Category Archives: Ethics

Drug costs

Health Affairs has some ideas regarding drug costs. 

A few jaw-dropping facts quickly illustrate the pattern of rising drug costs. The average annual cost of cancer drugs increased from roughly $10,000 before 2000 to over $100,000 by 2012, according to a recent study in Mayo Clinic Proceedings. Several breakthrough specialty medications and orphan drugs recently approved by the Food and Drug Administration (FDA) have subsequently entered the pharmaceutical market with hefty price tags. Consider Biogen Idec’s multiple sclerosis drug, Tecfidera, which costs $54,900 per patient per year; hepatitis C cures from Gilead Sciences, with a sticker price of $84,000 per patient; and Orkambi, a cystic fibrosis drug from Vertex Pharmaceuticals approved this month, priced at a whopping $259,000 per year.

And

generic drug prices have at least managed to raise eyebrows. In 222 generic drug groups, prices increased by 100 percent or more between 2013 and 2014, according to Forbes. As generic drugs have long provided payers some respite from other more expensive products and services, rising prices in generics like Mylan NV’s albuterol sulfate—which increased about 4,000 percent from 2013 to 2014—are well worth the concerns.

And consider this as well.

Pharmaceutical companies and free market proponents were unhappy at the Obama administration’s recent proposal to grant Medicare the authority to negotiate drug prices. A Republican-controlled Congress is unlikely to accept such meddling in private markets, and a lobbying firm in Washington called the proposal “dead on arrival.”

Read the rest of the article for more facts and thoughts on amelioration….or just read some of our old posts

Medicynical Note:  And why anyone in their right mind would oppose Medicare negotiating drug prices is anybody’s guess—my guess is that campaign support (money) from drug companies (in other circles known as bribes) carry the day. 

What’s going on is not sustainable and something has to give.  Drug Companies want everyone but them to literally give $$$$.  Their business is not health care but rather maximizing revenue.  Patient outcomes, access, bankruptcy, sustainability is not their department.  

It IS the money stupid!

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Decisions in health care (Electronic Medical Records): It’s the money stupid!

Health affairs blog notes that the decision to implement and fund the electronic medical record was based on faulty research that indicated it would save money.   The premise was wrong.  And the the flaw in the research, in part, was that the research and the decision to fund was influenced by lobbyists paid by vendors of such systems—greasing the wheels so to speak.  This is highly legal, given the Supreme Court’s granting of citizenship to corporations and moneyed interests, allowing them unlimited “access” (ability to bribe)   to whichever political hack who would support their plans.

Long before Congress created the Health Information Technology for Economic and Clinical Health (HITECH) Act, giving $32 billion to health care providers to transfer to Electronic Health Records (EHR) vendors, plans for that windfall were created by an by Health Information Technology (HIT) vendors, HIT enthusiasts, and friendly politicians (like Newt Gingrich).

The plans included an enormous lobbying campaign. Congress responded obediently. Most commentators focus on that $32 billion for the HITECH Act’s incentives and subsidies. But that was only seed money. The real dollars are the trillions providers spent and will spend on the technology and the implementation process.

Much of the economic justification for the spending on HIT was based on a now-debunked RAND study that promised up to a $100 billion in annual savings. Recently, however, in a remarkable act of ethics and honesty, RAND disclosed its previous study’s problems, dubious data, and weak research design, and that the research was subsidized by two of the larger HIT vendors (Cerner and GE).

Interestingly, in contrast, the Congressional Budget Office (CBO) and the Office of the National Coordinator for Health Information Technology (ONC), both of which touted the first RAND study, have not issued reassessments of their happy predictions but continue to promote HIT’s cost savings and improved patient safety. While HIT should be and absolutely is far better than paper records, more than 30,000 studies had already failed to support such bold assertions of powerful improvements in health and efficiency. Moreover, the research designs of all but a tiny proportion of those studies were too weak to yield trustworthy conclusions. And the best of them showed few if any benefits. This comes to the heart of our concern here: the use of weak research in support of less-than-effective health policies and medical treatments.

Medicynical Note:  And yes, there is no shortage of political hacks in our congress.

Skim milk masquerading as cream, again.  Is this any way to run a government? 

