Unbiased Analysis of Today's Healthcare Issues

Friday Links

Written By: Jason Shafrin - Jul• 30•15

ACC/AHA Statement on Measuring Treatment Value

Written By: Jason Shafrin - Jul• 29•15

The conventional premise governing performance measures and guideline recommendation…is that all healthcare professionals should act in the best interests of their patients without regard to costs.

However, as the cost of medical care has increased, specialty societies are increasing considering the cost of care when selecting treatments. For instance,

A recent survey reported that slightly more than half of the largest US physician societies explicitly consider costs in developing their guideline documents, although their approach remains vague.

If one considers the patient-physician relationship as a principal-agent relationship, does the physician need to consider cost when making treatment recommendations? Shouldn’t the physician have the patients best interest at heart?

The ACC/AHA statement on the value of treatments notes that “Protecting patients from financial ruin is fundamental to the precept of ‘do no harm.’”

If economic studies are used to measure treatment, what is the appropriate threshold? There is clearly not single correct answer. “The World Health Organization (WHO) has suggested a rough benchmark of 3 times the GDP per capita as an upper threshold for an acceptable level of cost-effectiveness in a given country.24

Economic analysis requires high quality data on the benefits and cost of treatment. Determining the quality of a study, however, is not easy. One of the earliest and most frequently cited criteria was
developed for the British Medical Journal. Another approach—the Quality of Health Economic Studies (QHES) instrument—examines the clarity of the publication, identifies the study’s perspectives, examines whether subgroup analyses were performed, identifies relevant time frame for the outcomes measured, describes validity and reliability of the study, and a number of other factors. In fact, the ACC/AHA guidelines recommend using QHES.

The ACC/AHA recommends evaluating evidence as follows:
“This system synthesizes the data to establish the benefit of diagnostic approaches and treatments compared with risk (COR, ranging from the highest [I] to the lowest [III]) and integrates the precision and, implicitly, the quality of the underlying evidence (LOE, from the best [A] to the poorest [C]). In comparing risks and benefits, the writing committees ultimately develop a qualitative determination as to whether the benefits outweigh the risks. In general, this assessment is based on the number and types of supportive studies and their statistical significance rather than the absolute magnitude of the benefit or the value provided (cost-effectiveness).” Using this approach, ACC/AHA would categorize treatments as high value (< $50,000/QALY gained), intermediate value ($50,000-$150,000/QALY gained), low value (>$150,000/QALY gained), Uncertain value (in the case where the evidence base is weak), or not assessed. This approach is derived from the WHO-CHOICE (Choosing Interventions that are Cost-Effective) initiative, which provides a framework for cost-effectiveness thresholds that can be applied globally to a wide range of health interventions.


Is Medicare no longer a budget buster?

Written By: Jason Shafrin - Jul• 28•15

Not entirely, but the 2015 Medicare Trustees report is certainly more optimistic than in the past. Brookings reports:

The Trustees have dramatically lowered their projections of long-run Medicare expenditure growth. In 2009, for example, the Trustees projected that Medicare spending would reach 11.2 percent of GDP by 2080—compared with just 6 percent in this year’s report. The change in the spending outlook is attributable to the effects of the ACA on provider reimbursements and a much slower rate of increase in actual Medicare expenditures since 2009. Excess cost growth in Medicare—the difference in the growth rates of per beneficiary spending and per capita GDP—is now expected to be quite low relative to historical averages.


So what’s the problem? The current projection is based on current law; however, law is likely to change, particularly laws that mandate reductions to provider payments. Specifically,

The Affordable Care Act included provisions that lowered the annual increases in provider reimbursements. Before the ACA, payments were to be updated each year by an amount equal to the growth of input costs (hospital wages, etc.); after the ACA, the payment update equals the growth of input costs less the rate of increase in economy-wide productivity.

These provisions are likely to be repealed. After accounting for this unrealistic decreases to payments to providers, “Medicare spending rises to 9.6% percent of GDP, about 50% higher than in the baseline scenario.”

Does your employer cover transgender benefits?

Written By: Jason Shafrin - Jul• 27•15

It may be more likely than you think. The Health Business Blog (via Business Insurance) notes that:

…the Office of Personnel Management recently required Federal Employee Benefit Plan providers to cover transition-related care…About half of large employers offer transgender-related surgical coverage compared with 5 percent in 2007, according to a National Business Group on Health survey.

