Does It Matter Who Pays For Care? Who Has the Standing to Set Limits?

Some observers have begun to suggest that it really doesn’t matter who pays for health care. What matters is how we pay, and what we pay for.

Dr. Atul Gawande made this point in the brilliant piece that the NewYorker published at the beginning of this month.  “Activists and policymakers spend an inordinate amount of time arguing about whether the solution to high medical costs is to have government or private insurance companies write the checks . . . ” Gawande observes.  “These arguments miss the main issue. When it comes to making care better and cheaper, changing who pays the doctor makes no difference.” In other words, he is saying, it just isn’t important whether we have a public-sector insurance plan competing with private sector insurers.

Over at the Huffington Post, Jim Jaffe makes a similar argument. He begins by saying that health care spending has become unsustainable. Trying to pay less for health care services isn’t the whole answer: “Ultimately we have to provide fewer services.” 

The Battle Over Biologics Begins

Drug companies have been allowed to introduce generic versions of traditional pharmaceuticals since 1984—saving the U.S. health care system an estimated $734 billion over the last ten years alone. But there currently is no regulatory pathway for creating generic versions of “biologics”. Unlike traditional, small-molecule pharmaceuticals, biologics such as  Avastin, a drug used to treat cancer, are protein-based and include monoclonal antibodies, growth factors, immune modulators and other molecules that are derived from living matter or manufactured by cells. Currently, brand-name biologics account for approximately 15 percent of total U.S. prescription drug sales—and they are growing in importance.

Little wonder that President Obama is determined to try to bring generic biologics to market.

Why don’t we already have generic versions of these popular drugs? One reason cited for the holdup is that biologics are more complex than small-molecule drugs and that it’s virtually impossible to create an exact replica (a so-called bioequivalent) of a pioneer biologic drug. The “follow-on” version of a biologic can be very similar to the branded drug but it might be manufactured a bit differently or might have slightly different side effects in certain patients. That means the approval process for follow-on biologics will involve more testing than is normally done for generic versions of small molecule drugs like antidepressants or heart drugs.

“The Truth about the Insurance Industry”

Ezra Klein does a bang-up job of explaining the fundamental problem with for-profit health insurance over at his Washington Post blog. Ezra also links to Congressional testimony by one Wendell Potter, who worked in the insurance industry for some 20 years.

I would add only that non-profit private sector insurers don’t labor under the same built-in conflict of interest. They don’t have “a fiduciary duty to maximize profits.”

In Europe, every country offers some combination of regulated non-profit private sector insurance and public-sector insurance. The hybrid model seems to work well.  If you have only public sector insurance (as in the U.K.) and Sarah Palin is elected president, you have a problem. Don’t laugh. Were you laughing when GWB was re-elected? Okay, some people liked President Bush. Obviously quite a few people voted for him. But you never know who is going to wind up in the White House. When Margaret Thatcher took charge in the U.K., she took a hatchet to the National Health Service. It still hasn’t fully recovered.

 

First, They Came Bearing Trinkets for Doctors--Now, Junkets for Journalists

Over on the always-excellent Schwitzer Health News Blog,  the University of Minnesota’s Gary Schwitzer spotlights a notice that appeared in the Society of Professional Journalist’s (SPJ) e-newsletter:

“Interested in covering the health industry, science and medical research? Even more interested in using journalism to inform the public about the leading cause of illness and death worldwide? The National Press Foundation offers an all-expenses-paid four-day fellowship for journalists on ‘Cancer Issues.’ The program will be in Washington, D.C. Sept. 13-16. Fifteen fellowships will be awarded and they all include lodging, airfare and most meals. The applications deadline is 5 p.m. July 28, 2009."

Who exactly is paying for such largesse?  Schwitzer provides a link to the National Press Foundation website where, at the very bottom of the announcement, in small type, you discover that “This program is underwritten by Pfizer Inc.”  In an e-mail that I received earlier this week, Schwitzer writes:  “As always, I see health policy ramifications here. At a time when Pharma is negotiating just what its role in health care reform will be, this is especially troubling."

I couldn’t agree more.

 Schwitzer also points to a 2008 BMJ  article titled “Who’s Watching the Watchdog” by  Lisa Schwartz and Steve Woloshin, both associate professors at the  Dartmouth Institute for Health Policy and Clinical practice, and Ray Moynihan, a lecturer at the University of New Castle, Australia.
 
“As watchdogs the media play a vital role in highlighting interconnections between doctors, researchers and the drug industry. But who watches the watchdogs? Financial ties between medical journalists and for-profit companies they cover in their reporting have received little attention in the media or from the research community. Such ties warrant scrutiny, not least because many of us first learn about new treatments from the news media, and these reports can affect the way the public uses health care.”

Schwitzer also quotes SPJ’s own code of ethics, adding “I don’t think SPJ should promote events in its own newsletter that, in my reading, invites journalists to violate the SPJ code.”  To read the whole post, click here.

 

Truth Squad: The President’s Press Conference

On Politco.com’s  “Arena,” Rory Cooper, Director of Strategic Communications for the Heritage Foundation recently accused President Obama of  lying during yesterday’s  press conference.

