David Williams of Health Business Blog hosts this week’s roundup of risky blogposts. It’s a great way to learn about the riskiest profession, problematic cancer care, and even risky transplant issues:
In a previous post in 2006, I wrote that the cost to bring a drug to market is $802 million. Although that is a huge number, it may be an underestimate.
Pharmafile reports that the cost to bring a brand drug to market is now over $1 billion.
the cost of bringing a brand from discovery to market has increased 18% over the four years from $1.1 billion in 2010, to $1.3 billion in 2013.
This type of figure – around $1 billion – is often quoted by the pharma industry and is supported by the ABPI (which in fact says it costs £1.15 billion – pounds not dollars) to do the necessary R&D, with The Office of Health Economics putting the cost per new medicine higher still, at £1.2 billion.
However, earlier this year Sir Andrew Witty, chief executive of GSK, memorably disputed this by saying that the $1 billion price tag is ‘one of the great myths of the industry’.
The article also states that return on investment for a number of large PhARMA firms is has declined from 10% in 2010 to 5% in 2013.
Typically, when the Healthcare Economist talks about death, it deals with sad topics: mortality rates, preventable deaths, etc. Today, I will discuss a happier death-related topic: the feared “Group of Death”.
The World Cup Groups were unveiled today and popular press is claiming that the U.S. team is placed in the Group of Death. There is no doubt that the U.S. draw is formidable: Germany, Portugal and Ghana. However, is the “Group of Death” label appropriate?
I did my own calculations to find out. I used a number of different measures of the quality of a World Cup group based on 3 rating measures: FIFA rankings, ESPN’s Soccer Power Index (SPI) Ranking, and each country’s SPI score. Using these metrics, I calculated group quality as follows:
As shown in this spreadsheet, according to the FIFA rankings, the U.S. almost certainly falls in the Group of Death. Group G (the U.S. group) tops the Group of Death along all metrics.
If we use ESPN’s SPI, however, Group G is not the most difficult: Group B or Group D is seen as the Group of Death. Group B has three of the top 10 teams in the SPI rankings: Spain, Chile and the Netherlands. Thus, Group B is the Group of Death based according almost all SPI score rankings except the averge ranking among the bottom 3. The reason is that Group B also has Australia, which is the 2nd lowest ranked team in the tournament.
Group D is another contender for the Group of Death. This group has Uruguay, England, Italy and Costa Rica. Only 1 of these countries is ranked in the top 10 in the world according to SPI (Uruguay #8), but the top 3 teams are all in the top 13 (England #10, Italy #13) and the worst team, Costa Rica (is ranked #25).
Yet even according to SPI, Group G is a difficult one. It ranks between the 2nd and 4th most difficult group (out of 8) on all SPI metrics. Further, consider the SPI rank of the worst team in each group. Ghana (#24) has the highest SPI and highest FIFA ranking of any group’s worst team. In other words, the U.S. has no easy wins on its schedule.
In any case, next summer should be a blast as the World Cup only comes around once every 4 years.
What is on the mind of the Wonk blog-o-sphere? You guessed it…
Loyal reader, your time is precious. So without further ado, let’s get to the best health wonk posts of the week!
The Institute of Medicine (IOM) makes a number of recommendations on how to improve cancer care in their 2013 report. I have listed them all here. For some of these recommendations, I have comments below.
The Centers for Medicare & Medicaid Services and other payers should design, implement, and evaluate innovative payment models that incentivize the cancer care team to discuss this information with their patients and document their discussions in each patient’s care plan.
Federal and state legislative and regulatory bodies should eliminate reimbursement and scope-of-practice barriers to team-based care.
Congress should amend patent law to provide patent extensions of up to six months for companies that conduct clinical trials of new cancer treatments in older adults or patients with multiple comorbidities.
Prioritize, fund, and direct the development of meaningful quality measures for cancer care with a focus on outcome measures and with performance targets for use in publicly reporting the performance of institutions, practices, and individual clinicians.
Academic institutions and professional societies should develop interprofessional education programs to train the workforce in team-based cancer care and promote coordination with primary/geriatrics and specialist care teams.
It’s that time of year. The time of year where Medicare threatens to cut physician salaries by double digits (in this case 24.4%). This is no idle threat. Under current law, CMS is mandated to cut physician salaries under the sustainable growth rate formula. Its the time of year that physician lobbyists (rightly) complain that such a cut to wages would greatly reduce the share of physicians that accept Medicare (and Medicaid) payments. This issue has come up every December (for instance, see my 2012/13, 2011/12 posts).
