PNHP

Maryland should move toward single-payer

Maryland should move toward single-payer

By Ron Meservey
The Baltimore Sun, Letters, March 6, 2014

The article, “Officials mull next steps for state exchange” (March 2) omitted the possibility of Maryland seeking help from the one state that is on a sensible path to a workable, universal health care system — Vermont.

The U.S. is the only developed country in the world that lacks universal health care. As a result, despite spending more per capita on health care than any other nation on Earth, we still have some 50 million Americans without health insurance, of whom some 50,000 die needlessly every year because they cannot afford the health care they need and medical debt is the leading cause of personal bankruptcy.

In terms of life expectancy and other quantifiable measures of public health, as a nation we rank somewhere between 35th and 40th in the world. Vermont is on course to set up a single-payer, publicly financed and privately delivered health care system similar to Canada’s Medicare that will cover everyone in the state with the same high standard of care and eliminate the useless, wasteful private insurance companies altogether.

A recent economic impact study found that such a system in Maryland could cover all Marylanders as the Affordable Care Act or “Obamacare” will not even when fully implemented. And it will do so at far less cost than either the ACA or our present non-system.

Ron Meservey resides in Columbia.

http://articles.baltimoresun.com/2014-03-06/news/bs-ed-exchange-letter-20140306_1_state-exchange-health-care-single-payer

Worse Than the Mob: The Insurance Industry Is Organized Crime

By William Rivers Pitt
Truthout, March 6, 2014

We got accountants playin’ God
and countin’ out the pills
Yeah, I know, that sucks – that your HMO
Ain’t doin’ what you thought it would do
But everybody’s gotta die sometime…

– Steve Earle

Nothing so thoroughly dominated the American political landscape over the last year more than the Republican assault on the Affordable Care Act, colloquially known now as “Obamacare.” The GOP’s eternal refrain that “Government is the problem” was used as a battering ram against the law, and House Republicans have voted to repeal or denude it exactly fifty times as of today. Ted Cruz and his cohort of wreckers shut down the government over it, and the Tea Party base broke out their Sharpies to make gloriously stupid protest signs that read “Government Keep Your Hands Off My Medicare.”

Amusing as all this was, the dark underbelly of it all is dangerously wrong. Yes, the ACA exchange website rollout was a train wreck, and yes, a small segment of the population has had problems with the new law. This is not in dispute. Websites can be fixed, however, and problems can be solved. None of this holds a candle to the awesome misery and financial pain inflicted upon the populace by the holy and sainted world of private business, known in this instance as the insurance industry.

My own saga with these broad-daylight thieves began in late summer, when I moved my family to New Hampshire. We were living in Boston before the move, and had health insurance through my wife’s employer. My wife has Multiple Sclerosis, and one of the big reasons we felt comfortable about moving was that, if she changed jobs after the move, she could not be denied health insurance due to her pre-existing condition, thanks to the ACA.

We made the move, and my wife’s employer transferred her to their location in Concord, more than an hour’s drive away from our new home. She worked full-time to keep the health insurance, but after three months of ten-hour days combined with almost three hours on the road getting to and from work, it became clear that the situation was untenable. She was exhausted all the time – fatigue is the #1 danger zone for people with MS; it leaves you wide open for an attack – and worse, she felt like she was missing out on raising our daughter because she was gone more than thirteen hours a day.

On top of that, winter was coming, and the last thing she wanted to deal with was driving one-lane roads at night in a snowstorm, which would have happened more than a dozen times given the severity of this winter. After careful consideration, she asked her employer to transfer her to a location only 20 minutes away from home. The price of that transfer: going from full-time to part-time, and losing our insurance.

We looked into the insurance available through my employer, but came to the conclusion – based on the information provided on the Healthcare.gov website – that going through the exchange was our best option. So we went to the website, and shopped for new insurance. The website was klunky, to be sure, but when I reached a point where it didn’t seem to be making sense any more, I called the 800-number provided and spent a couple of hours talking to a tremendously nice woman with a near-parody Wisconsin accent – “Ooh yah, dearie me” – who was amazingly helpful, and got me the rest of the way through the process. Given the fact of my wife’s MS, our process was particularly complicated, and this person did everything necessary to make sure we were taken care of.

That’s when my dealings with the government ended, and my dealings with the insurance industry began, and it has been downhill at speed ever since.

There is exactly one insurance company in New Hampshire peddling plans through the ACA: Anthem BlueCross BlueShield. After completing the enrollment process through the exchange, the next step was to deal directly with Anthem, which quickly came to be about as fruitful as trying to batter down a brick wall with my daughter’s teething ring. First it was two weeks of phone calls, involving serial hours listening to on-hold music that could easily have come straight out of a bad porn movie soundtrack, just to establish that Anthem actually recognized Multiple Sclerosis as a real disease. Then it was another week of porn-flick hold-music to get a straight answer on the location and availability of MS doctors that were “in the network,” and thus covered.

Every phone call yielded a different set of answers, a different phone number to call, which invariably led nowhere. The calls that finally yielded answers and useful information felt like luck-of-the-draw; we either got someone on the line who actually felt like working that day, or were simply fortunate that the person we spoke to actually picked the correct answer off their sheet of go-away pat responses. In the end, all of this took so long that we wound up shelling out nearly a thousand dollars to get COBRA coverage from my wife’s employer, just to make sure we had something over our heads. Finally, after almost a month of nonsense, we managed to get everything squared away, I cut Anthem a check, and we received insurance cards in the mail.

All was quiet for a while, until the beginning of last week, when my wife’s MS medication began to run low. Previously, and with no hassles, the process to acquire a refill for her prescription was to call the company that makes her medicine about a week before it ran out, place an order for a refill, and it would be delivered two days later. When we called the drug company at the beginning of last week, however, we hit a great big pothole: they could not do the refill until our new insurance company approved it.

My wife contacted Anthem a month ago to clear the way for this approval process. They required a statement from her neurologist in order for the prescription to be approved. That statement was acquired, and sent to Anthem, a month ago. According to every conversation we had with Anthem this week, however, the statement from her neurologist did not exist, and the process had to begin again from scratch.

And so it was phone calls to Anthem, and more phone calls, and hold music – between the two of us, my wife and I have logged enough hours on hold to fly to Neptune and back – and one answer with one phone call once we finally got someone on the line, another answer with another phone call once we finally got someone on the line, and all the while my wife’s stock of MS medicine dwindled, and dwindled, and dwindled.

Last Wednesday, fearing the worst, my wife began rationing her medicine: one dose a day instead of two. We made this very clear to the people at Anthem – I HAVE MS AND AM ALMOST OUT OF MEDICINE – but still, it was “Call this number” that went nowhere, “Call that number” that went nowhere, one answer, and then another, no two ever the same, the awful infinity of hold music, and then oops, we accidentally inverted the numbers on your prescription, we have to start over again, we will call you back, and then silence, and silence, and silence.

For those not in the know, Multiple Sclerosis is an auto-immune disease that causes the body’s own immune system to attack the brain. Think of the neurons in your brain as if they were stereo cables: copper wiring encased in a rubber sheath. With MS, the immune system chews through that rubber sheath and attacks the wiring, destroying it. The damage done is irreversible, and in the worst case can cause paralysis, blindness, weakness, loss of motor function in arms and legs, an inability to swallow, and permanent disabling pain. It is a filthy, wretched disease that does not even have the common decency to kill you after it is done torturing you; it leaves that to the other diseases that come galloping through the door after your body has been destroyed. The only thing keeping the beast at bay is my wife’s medication. When she has it, she is fine and strong, able to work and hold her child, able to live a normal life. When she does not have it, she is hedging Hell.

This was the cocked pistol at my wife’s head as we tried and failed all week to get Anthem to approve her prescription refill.