Why would an employer cover these benefits? Altruism? Not entirely. David Williams writes:

  • An increasing belief that such coverage is medically necessary, and therefore in keeping with the overall philosophy of health insurance
  • A desire to increase competitive positioning in recruiting, by appearing progressive
  • A realization that the overall costs are likely to be small, typically less than 0.5% of total health care costs
  • Employer worry that failing to offer these such benefits could lead to discrimination claims

It could be the case that health insurance policies are reflecting changing perceptions of transgender individuals in the US.

Friday Links

Written By: Jason Shafrin - Jul• 24•15

Basket vs. Umbrella clinical trials

Written By: Jason Shafrin - Jul• 22•15

How do you determine if a drug is effective?  Typically, biostaticians rely on a randomized control trial where half the patients receive the treatment of interest and the remaining half receive either a placebo or the current standard of care depending on the trial design.

Recent advances in cancer, however, call for more sophisticated designs.  Some cancer treatments are only effective for patients with specific biomarkers; this treatment heterogeneity complicates the trial design.  Further, some new treatments–such as immuno-oncology therapies–may improve health for patients with multiple tumor types.

How do biostasticians deal with these issues?

Richard Simon of the National Cancer Institute discussed two specific trial types in a recent AMCP article.

  • Umbrella trials: Umbrella studies are designed to test the impact of different drugs on different mutations in a single cancer type…The trial design can help to facilitate patient screening and accrual, and is quite suitable for trials examining low-prevalence diseases.  The primary features of umbrella trials are: (i) the inclusion of multiple treatments and multiple biomarkers within the same protocol, (ii) a design that allows for randomized comparisons, (iii) a design that can have flexible biomarker cohorts, and (iv) a design that can add/drop biomarker subgroups.
  • Basket trials: Basket studies are designed to test the effect of a single drug on a single mutation in a variety of cancer types. They provide a unique way of merging the traditional clinical trial design with rapidly evolving genomic data that facilitate the molecular classification of tumors.  Basket trials can also screen multiple drugs across many cancer types. A basket design provides evidence for pairing a drug with a validated biomarker in a specific tumor.

International Reference Pricing

Written By: Jason Shafrin - Jul• 21•15

What is international reference pricing (IRP)? IRP is system whereby a country states that they will pay no more than the price paid by another country or a basket of countries. In theory, countries could also regulate drug prices by saying that they would not pay more than X% of country A’s price or X% of the reference basket of country A, B and C. How does this work in practice? A paper by Houy and Jelovac (2015) repots:

In 2010, all EU countries except Germany, Sweden, and the UK extensively use IRP [international reference pricing]. This policy leads to an interdependence of prices between countries. Many authors recognize that this interdependence gives pharmaceutical firms an incentive to launch new drugs in high-price countries first and to delay launch or even not to launch new drugs in low-price countries.

Who uses reference pricing and which countries’ prices are most important in determining a countries own price?

Slovakia had the maximum number of countries in the reference basket (n=26 ) and Luxembourg had the minimum number of RCs (n=1 ). Germany (n=13 ), Spain (n=13 ), France (n=11 ), and the UK (n=11) were the countries most frequently referenced.

The authors create a model pharmaceutical firms’ response to IRP and reach three conclusions:

First, there is no withdrawal of drugs in any country in any period. Second, whenever the drug is sold in a country, it is also sold in all countries with larger willingness to pay (WTP). Third, there is no strict incentive to delay the launch of a drug in any country.


Quotation of the Day

Written By: Jason Shafrin - Jul• 20•15

The human mind is generally far more eater to praise and dispraise than to describe and define.  It wants to make every distinction of value; hence those fatal critics who can never point out the differing quality of two poets without putting them in an order of preference as if they were candidates for a prize.

C.S. Lewis, The Four Loves.

Half a trillion dollars

Written By: Jason Shafrin - Jul• 19•15

Clearly, the care family members provide for sick relatives add significant value to the life of the infirm. Many non-economists may consider the cost of this care as “free” because family members typically are not paid for this services.  However, nothing could be further from the truth.  If family members were not caring for their elderly relatives, the cost to care for elderly patients would be increased nursing home admissions and additional home health visits.  Further, adults often must give up on their own careers to help out with their elderly parents.

Thus, it is not surprising that a recent AARP study found that the cost of caregiving is high.  What may be surprising is just how high it is. According to the Valuing the Invaluable: 2015 Update report:

In 2013, about 40 million family caregivers in the United States provided an estimated 37 billion hours of care to an adult with limitations in daily activities. The estimated economic value of their unpaid contributions was approximately $470 billion in 2013, up from an estimated $450 billion in 2009.

Adults who care for elderly parents often do not get the credit they deserve.  Thus study shows not only does caregiving provide valuable intangible benefits to the infirm, but it also generates significant monetary value as well.


Written By: Jason Shafrin - Jul• 16•15