Health care/Insurance—We’re the worst

T.R. Reid’s book “The Healing of America” compares our non-system of  health care  with other countries solutions.  In a recent interview he noted:

In coverage, against all the countries like us, we’re the worst. There’s no other country that lets people go without health insurance. Quality on comparative measures…we rank pretty low among the rich countries. We’re better than the poor countries, but compared to Britain, Germany, Japan we rank pretty low on health outcomes. Cost–we’re the highest by far. We pay twice as much per capita  for health care and still leave 31 million people without coverage.

And

The first thing we need to do is make a moral commitment to cover everybody and we’ve never done that. It doesn’t have to be socialized medicine. Germany covers everybody with private insurance, private doctors and private hospitals and they still spend much less than we do.  We could do it through government, we could do it through private insurance, but you need to commit to cover everybody and once we do that we’ll get it done.

Medicynical Note:  The question is why don’t we formally commit to cover everybody.  We, the government,  already cover all people over 65, those who are disabled, some of the poor, the military and their retirees, government employees—probably half the country.

Meanwhile health care costs spiral.  Drug companies gouge the sick and infirm.  Insurers make certain to get their 20%.  An no-one really really is interested in curbing costs.  It’s amazing what we tolerate. 

The $153,000 Snake Bite and America’s Decline

The paradox of American capitalism is that we say it works best when there is a “free market” with competition.  But as we have seen time and again the goal of business, even in healthcare, is obtain monopoly status (i.e. eliminate competition) for your “product” and then gouge your customers–a great business plan, no?

This was brought home by the Washington Post article reporting a snake bite for which medical costs were $153,000.

The bulk of his hospital bill—$83,000 of it— is due to pharmacy charges. Specifically, charges for the antivenin used to treat the bite. KGTV reports that Fassler depleted the antivenin supplies at two local hospitals during his five-day visit. Nobody expects antivenin to be cheap. But $83,000?

There’s currently only one commercially-available antivenin for treating venomous snakebites in the U.S. — CroFab, manufactured by U.K.-based BTG plc. And with a stable market of 7,000 to 8,000 snakebite victims per year and no competitors, business is pretty good.

and

BTG has fought aggressively to keep competitors off the market. A competing product, Anavip, just received FDA approval this year and likely won’t be on the market until late 2018. This lack of competition is one reason why snakebite treatments rack up such huge hospital bills — $55,000. $89,000. $143,000. In May of this year, a snakebit Missouri man died after refusing to seek medical care, saying he couldn’t afford the bill.

Excessive costs  are nothing new to anyone with a serious illness.     New cancer drugs for example start at $100,000/year for the drug alone, whether they work or not.  As a matter of fact most don’t work at all for the majority of patients treated with them.

This article was almost immediately followed in my browser by the brief statistical review of the 12 economic signs that the U.S. is on the decline published in Fortune magazine  based on the academic article Is the U.S. Still the best Country in the World? Think Again by Hershey Friedman and Sarah Hertz.  Interestingly the thesis of the article is not that the U.S. has too many regulations but rather that unfettered capitalism really really does not work.

“Capitalism has been amazingly successful,” write Friedman and co-author Sarah Hertz of Empire State College. But it has grown so unfettered, predatory, so exclusionary, it’s become, in effect, crony capitalism. Now places like Qatar and Romania, “countries you wouldn’t expect to be, are doing better than us,” said Friedman.

Read the article for the 12 signs but consider that whether it’s incomes, poverty levels, internet speeds, education, health, or prison population the U.S. lags other countries in the world.  Hardly the position for a world leader.

Medicynical Note:  I would posit that the snakebite anecdote is the concrete example of the second article’s thesis.  Our costs lead the world (yes that is one area we are world leader) and that in turn affects access, quality and yes the economic well being of citizens.  The U.S. continues to lead the world in bankruptcy from health care costs–a category of bankruptcy unknown in other countries.

Even more damning is that patients almost never know the cost of a  health care service AND providers (hospitals and practitioners) have little certainty  as to what they will actually be paid for the service rendered.  And yes adding to the insanity,  people billed directly, those without insurance and least able to pay, are billed more, much more, for the same services.  That’s true predatory capitalism!

Oncologists Consider Value: About Time!

I suppose coming late to the table, albeit at a great cost to society, is better than missing out completely.  That’s the way I read the recent earth shaking announcement by ASCO (American Society of Clinical Oncology) of a “value framework” for considering cost in the evaluation of a drug.

Drug costs have increased such that new medications for cancer are in the $100,000/year and higher range.  It is  not so surprising  that  doctors buffered by insurers, isolated from the billing procedures and in many instances on the payroll of drug companies have been slow to discover that their patients endure hardships in trying to pay for medications and that drug costs seem disconnected from efficacy.