By Friday morning, we were frantic; she had one dose left, her MS symptoms were escalating rapidly because she had been rationing her medication for days, and if we didn’t get it done today, there could be no Saturday delivery of the medication, and we would be stuck with no medicine until after the weekend, and likely into the middle of the next week, if not beyond. Repeated calls to Anthem resulted in the same lather-rinse-repeat runaround, so in extremis, we reached out to her neurologist in Boston to see if he could help.

My wife’s neurologist is one of the best MS specialists in the city of Boston, which makes him one of the best MS specialists on the planet. He was appalled and astonished by what we had been dealing with, and took it upon himself to deal with Anthem himself…and after five hours on the phone with them, getting one different answer after another, he was finally told that approval for my wife’s medication had to be put before a review board, and would take at least 72 hours, and it wouldn’t happen until Monday at the earliest. In all the phone calls we’d made to Anthem regarding this prescription, not one person had told us about a review board. One of the best neurologists in practice was forced to surrender.

As a last-ditch Hail-Mary option, my wife’s neurologist told us to call the drug company directly; in extreme circumstances like ours, a lot of pharmaceutical companies will provide enough medication at no cost to serve as a bridge until a prescription is approved…but by then, it was after 5:00 p.m. on Friday, and when we called the company, we discovered they were closed for the weekend. It was over. My wife took no medicine on Saturday, and took her last remaining dose on Sunday night. She has not been on her medication since.

On Monday morning, a phone call to the drug company yielded immediate results: a month’s worth of medication was coming, and should arrive soon. Still, when my wife goes for her annual MRI, I expect to see a new brain lesion on the print-out of the scan, caused by this gap in her course of medication. We will name it “Anthem,” in honor of all the people who worked so diligently to make sure she could not get her medicine.

As of this writing on Wednesday night, we still have heard no word from Anthem as to the status of their suddenly-revealed approval process for my wife’s medication.

I believe down to my bones that what we have endured at the hands of these cretins has been entirely deliberate. No amount of incompetence or laziness can account for the appalling lack of response, the runaround, and the sudden appearance of this “approval process,” we have gotten from Anthem. They do not want to co-pay for my wife’s medication or for her disease in general, and are doing everything they can to avoid it. Period, end of file.

If you think this is a unique situation, a one-off that does not represent the general experience people have with the insurance industry, think again. I made mention of our situation on social media, and the testimonials I received in response were both astonishing and harrowing:

S.L.: As someone who worked for a big, local health insurance company, I can tell you that this sort of thing happens a LOT. And it’s one of the reasons I didn’t last too long, at that job. I felt like the biggest piece of poo, for having to follow “company guidelines” that royally screwed people over. I’d rather scrub toilets than to ever work in the health insurance field again.

J.R.: I have rheumatoid arthritis and have had nothing but hassles with BCBS denying coverage for blood work and medicines. In fact, I was on the Arkansas Risk Pool because I have a “pre-existing condition” and no other health insurance company would take me. But now that very same Risk Pool is not going to pay my office visits and labs from last year because…(wait for it) I have a pre-existing condition! Fuck all of them. I am sick of being punished for my chronic condition.

R.M.: As a mental health professional I’m convinced insurance companies will do ANYTHING to delay or avoid payment. Michael Moore understood that years back, providers bang heads against walls and get scared shitless we’ll be caught up in the outcomes of reckless disregard for what patients desperately need, and it’s the love of profit, pure and simple. The history of “insurance” in its many forms is book-worthy, from the black and poor families who used to save every penny for when the insurance man came around, often just so they’d get buried without ruining their families, to the people who literally sit and go over dental x-rays and challenge whether you really need that more expensive treatment when they’ve never laid eyes on you, to the many people who have been in your wife’s situation.

T.R.: Similar thing happening here with my lead-poisoned kiddo – waiting 4 months – sick 11 year old misses 9 weeks of school – waiting to see a specialist because he “isn’t in enough pain to expedite” and he can’t eat or breathe without pain – we finally get in to specialist on Wednesday (Pediatric GI) and she said – and I quote ” I don’t even need to examine him really – I’ve reviewed all the paperwork” WTF – sending us away with a referral to a pain clinic! Fuck – an 11 year old needs to be in debilitating pain for four months so he can see an idiot who refers him to a pain clinic !!!

G.S.: Our insurance company did the same thing with my migraine medicine, zomig. Told me I could only have 6 pills a month- which is awesome when your migraines come in clusters, multiple times a day, weeks on end. We ended up having to pay hundreds of dollars to get them. Doctor even called in an override to no avail.

K.B.: I have stories, many of them from my husband’s last 6 months of life in hospitals, or the ten years before as he slowly became more ill each year. What killed him? Mostly incompetence or willful disregard. Steve had been in the hospital since April 5 for a surgery to remove an aneurism that had been allowed to grow to nearly 23% of his body mass. A man that was 6’4″ and right at 225 pounds. On his birthday (June 10th) he was about 145 lbs unable to walk at all without two people holding him.

T.S.: Once, when the firm changed plans, I found that my insulin pens were covered by the new one, but the syringe tops were not. The pens are sitting there full of medicine, but you must tap the pen with a syringe top to get at it, obviously. These needle are fairly expensive, and as an item that must be changed for every shot, I could go through 6-10 a day. Of course I spent weeks on this, and ultimately someone approved my claim, seeing the obvious problem. But I always thought it was a deliberate bottom-line choice to begin with, and that I was lucky to get a fix at all.

A.S.: I had a wrangle with United Health Care last year over a denied claim. I had had an echocardiogram to determine if high blood pressure was causing damage to my heart, a procedure covered for that purpose. However, the code submitted by the provider’s office indicated that the echo was done to DIAGNOSE high blood pressure, for which it is not covered.

M.S.: You’ll never hear me say a good word about any health insurance company, not after the one I had in 2001 decided that the only kind of chemo they would pay for is one that gave me congestive heart failure seven years later.

L.S.: I got out of the hospital yesterday and did the pharmacy drive thru for my pain control script on the way home. Had to pay for it out of my own pocket because of some screw up at the insurance company. It is fucking Sat. morning and I have just been released after a few days in the hospital trying to stop an internal bleed someplace around my spleen. Trust me when I say pain control was not an optional thing. I paid the man for those drugs and cussed while I did it.

K.F.: Humana screwed me over by first denying coverage for emergency surgery (because I had not asked Mother May I & instead relied on a doctor telling me I needed surgery–silly me), then covering the expenses after I made a ruckus, then a YEAR LATER, deciding on their own that they didn’t have to pay after all, resulting in me getting calls from a collection agency threatening all kinds of nasty stuff.

L.D.K.: I had Aetna tell me they wouldn’t pay for an anti-fungal prescription for my toenail fungus……after multiple appeals and proof (biopsy results) that only this certain (expensive) medication would be affective in curing it…..but that they WOULD PAY to have all my toenails SURGICALLY REMOVED!

I.B.: Harvard Pilgrim Healthcare canceled my prescription for Provigil when I lost my job. They said that since I no longer “do productive work,” I no longer needed a medication that prevented me from sleeping all day. My doctor had to write them a letter explaining that without the medication, I wouldn’t be able to SEEK productive work, let alone ever HAVE productive work. We eventually got them to reinstate the prescription, but it took a couple months.

S.C.: My health insurance company tried to refuse to cover the brand of ADHD medication I need and force me to use one that contains a dye I’m allergic to.

A.W.: My dad’s been a doctor for 40+ years. From talking with him, the growing bureaucracy and endless paperwork that has come to typify interactions with the insurance companies makes actually doing the job of caring for the sick increasingly difficult. He also knows a few doctors who were charged with insurance fraud, for lying to the insurers in order to get patients the treatment they needed.

I could share a hundred more similar stories. The pattern is self-evident.

One person who wrote to me asked the pertinent question: why, given all the new customers the ACA will be funneling to the insurance companies, would the industry be so intransigent in its resistance to the law? Why would they keep deliberately screwing people even though their balance sheet is being flooded with new paying customers? The answer, I believe, lies in an article I wrote back in November:

According to the American Medical Association, more than 81 million people currently suffer from some form of cardiovascular disease.

