Category Archives: Health Economics

More Comparison Studies: Capecitabine (Xeloda) vs Standard Chemotherapy

In an attempt to prevent recurrence of breast cancer, chemotherapy is given after surgery. This is known as adjuvant chemotherapy.

One of the standard adjuvant regimens is CMF (cyclophosphamide, methotrexate, and 5-FU). Compared to other adjuvant regimens the toxicity is moderate but all the drugs are given intravenously. About 15 years ago Roche developed capecitabine (Xeloda) an oral drug that is simply 5FU in oral form. The cost of this drug is several hundred times (yes you read that correctly) that of the intravenous drug but the thought apparently was that the drug would save visits to infusion centers, which are also expensive.

Now, as reported in NEJM there is evidence that the use of capecitabine is inferior to CMF as adjuvant treatment of breast cancer in women over age 65. Unfortunately it’s taken 15 years to find this out.

Medicynical note: This experience is yet another example of why we need to compare treatment regimens. It’s counter intuitive to argue against this notion unless you are a drug company. Or an insecure physician who’s ego can’t deal with another source of information, besides the bias offered by pharmaceutical companies.

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Finally, ASCO has a concern about costs? The Need for Comparison Studies

From Forbes:

“But many companies seem to be maximizing cancer profit instead. Big drug companies are making big money off smaller and smaller improvements in cancer care. Newfangled cancer drugs can cost $50,000 a year, and that doesn’t mean they will add a year to the patient’s life–you might spend $50,000 for a year and extend the patient’s life by only weeks.”

Regarding Avastin:

“The hope was that further studies of Avastin in other types of cancer or in earlier stages of the disease would show even greater survival benefits. But they haven’t. In several breast-cancer trials–including a new one being presented at the meeting this weekend–Avastin slowed the progression of disease but did not extend patient survival at all. But doctors still use the drug in treating breast cancer because they figure it helps symptoms, even if patients don’t live longer. Avastin costs up to $55,000 a year.”

More:

“Roche is also combining other expensive drugs with Avastin. One study at the meeting showed that adding Tarceva……. delayed by one month the median time it takes lung tumors to grow. “

Medicynical note: ONE MONTH delay for $50,000. Terrific.

Where is the value? Meanwhile the drumbeat of studies showing very limited improvement but very high costs continues.

Also regarding Avastin:

“Avastin failed to prevent colon cancer from recurring after surgery. In the first year of treatment, more patients who got Avastin remained free of detectable cancer. But after a year, the drug was stopped, and by the end of the study, the apparent initial benefit had faded completely.”

In fact most people who receive drugs after surgery have no risk at all for recurrence. For those with what’s called Duke’s C disease the risk of recurrence is about 35-40%. Treatment with chemotherapy with or without Avasatin decreases the risk of recurrence by 15%. That means 20-25% recur no matter what we do. That also means that around 80% of people receiving these drugs get no benefit at all from chemo (the 60% without risk of recurrence and the 20% who recur no matter what we do).

The costs of these type treatments are astronomical. The drug company’s hopes of having $50,000/year drugs used on all patients are deal busters. I can’t think of a better poster child for comparison studies than those cited above.

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It’s the Money

Fascinating article in The New Yorker (June 1, 2009) on the variations in health care costs. Atul Gawande visits one of the the most expensive Health Care Markets, McAllen Texas, and looks at the reasons.

No surprises here, but nice documentation and explanation of the issues.

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Miami’s Health Care Costs: What Happened to Supply and Demand?

Medicine’s costs confound economists. Classical economic theory (I’m not an economist, correct me if I’m misinterpreting) would have you believe that as supply increases demand is met and prices stabilize. In health care as supply increases, demand increases and prices increase. Health care is simply not a reasoned rational system.

Consider Miami: (Time, May 20,2009)

“the 2008 average private-provider costs for a Miami family of four – $20,282 – as the highest among the 14 major U.S. cities it studied, adding that more than 40% of that amount came out of Miamians’ own pockets.”

“Miami’s inordinate health-care outlay – 20% more than the national average – “is not a pretty picture,””

“That’s especially true since Miami-Dade County also has one of the country’s lowest median incomes ($43,495).”

