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Tevi Mettle

  • 06.01.2009
Former HHS DepSec Tevi Troy has an important article in the June edition of Commentary, "The End of Medical Miracles?"

Here's how it begins:

"AMERICANS HAVE, at best, a love-hate relationship with the life-sciences industry—the term for the sector of the economy that produces pharmaceuticals, biologics (like vaccines), and medical devices. These days, the mere mention of a pharmaceutical manufacturer seems to elicit gut-level hostility. Journalists, operating from a bias against industry that goes as far back as the work of Upton Sinclair in the early years of the 20th century, treat companies from AstraZeneca to Wyeth as rapacious factories billowing forth nothing but profit. At the same time, Americans are adamant about the need for access to the newest cures and therapies and expect new cures and therapies to emerge for their every ailment—all of which result from work done primarily by these very same companies whose profits make possible the research that allows for such breakthroughs."

During the course of his article, Troy discusses the issues that threaten to derail medical progress (litigation, an overly cautious FDA and, of course, legislation to put Uncle Sam in charge of our healthcare).  Troy concludes:

"Just as there is potential danger from the way in which Americans take the power of the antibiotic for granted, so, too, one of the greatest threats to our health and continued welfare is that Americans in the present day, and particularly their leaders, are taking for granted the power, potency, and progress flowing from life-saving medical innovations. And in so doing, they may unknowingly prevent the kind of advance that could contribute as vitally to the welfare of the 21st century as the discovery of the antibiotic altered the course of human history for the better in the century just concluded."

Tevi's complete article can be found
here.

All the rest is, well, commentary.

Dear John

  • 05.29.2009
Lately we’ve been discussing the issue of taxing employer-based healthcare benefits in order to finance Uncle Sam’s career change to Uncle Sam, MD.

We talked about it here:

The Vast Reich Wing Conspiracy

And here:

Pink Cadillac

And now we welcome the Wall Street Journal to the debate. Here’s what they had to say on this today:

 


Taxing Health Care
Obama and Democrats owe John McCain an apology.

Politicians wouldn't be politicians if they didn't trim their sails to the prevailing winds. Even so, the emerging 180-degree turn by Democrats on taxes and health insurance is one for the record books.

Democrats have spent years arguing that proposals to equalize the tax treatment of health insurance are an outrage against the American people. Workers pay no income or payroll taxes on the value of job-based plans, but the same hand isn't extended to individuals who must buy coverage on their own. Last year liberals mauled John McCain for daring to touch the employer-based exclusion to finance more coverage for the individually uninsured. He was proposing "a multitrillion-dollar tax hike -- the largest middle-class tax hike in history," said Barack Obama, whose TV ads were brutal.

But now Democrats need the money to finance $1.2 trillion or more for their new health insurance entitlement. Last week Senate Finance Chairman Max Baucus released his revenue "policy options" and high on the list is . . . taxing health benefits. Or listen to White House budget director Peter Orszag, who recently told CNN's John King that the exclusion "was not in the President's campaign plan, it wasn't in our budget. Clearly, some Members of Congress are putting it on the table and we are going to have to let this play out."

Mr. King tried again. "Let this play out. But would the President sign a bill that includes a pretty significant tax increase? That would be a tax increase." Mr. Orszag: "We're not going to be -- I think it's premature to be commenting on individual items . . . There are lots of ideas that are being put on the table." Translation: You betcha he'd sign it.

The tax exclusion is such a big revenue prize because Mr. Baucus is scrubbing every other tax nook and cranny and only coming up with rounding errors. A sampler:

- Impose an excise tax on hard alcohol, beer and some kinds of wine. That would be in addition to a sin tax on beverages sweetened with sugar or high-fructose corn syrup, such as soda. Mr. Baucus doesn't offer revenue estimates, though the Congressional Budget Office says a $16 per proof gallon alcohol tax might raise $60 billion over 10 years, and another $50.4 billion at three cents per 12 ounces of sugary drink.

- End or limit the tax-exempt status of charitable hospitals, which only costs currently a mere $6 billion a year.