It is one thing to disagree on how best to reform healthcare, but claiming that the president is telling a bald-faced lie seems to me an unwarranted ad hominem attack .  When it comes to being candid, this president has a pretty good track record.  (Today he even admitted that he’s a not-quite-reformed smoker, though he never smokes in front of his children.) But  I guess if a pundit doesn’t have any ideas about reform, only an ideology, resorting to personal attack (without evidence) is the best he can do.  (If I were the subjects of these attacks, I would be tempted to have a once-a-month cigarette too. )

A Telling Table: Senators and Contributions from Health Insurers

Here is an eye-opening table revealing which Senators have received the largest contributions from PACs representing the insurance industry. Compare the names on the list to those who suggest it would be “unfair” if private insurers had to compete with a public-sector insurance plan that could offer better, less expensive insurance to all of us. The numbers come from this site. (Thanks to Brad F. for calling my attention to this website. )

Senator            Cycles     PAC $
Baucus (D-MT)       3.125      $141,250
McConnell (R-KY)   3.125     $110,750
Nelson (D-NE)       3.125      $106,123
Kyl (R-AZ)         3.125          $106,000
Gregg (R-NH)       3.125       $103,500
Grassley (R-IA)    3.125         $95,000
Lincoln (D-AR)     3.125         $91,000
Enzi (R-WY)        3.125         $87,000
Chambliss (R-GA)   3.125      $86,750
Ensign (R-NV)      3.125         $85,750
======================================
AVERAGE SENATOR          $37,267

Good News for Seniors, Not A Big Sacrifice For Pharma

I am now part of a Washing ton Post panel of health care analysts. Each Monday, the Post sends us a question, and asks us to comment. This week, the question focused on “the pharmaceutical industry’s offer to has put $80 billion on the table to reduce the cost of health-care reform over the next decade. What is your reaction to the offer and the impact it will have on the debate?”
Below, my reply:                          

The announcement that drug-makers will offer 50% discounts  to Medicare beneficiaries who fall into  the Medicare Part D doughnut hole is excellent news for seniors. Drug-makers will help to bridge the gap in coverage that forces roughly 15% of seniors stop buying medications when their annual prescription drug bill reaches $2700. 

But this is, as the president said, “a first step.”  Pharma is going to have to do more.

Look at it this way: this year, prescription drug sales in the U.S. will total $252 billion.Meanwhile, if sales continue to rise—and drug-makers continue to hike prices, spending on drugs is expected to double between 2014 and 2018.  By 2019, Pharma hopes to rake in over $500 billion in U.S. sales.

In that context, giving up $80 billion over ten years is not a huge sacrifice. Pretend that the $80 billion is spread out evenly, $8 billion a year. This means that in 2019, instead of showing revenues of $500 billion, the industry would have to make do with $492 billion. But unless GDP doubles, we cannot afford to spend $492 billion on drugs in 2019.

Why does Pharma charge U.S patients sky-high prices? Because it can. No one is pushing back. In other countries governments negotiate to protect dying patients from being gouged.

Meanwhile, Pharma is spending twice as much on marketing and advertising as it does on research. Perhaps it should re-think that spending—and pricing. Either that, or prepare to negotiate. Together, Medicare and a public sector insurer should be able to make drugs as affordable here as they are in France.

Will Doctors “Help Drive Healthcare Reform Or Risk Becoming Road Kill”?

Over at Huffington Post, HealthBeat reader Jim Jaffe asks “Which Side Are Docs On?”

“The quest for evidence-based medicine, embedded in already-enacted economic stimulus legislation, gives reformers a tool to recruit doctors. New research would define optimal care, which often is different - and less expensive - than what doctors are doing today. How to turn these findings into practice is a key question.

“Doctors can reject it, attempt to stick to their old habits, resist efforts to impose it on them and rally their patients against rules imposed by faceless bean-counting bureaucrats. That worked when they successfully resisted and rejected managed care a decade ago.”

But, Jaffe points out, “Things have changed since then. The cost problem is seen as more acute. There's a growing realization that there's substantial overconsumption. And opposing protocols set by reputable scientists would be much tougher than pushing back on insurance companies that had meager public support.”

To read the whole post, got to : http://www.huffingtonpost.com/jim-jaffe/which-side-are-docs-on_b_218563.html

Bipartisanship and Health Care Reform: While Bipartisanship May Sound Like a Worthy Goal . . .

When legislators talk about the importance of striving for “bi-partisan” legislation, they are usually arguing for legislation that fairly represents the goals and interests of the vast majority of Americans.

But today, only 21 percent of all Americans identify themselves as Republicans. . Sixty-three percent approve of the job that  President Obama is doing.  Given the state of the economy, this is an extraordinarily high number. 

Moreover, a New York Times/CBS poll published Saturday reveals that an overwhelming majority of independents as well as Democrats agree with the president about the need for a public-sector insurance option.  The question was remarkably clear: “Would you favor or oppose the government's offering everyone a government administered health insurance plan like Medicare that would compete with private insurance plans?" Seventy-two percent of respondents favored the public option, including 87 percent of Democrats, 73 percent of independents, and 50 percent of Republicans.

Why I Am Not Worried About Health Care Reform

“Health Care Reform in Trouble”: that was the headline above Ezra Klein’s post on his excellent Washington Post blog yesterday.   Klein then linked readers to Jon Cohn post on TNR’s The Treatment : “This CBO Projection Should Worry You,” There, Cohn referred to reports that the Congressional Budget Office was projecting that  the Senate Finance Plan for reform would cost $1.6 trillion over 10 years—about $600 billion more than the Committee had projected.  Cohn, usually an optimist, sounded worried, very worried: “Universal coverage will rise or fall based on the money. And right now, I worry, falling seems all too plausible.”

Late yesterday,  Klein broke more bad news.  In response to the CBO estimates, the Senate Finance committee has scaled back its rough draft of a plan for healthcare reform: “Specifically, subsidies have dropped from 400 percent of the poverty line to 300 percent. Medicaid eligibility has been tightened to 133 percent of poverty for children and pregnant women and 100 percent of poverty for parents and childless adults. The plans being offered in the exchange have seen their actuarial values sharply lowered.  . . . Sen. Kent Conrad's co-op idea is up for discussion. There's no public plan mentioned anywhere in the document.”