Yet, this year, Congress just may fix the SGR. The National Journal reports:
Senate Finance Committee Chairman Max Baucus says his panel will consider so-called “doc fix” legislation to repeal the rate formula used for physician reimbursement under Medicare when lawmakers return to Washington in December.
The Montana Democrat sent out a notice Thursday to fellow committee members announcing they will meet in “open executive session” on Dec. 12 “to consider an original bill to repeal what is officially known as the Medicare Sustainable Growth Rate (SGR) formula.”
The legislation that Baucus will offer will be distributed 48 hours before the start of that meeting.
However, there remain significant stumbling blocks to any major overhaul of the doc fix—including how to pay for it—even as bipartisan support for repeal has gained momentum.
Unless Congress acts by Jan. 1 in some manner, Medicare physician payments will be cut by about 24.4 percent.
Although almost no one believes that the SGR will come into play. Such a drastic cut to physician salaries would greatly reduce patient access to physicians as many physicians stopped accepting Medicare. In fact, organizations such as the Congressional Budget Office (CBO) even makes alternative long-term budget projections that assume that the SGR will never be enacted. The reason why SGR is not repealed is that it would make the official budget look much worse than it does on paper.
Will the SGR be repealed? With Congress’s recent history of failing to pass any legislation to avert a shutdown, my bet is that there will be a 1 year reprieve for the SGR and Congress will once again kick the can down the road.
Ontario implemented a physician pay-for-performance (P4P) scheme in 2002. This P4P framework was a jointly agreed upon by the Ontario government and the Ontario Medical Association. The Ontario P4P program is described in Hurley, DeCicca and Buckley (2013) in more detail below:
[Ontario's P4P program] targets performance bonuses on effective preventive services whose rates of provision were below optimal levels. The P4P incentives include two components: a contact payment and a cumulative preventive care bonus payment. The contact payment pays a PCR practice $6.86 for each eligible patient in the target population that it contacts to schedule an appointment for one of the defined preventive care services. The cumulative preventive care bonus payment rewards a PCR practice for achieving high rates of service coverage in its practice population. The P4P payment for each service is made on March 31 of each year based on the proportion of a physician’s eligible, enrolled patients who received the targeted service during the eligible period of time. Payment in all models is based on the performance of individual physicians (i.e., not the group as a whole).
The question is, did it work? The authors use a difference-in-difference framework that takes advantage of the fact traditional fee-for-service physicians were not included in the P4P program, only physicians who worked in ‘primary care reform’ (PCR) practices were effected. They find the following:
Our estimates indicate that Ontario’s P4P incentives led to only a modest improvement in performance with respect to Pap smears, mammograms, senior flu shots, and colorectal cancer screenings, and no improvement with respect to toddler immunizations…Overall, our results are consistent with existing research, which in general has found that targeted P4P incentives generate mixed, mostly modest physician responses…our findings send a cautionary message regarding the effectiveness of employing P4P to increase the quality of physician care.
A number of companies, such as 23andMe, allow individuals to sequence their own genes in order to attempt to determine if they have an elevated risk for certian diseases. This sector has largely been unregulated…until now. The Economist reports,
On November 22nd the FDA…sent a stern letter to 23andMe, a genetic-testing firm. Despite “more than 14 face-to-face and teleconference meetings, hundreds of e-mail exchanges and dozens of written communications”, the FDA complained, the company had not met its requests for data—nor even contacted it since May. The FDA ordered 23andMe to stop selling its testing service forthwith. The company has 15 days to respond to the regulator’s concerns. Fights over genetic testing, however, are sure to go on for a lot longer.
Alex Tabarrok of Marginal Revolution provides insightful commentary which I reproduce below.
Let me be clear, I am not offended by all regulation of genetic tests. Indeed, genetic tests are already regulated. To be precise, the labs that perform genetic tests are regulated by the Clinical Laboratory Improvement Amendments (CLIA) as overseen by the CMS (here is an excellent primer). The CLIA requires all labs, including the labs used by 23andMe, to be inspected for quality control, record keeping and the qualifications of their personnel. The goal is to ensure that the tests are accurate, reliable, timely, confidential and not risky to patients. I am not offended when the goal of regulation is to help consumers buy the product that they have contracted to buy.
What the FDA wants to do is categorically different. The FDA wants to regulate genetic tests as a high-risk medical device that cannot be sold until and unless the FDA permits it be sold.
What happens if you’re having Thanksgiving dinner and the topic turns to health care. Or worse, the status of Healthcare.gov and the Obamacare Health Insurance Exchanges. What do you do? How do you sound in the know, even if you’ve been slacking off any haven’t ready my blog for months? The Wall Street Journal provides a nice “cheat sheet” for the status of Healthcare.gov.
Q: Why didn’t HealthCare.gov work?