- Make college students in work-study programs subject to the payroll tax. Also targeted are medical residents, perhaps on the principle that they'll one day be "rich" doctors. CBO has no score on these.

- Reducing Medicare reimbursement rates for supposedly "over valued physician services," such as diagnostic imaging. CBO says that requiring doctors to get prior clearance could save $1 billion in 10 years.

- For individuals with high-deductible insurance plans, contributions to health savings accounts would no longer be tax deductible. That would penalize patients who choose plans that encourage them to be informed consumers. CBO says that banning HSA payments entirely would yield all of $10 billion.

By contrast, the employer-based exclusion offers a huge money pot -- an estimated $226 billion in 2008. Yet as liberal MIT economist Jonathan Gruber recently told Mr. Baucus's committee, "no health expert today would ever set up a health system with such an enormous tax subsidy to a particular form of insurance" (his emphasis). It creates a coverage gap between workers who receive it from their employers and those who pay -- or can't afford to pay -- with after-tax money.

The tax exclusion is also one reason health costs continue to rise. It encourages workers to take an extra dollar of compensation in fringe benefits instead of cash while also routing low-deductible health spending through third parties. Some 84 cents of every medical dollar is spent by someone other than the patient. The insured have no incentives to make cost-conscious decisions about care.

So reforming the exclusion would inject a dose of discipline into American medicine. But for most Democrats the goal isn't to create a more rational health-insurance market. They simply want the revenue for another government program. Mr. Baucus won't target gold-plated employer insurance plans in general, because union-negotiated benefits are usually gold-plated. Rather, he may cap or phase out the exclusion by income, starting with workers earning more than $200,000. Insurance options that don't conform to government diktats (health savings accounts) would also lose any tax advantage. This would do nothing for market efficiency, but it would be one more stealth tax increase.

Democrats owe an apology to Mr. McCain, and it'll be fascinating to see if they will now suffer a political backlash of their own making. Having told the country that this tax reform is really a tax increase, Democrats are opening themselves to the same attacks they leveled against Republicans.

They could avoid that fate if they used the tax exclusion money to finance, say, a tax credit for the uninsured. That would be a genuinely bipartisan reform. But liberals won't accept that because they want to take one giant step toward government-run health care. And the only way they can pay for it is by taxing everything in sight, including your current health insurance.

Churchill observed: "It is one thing to see the forward path and another to be able to take it."  At The Brookings Institution, CMPI convened the Critical Path for Personalized Medicine, a small group that  took the first transatlantlic steps towards harnessing the science of personalized medicine to the task of controlling health care costs and increasing the value of medical technology that the science itself made possible.  It was lead by two remarkable individuals:  Mark McClellan who ran both the FDA and Medicare and Sir Michael Rawlins, MD who for the past decade has been chair of the British National Health Service's National Institute for Clinical Excellence, the entity tasked with developing guidelines for preventative care and treatment of illnesses as well as evaluating the cost effectiveness of new technologies. 

Sir Michael noted that comparative effectiveness cannot be conducted by relying on randomized clinical trials and should instead use tools that allow doctors to determine who responds best to what treatments over time.  Predictive and interventional approaches are obviously the most valuable. Such tools can provide every one a clearer idea of the value of care. 

Over the course of the four hours we spent together that the way forward requires an approach described artfully by Ralph Snyderman, Chairman Emeritus of Duke University Medical Center:

  • Start with high power predictive tools for big time clinical decions with short term impact on major diseases
  • Create model clinical settings where clinical data and genetic information can be collected and combined
  • Use clinical setting to establish predictive reliability of clinical decision tools and measure clinical outcomes
  • Measure value of such tools to employers, individuals and health plans
   
Ultimately the reimbursement for health care will have to be inverted to pay for prospective care and reward targeted therapies.  

But our critical path group is committed to doing the hard work.  We don't need any more conferences about comparative effectiveness.  We need to take the first steps forward.

