Patent Reform–A Necessity For Health Care Reform

Posted on October 8, 2009 | 1 comment

Drug companies claim the U.S. patent system encourages development of new drugs and that the high prices are a necessary corollary. (see this) Others have questions regarding the monopolistic practices legalized by the system. This FDA Backgrounder, and this chapter from Against Intellectual Monopoly by Michele Boldrin and David K. Levine offer more background information.

Wikipedia defines a patent as a “set of exclusive rights granted by astate to a person for a fixed period of time in exchange for the regulated, public disclosure of certain details of a device, method, process or composition of matter (substance) (known as an invention) which is new, inventive, and useful or industrially applicable.” The right to produce the product protected by the patent is subject to further regulation by various regulators.

The regulator of drug patents in the United States is the FDA. Over the years the rules governing drug patents have evolved. Some milestones include:

1938 Federal Food, Drug, and Cosmetic Act : For the first time it was required that a drug be shown safe.

1962 Kefauver-Harris Drug amendment: Required that the drug be proved effective before marketing.

1980 Dole-Bayh– Prior to this products developed under federal grants were in the public sphere. To encourage commercial development of these advances individuals and institutions were allowed to patent these developments and even license or sell the patent to private companies.

Products developed to a major extent with public funds, such as imatinib (Gleevac) and bevacizumab (Avastin), are taken private and the public then gets to pay whatever the drug company or developer wishes for the technology. The result of Dole-Bayh has been medical progress at a tremendous cost. Basic research has suffered as workers are continually looking for something to take private-akin to hitting the lottery. We’re talking tens to hundreds of millions of dollars in fees to the individuals and the sponsoring university of such research. This has literally changed the landscape of medical research and not all for the better. See this article for the rationale and the unintended consequences.

In part because of Dole-Bayh, prescription prices in the past 25 years have increased astronomically. The price of newly patented oncology medications has increased to 50-100 times the level of the seventies, 15-20 times that of the 80’s. Between 1990 and 2001 the average price of all types of prescriptions tripled. Not surprisingly drug profits, after paying all costs of development including research and drug promotion, are at the unprecedented level of 18-20 % of revenue. Some think Dole-Bayh as currently applied is a giveaway to the industry. They further maintain that the law has provisions calling for reasonable pricing of government financed inventions. It’s never been enforced.

1984 Hatch-Waxman act–extended the length of patents up to 5 years (normal patent length is 20 years) to make up for the time the drug took to be approved by the FDA. It also provides for accelerated approval of generic drugs by not requiring generic companies to repeat the original research that proved them safe and effective.

Drugs that are clearly effective and safe are FDA approved and marketed promptly and do not qualify for additional patent time sanctioned by Hatch-Waxman. On the other hand many of the drugs needing additional time for approval and wanting patent extensions have marginal efficacy and/or questions regarding toxicity. That’s what delayed their approval. Ironically, the terms of Hatch-Waxman will extend patents most for drugs that may deserve it least.

The law is gamed by patent holders through legal loop holes and payments to generic manufacturers that actually delay the marketing of competing generics. It’s been a boon to lawyers. A company with a patented drug for example has been able to delay a generic by 30 months simply by raising an objection to marketing it-this was done multiple times in some instances. In addition it allowed hundreds of millions of dollars in payments between the patent holder and generic companies to delay the release of generics. There has been some attempt to control this. The Greater Access to Affordable Pharmaceuticals law passed the Senate in 2002 and was reconsidered in 2003. The FDA revised the rules of Hatch Waxman to address this issue, but the affect of these changes remains unclear. This article from the July 1 2006 Times and this from the Washington Post indicate that the pharmaceutical industry continues to game the system.

Among the criticisms of patents is the notion that patents create monopolies which almost always result in inefficiencies, stifle competition (by definition), cause higher prices, lower quality and shortages.

It’s clear that our system of care has problems with inefficiency and pricing from the patent monopoly. We have the most costly health care system in the world but have mediocre results. Prices of pharmaceuticals have reached unprecedented levels. Medicynic has previously noted pricing of new cancer drugs/year exceeds the median and average incomes in the U.S. and more. The issues of lower quality and shortages apply because of aggressive marketing of mediocre patented drugs and because people lack access because of price–a pernicious form of health care rationing.


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Posted in General Cynicism, Health Economics, Patents, Uncategorized

Discomfort and Change in Health Care

Posted on October 8, 2009 | Leave a comment

The health care debate continues, the strident opposition seems in the process of defeating themselves, with their distortions and frank lies about the need for and effects of health reform.

The problem is that the institutions most comfortable with the current system will not change unless forced to do so. Physicians will continue to game the system to ensure their incomes; insurers and their investors will continue to expect cost plus profits which are the highest in the world; suppliers and patent holders will continue to overcharge and obfuscate the actual benefit of their advance.

