Games, the city's tourism chief said," as reported in various U.S. papers, which reported also that "A Beijing tourism offical said in the June 21 edition of China Daily that the city would let the market decide hotel rates."

Well, now. Those are powerful words indeed, and not only about hotel rooms, and there are many, many politicos right here in the good ole US of A who could learn a thing or two from that simple free-market wisdom as brought to us courtesy of the Chinese Communist Party. Apartment rents. Gasoline prices. Agricultural commodities. Highway capacity. The list is endless when considering the market meddling of U.S. officials at the local, state, and federal levels.

And let us not forget health care. To say that people are "covered" is to say that they do not bear the full cost of the health care consumption that they pursue, and since resources are limited always and everywhere, the inexorable result is expanding demands and rising prices. And those prices can be suppressed in any number of ways, but the laws of economics cannot be wished away, as the Chinese commies know only too well, with various forms of nonprice rationing the only possible outcome. The plain fact is that various public policies in the U.S. drive up the cost of health coverage and reduce competitive pressures, and no amount of "compassion" can overcome the ensuing effects. Whatever the characteristics of Communist systems around the world, compassion was absent among them, and so hard truths emerged in plain force. As any good commie knows, only the market is truly compassionate because self-interest leads us to produce the things that others need. And so yet again we find truth in an unexpected place.

Posted by Benjamin Zycher at 05:52 PM | Comments (0)

June 29, 2007

Ah, the blessings of schalami schlice schocialism in health care. I refer, of course, to the latest effort in Congress to expand SCHIP---the State Children's Health Insurance Program---to children in families with incomes up to 400 percent of the federal poverty line. Yes, 400 percent: That's $82,600 annually for a family of four. In 2005, median income for family households was about $57,300. This effort is projected to cost $50 billion over five years, and whaddya know: That is the rough cost of the Medicare Advantage program, in which federal subsidies for private health coverage engender competition among private insurers to satisfy the heterogeneous preferences of customers, something for which Congress and the federal bureaucracy are not noted. Under the PAYGO budget rules, new spending is supposed to be offset by new revenues and/or cuts in existing programs; and so it is not hard to infer that the Democrats, anxious to avoid comparisons between the private and public satisfaction of patients, would dearly love to get rid of Medicare Advantage so as to fund this huge expansion in schingle-payer SCHIP schocialism, a program taylor-made for the wealth redistribution games that are the very essence of Beltway life.

A number of states now are expanding SCHIP to adults. Doesn't the "C" in SCHIP stand for children? Well, yes. But fear not, dear reader. As adults become increasingly dependent upon the Beltway for health care and myriad other goodies, the infantilization of America will proceed apace. Thus does the political class indeed look upon all Americans as children. It's a lotta bullSCHIP.

Posted by Benjamin Zycher at 08:22 AM | Comments (0)

June 28, 2007

A New Jersey judge ruled yesterday that companies cannot use FDA regulation as a shield (called "preemption") against state lawsuits alleging harm from FDA approved drugs, in this case Wyeth's hormone drug Prempro.

The plaintiff's attorney in the case argued that "a drug being approved by the FDA does not protect the drug companies from being sued...The FDA regulations (on label warnings) are a floor, not a ceiling."

This is a very bad principle for anyone who cares about continuing drug innovation or, for that matter, patient safety. Companies cannot predict ahead of time all of the side effects from drugs, or even whether not a patient's illness was caused by a medical treatment, the environment, or genetics.

Laying the onus on drugmakers to warn patients of every conceivable risk will lead to endless, confusing drug labels that are useless in indentifying real risks. Alternately, drugmakers will just stop making drugs for conditions where the liability exposure is just too severe.

Peter Schuck, writing in The American Lawyer, makes the case for statutory preemption based on FDA compliance:

"New, improved drugs can save countless lives and improve the quality of life for millions. This social cornucopia, however, depends on the willingness of the pharmaceutical industry, operating in a fiercely competitive international market, to invest vast sums of money and many years of research and development in hopes of coming up with a blockbuster drug like Lipitor to make up for the far more numerous duds. But since a few adverse jury verdicts can destroy a product -- or even a company -- drug manufacturing is a high-stakes roll of the dice. To elicit the necessary large, long-term investments, some legal predictability is needed."

