Unbiased Analysis of Today's Healthcare Issues

Quotation of the Day

Written By: Jason Shafrin - Sep• 05•17

Always tell the truth. It’s the easiest thing to remember

David Mamet

(more…)

The news you didn’t notice when reading about the $475,000 treamtent

Written By: Jason Shafrin - Sep• 04•17

David Augus and and Dana Goldman weigh in on Novartis’ decision to price their new chimeric antigen receptor T-cell (CAR-T) therapy known as Kymriah (tisagenlecleucel).  The treatment represents ground-breaking technology, but is priced at $475,000 per treatment.  But the authors note that there is something else novel about this technology:

There was another announcement from another government agency, the Centers for Medicare and Medicaid Services (CMS). But it also could have far-reaching impact on how we pay for—and ultimately treat—cancers of all kinds. CMS would cover Kymriah’s announced price of $475,000 for the treatment. That grabbed headlines, but in the long run it does not compare to the other part of the announcement from CMS. For the first time the agency agreed to a payment plan which is dependent on whether the drug actually produces a benefit to the patient. Novartis will get paid $475,000 only if patients respond to the drug by the end of the first month of therapy

One key point the authors make is that pharmaceutical firms in the past have been incentivized to treat chronic diseases since they get paid per dose.  However, if payment is tied to value, one-time use cures–such as Kymriah has the potential to be–could become an attractive investment option for researchers and patients may see more treatment cures in the coming years.

Should employers provide health insurance to their workers?

Written By: Jason Shafrin - Sep• 03•17

On this Labor Day, I want to address a fundamental question in the U.S. health care system: should employers provide health insurance to their workers?  I won’t take a stand on the issue but I will just list some pros and cons.  Wherever you stand on the issue, I recommend you carefully consider the arguments in favor of the other viewpoint, as there are valid points on both sides.

Employers should provide health insurance.

  • There is an equity argument that we want individuals to have health insurance
  • Employers are interested in getting people back to work so they are incentivized to make sure their workers have health care coverage that can get people back on the job.
  • For individuals who do not like government-run health insurance, pure individual-market health insurance schemes are problematic on equity grounds.  Sicker individuals have to pay higher insurance rates which often leads to their exit of the market.  Adverse selection death spirals can occur making individual market unaffordable.  The Affordable Care Act (ACA) “solves” this problem by prohibiting insurers to vary premiums by health status (community rating) except for some narrow ranges based on age and smoking status.  However, by failing to price insurance based on actuarial value, healthy individuals may leave the Obamacare market.  The ACA “solves” this problem through government subsidies, which can decrease individual out-of-pocket cost but impose a steep health care bill.
  • On the other hand, employer-provided health insurance is a natural pooling mechansim where insurance can be price at an actuarially fair value (for the group) and sick and healthy people can pool together.
  • Employer-provided health insurance has lower administrative cost than individual market because there is less effort needed to correctly price for an employer with 100 employees than for pricing each individual insurance plan separately.
  • The U.S. has a long history of employer-provided health insurance so there are some path-dependent reasons (e.g., easier to work with existing institutions) why employer-provided health insurance makes sense.
  • For workers, the tax deductibility of employer-provided health insurance is a bit benefit

Employers should not provide health insurance.

  • Employer provided health insurance is not equitable for those without employment.  A single payer system is more equitable.
  • If people get sick, they may lose their job and thus lose health insurance at exactly the time when they need it.
  • Large employers have the ability to set up human resource (HR) departments to research health plans and get a good deal as these fixed costs are spread out over more employees so the per employee cost is low.  For small and medium sized employers, picking a health insurance plan may be outside their core competency and the same (or similar) costs to set up these programs are spread over fewer workers.
  • Individual health insurance preferences are likely heterogeneous.  For instance, some people may prefer to spend less on health insurance and have more of their compensation in cash; others may prefer to have more of their compensation as health insurance.  Employer-based health insurance often limits employee choice of plan or may not allow workers who prefer less expensive insurance to fully recoup these cost savings in terms of additional salary.
  • The tax deductibility of employer health insurance imposes a large cost on the federal budget.  Further, the deductibility is regressive since richer individuals benefit more from this tax exemption.

Friday Links

Written By: Jason Shafrin - Aug• 31•17

Warren Buffet, Success, Correlation and Causation

Written By: Jason Shafrin - Aug• 30•17

Warren Buffet once stated:

 “The difference between successful people and very successful people is that very successful people say no to almost everything.”

I agree with with Buffet’s statement.  However, many self-help blogs have interpreted this as a causal statement. Gregg McKeown of Entrepreneur magazine comments on the Buffet quotation as follows:

As I wrote in a piece for Harvard Business Review, this means, “Not just haphazardly saying no, but purposefully, deliberately, and strategically eliminating the nonessentials. Not just once a year as part of a planning meeting, but constantly reducing, focusing and simplifying. Not just getting rid of the obvious time wasters, but being willing to cut out really terrific opportunities as well. Few appear to have the courage to live this principle, which may be why it differentiates successful people and organizations from the very successful ones.”

I agree that focus is important, but does the ability to say ‘no’ cause people to become successful?  Perhaps not.

Very successful people have a lot more opportunities to do different things.  Consider the case of the President of the U.S.  Whatever your political leanings, any U.S. President has innumerable opportunities to do different things.  They are asked to make more appearances, give more speeches, travel to more countries, receive more book offers, etc.  Senators are also very successful people but do not receive as many opportunities.  Did “saying no” get President Obama elected?  Did “saying no” get President Trump elected?  Both are unlikely the case.

Thus, I would say that the “saying no” phenomenon of very successful people is perhaps 5% causal–that very successful people are more focused on the end goal–and 95% just a correlation that very successful people have lots of opportunities.