Physicians:

  • Previously the emphasis on cost containment focused on physicians. They were individuals and small groups for the most part; had limited resources for lobbying; and indeed are the door keepers for the system
  • These efforts failed and resulted in distortions as doctors gamed the system to increase income. Medical students funneled into the high income, lower contact fields and practices found ways to incorporate high income technology, that doesn’t necessarily improve outcomes into their practices. Consider the proliferation of MRI’s in orthopedists offices, CT scanners in group practices, etc. These techniques are like the proverbial hammers looking for “nails’ to hit. At some point these costs will have to be approached.
  • Part of the utilization fix will have to be a redistribution of fees to emphasize primary care. Cost efficacy of interventions will need to be analyzed compared and incorporated into our best practices.

Insurers:

  • Insurers need competition from an efficient, non-profit competitors. Hopefully there will be a public option in the forthcoming reform to keep them honest.

Patent Holders (Drug companies and such)

  • Technology patent holders have taken advantage of desperate and sick people gouging them by charging outrageous amounts to access their technology which in many cases offers small incremental, if any, improvement over previous approaches. Our costs are twice that of other industrialized countries in part because of these inefficiencies.
  • These companies even oppose comparing newer expensive treatments with standard therapy to see which works best and oppose studies to understand the true cost of a therapy both in terms of it’s price to the individual and to the system. (cost efficiency)
  • Patent holders in medical fields have violated the public trust. Their government provided patents have given them a generation long monopoly–it’s anything but a “free and open market.”
  • One would think that being in a altruistic endeavor, health care, advances would be priced reasonably. It’s hard to imagine a single drug costing more than the median and average incomes in our country, and over a lifetime more than our home. Or a single imaging procedure that costs more than the entire care plan for a cancer patient 20 years ago. But that’s what’s happened. Cost-efficiency is not in a concept honored by these folks as they take advantage of the infirm and dying. I’ve long felt we need to change the terms of patents to encouraging responsible, realistic, sustainable pricing.


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Posted in General Cynicism, Health Economics, Uncategorized

The big Bamboozle, Health Care in the U.S.

Posted on October 6, 2009 | 1 comment

I’ve note previously the complexity of health care choices facing the consumer and why “free choice” in health care is a flawed notion.

Today’s Washington Post points out another dimension of the health care problem.

Facility Fees

  • “Called “provider-based billing,” it allows hospitals that own physician practices and outpatient clinics that meet certain federal requirements to bill separately for the facility as well as for physician services.”
  • “Unlike other add-ons that have aroused public ire — baggage charges on airlines, surcharges for concert tickets or resort fees tacked on by hotels — outpatient facility fees, which range from about $25 to hundreds of dollars per visit, may involve a service that is a matter of life and death, such as chemotherapy.” Medicynical note: Much of health care falls under the ‘life and death” rubric and is not discretionary and not amenable to normal consumer “choice” options.”
  • These fees are considerable, as noted in the article they range from $10 to $171. More than the charge for some doctor visits
  • Insurers doing what they do best are no longer covering this fee, passing on the charge.

Our non-system of care is carefully designed not to improve the health and well-being but rather to assure the profits of insurers, providers and suppliers. We need to reform this.


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The Republican Plan–Bobby Jindal

Posted on October 5, 2009 | Leave a comment

The keys to any health care proposal are affordability, community rating, guaranteed insurability and universal access.

Community rating “requires health insurance providers to offer health insurance policies within a given territory at the same price to all persons without medical underwriting, regardless of their health status.”

Guaranteed insurability and universal access implies that people will not be rejected for coverage because of preexisting illness and that insurance will somehow be made affordable to all.

In today’s Post Bobby Jindal touts 10 republican ideas on health care–none of which explicitly support affordability, community ratings, guaranteed insurability and universal access.