According to the American Cancer Society, more than 11 million people currently suffer from some form of cancer.

According to the American Diabetes Association, almost 24 million people currently suffer from diabetes; the Centers for Disease Control estimate that half of all Americans could suffer from the disease by the year 2050.

The Centers for Disease Control estimate that some 50 million Americans suffer from arthritis, rheumatoid arthritis, gout, or lupus, 21 million of whom are disabled due to the condition.

According to the Alzheimer’s Association, more than five million Americans are currently afflicted with Alzheimer’s disease, a number that will shortly spike as our Boomer population grows older.

According to the National Multiple Sclerosis Society, some 400,000 Americans currently suffer from MS.

According to the National Parkinson’s Foundation, between 50,000 and 60,000 new cases of Parkinson’s are diagnosed in America each year.

The CDC estimates that close to a million people a year become infected with herpes.

More than a million Americans are infected with AIDS.

Some 79 million Americans are infected with the human papillomavirus (HPV), a disease that causes cancer in both women and men.

That, right there, is more than half the country.

That, right there, is the reason. Whatever other flaws may exist within the ACA, the one aspect of it that is a perfect good is the law’s mandate against people with pre-existing conditions being denied coverage, or getting wildly over-charged because of their condition. Before the law’s passage, this pool of customers – more than half the country, by the numbers – represented the insurance industry’s main cash cow, their profit engine…and when the ACA became law, they lost that, and are now seeking to make up the profit gap wherever and however they can.

The ban on insurance companies denying coverage for people with pre-existing conditions, or over-charging for that coverage, is comparable to telling the Mafia they can no longer take kick-backs from the businesses under their “protection.” In the movie Goodfellas, the main character, Henry Hill, succinctly lays out the Mob’s business philosophy regarding those who are struggling to make ends meet:

“Business bad? Fuck you, pay me. Oh, you had a fire? Fuck you, pay me. Place got hit by lightning, huh? Fuck you, pay me.”

In other words, they’re going to get paid one way or the other. If the insurance industry can’t screw you by charging triple rates for your pre-existing condition, they will get their pound of flesh some other way, like denying or delaying approval of an expensive prescription for a serious medical condition that will ruin your body and your life. But they are going to get that pound of flesh, and nothing is going to stop them.

Fuck you, pay me.

The Mafia has broken a lot of legs over the years, and put a lot of bodies in the ground, and extorted a lot of money from fearful people who have no choice but to obey, but the Mafia is left in deep shade by the insurance industry in America. The Republicans have spent oceans of time over the last few years yodeling about fictional “death panels” being a part of the ACA, but those “death panels” are all too real, and have existed for years in the guise of insurance companies that will drain your body of blood before refusing to approve coverage for a transfusion.

So, yeah, those who rant on about government being the problem with health care in America are cordially invited to take a flying fornication at a rolling doughnut on a gravel driveway in the rain. If you’re going to ding the government for anything, ding them – ding the Obama administration – for willfully abandoning the idea of single-payer universal care in favor of allowing the shameless muggers of the insurance industry to retain control of the process. They were awful before, and are worse now, because they are scratching as hard as they can to make up for the revenue they will be losing because they can no longer shaft sick people on the books.

Abandoning the concept of single-payer health care is the Original Sin of the Affordable Care Act. While I and the half of the country dealing with pre-existing conditions are grateful for the prohibition against denying coverage to people thus afflicted, that protection is next to useless when dealing with the shark tank that is the insurance industry. They have less morality than a Mafia leg-breaker, but far more power, and someone decided to keep them in charge of the process anyway.

The wrong people are running this show. Again.

http://truth-out.org/opinion/item/22279-william-rivers-pitt-worse-than-the-mob-the-insurance-industry-is-organized-crime

Another ACA final rule – 335 pages

HHS Notice of Benefit and Payment Parameters for 2015 under the Patient Protection and Affordable Care Act: Final Rule

Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS), March 11, 2014

SUMMARY:

This final rule sets forth payment parameters and oversight provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost- sharing reductions; and user fees for Federally-facilitated Exchanges. It also provides additional standards with respect to composite premiums, privacy and security of personally identifiable information, the annual open enrollment period for 2015, the actuarial value calculator, the annual limitation in cost sharing for stand-alone dental plans, the meaningful difference standard for qualified health plans offered through a Federally-facilitated Exchange, patient safety standards for issuers of qualified health plans, and the Small Business Health Options Program.

Final rule (335 pages): http://www.ofr.gov/OFRUpload/OFRData/2014-05052_PI.pdf

Comment:

By Don McCanne

Any major legislation, once enacted, must then be subjected to a rule making process to have guidelines by which to administer the law. Legislation as complex as the Affordable Care Act (ACA) is expected to have an extensive set of rules, but this 335 page final rule on just a few aspects of the legislation demonstrates how unnecessarily complex ACA is.

The rule on risk adjustment, reinsurance, and risk corridors is a good example. Risk adjustment transfers funds from insurers who enrolled lower-cost, healthier individuals to insurers who had higher expenses because their enrollees had greater health problems (an almost impossible task to do fairly). Reinsurance is paying insurers a portion of their losses if they had higher than expected expenses for their enrollees. Risk corridors establish two levels of spending – one below which profits are excessive and the other above which losses are excessive – levels used to protect against inaccurate initial rate setting by the insurers.

The final rule is highly complex, which is not surprising since it is difficult to adjust for fairness after health care losses have occurred. It should be obvious that this administrative complexity is not to protect patients, but rather it is to protect the insurers. In fact, much of the profound complexity of ACA was based on making reform work for the insurers while sacrificing policy improvements that would be designed to work best for patients. 

Under a single payer system, risk adjustment, reinsurance, and risk corridors would not even be necessary since you would not have competing private insurers that are each trying to game the system.

If you really want to understand better how our politicians selected the wrong model for reform, read the 335 pages of this final rule. Then read the thousands of other pages of final rules that also apply to ACA.

Yes, there would be rules under Improved Medicare for All, but they would be administratively efficient rules selected to make the system work better for patients, not for private insurers.

Another ACA final rule – 335 pages

HHS Notice of Benefit and Payment Parameters for 2015 under the Patient Protection and Affordable Care Act: Final Rule

Department of Health and Human Services, Centers for Medicare & Medicaid Services (CMS), March 11, 2014

SUMMARY:

This final rule sets forth payment parameters and oversight provisions related to the risk adjustment, reinsurance, and risk corridors programs; cost sharing parameters and cost- sharing reductions; and user fees for Federally-facilitated Exchanges. It also provides additional standards with respect to composite premiums, privacy and security of personally identifiable information, the annual open enrollment period for 2015, the actuarial value calculator, the annual limitation in cost sharing for stand-alone dental plans, the meaningful difference standard for qualified health plans offered through a Federally-facilitated Exchange, patient safety standards for issuers of qualified health plans, and the Small Business Health Options Program.

Final rule (335 pages): http://www.ofr.gov/OFRUpload/OFRData/2014-05052_PI.pdf

Any major legislation, once enacted, must then be subjected to a rule making process to have guidelines by which to administer the law. Legislation as complex as the Affordable Care Act (ACA) is expected to have an extensive set of rules, but this 335 page final rule on just a few aspects of the legislation demonstrates how unnecessarily complex ACA is.

The rule on risk adjustment, reinsurance, and risk corridors is a good example. Risk adjustment transfers funds from insurers who enrolled lower-cost, healthier individuals to insurers who had higher expenses because their enrollees had greater health problems (an almost impossible task to do fairly). Reinsurance is paying insurers a portion of their losses if they had higher than expected expenses for their enrollees. Risk corridors establish two levels of spending – one below which profits are excessive and the other above which losses are excessive – levels used to protect against inaccurate initial rate setting by the insurers.

