Medicynic

Suggestions to the new congressional debt committee from the Incidental Economist:

1. Competitive bidding, also known as competitive pricing. This idea really puts the market to work to buy Medicare benefits for the lowest possible price on a market-by-market basis. Participants can be public and private entities. It piggybacks on the exiting, hybrid structure of Medicare (FFS Medicare + Medicare Advantage) and makes all participating plans compete directly in a way they never have. Scholars have estimated the savings to be 8% of Medicare spending. I’ve written a lot about this elsewhere. Perhaps this post is the best place to start.
2. Competitive bidding can be put to work for durable medical equipment too. See the work of Peter Crampton.
3. Part D formulary design and drug pricing. Did you know the VA buys drugs for 40% less than Medicare? True! That alone suggests Medicare could spend a lot less on drugs. There are many possible Part D reforms that would lower program spending. Kevin Outterson wrote about some. For more about what it would take and mean to make Medicare’s drug benefit more like the VA’s see my post, which links to my paper with Steve Pizer and Roger Feldman.
4. Reference pricing. This idea came to me via David Leonhardt and Peter Orszag (smart guys, by the way; you should talk to them). The basic idea is that Medicare should only spend an amount on therapy for a condition equal to the lowest cost, effective one (that’s the “reference price”). If individuals want more costly therapies that are no more effective, they should pay the difference out of pocket. There’s more to this. See this prior post and related links therein.
5. There are lots of things Medicare shouldn’t even be paying for at all because they don’t work. See Rita Redberg’s NY Times op-edon this.
6. Support comparative effectiveness research so we can learn more about which therapies are most effective. There is too much we don’t know and it is costing us. Let ACOs be tested. We don’t know if they’ll work, but they’re worth a try.
7. Support the IPAB. Isn’t it obvious by now that Congress itself can’t control Medicare costs? 7. 8. Consider all-payer rate setting. More on that here. Perhaps this post is a good starting point

Medicynical Note: These are excellent suggestions, many of which approach the issue of value and efficiency.. The new super congress however, is unlikely to look deeply into programs and solutions but rather will opt for across the board type fixes. On one hand republicans would view such fixes as an opportunity to hamstring Medicare which their conservative base views as evil. On the other hand, the democrats have shown little insight or particular interest in constructive alteration of Medicare.

Underlying both parties is the desire to hang the responsiblity for Medicare cuts on the other. Not a particularly constructive atmosphere for controlling costs and maintaining quality.

Over the years the criteria for a response to treatment has eroded changed. We once considered a decrease in size of a tumor of 50% with prolongation of survival a partial response. Then we considered any response as long as the patient lived longer as evidence of a treatment’s efficacy. Now, in the new world of money driven medicine, the benchmark has eroded even further and seems to be anything the manufacturer decides is a response, whether or not the patient lives longer. Medicyically I’d add anything that boosts a profit.

The NEJM (July 14,2011) discusses the recent removal of breast cancer by the Food and Drug Administration (FDA) from the indications for use of Avastin. The article focuses on whether a slowing of progression is adequate for recommending use of a drug. It should also be understood that this drug has been shown to improve survival in breast cancer patients by just 1 or 2 months; and that as new studies accrue the length of the delay in progression (and survival benefit) appears to be less and less; and that this drug costs between $80,000 and $100,000/year, for the drug alone.

Genentech argues that progression-free survival is an acceptable measure of direct clinical benefit in metastatic breast cancer and that confirmatory trials demonstrate that bevacizumab prolongs progression-free survival. Yet the progression-free–survival benefit in confirmatory trials, while statistically significant, was considerably smaller than that seen in E2100. In addition, safety concerns — both new and previously described — have arisen from the recent clinical trials. Genentech further claims that the FDA has switched approval standards for bevacizumab. The agency, however, has consistently maintained that progression-free survival is “not statistically validated as surrogate for survival in all settings” and is “not precisely measured.” Therefore, the FDA has full authority to respond to adverse safety and efficacy data by changing medication labeling.

Medicynical Note: This company obviously doesn’t give a damn whether this drug offers value, or whether the drug has significant benefit for the amount charged for it. Under the guise of offering desperate patients a choice, albeit and expensive ineffective one with significant side-effects, the company’s management is keeping true to its fiduciary responsibility to simply make money for stockholders.

It’s hard to conceive of a worse basis for health

care.

Over the years the criteria for a response to treatment has eroded changed. We once considered a decrease in size of a tumor of 50% with prolongation of survival a partial response. Then we considered any response as long as the patient lived longer as evidence of a treatment’s efficacy. Now, in the new world of money driven medicine, the benchmark has eroded even further and seems to be anything the manufacturer decides is a response, whether or not the patient lives longer. Medicyically I’d add anything that boosts a profit.

The NEJM (July 14,2011) discusses the recent removal of breast cancer by the Food and Drug Administration (FDA) from the indications for use of Avastin. The article focuses on whether a slowing of progression is adequate for recommending use of a drug. It should also be understood that this drug has been shown to improve survival in breast cancer patients by just 1 or 2 months; and that as new studies accrue the length of the delay in progression (and survival benefit) appears to be less and less; and that this drug costs between $80,000 and $100,000/year, for the drug alone.

Genentech argues that progression-free survival is an acceptable measure of direct clinical benefit in metastatic breast cancer and that confirmatory trials demonstrate that bevacizumab prolongs progression-free survival. Yet the progression-free–survival benefit in confirmatory trials, while statistically significant, was considerably smaller than that seen in E2100. In addition, safety concerns — both new and previously described — have arisen from the recent clinical trials. Genentech further claims that the FDA has switched approval standards for bevacizumab. The agency, however, has consistently maintained that progression-free survival is “not statistically validated as surrogate for survival in all settings” and is “not precisely measured.” Therefore, the FDA has full authority to respond to adverse safety and efficacy data by changing medication labeling.

Medicynical Note: This company obviously doesn’t give a damn whether this drug offers value, or whether the drug has significant benefit for the amount charged for it. Under the guise of offering desperate patients a choice, albeit and expensive ineffective one with significant side-effects, the company’s management is keeping true to its fiduciary responsibility to simply make money for stockholders.

It’s hard to conceive of a worse basis for health care.