  1. Voluntary purchasing pools: The idea of purchasing pools and increased negotiating leverage are good but these same republicans opposed giving Medicare D (the medicare drug program) the same leverage.
  2. Portability-Can’t argue with the concept but the devil is in the details which are lacking. Jindal makes much of allowing consumers to “own” their policies, but doesn’t explain what that means. In any case one can only “own” something if it’s affordable. Jindal doesn’t mention the use of community ratings, so that those who need coverage most, i.e. those with illness, could afford the coverage.
  3. Lawsuit reform: I don’t have problem with this but where it’s been in vogue, such as Texas, malpractice rates have not declined and over-utilization remains the rule. See Gawande’s extensive damning piece in the New Yorker.
  4. Coverage of pre-existing illness: Jindal supports coverage of preexisting conditions. There’s nothing wrong with his suggestion except that without controlling rates, which is not discussed, such coverage is unaffordable.
  5. Transparency and payment reform: Providing more information of quality and cost is a terrific idea that both republicans and democrats can agree on. Rewarding efficiency and quality are also non-controversial but there are profound problems in determining what constitutes quality. For reasons that baffle me, republicans refuse to consider comparison studies between different treatment options. Seems like common sense but the drug companies sense that many of their marginal products will be proven ineffective and oppose this through their surrogates (republican and democrat) in congress.
  6. Electronic Medical Records: This is a good idea that may decrease duplication of medical procedures and improve the availability of information. No great cost savings are likely given the high cost of implementation and maintenance.
  7. Tax-free Health Savings Accounts: A republican shibboleth that does nothing to provide insurance to the average citizen (mean income $50,000/year). HSA’s work fine if you are wealthy but not at all if you are near of below the average or median income–that’s most of us.
  8. Reward healthy lifestyle choices: This is a seemingly Innocuous concept that increases charges to those at greater risk. This of course undermines the notion of “owning” insurance, coverage of pre-existing illness and guaranteed insurability. If we reward healthy choices it would not be long before someone would want to reward those whose genetic makeup show no increased risk–and ding those with genetic predisposition. I prefer encouraging healthy lifestyle choices in different ways than a sliding scale pricing. The cost of health insurance should be based on community norms, not an individual’s circumstances.
  9. Cover Young Adults: Terrific idea but Jindal want to keep them on their parent’s policies. So much for “owning” one’s own policy.
  10. Refundable tax credits: This an almost incomprehensible suggestion. He’d take money from the coverage for uninsured people to pay for non-emergent care. Previous republican proposals offered a tax credit that would not provide enough assistance to buy insurance. He avoids the issue of those who pay little or no taxes for whom a tax credit does nothing.


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Hamburgers

Posted on October 4, 2009 | Leave a comment

Hamburgers, Ground Beef Inspection Flaws.

If you’ve got to have one, grind your own.

Medicynical note: Our food supply system is failing. Industrialized agriculture’s goal is profit not better nutrition–sound familiar?


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What Vacuums tell us about Free Market in Health Care

Posted on October 3, 2009 | Leave a comment

I’m shopping for a new vacuum cleaner and my head is spinning from the multitude of features, conflicting reviews, and range of costs. Adding insult to injury, the same high quality vacuum that costs over $600 here actually costs less by over $200 in Europe. (Google the cost of a Miele or Sebo in UK and here). Other than health care I have trouble thinking of something that costs less in Europe than here.

I’ve been told we, the U.S., have the most efficient marketplace in the world in the U.S. That competition will find the “right” price.

What my experience tells me is that marketplaces can be manipulated, even for something simple and mundane.

Imagine how easily we could be manipulated if the issue is more complicated; the costs are 100 times more’; and if you don’t fully understand the problem and the options. Maybe that’s part of our health care waste alluded to in the last post.

Any vacuum recommendations?


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Waste in Health Care

Posted on October 3, 2009 | Leave a comment

Here is RAND on health care waste.

How do we rank on administrative costs?

  • “For example, there are significant differences in administrative overhead between public and private insurances, leading some to conclude that the excess spending by private insurance companies must constitute administrative waste. Estimates indicate that overhead/administrative costs (premiums minus claims payments) make up 14 percent of total private insurance expenditures, compared with 3–5 percent of spending in public sector programs such as Medicaid”

Medicynical note: The article points out that between $100 billion and 300 billion can be saved from health costs by curbing administrative waste.

Operational Waste?

  • “Paul O’Neill, former U.S. Secretary of the Treasury and former CEO of Alcoa, garnered wide attention for his claims that achieving perfect operational efficiency could reduce health care costs by 50 percent while improving the quality of care (“Editorial,” 2005). While leading the Pittsburgh Regional Health Initiative, O’Neill implemented simple process improvements to reduce “defects in the production of care in intensive care units that resulted in significant reductions in patient infections and deaths.” According to O’Neill, the goal of the health care system should be perfection, particularly in the area of patient safety and the reduction of medical errors.”

Medicynical note: O’Neill is right in his belief that we can cut costs with more efficiency. Now health care operates on a cost plus basis–there is no incentive to be efficient at any level. With change we can achieve substantial savings, but not 50% in my view.

Clinical Waste:

  • “Overall, these studies indicate that one-third or more of all procedures performed in the United States are of questionable benefit. (See, for example, Bernstein et al., 1993; Hilborne et al., 1993; Kleinman et al., 1994; Winslow et al., 1988.) Such procedures may constitute clinical waste.”
  • “After adjusting for age, sex, and race, per capita Medicare spending in 2000 in New York City was more than twice as much as it was in Portland, Oregon ($10,550 versus $4,823) (Fisher, 2003). Such differences stemmed from differences in practice patterns rather than from differences in price or underlying illness, and outcomes were unaffected. Spending variations that do not result in improved clinical outcomes may constitute clinical waste.”