The final rule is highly complex, which is not surprising since it is difficult to adjust for fairness after health care losses have occurred. It should be obvious that this administrative complexity is not to protect patients, but rather it is to protect the insurers. In fact, much of the profound complexity of ACA was based on making reform work for the insurers while sacrificing policy improvements that would be designed to work best for patients.

Under a single payer system, risk adjustment, reinsurance, and risk corridors would not even be necessary since you would not have competing private insurers that are each trying to game the system.

If you really want to understand better how our politicians selected the wrong model for reform, read the 335 pages of this final rule. Then read the thousands of other pages of final rules that also apply to ACA.

Yes, there would be rules under Improved Medicare for All, but they would be administratively efficient rules selected to make the system work better for patients, not for private insurers.

Progressive deterioration in health plans offered by major employers

Survey for the National Business Group on Health

Towers Watson, March 6, 2014

The cost of providing employer-sponsored health care benefits is expected to increase 4.4% this year, a slight uptick from last year, when cost increases fell to a 15-year low, according to an annual survey by global professional services company Towers Watson and the National Business Group on Health (NBGH), an association of large employers.

The 19th Annual Towers Watson/NBGH Employer Survey on Purchasing Value in Health Care found that employer costs are expected to reach $9,560 per employee in 2014, an increase of 4.4% from $9,157 in 2013 (DM – but it would have been a 7.0% increase had employers not made changes to their plans that shifted more costs to their employees). The survey found the employees’ share of premiums increased nearly 7%, to $2,975, this year. Out-of-pocket costs also increased. The total employee cost share has climbed from 34.4% in 2011 to 37% in 2014. Employees now pay over $100 more each month for health care compared with just three years ago.

“Despite the moderation, health care costs continue to outpace inflation and remain a major concern for U.S. employers given the challenging macroeconomic environment,” said Ron Fontanetta, senior health care consultant for Towers Watson. “To find more effective ways to manage health costs, many employers are focusing on reshaping their health strategy for the next three to five years.”

Indeed, while the vast majority (95%) of respondents indicate that subsidizing health care coverage for active employees is a very important part of their rewards package, almost as many (92%) expect to make moderate to significant changes to their programs by 2018.

Contribution strategy for spouses changing: Nearly half (49%) of employers have increased employee contributions for dependent tiers at higher rates than for individuals. Another 19% expect to make this move next year. Only 56% of companies believe that subsidized health care for spouses will be very important for 2015 and beyond — down from over 70% today, an indication that the trend toward increased cost sharing for spouses will likely continue.

More employers embracing account-based health plans (e.g., HSAs): Nearly three-quarters of respondents currently offer these plans, with another 9% expecting to add one for the first time in 2015. Nearly one-third of all companies could offer ABHPs as their only option by 2015 if they follow through with current plans.

Employers looking at exchange options: Two-thirds of companies believe that private exchanges will offer a viable alternative to employer-sponsored coverage for active employees as early as 2015.

Retiree health: Nearly two-thirds of employers that offer access to a sponsored plan today say they are likely to eliminate those programs in the next few years and steer their pre-Medicare-age population to public exchanges.

Health and financial subsidies: Twenty-two percent of companies adopted outcomes-based incentives (other than for tobacco), and that figure could reach 46% by 2015 if companies follow through with their plans.

Value purchasing: The best-performing respondents are addressing key drivers of performance including pharmacy management, network delivery options and enhanced wellness strategies.

http://www.towerswatson.com/en-US/Press/2014/03/us-employers-experiencing-smallest-increases-in-health-care-costs-in-15-years

Comment:

By Don McCanne, M.D.

The most important reason that a more effective model of social insurance, such as single payer, was rejected in favor of a fragmented model of reform based on private health plans and public programs was that a majority of Americans were receiving their coverage through their employment and that was perceived as a segment of the market that was working well and should not be disrupted. “If you like the insurance you have, you can keep it.”

Not only was three-fifths of the population already covered by employer-sponsored plans, if this coverage were abandoned, the policy community working on reform would have had to devise a way of replacing the funds paying for this coverage – decisions that would likely provoke even greater public hostility than we saw with the enactment of the Affordable Care Act.

In the last half century, the best coverage has been provided mostly through large employers – those represented by the National Business Group on Health (employers with over 1,000 employees each and 55 million employees in total). These employers have been very concerned about rising health care costs, and now they know that they will have to live with our highly flawed version of comprehensive reform – the Affordable Care Act. They see very little in this Act that will provide them relief, so they are moving forward with their own measures.

We can now see where employers have been, where they have taken us, and where they are headed – on a downward spiral of ever inferior employer-sponsored health plans.

Some of the changes we are seeing, according to this and other reports:

*  Higher deductibles (shifting costs to those with health care needs)

*  Health savings accounts (not much help when they are underfunded or empty)

*  Increasing employees’ share of premiums

*  Reducing dependent coverage, especially spouses

*  Sending employees to private insurance exchanges (shifting to defined contribution)

*  Using narrower provider networks (taking away health care choices)

*  Using outcome-based incentives that effectively penalize those with health problems

*  Dumping retirees into public exchanges

*  Using value purchasing – a code term for managed care

How could employers be so crass as to dump on their employees like this? Quite simple. They now have a new standard to point to – the low actuarial value private plans that are being offered through the government exchanges – plans that are using many of of the same strategies that will be harming the physical and financial health of plan enrollees. In fact, two-thirds of employers believe that “private exchanges will offer a viable alternative to employer-sponsored coverage for active employees as early as 2015” – next year! These private exchanges will offer plans using the same devious measures that will shift more costs to patients, thereby impairing access.

Our observation of this rapid deterioration in plans offered by the nation’s largest employers should cause us to sound the alarms. We need to begin immediately preparation for transition into a single payer national health program – an improved Medicare that covers all of us. The Fortune 500 employers are not going to do it for us.

Progressive deterioration in health plans offered by major employers

Survey for the National Business Group on Health

Towers Watson, March 6, 2014

The cost of providing employer-sponsored health care benefits is expected to increase 4.4% this year, a slight uptick from last year, when cost increases fell to a 15-year low, according to an annual survey by global professional services company Towers Watson and the National Business Group on Health (NBGH), an association of large employers.

The 19th Annual Towers Watson/NBGH Employer Survey on Purchasing Value in Health Care found that employer costs are expected to reach $9,560 per employee in 2014, an increase of 4.4% from $9,157 in 2013 (DM – but it would have been a 7.0% increase had employers not made changes to their plans that shifted more costs to their employees). The survey found the employees’ share of premiums increased nearly 7%, to $2,975, this year. Out-of-pocket costs also increased. The total employee cost share has climbed from 34.4% in 2011 to 37% in 2014. Employees now pay over $100 more each month for health care compared with just three years ago.

“Despite the moderation, health care costs continue to outpace inflation and remain a major concern for U.S. employers given the challenging macroeconomic environment,” said Ron Fontanetta, senior health care consultant for Towers Watson. “To find more effective ways to manage health costs, many employers are focusing on reshaping their health strategy for the next three to five years.”

Indeed, while the vast majority (95%) of respondents indicate that subsidizing health care coverage for active employees is a very important part of their rewards package, almost as many (92%) expect to make moderate to significant changes to their programs by 2018.

Contribution strategy for spouses changing: Nearly half (49%) of employers have increased employee contributions for dependent tiers at higher rates than for individuals. Another 19% expect to make this move next year. Only 56% of companies believe that subsidized health care for spouses will be very important for 2015 and beyond — down from over 70% today, an indication that the trend toward increased cost sharing for spouses will likely continue.

More employers embracing account-based health plans (e.g., HSAs): Nearly three-quarters of respondents currently offer these plans, with another 9% expecting to add one for the first time in 2015. Nearly one-third of all companies could offer ABHPs as their only option by 2015 if they follow through with current plans.