Subject: Preemption

  • 05.28.2009
The May 20th memo from the President is unambiguous, "... preemption of State law by executive departments and agencies should be undertaken only with full consideration of the legitimate prerogatives of the States and with a sufficient legal basis for preemption."

Specifically:

To ensure that executive departments and agencies include statements of preemption in regulations only when such statements have a sufficient legal basis:

1. Heads of departments and agencies should not include in regulatory preambles statements that the department or agency intends to preempt State law through the regulation except where preemption provisions are also included in the codified regulation.

2. Heads of departments and agencies should not include preemption provisions in codified regulations except where such provisions would be justified under legal principles governing preemption, including the principles outlined in Executive Order 13132.

And here's a direct slap at the FDA's New Labeling Rule preamble:


3. Heads of departments and agencies should review regulations issued within the past 10 years that contain statements in regulatory preambles or codified provisions intended by the department or agency to preempt State law, in order to decide whether such statements or provisions are justified under applicable legal principles governing preemption. Where the head of a department or agency determines that a regulatory statement of preemption or codified regulatory provision cannot be so justified, the head of that department or agency should initiate appropriate action, which may include amendment of the relevant regulation.

The complete memo can be found
here.

This should put to bed any lingering doubts as to the Administration's views on the topic.  Happy Hour for the trial bar begins immediately.

Health care costs money, a point that has been strongly reinforced from all directions over recent weeks and months. So why when you ask a lot of Americans what they want from health care reform do they answer “healthcare that’s free like in Europe”? I’ve already established that few people in America actually have the faintest idea what health care systems in Europe look like (and apparently cannot be bothered to do five minutes worth of research to find out) so today I want to talk about what health care actually costs beyond the borders of the US.
 
In the US, according to the 2008 Milliman Medical Index, a family of four with an employer-based PPO would pay around $15,609 total this year in health care costs. Of this amount, $9442 was paid by the employer and the employee contributed $3,492 in premiums and $2,675 on copays, etc.
 
Other sources put the cost of premiums for a four person family at $5,799 if buying directly or $3,281 via an employer, about 10 and 6 percent respectively of an average family income of $58,526.
 
When Americans talk about ‘free health care,’ they are really talking about a single payer system in the mold of Canada, the UK, or Scandinavia. So lets see what residents in thse countries really pay. In Canada, the system is mostly tax funded and while there is not a particular percentage allocated to health care, it is estimated that ~22% of taxes collected went to the health system in 2004. Several provinces also charge additional premiums, including Quebec, Ontario, Alberta, and British Columbia. The Organization for Economic Development and Cooperation estimated in 2008 that in Ontario these extra fees ranged from 300-950 Canadian dollars based on income, in addition to 6-25 percent of taxes being destined for the health care system, also dependent on income. Canadians also may spend money to receive private treatment for procedures or drugs that are not covered by the government system.
 
Citizens of the UK pay 11 percent of each pound they make in weekly income between £100 - £670 for the NHS, plus an addition 1 percent of income over £670 a week. Hidden fees, such as costs for parking at medical facilities, drive up the costs further. In 1998, NHS costs totaled £1.3 billion, today it is £3.7 billion, a rise of 186 percent. Prescriptions now cost Brits £459 million versus £321 million ten years ago. The co-pay for drugs is low, £7.10 as of April 2008, but many drugs are not covered, sometimes because NICE has decided that although they are efficacious, they are not cost-effective. And until recently anyone who used their own money to buy powerful but expensive uncovered drugs found himself shut out of the NHS and forced to pay for all care privately.
 
Figuring out what health care costs citizens is trickier when it comes to Norway, the system is tax funded but the government doesn’t designate a certain percentage to health care. However, the country spent 9.1 percent of GDP and $4328 per capita on health care in 2005 so the percentage of taxes it consumes is likely to be substantial. Even so, the costs Norwegians have to cover out of pocket are substantial, amounting to about 16.7 percent of expenditures in 2005. Patients are charged copays, about 125 to 235 kronorfor a visit to a GP depending on the reason and whether it is day or night, up to a given annual individual total, about 1615 kronor in 2006.
 