Medicynical Note: Many interventions are simply ineffective or cost too much for very limited benefit. We, both the consumer and the health care providers, need help in deciding the proper course. Comparison studies are essential to health care reform. One would think that everyone would favor finding our what works better, but guess who opposes this? Amazing!

See the article for references and full explanations.


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Posted in General Cynicism, Health Economics

Incomes, Health Care Reform, Horror Stories

Posted on September 30, 2009 | Leave a comment

This has been widely reported. Census data show falling income — latimes.com

Among other facts:

  • “In 2008, the median household income in the United States plummeted 3.6% from the year before, and the percentage of people living in poverty soared to an 11-year high”
  • “The data show the devastation of the recession through various economic indicators, such as the real median household income. In 2007 it was $52,163. A year later it dropped to $50,303, the lowest level since 1997.”

Medicynical Note: Meanwhile health care cost inflation is estimated at approaching 10% for 2009 by Price Waterhouse.

I don’t like anecdotes but it seems to be the currency of the debate on health care. So………

Case 1:
While at a local tumor board this week we encountered the case of a young woman with Hodgkin’s disease, a curable lymphoma. It’s curability depends in part on the stage of the disease–early is better than late. In this case the patient delayed calling attention to the mass in her neck for six months because she had no health insurance.

If Hodgkins disease is local, that is one or two lymph node areas involved, it can be treated with irradiation alone, i.e. without chemotherapy. The further advanced the disease the more extensive, expensive and toxic the treatment. Chemotherapy is necessary for most cases when the disease advances.

So this young woman went from have a disease amenable to local (extended field) irradiation to a situation where she will now require both systemic chemotherapy and irradiation. In addition to the immediate toxicity, her future fertility will likely be compromised–as well as her chance for cure. Guess who’s paying?

Case 2
This is the story of a young woman with headaches who earlier this summer delayed seeing a doctor because she had no insurance. The headaches persisted and while on a hike with a friend in the mountains, she collapsed and died. She undoubtedly had a leaking aneurysm which finally burst. Delay in seeking care in this case was fatal.

These are two cases from my personal experience in the last 3 months. Only in America would this be allowed to happen and only in America would people call such a dysfuntional non-systematic health care establishment the “best in the world.”

We need health reform to assure access to care. It’s literally killing us!


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Posted in General Cynicism, Health Economics

Abortion and Health Care Reform

Posted on September 29, 2009 | Leave a comment

If I understand it, the people who think health care reform will result in government control over a patient’s health care decisions, want the government to forbid people from choosing whether or not to have an abortion.

What’s going on here?


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Posted in General Cynicism

What’s different about healthcare

Posted on September 19, 2009 | 1 comment

That’s a deceptive title because when talking about a “free market” for products, there are many things “different” about the health care product.

I touched on a few in yesterday’s entry.

Today I’d like to explore the notion of effectiveness. In my specialty medical oncology, the only way we gauge effectiveness is through large studies of patients with the problem and comparing the outcomes (length of survival, rate of recurrence, etc). In any given patient it’s often difficult, if not impossible, to ascertain whether the treatment has actually worked or not.

For example, consider the patient with breast cancer who has had surgery with the tumor completely removed. If nothing else is done we will know in time whether the surgery cured the patient or not.

But, we often treat these patients with some type hormonal blocker (tamoxifen or another) with or without chemotherapy (called adjuvant therapy in doc talk). This can get quite expensive and is associated with frequent severe side effects.

If treated in this way and the tumor doesn’t recur, in any individual case we cannot know whether the surgery removed it all or the ensuing hormone blocking and/or chemo had some effect. Furthermore, if the tumor does recur later we are unable to determine whether the treatments delayed the recurrence.

The same is true for all other cancer types. In an individual case we simply cannot know whether the therapy given was worth the pain, cost and side-effects, unless large comparison studies of treatments and their outcomes are done.

You can of course say well, if it doesn’t return who cares. But given that tumors often recur and that there are extreme side-effects and greatly decreased quality of life from treatment and yes extreme costs, it’s important to understand whether a therapy works and just how effective it is.

Now to the difference between health care and other products. We spend literally thousands of dollars on treatments for cancer. Single drugs can cost as much as $100,000/year–that’s more than the great majority of people earn in year. In most instances, in cases of advanced disease, the improvement in survival from these agents (take Senator Kennedy’s case for example) is limited, measured in days to a few months. We, our health care non-system spend literally hundreds of billions of dollars for treatment of just these cases.

Can you name another product in this cost range, bought in the free market, that may not work? or may work for only a few days or months? or if it does work costs hundreds of thousands of dollars?

Well, that’s the situation in health care. Our costs are untenable; Our outcomes difficult to measure; and the purveyors of these products don’t want to do comparison studies to figure out what works and how it actually does work.

We do need reform!


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Posted in Ethics, General Cynicism, Health Economics