Employers looking at exchange options: Two-thirds of companies believe that private exchanges will offer a viable alternative to employer-sponsored coverage for active employees as early as 2015.

Retiree health: Nearly two-thirds of employers that offer access to a sponsored plan today say they are likely to eliminate those programs in the next few years and steer their pre-Medicare-age population to public exchanges.

Health and financial subsidies: Twenty-two percent of companies adopted outcomes-based incentives (other than for tobacco), and that figure could reach 46% by 2015 if companies follow through with their plans.

Value purchasing: The best-performing respondents are addressing key drivers of performance including pharmacy management, network delivery options and enhanced wellness strategies.

http://www.towerswatson.com/en-US/Press/2014/03/us-employers-experiencin…

The most important reason that a more effective model of social insurance, such as single payer, was rejected in favor of a fragmented model of reform based on private health plans and public programs was that a majority of Americans were receiving their coverage through their employment and that was perceived as a segment of the market that was working well and should not be disrupted. “If you like the insurance you have, you can keep it.”

Not only was three-fifths of the population already covered by employer-sponsored plans, if this coverage were abandoned, the policy community working on reform would have had to devise a way of replacing the funds paying for this coverage – decisions that would likely provoke even greater public hostility than we saw with the enactment of the Affordable Care Act.

In the last half century, the best coverage has been provided mostly through large employers – those represented by the National Business Group on Health (employers with over 1,000 employees each and 55 million employees in total). These employers have been very concerned about rising health care costs, and now they know that they will have to live with our highly flawed version of comprehensive reform – the Affordable Care Act. They see very little in this Act that will provide them relief, so they are moving forward with their own measures.

We can now see where employers have been, where they have taken us, and where they are headed – on a downward spiral of ever inferior employer-sponsored health plans.

Some of the changes we are seeing, according to this and other reports:

*  Higher deductibles (shifting costs to those with health care needs)

*  Health savings accounts (not much help when they are underfunded or empty)

*  Increasing employees’ share of premiums

*  Reducing dependent coverage, especially spouses

*  Sending employees to private insurance exchanges (shifting to defined contribution)

*  Using narrower provider networks (taking away health care choices)

*  Using outcome-based incentives that effectively penalize those with health problems

*  Dumping retirees into public exchanges

*  Using value purchasing – a code term for managed care

How could employers be so crass as to dump on their employees like this? Quite simple. They now have a new standard to point to – the low actuarial value private plans that are being offered through the government exchanges – plans that are using many of of the same strategies that will be harming the physical and financial health of plan enrollees. In fact, two-thirds of employers believe that “private exchanges will offer a viable alternative to employer-sponsored coverage for active employees as early as 2015” – next year! These private exchanges will offer plans using the same devious measures that will shift more costs to patients, thereby impairing access.

Our observation of this rapid deterioration in plans offered by the nation’s largest employers should cause us to sound the alarms. We need to begin immediately preparation for transition into a single payer national health program – an improved Medicare that covers all of us. The Fortune 500 employers are not going to do it for us.

Cancer chemotherapy: Killing them not so softly

Associations between palliative chemotherapy and adult cancer patients’ end of life care and place of death: prospective cohort study

By Alexi A Wright, Baohui Zhang, Nancy L Keating, Jane C Weeks, Holly G Prigerson
BMJ, March 4, 2014

Conclusions

The use of chemotherapy in terminally ill cancer patients in the last months of life was associated with an increased risk of undergoing cardiopulmonary resuscitation, mechanical ventilation or both and of dying in an intensive care unit. Future research should determine the mechanisms by which palliative chemotherapy affects end of life outcomes and patients’ attainment of their goals.

http://www.bmj.com/content/348/bmj.g1219

****

Nexavar (sorafenib)
Bayer HealthCare and Onyx Pharmaceuticals

Nexavar is now indicated for the treatment of patients with locally recurrent or metastatic, progressive, differentiated thyroid carcinoma (DTC) that is refractory to radioactive iodine treatment.

Efficacy

Progression-free survival:

Median progression-free survival

10.8 months  Nexavar

5.8 months  Placebo

Overall survival:

Number of deaths

32% (66)  Nexavar

34% (72)  Placebo

Important safety considerations:

Most common adverse reactions reported for NEXAVAR-treated patients vs placebo-treated patients in DTC, respectively, were: Palmar-plantar erythrodysesthesia syndrome (PPES) (69% vs 8%), diarrhea (68% vs 15%), alopecia (67% vs 8%), weight loss (49% vs 14%), fatigue (41% vs 20%), hypertension (41% vs 12%), rash (35% vs 7%), decreased appetite (30% vs 5%), stomatitis (24% vs 3%), nausea (21% vs 12%), pruritus (20% vs 11%), and abdominal pain (20% vs 7%). Grade 3/4 adverse reactions were 65% vs 30%

(15 other important safety considerations are listed – available at the link)

http://www.nexavar-us.com/differentiated-thyroid-cancer/

****

Oncology “Top Five” List Identifies Opportunities to Improve Quality and Value in Cancer Care

American Society of Clinical Oncology, April 3, 2012

The Oncology Top Five List

1.  For patients with advanced solid-tumor cancers who are unlikely to benefit, do not provide unnecessary anticancer therapy, such as chemotherapy, but instead focus on symptom relief and palliative care. 

http://www.asco.org/advocacy/oncology-top-five-list-identifies-opportunities-improve-quality-and-value-cancer-care

Comment:

By Don McCanne

For those whose lives are dedicated to the science and art of healing, this discussion on cancer chemotherapy at the end of life is one that we shouldn’t have to have. But apparently we do need to discuss it.

The new study on this topic published by BMJ confirms what we already knew. Those patients who receive often futile chemotherapy late in the course of their malignancies seemed to be programmed for a course that increases the risk of being subjected to CPR, to being placed on a ventilator, and to dying in an intensive care unit. Most in their rational moments would prefer the more humane approach of hospice care in their final days. Yet the fact that this study was done is further evidence that mostly inappropriate, aggressive, and quality-of-life reducing interventions are still being pursued.

Nexavar is a $96,000 cancer chemotherapeutic agent that was recently approved for certain progressive thyroid carcinomas. It had been previously approved for selected cases of liver and kidney cancer, though NICE (UK’s National Institute for Health and Care Excellence) did not recommend it since “available evidence does not indicate that it delays symptom progression or improves quality of life.” Regular readers may recall that Marijn Dekkers, Chairman of Bayer, said that this product was not developed for poor people in the Indian market but rather for Western patients who could afford it.

What is the evidence for its use in “locally recurrent or metastatic, progressive, differentiated thyroid carcinoma (DTC) that is refractory to radioactive iodine treatment”? Simply stated, when radiologists followed the tumors by measuring them, there was no progression for six months for those given a placebo, whereas those receiving Nexavar did not demonstrate progression until eleven months. This is a demonstration that successfully treating a test, but not the patient, is considered by some to be of therapeutic value.

But what about the overall death rates? They were the same with Nexavar and placebo. Okay, what about the quality of life? Looking at the list above, the incidence of several miserable side effects was much greater in the Nexavar treated group than it was in the placebo group. They experienced poorer quality of life and did not postpone death. If you extend the findings described in the article in this week’s BMJ, by being treated with palliative chemotherapy, they had greater odds of being subjected to CPR, to being place on a ventilator, and to dying in an intensive care unit rather than in hospice.

The American Society of Clinical Oncology certainly recognizes what is happening here. As one of the top five opportunities to improve quality and value in cancer care, they recommend that “for patients with advanced solid-tumor cancers who are unlikely to benefit, do not provide unnecessary anticancer therapy, such as chemotherapy, but instead focus on symptom relief and palliative care.”

We desperately need NICE care in the United States. We would have that under a well designed single payer national health program.