Once a person (or one parent plus children under 16) has reached this threshold, they get a special card and their care is then gratis for the rest of the year. Over 1 million Norwegians reached this point in 2005. Children are not charged copays for all or some medical services, depending on age, and those who are retired or disabled also are exempted. For care in areas outside the health system, such as dental and rehabilitation or treatment outside Norway, there is a separate threshold of 2500 kronor, which works the same way. Other costs to patients come from copays for medications, plus having to pay the difference if a patient wants a pricier drug than the system will reimburse for.
 
These are simply the straight financial costs levied on those covered by these systems, without reference to the other types of costs that result from participating in the system due to the ways it controls costs. And this is just single payer, the next installment will consider the costs of other types of international systems and how they compare to those in the US.

Nothing but "Net"

  • 05.27.2009
According to new FDA draft guidance, promotional material can be misleading even if specific individual claims or presentations aren't misleading. For example, if music plays over a voice-over of fair balance/adequate provision – the agency feels that can be misleading. Similarly, "discordant" images of happy patients (i.e., running through a field of daisies for an allergy medicine) while the risk information is detailed could also be viewed as violative.

Pretty subjective proposition. 

The draft guidance (which can be found
here) also introduces a new term, "net impression."  DDMAC will now consider the “net impression” of consumer ads and physician detailing materials to determine if a piece conveys accurate information about a particular product.

In other words, rather than creating brighter lines so that industry can be in compliance, the agency is opting for even greater regulatory ambiguity.

Not good.

Tamiflurry

  • 05.27.2009
Attention Dan Brock (Director, Harvard University Program in Ethics and Health):

On May 4-5 the Harvard Business School Health Alumni Association along with the Young Presidents Organization/World Presidents' Organization (YPO/WPO) sponsored a conference in Washington, DC, "Health Reform at the Intersection of Government and Markets.”  After two days of robust debate and discussion over a wide range of issues, the event ended with a troubling episode.

So troubling, in fact, that one physician in attendance along with another independent businessman felt obligated to write to Randy Cohen, who pens “The Ethicist” column at the New York Times, with the following query:

“We were attending a conference on health reform which had included an impromptu presentation on the swine flu pandemic.  As the conference was closing, a physician was introduced and he said that as a “treat” for all his fellow attendees he would write prescriptions for TAMIFLU and that if he ran out of scripts, he would send one to anyone who emailed him a request.  A large line immediately formed of people eager to avoid the risk of shortages or rationing.  When confronted with our question as to the ethics and legality of his offer, he explained that he was a physician and had worked with the CDC and was confident he was acting in a morally and professionally correct manner – was he?  For that matter, were the conference organizers in ethically troubling territory?”

To which Cohen replied:

“As you know, it is a violation of medical ethics to prescribe to a non-patient, i.e. to someone you've not examined (albeit a violation committed by, one study suggests, 100% of physicians).  It is also a more general ethical transgression for a healthy person to stockpile a medication that might end up in short supply.  In a more just world, this guy would have his license suspended.  But I wouldn't count on that happening.”

Over lunch the other day, my doctor friend shared the rest of the story:

“From every angle, this was reprehensible and should not have been permitted.   From a medical professional code of conduct point of view, it is an abuse of prescriptive authority to offer Rx of any drug to people who are not patients of a prescribing physician.  It is medically irresponsible to give access to drugs which are not without risk as any adverse event could not be accountable (or appropriately handled) to this particular physician prescribing Tamiflu.  

This is an act that can be considered illegal in several states, ethically wrong, medically reckless and dangerous, and inexcusable, especially in the manner it was presented to the conference attendees. From a "conflict-of-interest" point of view, this physician was offering Rx as a "treat" (code word: perk/kickback) to conference attendees who had paid to come to the conference.   So, while there is no direct exchange of money for the Rx which will benefit this physician, it could easily be interpreted that he was an agent of the conference (since the conference organizers condoned the offer by allowing him the podium to present his offer and did not rebuke or stop him from doing so) and therefore Rx access was exchanged for money. From a supply chain, he was encouraging stockpiling of Rx, which is to give people access to a Rx for storage in their medicine cabinets (which will likely not be used) and taking it out of the supply for the nation.