Sadly, given the current political climate in Congress - and public antipathy towards drug companies - legal predictability in this quarter is probably a long way off.

Posted by Paul Howard at 09:47 PM

The world is awash in counterfeit and fake products, from handbags to cancer drugs. The economics of counterfeiting is simple and powerful: as long as counterfeiters can arbitrage the difference in price between the original product and a low-price copy (and get the copy past customs officials or other regulators) there will be a lucrative market for cheap imposters.

While many consumers may nod or wink at fake Gucci bags (although IP theft is still theft) they should be much more concerned about the rise in counterfeit or fake food products and pharmaceuticals.

The recent panic over melamine in pet food or tainted toothpaste from China is just the tip of the fake iceberg: Pharmaceuticals are a particularly attractive target for counterfeiters because sophisticated fakes are easy to make and can (think: cancer drugs) be sold in bulk for enormous profits.

Joel Schwarcz, a professor at McGill Univesity in Canada, recently put it this way: "It is hard to estimate the disastrous effects of infiltrating the pharmaceutical marketplace with antihypertensives, cholesterol lowering medications, cancer drugs and malaria treatments that look like the genuine article but contain little or no active ingredient...Roughly 10 percent of the world's medicine supply is now fake, with hundreds of thousands dying every year due to counterfeit or substandard medicine."

Infiltration will likely intensify as policymakers in rich nations push for access to cheaper drugs from abroad - often from poorer countries with lax regulatory authorities.

In short, the longer the supply chain gets, the more vulnerable it becomes. The book to read on the topic is Dangerous Doses, by Katherine Eban.

Posted by Paul Howard at 03:59 PM

June 27, 2007

Ah, the Family Feud: It's not just for morning television anymore. No, the feud over the uninsured, about which that great family Americana has been squabbling for years, yet again lights up, so to speak, the pages of the New York Times (June 26): "Survey Finds 43.6 Million Uninsured in U.S."

This is an estimate "based on those who did not have [health] insurance at the time of the interview." Well, for how long were they without coverage? How many actually were denied health care? Was the absence of coverage the result of forces beyond their control, or was it a matter of choice? Did the absence of coverage yield adverse health outcomes? What are the prospective implications of "covering" everyone? And so on. Needless to say, the newspaper of record did not find such nitpicking fit to print, or, for that matter, fit even to contemplate. I heard that another survey found that 294 million Americans subsist without subscriptions to the New York Times. Oh the humanity.

Posted by Benjamin Zycher at 05:21 PM

The Chicago Tribune offered a great editorial today on the AMA's vote to call for greater federal and state regulation of convenient care clinics (aka, their competitors).

"The AMA members want to make sure the nurse practitioners and physician assistants who staff those clinics get enough supervision from actual doctors. They worry about conflicts of interest between the nurses writing prescriptions and the in-store pharmacies that fill them. They worry that drop-in medical care discourages patients from building a long-term relationship with a family doctor. We appreciate their concern; we really do. We just wish they'd demonstrate it by trying to offer what Wal-Mart is offering -- accessible, affordable care -- instead of throwing up bureaucratic hurdles to stifle the clinics' explosive growth."

The Tribune concludes that "nothing keeps a business fit and healthy like a good dose of competition." Doctors, take your medicine.

Posted by Paul Howard at 04:39 PM

This article, from The Scotsman, which examines the ongoing debate over health care rationing in the United Kingdom (particularly in Scotland), is a real eye-opener. The UK's universal health care system, the NHS, is in increasing disarray, with patients and doctors trying to navigate a byzantine and confusing system:

"The [NHS] must be more open with patients about the need to ration treatments and services in a system with a limited pot of cash, doctors said yesterday...It comes after growing discontent over decisions made by NHS rationing bodies in the UK, including the Scottish Medicines Consortium.

"Rationing is reduction in choice. Rationing has become a necessary evil. We need to formalise rationing to prevent an unregulated, widening, postcode-lottery of care. Government no longer has a choice."

The article also notes that a "chaotic new recruitment system" in Scotland "has left junior doctors scrabbling for jobs." One doctor called the government system "a disaster" that has "left doctors anxious and depressed."