NICE: http://www.nice.org.uk

An extra: Roberta Flack – Killing Me Softly (Imagine the oncologist “singing my life with his words”) : http://www.youtube.com/watch?v=O1eOsMc2Fgg

Cancer chemotherapy: Killing them not so softly

Associations between palliative chemotherapy and adult cancer patients’ end of life care and place of death: prospective cohort study

By Alexi A Wright, Baohui Zhang, Nancy L Keating, Jane C Weeks, Holly G Prigerson
BMJ, March 4, 2014

Conclusions

The use of chemotherapy in terminally ill cancer patients in the last months of life was associated with an increased risk of undergoing cardiopulmonary resuscitation, mechanical ventilation or both and of dying in an intensive care unit. Future research should determine the mechanisms by which palliative chemotherapy affects end of life outcomes and patients’ attainment of their goals.

http://www.bmj.com/content/348/bmj.g1219

****

Nexavar (sorafenib)
Bayer HealthCare and Onyx Pharmaceuticals

Nexavar is now indicated for the treatment of patients with locally recurrent or metastatic, progressive, differentiated thyroid carcinoma (DTC) that is refractory to radioactive iodine treatment.

Efficacy

Progression-free survival:

Median progression-free survival

10.8 months  Nexavar

5.8 months  Placebo

Overall survival:

Number of deaths

32% (66)  Nexavar

34% (72)  Placebo

Important safety considerations:

Most common adverse reactions reported for NEXAVAR-treated patients vs placebo-treated patients in DTC, respectively, were: Palmar-plantar erythrodysesthesia syndrome (PPES) (69% vs 8%), diarrhea (68% vs 15%), alopecia (67% vs 8%), weight loss (49% vs 14%), fatigue (41% vs 20%), hypertension (41% vs 12%), rash (35% vs 7%), decreased appetite (30% vs 5%), stomatitis (24% vs 3%), nausea (21% vs 12%), pruritus (20% vs 11%), and abdominal pain (20% vs 7%). Grade 3/4 adverse reactions were 65% vs 30%

(15 other important safety considerations are listed – available at the link)

http://www.nexavar-us.com/differentiated-thyroid-cancer/

****

Oncology “Top Five” List Identifies Opportunities to Improve Quality and Value in Cancer Care

American Society of Clinical Oncology, April 3, 2012

The Oncology Top Five List

1.  For patients with advanced solid-tumor cancers who are unlikely to benefit, do not provide unnecessary anticancer therapy, such as chemotherapy, but instead focus on symptom relief and palliative care.

http://www.asco.org/advocacy/oncology-top-five-list-identifies-opportuni…

For those whose lives are dedicated to the science and art of healing, this discussion on cancer chemotherapy at the end of life is one that we shouldn’t have to have. But apparently we do need to discuss it.

The new study on this topic published by BMJ confirms what we already knew. Those patients who receive often futile chemotherapy late in the course of their malignancies seemed to be programmed for a course that increases the risk of being subjected to CPR, to being placed on a ventilator, and to dying in an intensive care unit. Most in their rational moments would prefer the more humane approach of hospice care in their final days. Yet the fact that this study was done is further evidence that mostly inappropriate, aggressive, and quality-of-life reducing interventions are still being pursued.

Nexavar is a $96,000 cancer chemotherapeutic agent that was recently approved for certain progressive thyroid carcinomas. It had been previously approved for selected cases of liver and kidney cancer, though NICE (UK’s National Institute for Health and Care Excellence) did not recommend it since “available evidence does not indicate that it delays symptom progression or improves quality of life.” Regular readers may recall that Marijn Dekkers, Chairman of Bayer, said that this product was not developed for poor people in the Indian market but rather for Western patients who could afford it.

What is the evidence for its use in “locally recurrent or metastatic, progressive, differentiated thyroid carcinoma (DTC) that is refractory to radioactive iodine treatment”? Simply stated, when radiologists followed the tumors by measuring them, there was no progression for six months for those given a placebo, whereas those receiving Nexavar did not demonstrate progression until eleven months. This is a demonstration that successfully treating a test, but not the patient, is considered by some to be of therapeutic value.

But what about the overall death rates? They were the same with Nexavar and placebo. Okay, what about the quality of life? Looking at the list above, the incidence of several miserable side effects was much greater in the Nexavar treated group than it was in the placebo group. They experienced poorer quality of life and did not postpone death. If you extend the findings described in the article in this week’s BMJ, by being treated with palliative chemotherapy, they had greater odds of being subjected to CPR, to being place on a ventilator, and to dying in an intensive care unit rather than in hospice.

The American Society of Clinical Oncology certainly recognizes what is happening here. As one of the top five opportunities to improve quality and value in cancer care, they recommend that “for patients with advanced solid-tumor cancers who are unlikely to benefit, do not provide unnecessary anticancer therapy, such as chemotherapy, but instead focus on symptom relief and palliative care.”

We desperately need NICE care in the United States. We would have that under a well designed single payer national health program.

NICE: http://www.nice.org.uk

An extra: Roberta Flack – Killing Me Softly (Imagine the oncologist “singing my life with his words”) : http://www.youtube.com/watch?v=O1eOsMc2Fgg

Not far enough?

Health care for everyone isn’t a question of realism – it’s a moral necessity

By Gabriel Edwards and David Mealiea
The New Physician, January-February 2014

In medical school, we are taught that practicing good medicine means first asking a good history. Gathering relevant information guides the review of the patient’s body systems, physical examination, and ultimately the assessment and plan that leads to an effective medical intervention. With experience, the doctor learns to recognize patterns which help guide clinical judgment. We are at the beginning of this process, but some patterns have already begun to emerge.

There’s the 40-year-old woman who can’t afford the premiums and deductibles on the insurance offered through her workplace. She suffers from depression and has to take the generic form of her preferred antidepressant, with significant psychiatric side-effects. There’s the 58-year-old man with musculoskeletal issues. The attending physician acknowledged that his workup and treatment would be different had he been insured. He might otherwise have received an MRI of his back and treatment of his right leg problems, correcting his posture. Then there’s the 27-year-old who can’t afford insurance covering the suboxone treatment for his opiate addiction, forcing him to buy it on the street.

The Patient Protection and Affordable Care Act (ACA) was signed into law by President Barack Obama on March 23, 2010, with the goal of reducing the number of uninsured Americans by making health care more affordable to Americans. It achieves this through mandates, subsidies and insurance exchanges. But a May 14, 2013, report by the Congressional Budget Office projected that the number of American who will remain uninsured in 2023 will be 31 million, revised upward from a previous projection of 30 million.

The patients we described above are just a few of those millions of Americans struggling with the effects of being uninsured. But additionally, we have an epidemic of inadequate coverage among Americans who are insured. Without solving the latter, we won’t adequately help the former even if we managed to insure every man, woman and child in the country. Getting everyone on board with health insurance is an initial step, but if everyone is on board a vessel which is slowly sinking, we haven’t gone far enough. In theory, paying for insurance should result in adequate, affordable health care. In reality, it doesn’t. And that brings our entire approach to financing health care into question.

Massachusetts implemented a policy of universal health coverage in 2006, four years prior to the ACA’s passage. A study published in the American Journal of Medicine showed that the amount of bankruptcies in the state due to illness and medical bills were reduced, but not significantly: dropping 59 percent to 52 percent from 2007 to 2009. Furthermore, the study states that “in 2009, 89 percent of debtors had health insurance at the time of filing.” It seems antithetical to us that the provision of health care necessary to ensure an adequate quality of life should result in financial ruin. Medicine is complicated enough without having to consider whether even the insured patients can afford the care they need to live healthy, productive lives.

The insurance exchanges offer plans of various cost, and the most expensive plan, dubbed “Platinum,” will pay 90 percent of essential health benefits. It is the responsibility of the patient to pay the other 10 percent of health care expenditures out-of-pocket, in addition to added costs associated with care received by providers deemed out of network. A June 2013 study published in the journal Health Services Research found that among those who pay for out-of-network services, 58 percent of inpatient services and 13 percent of outpatient services were paid involuntarily. An individual navigating our highly fragmented system will pay for the health care most immediately available to them in times of need, in or out of network. This demonstrates a pitfall of a system that expects individuals to make rational economic choices when purchasing health care in situations that are often medical emergencies.