Given how much we were talking about economic forces of supply/demand affecting behavior, it is highly ironic that this was permitted.  From a public health perspective, this physician took advantage of a perceived panic (pandemic only means "widespread" and does not indicate severity) and called his actions "giving access" to a "needed therapeutic" during a "pandemic."   It seems interesting that if he truly felt that way, then why did he not go out onto the streets or to the inner city and offer his scripts to others (who wouldn't necessarily have access).  Funny how he should only offer this to people who most easily can gain access to their physician should they want and need the Rx (members of HBS Health Alumni Association).   This could also be interpreted as an odious way to win friends and influence people. 

And finally, from a medical practice point of view, Tamiflu is not without risk.   When challenged, this physician merely mentioned that he was asking everyone if they had kidney problems (a contraindication for prescribing the Rx), but he did not warn anyone that there have been quite a number of cases internationally of behavioral changes that are reported with the use of Tamiflu.  Without discussing risk and only touting benefit could be defined as medical malpractice.
 
As organizers of this event, this behavior should not have been encouraged nor condoned.  Silence is the wrong action because it is not recognizing that everything this did in the final two minutes, in effect, undermined the intention and perception of the conference.”

Indeed.

 Dr. Brock – what can you do about this?

Somehow, I don't think Adam Smith had this in mind.....

I bought my daughter Botox jabs for her 18th birthday...says mother who has spent £45,000 on plastic surgery
By Tamara Cohen
May 26th 2009

Most mothers would aspire to pass on something of themselves to a teenage daughter.

But for Margaret King, that didn't mean offering young Jodie advice on the opposite sex or even guiding her on her wardrobe choices.

For her 18th birthday, she bought her Botox injections to get rid of the 'wrinkles' on the teenager's forehead.

 
Jodie King and mother Margaret, who bought her daughter Botox injections for her 18th birthday

Jodie King and mother Margaret, who bought her daughter Botox injections for her 18th birthday

 

Mrs King, who has spent £45,000 on cosmetic surgery procedures for herself, said: 'Jodie's forehead is like mine - she gets pronounced lines when she makes a facial expression. I knew Botox would solve the problem.'

Many surgeons do not recommend using Botox under the age of 30 because the skin has not sufficiently wrinkled and it could lead to an unnecessary loss of facial expression.

But Jodie, who had been worried about her complexion, is now addicted to the jabs and has spent £1,000 on them. "


It seems like the idea of taxing employer-provided healthcare in order to finance a massive take-over of said healthcare by Uncle Sam is gaining traction. Here's what Robert Reich has to say:

"According to the Congressional Budget Office, taxing all employee health benefits would yield a whopping $246 billion every year. Even limiting the tax to higher-income employees would go a long way to funding universal health care. Employer-provided health insurance is the biggest tax break in the whole federal income tax system.

Tax-free employer-provided health care is also, in effect, the government-backed health insurance system we now have. It now covers three-fifths of the American population under 65. Seventy percent of the 253 million Americans with health insurance receive at least some of it through their employers."

Lately we've been hearing about all those "wealthy executives" who get "Cadillac health plans." Reich joins in as follow:

"Top executives and their families get gold-plated plans guaranteeing top-notch medical attention for just about every risk imaginable, along with extra coverage in retirement."

(For more on "Cadillac" health plans,
click here)

And here comes who gets it in the neck -- "The good news is that a program providing universal health care doesn’t need the full $246 billion a year generated if every employee now receiving tax-free health benefits had to start paying taxes on them. Obama’s health care reserve fund needs around $650 billion over ten years. So a sensible and politically feasible alternative is to limit tax-free employer-provided health benefits to workers whose incomes are under, say, $100,000 a year, and subject those with higher incomes to progressively higher taxes on them."

That's right -- higher taxes for Americans with employer-provided healthcare who earn over $100,00 a year.

Do you feel like a "wealthy executive" yet?

CMPI

Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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