Read the whole thing.

Posted by Paul Howard at 03:41 PM

June 26, 2007

Roger Bate, a resident fellow at the American Enterprise Institute, and his co-author Kathryn Boateng, have put together a short but powerful expose on the rise of counterfeit and fake drugs in global drug markets. Although the problem afflicts rich and poor nations alike, the greatest impact falls on patients in the poorest countries, where regulatory agencies are weak and epidemics like malaria and AIDS are rampant. Bate and Boateng write that

"Counterfeit drugs contain little or none of the active ingredients of legitimate drugs, with varying consequences depending on the disease. An outright lack of therapeutic benefits may cause death, particularly in infants. But low-strength medicines will only knock out the weaker diseases, leaving the stronger ones to thrive and develop resistance to the drug. This means that even the genuine drug will be rendered useless to the patient; unless he can get access to vastly more expensive second-line drugs, he has no hope. If the disease develops population-level resistance, a whole drug class will be lost."

Read the whole thing: Bad Medicine in the Market.

Posted by Paul Howard at 05:21 PM

Remember the adage that "if you can't beat them, join them"? When it comes to health care, the reigning slogan is "if you can't beat them, have them regulated out of existence." At least, this seems to be the tactic the American Medical Association is using against convenient care clinics like RediClinic and MinuteClinic, according to the Houston Chronicle:

"TheAmerican Medical Association wants authorities to investigate whether quickie retail-based health clinics run by pharmacy chains pose conflicts of interest that put profits ahead of patient health.

The nation's largest physicians' group on Monday adopted a resolution vowing to seek an investigation after several AMA doctors complained that the clinics interfere with the traditional practice of medicine."

Health care is the most regulated industry in America, making it extraordinarily expensive, dysfunctional, and confusing for patients and doctors alike.

Convenient care clinics offer consumers basic care at affordable prices in highly accessible locations. Rather than embracing the clinics as a way to empower consumers, the AMA is trying to strangle competition.

This will increase consumers' frustration with the health care system, as well as the public's willingness to embrace single payer health care - where doctors will have even less autonomy and initiative than they have today.

There is another expression for this kind of behavior: cutting off your nose to spite your face.

Posted by Paul Howard at 03:55 PM

June 25, 2007

Oh, dear. The ineffable Arnold, Governator of the great State of California, where I am privileged to pay my taxes, has issued a plea to health insurers in the state; "I beseech thee, oh sellers of health coverage and providers of milk and honey for the masses, sell thou your policies to anyone who can afford the premiums. Guaranteed issue is the new black."

I quote from memory. Anyway, given that the state imposes any number of constraints on underwriting---allocation of premium costs in accordance with expected claims---it would seems that Arnold ought to beseech the bureaucrats and the politicians for a change in the regulatory environment and for elimination of rules that make insurance more expensive. But what do I know about prayer, anyway? Well, a lot more, I think, than a guy who spent most of his career in Hollywood, bending knee at the alter of the box office numbers. But I digress.

Posted by Benjamin Zycher at 05:45 PM

June 22, 2007

The Newark Star-Ledger had a fascinating article last week on the high cost of orphan drugs, i.e. medicines that are that used to treat very small patient populations. The number of orphan medicines has increased rapidly since Congress passed the Orphan Drug Act in 1982, which provides companies with powerful financial incentives to develop medicines for rare diseases.

But even with these incentives, companies much charge high prices in very small patient populations in order to recoup their investments and reap an attrative profit. Consequently, orphan drugs are tremendously expensive - sometimes hundreds of thousands of dollars a year. The Ledger reports growing concerns from insurers and policymakers:

"This is probably the biggest moral nightmare facing patients, doctors, payers and employees today," said Art Caplan, a bioethicist at the University of Pennsylvania. "What's the cap on the extent to which I am my brother's keeper?"

"Specialty pharmaceuticals accounted for 24 percent of total drug spending in 2005, according to industry statistics. By 2010, they are expected to comprise 44 percent. Three years ago, manufacturers reported 108 such products in development. By 2005, the most recent year for which statistics are available, the number ballooned to 800."

By any measure, the Orphan Drug Act has been a spectacular success, with millions of patients receivin