“”South Florida has an “excess capacity of health-care providers and institutions,” Quick notes. And to make sure they all get a piece of the action, they’ve created a wasteful and ill-coordinated system of health-care redundancies, from unnecessary MRIs to inpatient treatment that too often could have been cheaper outpatient treatment. Miami-Dade, for example, has one of the nation’s highest hospital readmission rates – and more MRI machines than Canada.” (Medicynical emphasis)

Medicynical Note: For-profit medicine is simply for profit. In Miami, efficiency and even the patient’s welfare comes second. Can we learn from Miami?

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Health Care Reform–How about more detail?

As the NY Times notes it will be difficult to reach the cost cutting goals offered by doctors, hospitals, drug makers and insurance companies. ($2 trillion in cost reductions over 10 years)

Medicynic didn’t hear that drug companies were cutting prices rather they volunteered to decrease the rate of increase. Huh? If your drug costs more than you car, or more than your salary such cost cutting will have little impact. Nor did they come out and support the notion that comparison of different approaches would improve care and cut costs.

Medicynic didn’t hear insurance executives volunteer to match the administrative efficiency of other industrialized nation’s insurance plans. Rather they promised to “end certain underwriting practices, like refusing to cover individuals with pre-existing conditions or charging women higher rates than men.”

According to Mckinsey we spend in the range of 30% of health care expenditures on administration. This is nearly $500 per capita, “five times the average level across 13 other countries.”

Medicynic didn’t hear hospitals promise efficiency and cost consciousness. There was nothing noted about geographical differences in costs and utilization but hopefully that will be on the table.

Medicynic, a retired physician, has great sympathy for physicians. They are part of the problem but an essential part of the solution as they control health care resource usage. Unfortunately, in the past, physician fees have been the simplest way to cut costs and many have been unfairly squeezed by previous cost containment efforts. Seeing patients at a loss as primary care physicians do for Medicare and Medicaid patients distorts the fee system–they need to make more elsewhere in the system to compensate. A system that pays more for procedures encourages over-usage.

Physicians have traditionally not considered cost when recommending therapy. This obviously needs to change and comparison studies offer the best way to evaluate cost efficacy.

What I saw was a photo-op, what I heard was rhetoric without commitment; a NIMBY- like approach that is not likely to crowd any of the participants bottom line–except, I would guess, physicians.

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Fee for Service–Part of the problem

We have perverse incentives that increase utilization and health care costs. Consider this:

“Millions of patients each year leave the hospital only to return within weeks or months for lack of proper follow-up care.”

“In fact, because insurers typically pay hospitals to treat patients – not to keep them away by keeping them healthy – hospitals can actually lose money by providing better care. Empty beds mean lost revenue.”

The question is how to align incentives to encourage prevention, efficiency and quality care.

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Health Savings Accounts–Where are the Savings?

  1. David Ignatius notes:

“He found that for the 53 percent of households that hold at least one retirement account, the median combined balance was a mere $45,000.”

“Hold on, you say, that figure includes some younger workers who haven’t started saving in earnest yet. Okay, for households headed by persons between the ages of 55 and 64, the median value of all retirement accounts was just $100,000. Purcell noted that for a 65-year-old man retiring last month, that $100,000 would buy an annuity that would pay a paltry $700 a month for life, based on current interest rates.”

This in the generation that has lived through what is arguably the most prosperous era of our country’s history.

Meanwhile:

“Fidelity Investments says a 65-year-old couple retiring in 2008 will need approximately $225,000 to cover medical costs in retirement. That doesn’t even include over-the-counter medications, most dental services, and long-term care. The Employee Benefit Research Institute figures a married couple will need a staggering $305,000, just to have a 90 percent chance of being able to pay for all out-of-pocket retirement health expenses (the money could be paid in part out of retirement income, however.)”

Medicynical Note: Proponents of HSA’s (Health Savings Accounts) and other high deductible health insurance schemes say paying for health care is easy. Simply have people use health savings accounts to put aside money for the times when they need it. The problem is that during the most financially remunerative era in our history savings of any type didn’t occur. Moreover, the health of our economy depended on low savings rates to spur consumption.

