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© 2011, 2012 Health Futures Digest
| The US may not remain the leader in healthcare innovation as the Human Physiome Project, the International HapMap Project, the Allen Institute’s Brain Atlas, the Cancer Genome Atlas and similar advances — made accessible at no cost to the global research community — begin to help other countries contribute innovations. The US can hold its head high as the prime mover and sponsor of most of these projects. But innovation leadership should not be conflated — as one pundit attempts to do — with the need for US government intervention to provide access to care for all and to bring down the unnecessarily high cost of drugs for its citizens.
That need was recently reiterated in a Commonwealth Fund study which found that young US adults go without necessary healthcare because of the cost. However, the study does not appear to have investigated the extent to which young adults get their healthcare outside the healthcare non-system (advertising, the Internet, social networks), and manage it through over-the-counter drugs, “gray market” prescription drugs surplus to legitimate recipients’ needs, and home medical technologies. Inside the healthcare non-system, the practice of advanced evidence-based medicine — the kind that will take its evidence from EMRs and patient genomic data, not merely clinical studies — will result in better care, but it could cost society more, some people think. The difficulty of establishing value-based pricing for advanced medicine (in particular, pharmacogenomic drugs) is one barrier to the advance of personalized medicine. Another barrier is the lack of investment in basic and translational research into the predictive power of biomarkers. A proposal to base prices for biomedical innovations on the cost of developing and producing them prompted an alarmed biotech investor to propose instead to base prices against the innovation’s impact on Quality-Adjusted Life Years (QALYs). While this would not be easy, it is doable and worth doing, he asserts. Uncertainly over value and pricing may be one reason why CMS is reluctant to reimburse for the proliferation of spinal-care innovations that emerged during 2006, New York State’s plan to close underused hospitals, steer more people toward less expensive alternatives to emergency rooms and nursing homes, and invest heavily in health IT for the hospitals that remain may be a harbinger of things to come for other states, despite the fact that in most other states the hospital industry is growing rather than shrinking. Given the current economics of healthcare, it seems unlikely that the growth is sustainable, in which case New York has gotten ahead of the game, and other states would do well to consider the model. More focus on outpatient clinics and in-home care could help curb hospital growth and Medicaid spending in all states, it seems to us. The methodology behind U.S. News & World Report’s annual ranking of the “best” hospitals leaves something to be desired, it seems. |
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| Best Healthcare System in the World?
The United States may spend more of its gross domestic product on medical care than any nation in the world, Americans may not live as long as Western Europeans or Japanese, and more Americans lack insurance coverage, but “When it comes to medical innovation, the United States is the world leader,” claims economics professor Tyler Cohen in an article contributed to HealthLeaders. As evidence, he cites:
Cohen cites a German biomedical research company executive as arguing that the research environment in the US is wealthier, more competitive, more meritocratic, and more tolerant of waste and chaos than in Europe, and that these attributes result in more medical discoveries and in a brain drain of researchers from Europe to the US. In arguing against government intervention to “bargain down health care prices,” which he claims would save money in the short run but cost lives in the long run, Cohen sets up what seems to us a straw man: “Medical innovations improve health and life expectancy in all wealthy countries, not just in the United States. That is one reason American citizens do not live longer.” This implies that American and European/Japanese life expectancies are the same, but they have been empirically shown over and over to be not. American citizens live shorter lives than citizens of many other wealthy countries. Citing economist Arnold Kling he conjectures that since “many Americans walk less and eat less healthy food than most Europeans, the longevity boost from health care in the United States may be real but swamped by the results of poor lifestyle choices. In the meantime, the extra money Americans spend to treat allergy symptoms, pain, depression and discomfort contributes to personal happiness.” The latter claim, for which Cohen supplies no evidence, is belied by research showing just the opposite (see the World Database of Happiness. On the basis of the bulleted points above, we might agree with Cohen’s conclusion that “The American health care system, high expenditures and all, is driving innovation for the entire world,” but not on the basis of the rest of the arguments he presents. A recent Commonwealth Fund report explores reasons behind the high percentage of uninsured young adults (aged 19-29) in the US, and the consequences. The report found that 56 percent of young adults without health insurance went without needed healthcare because of cost, and a further 46 percent were paying off medical debt or had trouble paying medical bills. This evidence suggests long-term implications for both their physical and financial health, a Fund official told Birmingham News staff writer Lisa Osburn. The report suggests:
Impacts of HIT, Pharmacogenomics, & EBM Various studies say a nationwide EMR system in the US should reduce medical errors and save (according to one RAND study) about US$80 billion a year, writes Steve Lohr in the New York Times. But “when combined with the emerging field of genomics, the records will also open the door to personalized medicine,” which may mean better care but “not the hoped-for fix for the nation’s rising health care bill.” “If better information really helps us understand what is happening in health care,” one source opined, “it could well lead to more care for more people and higher costs for the system as a whole.” Experience at the Veterans Affairs health system and Kaiser Permanente, which are insurers and well as healthcare providers and which have established EMR systems, illustrates the potential for market-disrupting cost savings. Their EMRs provided evidence that generic lovastatin works as well as expensive brand-name statins Zocor and Lipitor for nearly 90 percent of patients who need to control their cholesterol, and the result has been savings to the VA and Kaiser — and corresponding losses to Big Pharma — of millions of dollars. “Ideally,” says Lohr, “electronic patient records and a national health information network would someday give doctors everywhere the information to make similar prescribing decisions and to track their patients closely, if they chose.” The result would be billions of dollars in savings nationwide — and corresponding billions in losses to Big Pharma. But “Whether more data threatens blockbuster drugs or not, there are likely to be cases in