We believe that health care reform has to go beyond tethering more Americans to our current, dysfunctional system. But the only way that we can evolve toward a better system is to transcend the scope of the current debate that has dominated mainstream discussion. One of the effects of the battle to pass, preserve and implement the ACA has been the way it has framed this debate as a simple dichotomy between the law’s articulated vision and the status quo.

We write this article to encourage fellow students to consider another way, one that imagines a system that can serve all Americans’ needs. We have seen the financial and human costs that have resulted from our current system. Whether we choose to acknowledge it or not, the suffering of those without adequate access to health care weighs on us all, economically and spiritually. Reform should strive to bring people together in the task of improving the well-being of all Americans and not, as Dr. Margaret Flowers said in an opinion piece in Al Jazeera, to lower “the bar for what is considered to be adequate health insurance coverage.”

Our national conversation has been dominated by the question of insurance, and as such as we have one of our own: shouldn’t the purpose of insurance be to create a pool as wide as possible so that those of us who are sick can benefit from the support of those of us who are well? Other industrialized nations have managed this; here in the United States, Medicare and the Veterans Administration have managed the same for subsets of our own population, and are popular and operate with minimal administrative cost when compared to private insurance companies. Why wouldn’t a single unified system, then, encompassing all Americans, most effectively accomplish this? One simple enough not to crumble under the weight of its own complexity and in the face of an opposition that would rather profit from the fragmented status quo?

Ultimately, we want to start a conversation not just about health insurance, but also health care. We believe that ensuring health care for all isn’t just a luxury, sacrificed to the demands of what popular debate current frames as “realistic.” It is an economic and moral necessity. We want a system where future medical students won’t have to see as many of the things we’ve already seen in our young careers: namely, patients suffering due to the multiple barriers they’ve had to surmount simply to access the care that they need. Ensuring access to adequate care for all Americans is a litmus test of the health of our democracy, and it will require embracing the unavoidable reality that we are in this together.

Gabriel Edwards is a second-year at Oregon Health Sciences University in Portland. Dave Mealiea is a third-year at the University of Vermont. Let us know what you think about this topic: e-mail tnp@amsa.org

http://mydigitalpublication.com/publication/?i=198742&ver=html5&p=33#{%22page%22:32,%22issue_id%22:198742}

Venture capitalists in the pharmaceutical industry

The Calculus of Cures

By Robert Kocher, M.D., and Bryan Roberts, Ph.D.
The New England Journal of Medicine, February 26, 2014

Bringing a drug from bench to bedside is a risky and expensive proposition. The development of a new drug is estimated to cost many hundreds of millions of dollars; as a result, decisions about funding a drug-development program are based as much on economics as on science and medicine. Decisions to invest and reinvest at all stages of development are driven by the imperative to generate an attractive return on the capital invested, whether by venture-capital and public investors or by pharmaceutical companies.

It is not mysterious why projects get funded. As venture-capital investors, we evaluate projects along four primary dimensions: development costs, selling costs, differentiation of the drug relative to current treatments, and incidence and prevalence of the targeted disease.

Fortunately, much can be done to bring more drugs and a more diverse set of drugs to market. The two economic dimensions — development costs and selling costs — can be most easily improved. The most expensive step in creating a new drug is conducting clinical trials. Conducting a trial costs $25,000 or more per patient studied, and phase 3 trial programs consume more than 40% of a sponsoring company’s expenditures. Unfortunately, every patient is not equally valuable when it comes to clinical trials, and many clinical development programs are economically inefficient in that they are excessively large relative to the amount of information they yield, especially in light of the information-technology breakthroughs that have lowered the cost of data acquisition and analysis over the past 20 years.

High-frequency, material information about clinical efficacy and safety comes from the first few hundred patients studied in a trial. Unfortunately, most clinical development programs go far past the point of diminishing returns for frequent safety events, but they do not go far enough to permit detection of rare events. Statistically, it is only in the long tail of patient data that reliable signals of rare adverse effects can emerge and comprehensive safety can be established. Safety is critical, but studying the long tail of adverse events is not feasible from either a time or a capital perspective until after a new drug enters the market, especially if the drug is for a chronic condition.

Redesigning trials to include fewer patients, providing conditional approval of drugs, and requiring postmarketing surveillance could have a profound effect, allowing smaller development programs to achieve greater success. We estimate that development costs for drugs could be reduced by as much as 90%, and the time required by 50%, if the threshold for initial approval were defined in terms of efficacy and fundamental safety. Cutting costs and time, while requiring high-quality and transparent patient registries for independent safety monitoring, would be a more informative and cost-effective approach. With the widespread adoption of electronic health records and the introduction of many low-cost data-analysis tools, it is now feasible to develop mandatory postmarketing surveillance programs that make thousand-patient trials obsolete.

This approach to reducing drug-development costs would have the greatest effect on drugs for chronic conditions such as cardiovascular disease and type 2 diabetes, since such drugs currently require the largest trials. Moreover, our ability to identify rare side effects and take action to protect patients would be substantially improved when many more patients are being followed, albeit in the absence of a control group. We believe this approach would have no adverse effect on the trend in the development of drugs for orphan diseases and cancers, since those drugs will continue to have low development and selling costs and substantial differentiation from existing treatments. Yet, this approach would make it attractive to pursue drug candidates for many more disease conditions and would lower the threshold for financing a drug’s development so that more drugs would be brought forward.

Another major factor is selling costs. It is far more cost-effective to sell a drug when it is either prescribed by specialty physicians or commonly used in hospitals, both of which effectively aggregate patients. Moreover, it is easier to predict the level of adoption by these customers on the basis of the drug’s clinical differentiation and pharmacoeconomics. Sales of drugs prescribed by primary care doctors depend on a mixture of expensive sales representatives and advertising and can cost hundreds of millions of dollars annually.

While scientists work hard to increase the rate of scientific discovery, the rest of us should do our part to improve the other variables that figure into the calculus of which cures are brought to market. Such improvement would be good for patients and would represent good economic policy, since drug prices could be lowered even as investors generated the returns necessary to finance more discoveries.

http://www.nejm.org/doi/full/10.1056/NEJMp1400868

****

PNHP Data Update

September 29, 2000

The new editor of the New England Journal of Medicine, Jeffrey Drazen, M.D. was cited by the FDA last year for making “false and misleading” statements about the asthma drug, levalbuterol. Drazen received $7,000 from the drug’s maker, and has ties to another 20 drug firms (USA Today, 5/31/00). “Academic researchers should be able to own substantial stock in a company or accept sizeable consultant fees and still accept research support,” according to Drazen. (California Healthline, 5/26/00).

(Note: Though this was written in 2000, Jeffrey Drazen is still the editor of NEJM.)

https://www.pnhp.org/news/2000/september.php

Comment:

By Don McCanne, MD

One of the most serious defects of the U.S. health care system is that we not only allow but we encourage the participation of passive investors. For those who believe that the free market is what makes America so great, the opportunity to glom onto some of the $3 trillion that we spend each year on health care cannot pass the attention of the entrepreneurial mind. Venture capitalists in the pharmaceutical industry are a case in point.

The venture capitalists who authored this article in The New England Journal of Medicine have diagnosed a major problem with the U.S. pharmaceutical industry and are providing a solution – a solution for investors that is.

They have decided that clinical trials of new drugs are too expensive. They note that you can determine clinical efficacy from the first few hundred patients in the study and that adding many more patients goes far past the point of diminishing returns. As far as determining drug safety, we can use the computerization of health records to detect adverse events, taking advantage of the very large number of patients receiving the drug after it has been released for marketing. By reducing these research costs, and by moving products to the market earlier so they can begin providing returns, the venture capitalists then would have more funds to invest in even more new products. See, the market really works.