Something’s wrong here. HSA’s and such engage in magical thinking rather than serious problem solving. They are recipes for disaster. We need to find better ways to control health costs and pay for them.

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Cheap Health Insurance–Why the industry needs regulation

The notion that the market will provide efficient, quality health insurance is a figment of the same imagination that brought us gimmicky mortgages, derivatives and credit default swaps.

Some horror stories in the Seattle PI (website paper):

“We read everything, and it looked like it was really good,”

“But a year later, his wife underwent surgery and Stewart was saddled with $20,000 in medical bills. He has been quarreling since with the insurance company, which said his wife had a pre-existing condition.”

“a Bainbridge Island woman sued her insurance company, alleging that it misled her into thinking she had comprehensive coverage only to later burden her with $135,000 in bills.”

Average consumers cannot fully understand the strengths and limitations of proffered policies. Asking them to do so opens the door to all types of abuses a noted above. Policies have contingencies that people don’t fully understand. Deductibles expressed as per cent of fees sound reasonable until one is confronted with $100,000 or more in bills.

Medicynical note: We need standardized policies with equal benefit structures. Companies would compete on the quality of services, amount of deductibles and copays, and the efficiency of their administrative services.

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Drug Company Gifts: Conflicts of Interest

Gifts from drug companies to doctors continue despite reports to the contrary. Companies claim that such gifts are ethical and necessary. The NY Times notes:

“Drug companies spend billions (medicynical emphasis) of dollars wooing doctors – more than they spend on research or consumer advertising. Much of this money is spent on giving doctors free drug samples, free food, free medical refresher courses and payments for marketing lectures. The institute’s report recommends that nearly all of these efforts end.”

Imagine the cost savings to consumers if drug companies spent less on marketing. These companies claim it takes $800,000,000 to bring a new drug to market. How much of this inflated figure is gifts to doctors aimed an influencing their treatment decisions? If we presume the NY Times is correct and more is spent on gifts and advertising then research then the real cost of new drugs is significantly less than companies claim. Guess who ultimately pays for all this?

With drug prices increasing faster than any other part of health care expenditures is it too much to ask, as the IOM (Institute of Medicine) does, that companies and docs forgo this unethical practice?

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Progress against cancer–Very Limited and Very Expensive

Gina Kolata’s article in the NY Times (4/24/2009) omits noting the high cost of new approaches to cancer treatment but does highlight the limited progress that has been made.

Over the past 50 years she notes the death rate from cancer has declined only 5% and success in treatment of advanced diseases has been limited.

“With breast cancer, for example, only 20 percent with metastatic disease – cancer that has spread outside the breast, like to bones, brain, lungs or liver – live five years or more, barely changed since the war on cancer began.”

colorectal cancer , only 10 percent with metastatic disease survive five years. That number, too, has hardly changed over the past four decades. The number has long been about 30 percent for metastatic prostate cancer , and in the single digits for lung cancer.”

But the for drug companies financial results have been spectacular. Drugs, even relatively ineffective ones, may be priced at $100,000/year for the drug alone as noted here.

In the rare instance when a drug is effective the cost is even higher. Gleevec (imitinib), developed largely with tax funds for treatment of chronic myelogenous leukemia, is priced by Novartis in the range of $50,000-$100,000/year (depending on stage of disease and indication). These patients may live 10 years or more at a cost of $500,000 to a million dollars for the drug alone. Is this reasonable? It it the best we can do? Can we afford successful treatments?

The problem with cancer is that it is a genetic disease. As one ages and cells divide mistakes in DNA replication occur. These are random, occurring simply because nature isn’t perfect or because of influence of carcinogens. We can try to control the latter but cancer prevention is not simply a matter of smoking cessation (thought that helps) or diet modification and vitamins (they don’t appear to work). We can try to treat but this ordinarily won’t eradicate the genetic cause.

Medicynical note: The letters to the editor in response to the Kolata article are remarkable. Some quite informed. Some with THE answer: a diet cure , pot, homeopathy, diet to lower the body’s pH, etc.

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