which more information is likely to generate more prescriptions, more care and more health care spending.” Lohr cites the case of blood thinner warfarin (brand name Coumadin). Because it can be tricky to get the dose right to avoid side effects such as internal bleeding or strokes, it is prescribed for only about half the people who might benefit from it. The recent identification of gene types that appear to determine how an individual metabolizes warfarin may make it possible to tailor dosages accurately, and therefore potentially double its current use. He concludes: “If the old blockbuster business model is endangered, so is the standard pill, in 10-, 20- or 100-milligram doses. The electronic medical record, for all its promise, is no silver bullet for the nation’s health system.” Barriers to Personalized Medicine The following is the abstract from the source article: “In the five years since the sequencing of the human genome, the movement toward personalized medicine has been slower than expected, and both scientific and economic challenges will have to be overcome if that is to change, Lou Garrison of the University of Washington and M.J. Finley Austin of F.Hoffmann-La Roche say in the Sep/Oct Health Affairs. On the scientific front, pharmacogenetics-based diagnostics and drugs are unlikely to be linked in large numbers until we develop much greater knowledge concerning the actual predictive power of biomarkers; this will require substantially greater public investments in both basic and translational research, according to the authors. On the economic front, the two authors stress the need for value-based, flexible pricing systems, backed by strong, consistent, intellectual-property rules.” Responding to “the specter of an upside-down world of setting prices for biomedical innovations based on cost” proposed by a fellow contributor to the Health Affarirs blog, biotech investor Leighton Read suggests that “drugs should be pricy because they cost so darn much to discover and develop” (emphasis added.) To calculate a “fair” cost-based price would amount to Soviet-style planning, he implies, and strangle the source of pharmaceutical innovation. The old argument that the alternative — capitalist — model would result in “an array of biomedical and technology innovations that we could never afford” has not been substantiated, he claims. He seems to propose that value could, usefully though with difficulty, be derived by measuring the marginal cost of a specific use of a new technology in relation to the marginal QALY (Quality-Adjusted Life Year) output of such use, compared with some specific alternative. But in any event, “Whether or not you find the estimated billion-dollar price tag for a major new drug convincing, it’s hard to dispute the years of preclinical and clinical research and the massive capital investments in manufacturing that must be sustained before commercial products emerge.” He proposes the introduction of “a better framework for purchasing medical innovation that is set to begin enough years in the future that investors in the long-lead-time technologies can adjust to the new [policy] signals (and will not need to expend their political capital to derail these changes). This system will pave the way for wider and faster adoption of medical innovation demonstrating objective value for money that exceeds some pay-line on a cost-per-QALY yardstick that is reasonably consistent with trade-offs we make elsewhere in our economy. Let’s make sure that new innovation is not held to a higher standard than previous breakthroughs, which means that there is some system for continuous examination of value for money and a level playing field for payment decision on new and old technology. Furthermore, we need to envision a system where the other inputs to health care are evaluated and paid for on the same level playing field.” A dominant concern at the 2006 North American Spine Society (NASS) conference was that lack of reimbursement guidelines for spine surgery innovations could hinder their adoption. Innovations unveiled at the conference included a bone matrix allograft called Trinity, from Blackstone Medical, a spine graft containing adult mesenchymal stem cells harvested from cadaveric bone to aid fusion. As an allograft, doctors can use Trinity in any type of spine surgery. However, they are only reimbursed by the US Centers for Medicare and Medicaid Services (CMS) under general fusion DRGs but are more expensive, making them less profitable for hospitals. A bleak reimbursement outlook also plagues artificial disc entrants, the Advisory Board reports. Despite promising trial results, Synthes’ ProDisc — a potential alternative to both lumbar fusion and Johnson & Johnson’s Charite for treating degenerative disc disease — failed to demonstrate the outcomes necessary to secure additional reimbursement. Medtronic’s Arcuate, another minimally invasive innovation unveiled at the conference and marketed as an alternative to kyphoplasty, treats vertebral compression fractures through percutaneous injections of cement. St. Francis Medical’s X-STOP, an interspinous spacer, recently received a US$4,400 inpatient add-on payment from CMS, but next year is expected to receive a $5,500 outpatient add-on payment that will cover the full cost of the minimally invasive implant, which (the Advisory Board predicts) will drive most cases back to the outpatient setting. Because targeted therapies such as Arcuate and X-STOP address the patient’s pathology, reduce trauma, and remove the need for later fusion procedures they will gain greater market share at the expense ofspinal fusion surgery, which only alleviates the symptoms. Under a US$1.5 billion, 5-year deal with the US federal government, New York State will close several under-used hospitals to improve the economic health of those that remain and “steer people to cheaper health care alternatives than the ones they use now, like outpatient clinics rather than emergency rooms, and in-home care rather than nursing homes,” reports Richard Pérez-Peña in the New York Times. In addition, the state will invest heavily in health information technology for the surviving hospitals. “No other state has negotiated a similar deal, and none are likely to, officials said. The hospital industry in most states, like their populations, is growing; New York’s industry is shrinking, and is in uniquely bad financial shape,” he writes. A spokesman for governor Pataki said the deal would help ensure that the industry “remains strong, efficient and sustainable for many years to come.” In September, the University of Pittsburgh Medical Center’s chief medical officer sent a letter to local physicians encouraging them to vote early and often for UPMC hospitals should they be asked bt U.S. News & World Report to participate in the magazine’s annual survey of “best hospitals,” reports Christopher Snowbeck in the Pittsburgh Post-Gazette. Whether the letter contributed to UPMC’s rating as one of the 14 best hospitals in the nation in 2006 is impossible to say, but the practice at UPMC and probably other hospitals “reflects poorly on the U.S. News methodology,” an official of the Value Capture Policy Institute told Snowbeck, adding that the magazine was “in a sense, getting what they deserve by setting up the criteria in a way that rewards reputation disproportionately.” |
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