We have seen the tragedies of products rushed to the market, with the inadequacies of post-marketing surveillance, resulting in great harm to patients, even death, while the pharmaceutical industry pays massive fines that they pass off as simply a cost of business. When passive investors are involved, the investors must be taken care of first, certainly before the patients, and these guys writing this article want a greater piece of the action.

Why would one of the world’s most prestigious medical journals publish an article promoting the interests of venture capitalists in the pharmaceutical industry? The answer might be found in the views of the editor of NEJM, Jeffrey Drazen, MD, who in the past expressed the opinion, “Academic researchers should be able to own substantial stock in a company or accept sizeable consultant fees and still accept research support.”

It is sad when the pursuit of money contaminates even the paragons of health care, and yet those involved seem to be totally insensitive to the fact that there is even an issue here.

What does this have to do with single payer? When our own public purchasers of health care products and services enter the marketplace on our behalf to negotiate the acquisition of our health care, they can refuse to pay the money lenders who personally provide no value to our health care. If research funds are needed we can provide them ourselves though our own National Institutes of Health. Such an investment would have the goal of determining efficacy and safety – benefitting patients – and not on how fast you can turn a buck.

Venture capitalists in the pharmaceutical industry

The Calculus of Cures

By Robert Kocher, M.D., and Bryan Roberts, Ph.D.
The New England Journal of Medicine, February 26, 2014

Bringing a drug from bench to bedside is a risky and expensive proposition. The development of a new drug is estimated to cost many hundreds of millions of dollars; as a result, decisions about funding a drug-development program are based as much on economics as on science and medicine. Decisions to invest and reinvest at all stages of development are driven by the imperative to generate an attractive return on the capital invested, whether by venture-capital and public investors or by pharmaceutical companies.

It is not mysterious why projects get funded. As venture-capital investors, we evaluate projects along four primary dimensions: development costs, selling costs, differentiation of the drug relative to current treatments, and incidence and prevalence of the targeted disease.

Fortunately, much can be done to bring more drugs and a more diverse set of drugs to market. The two economic dimensions — development costs and selling costs — can be most easily improved. The most expensive step in creating a new drug is conducting clinical trials. Conducting a trial costs $25,000 or more per patient studied, and phase 3 trial programs consume more than 40% of a sponsoring company’s expenditures. Unfortunately, every patient is not equally valuable when it comes to clinical trials, and many clinical development programs are economically inefficient in that they are excessively large relative to the amount of information they yield, especially in light of the information-technology breakthroughs that have lowered the cost of data acquisition and analysis over the past 20 years.

High-frequency, material information about clinical efficacy and safety comes from the first few hundred patients studied in a trial. Unfortunately, most clinical development programs go far past the point of diminishing returns for frequent safety events, but they do not go far enough to permit detection of rare events. Statistically, it is only in the long tail of patient data that reliable signals of rare adverse effects can emerge and comprehensive safety can be established. Safety is critical, but studying the long tail of adverse events is not feasible from either a time or a capital perspective until after a new drug enters the market, especially if the drug is for a chronic condition.

Redesigning trials to include fewer patients, providing conditional approval of drugs, and requiring postmarketing surveillance could have a profound effect, allowing smaller development programs to achieve greater success. We estimate that development costs for drugs could be reduced by as much as 90%, and the time required by 50%, if the threshold for initial approval were defined in terms of efficacy and fundamental safety. Cutting costs and time, while requiring high-quality and transparent patient registries for independent safety monitoring, would be a more informative and cost-effective approach. With the widespread adoption of electronic health records and the introduction of many low-cost data-analysis tools, it is now feasible to develop mandatory postmarketing surveillance programs that make thousand-patient trials obsolete.

This approach to reducing drug-development costs would have the greatest effect on drugs for chronic conditions such as cardiovascular disease and type 2 diabetes, since such drugs currently require the largest trials. Moreover, our ability to identify rare side effects and take action to protect patients would be substantially improved when many more patients are being followed, albeit in the absence of a control group. We believe this approach would have no adverse effect on the trend in the development of drugs for orphan diseases and cancers, since those drugs will continue to have low development and selling costs and substantial differentiation from existing treatments. Yet, this approach would make it attractive to pursue drug candidates for many more disease conditions and would lower the threshold for financing a drug’s development so that more drugs would be brought forward.

Another major factor is selling costs. It is far more cost-effective to sell a drug when it is either prescribed by specialty physicians or commonly used in hospitals, both of which effectively aggregate patients. Moreover, it is easier to predict the level of adoption by these customers on the basis of the drug’s clinical differentiation and pharmacoeconomics. Sales of drugs prescribed by primary care doctors depend on a mixture of expensive sales representatives and advertising and can cost hundreds of millions of dollars annually.

While scientists work hard to increase the rate of scientific discovery, the rest of us should do our part to improve the other variables that figure into the calculus of which cures are brought to market. Such improvement would be good for patients and would represent good economic policy, since drug prices could be lowered even as investors generated the returns necessary to finance more discoveries.

http://www.nejm.org/doi/full/10.1056/NEJMp1400868

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PNHP Data Update

September 29, 2000

The new editor of the New England Journal of Medicine, Jeffrey Drazen, M.D. was cited by the FDA last year for making “false and misleading” statements about the asthma drug, levalbuterol. Drazen received $7,000 from the drug’s maker, and has ties to another 20 drug firms (USA Today, 5/31/00). “Academic researchers should be able to own substantial stock in a company or accept sizeable consultant fees and still accept research support,” according to Drazen. (California Healthline, 5/26/00).

(Note: Though this was written in 2000, Jeffrey Drazen is still the editor of NEJM.)

https://pnhp.org/news/2000/september.php

One of the most serious defects of the U.S. health care system is that we not only allow but we encourage the participation of passive investors. For those who believe that the free market is what makes America so great, the opportunity to glom onto some of the $3 trillion that we spend each year on health care cannot pass the attention of the entrepreneurial mind. Venture capitalists in the pharmaceutical industry are a case in point.

The venture capitalists who authored this article in The New England Journal of Medicine have diagnosed a major problem with the U.S. pharmaceutical industry and are providing a solution – a solution for investors that is.

They have decided that clinical trials of new drugs are too expensive. They note that you can determine clinical efficacy from the first few hundred patients in the study and that adding many more patients goes far past the point of diminishing returns. As far as determining drug safety, we can use the computerization of health records to detect adverse events, taking advantage of the very large number of patients receiving the drug after it has been released for marketing. By reducing these research costs, and by moving products to the market earlier so they can begin providing returns, the venture capitalists then would have more funds to invest in even more new products. See, the market really works.

We have seen the tragedies of products rushed to the market, with the inadequacies of post-marketing surveillance, resulting in great harm to patients, even death, while the pharmaceutical industry pays massive fines that they pass off as simply a cost of business. When passive investors are involved, the investors must be taken care of first, certainly before the patients, and these guys writing this article want a greater piece of the action.

Why would one of the world’s most prestigious medical journals publish an article promoting the interests of venture capitalists in the pharmaceutical industry? The answer might be found in the views of the editor of NEJM, Jeffrey Drazen, MD, who in the past expressed the opinion, “Academic researchers should be able to own substantial stock in a company or accept sizeable consultant fees and still accept research support.”

It is sad when the pursuit of money contaminates even the paragons of health care, and yet those involved seem to be totally insensitive to the fact that there is even an issue here.

What does this have to do with single payer? When our own public purchasers of health care products and services enter the marketplace on our behalf to negotiate the acquisition of our health care, they can refuse to pay the money lenders who personally provide no value to our health care. If research funds are needed we can provide them ourselves though our own National Institutes of Health. Such an investment would have the goal of determining efficacy and safety – benefitting patients – and not on how fast you can turn a buck.