He said the price of new cancer drugs now averaged about $10,000 a month, and some cost $30,000 a month, which can mean prohibitive co-payments even for some patients with good insurance. “Many cancer patients are facing severe financial strain, even bankruptcy in some cases,” he said.

The value framework envisions considering two costs: the out-of-pocket costs for the patient and the overall cost of a drug to the health system.

Drug companies of course don’t like the idea saying that drug costs are only part of the total cost of care (all of which has inflated in recent years)

But most telling:

Some experts say that ideally, the price of a drug should reflect its value, but that does not seem to be the case with cancer drugs. A recent study by researchers from the National Cancer Institute, published in JAMA Oncology, surveyed cancer drugs approved from 2009 through 2013. It found that prices did not correlate very well with how novel a drug was or whether it prolonged life versus just shrinking tumors.

Medicynical Note:  As I have noted previously our health care non-system is not designed to provide efficient cost effective care but rather to provide revenue to patent holders, insurers and the various providers.  There are no brakes in the system on costs.  The FDA is prohibited by congress (influenced by drug lobbyists) from evaluating cost-efficiency of new products; Medicare is prohibited by congress (influenced by drug lobbyists) from negotiating price or even evaluating value.  And doctors for whatever reason felt it unethical to consider costs when choosing an intervention.   It’s a perfect system for revenue generation but a rolling disaster for patients and society who ultimately have to pay the bills.  It’s bankrupting us.

We lead the world in costs, individual bankruptcy from health care expenditures (unknown in other industrialized countries) and the number of people without health care insurance.  This is not a desirable or viable health care system.

It’s the Money Stupid: Hospitals Cost to Charge Ratio

Health Affairs studied the cost to charge ratio in U.S. hospitals.  They found:

the average ratio of hospital charges for services (gross revenues) to payments received (net revenues) has grown from 1.1 to 2.6. This reflects a transition from predominantly cost- and charge-based payment systems to regulated and negotiated fixed payments. Hospitals have been able to squeeze additional revenues from remaining charge-based payers and services by sharply increasing charges, negatively affecting the uninsured.

Note that in the U.S. those least able to pay, i.e. those without health insurance are charge more, many times more in some instances, than those with insurance.

While most public and private health insurers do not use hospital charges to set their payment rates, uninsured patients are commonly asked to pay the full charges, and out-of-network patients and casualty and workers’ compensation insurers are often expected to pay a large portion of the full charges. Because it is difficult for patients to compare prices, market forces fail to constrain hospital charges.

The Washington Posts lists the hospitals and discusses the issue:

All but one of the facilities are owned by for-profit entities and the largest number of hospitals — 20 — are in Florida.

And:

Understanding hospital pricing and charges is one of the most frustrating experiences for consumers and health-care professionals. It is virtually impossible to find out ahead of time from the hospital how much a procedure or stay is going to cost. Once the bill arrives, many consumers have difficulty deciphering it.

Medicynical Note:  Our money driven non-system of health care emphasizes revenue over health care quality, efficiency and value.  Overcharging patients is the norm and frankly the daily goal of hospital CFO’s.  Hiding the cost until the presentation of the bill is a little like the Mad Magazine cartoon from the fifties…Great Moments in Medicine.  While satire, it does represent the reality of American health care today. 

 

 

Health Care in America: Overcharge the patient whenever you can

The LA Times notes the wide disparity in charges for joint replacement surgery in the LA area.

New Medicare data show that Inglewood’s Centinela Hospital Medical Center billed the federal program $237,063, on average, for joint replacement surgery in 2013.

That was the highest charge nationwide. And it’s six times what Kaiser Permanente billed Medicare eight miles away at its West L.A. hospital. Kaiser billed $39,059, on average, and Medicare paid $12,457.

They also note:

The average charge nationwide for a major joint replacement operation was $54,239, according to federal figures.

This is an industry unaware of value and efficiency, intent on charging whatever it can, without regard to actual cost.  Revenue rules.

Medicynical Note:  Insurers can negotiate the actual price with the hospitals and doctors but individuals are at a huge disadvantage.  Without insurance they will pay what’s billed or negotiate a lower price which will be still more than the insurers.   And if a consumer can’t pay cash he/she will incur financing charges and/or go bankrupt.  It’s a scam,  but in this case it’s run by the most distinguished (sic) institutions in our communities.