What do drugs cost in the long run?

Written By: Jason Shafrin - Aug• 29•17

That is the question that Lakdawalla et al. (2017) attempt to answer in the latest edition of the American Journal of Managed Care (AJMC).  The long-run average cost (LAC) of a pharmaceutical includes not only initial branded drug price, but also subsequent prices increases and decreases, especially those that occur after a treatment’s patent has expired and generics enter the market.  Further, the authors measure the LAC net of any medical cost offsets.

To measure the LAC, the authors rely on data from the 1996-2013 Medicare Expenditure Panel Survey (MEPS).  They find that:

Accounting for patent expiration, the loss of exclusivity price and the launch price overstate the LAC by 39% and 11%, respectively, and the LAC net of medical cost offsets by 75% and 40%, respectively.

Overstating long-run prices could be problematic for patients if it results in reduced treatment coverage and decreased incentives for innovation.  The authors write:

Branded prices, generic prices, and the LAC all play important roles in economic decisions, which are made on the margin. Prices at a point in time matter to payers, who must decide if the benefit of treating 1 more patient outweighs the cost. The LAC and the LAC net, however, should matter to regulators, policy makers, and payers assessing whether a new drug can be marketed or reimbursed. In this context, overstating the eventual cost of a drug may lead to fewer drugs being made available, weaker incentives to innovate, and ultimately, fewer new drugs discovered

(more…)

What outcomes matter to patients with Rheumatoid Arthritis?

Written By: Jason Shafrin - Aug• 28•17

That is the question that the Outcome Measures in Rheumatology (OMERACT) Working Group attempted to answer. Specifically, the working group aimed to determine the core set of outcome domains for measuring the effectiveness of shared decision-making (SDM) interventions within clinical trials used to treat rheumatic diseases.  These diseases included osteoarthritis (OA), rheumatoid arthritis (RA), and psoriatic arthritis (PsA).

This is not the first effort in SDM.  For instance, for more general

The International Patient Decision Aid Standards (IPDAS) has identified a set of 8 outcome domains for evaluating the effectiveness of patient decision aids: (1) recognize the decision to be made, (2) know the options, (3) their features, (4) understand that values that affect the decision, (5) clarify values, (6) discuss values with health providers, (7) participate in decision making in preferred ways, and (8) make an informed value-based choice.

However, the authors wanted to tailor the general SDM approach to rheumatic diseases. The authors used an online Delphi Panel methodology as well as a follow-up in person workshop.  About half of Delphi panelists were patients, and just over a third were clinicians, with policymakers, members of industry, consumer groups, and caregivers making up the remainder. The draft set of domains included:

 

  1. Identifying the decision: The decision to be made is pointed out
  2. Understanding information: The patients are aware of the available options, benefits, and harms
  3. Clarifying patients’ values: The patients feel clear about which features of the options matter their decision the most to them
  4. Deliberating: The patients weigh the good and bad features of the options of options
  5. Making the decision: A decision is made or postponed
  6. Putting the decision into practice: The patients adhere to the chosen option
  7. Effect of decision: The patients are confident and satisfied with the informed value-based choice and process

The top-rated domains in the OMERACT breakout groups were: understanding information (2), clarifying patient values (3), and making the decision (5), with the least necessary domain being deliberating (4). In the plenary session, the top domains were: effect of decision (7), understanding information (2), clarifying patient values (3) with the leas necessary domain being deliberating (4).

There was some disagreement, however, with respect to the degree to which participants felt that each domain was necessary.  Forums with more researchers/clinicians and fewer patients felt that many of these domains were less necessary than forums where patients made up a large share of respondents.

The authors conclude with the following quotation:

“Patients must be involved in their care and treatment decisions not just to ensure patient-centered care, but also so that patients understand and take responsibility for these decisions. SDM is the wave of the future; we can’t run away from it, we have to tackle it together.”

(more…)

Healthcare Economist name a top 50 blog

Written By: Jason Shafrin - Aug• 28•17

Cables and Sensors, a patient monitoring website, named the Healthcare Economist as one of the Top 50 medical blogs.

What are the politics of people against vaccinations?

Written By: Jason Shafrin - Aug• 27•17

Are Democrats or Republicans more likely to argue against vaccination?  A recent article by Charles McCoy in The Conversation reveals that the answer is not so clean cut.

What I found is that the more political someone is, the more likely he or she is to believe that vaccines are unsafe. Those who are “very conservative” are one-and-a-half times more likely to believe this than moderates.

Yet, the same is true for those on the left: compared to moderates, those who are very liberal are also one-and-a-half times more likely to believe vaccines are unsafe. It seems that it does not matter what your politics are, the more partisan, the more likely you believe vaccines are harmful.

To stereotype, both left wing liberals into “natural” health care and right wing libertarians interested in freedom of choice both are more likely to oppose vaccination compared to individuals with more moderate political affiliations.

What’s All the Fuss About Precision Medicine?

Written By: Jason Shafrin - Aug• 25•17

That’s the title of my article released today in U.S. News and World Report.  Here is an excerpt.

A number of health care industry leaders are making big bets that the future of health care lies in precision medicine. This July, Dr. Priscilla Chan and Mark Zuckerberg donated $10 million to the University of California-San Francisco’s precision medicine lab. Back in 2016, President Obama launched the Precision Medicine Institute with a $215 million investment from the federal government. In addition, the All of Us program is a National Institute of Health-funded initiative to collect genetic and environmental information to create precision medicines.

All of this money flowing into precision medicine may leave you with only one question left to answer: What is precision medicine?

The rest of the article answers this question. Do read the whole thing.