Health Business Blog

Horizon Blue Cross Blue Shield of New Jersey is the latest health plan to provide support to physicians who shift to electronic prescribing, according to the New Jersey Star-Ledger. Doctors have been slow to embrace e-prescribing because it costs them money and time while most of the benefits accrue to health plans, pharmacies, office staff and patients.

However, health plans are realizing that they can generate a high return on investment by providing financial support for e-prescribing. Plans like e-prescribing because it improves formulary compliance and use of generics by presenting information at the point of care. It’s also good for patients, because it reduces errors from sloppy handwriting and allows checking for drug-drug interaction and allergies. And it helps cut down on phone calls and paperwork for prescription renewals.

E-prescribing is also a good first step to prepare doctors for electronic medical records. And when e-prescribing, electronic medical records and claims systems are fully integrated, physicians will be able to rely on decision support systems to analyze all the information about a patient’s medical record and insurance coverage to suggest the most efficacious and cost effective treatments. I recently saw a very impressive demonstration of such a system from SafeMed, which is being piloted by Blue Cross Blue Shield of Massachusetts at Beth Israel Deaconess Hospital in Boston.

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The pharmaceutical industry doesn’t understand why it’s unpopular with the public. In my opinion, a big part of the problem is that the industry’s lofty rhetoric is seen as self-serving. For example, the industry touts the importance of patents on its drugs, but is seeking to preserve an exemption that has allowed drug companies to use analytical companies’ patents in drug discovery without paying royalties.

Here’s what the Pharmaceutical Research and Manufacturer’s of America (PhRMA) says on its website about the importance of patents:

Pharmaceutical companies rely on government-granted patents to protect their huge investments in researching and developing new drugs… Without patents to
protect all the inventions necessary to develop a drug for a limited time, others could simply copy the drugs immediately, offering their versions at a reduced price since they did not incur the high costs to develop the drug. This would seriously impact the pharmaceutical companies’ ability to recoup their costs and reinvest in other research projects.

But the drug industry is fighting hard to preserve an exemption that has allowed it to use analytical companies’ patents free of charge in research that is aimed at gaining FDA approval for a drug. When someone else owns the patents, all of a sudden the drug companies find that patents impede progress!

From today’s Wall Street Journal:

…if the Supreme Court upholds [the] view [that drug companies are infringing the analytical companies' patents], “drug innovators would have to sit on their hands, awaiting patent expiration before starting to conduct the battery of experiments necessary to qualify a path-breaking new drug for clinical trials including human subjects.” Potential treatments “for innumerable diseases and conditions will be denied to patients for a decade or more after all patents expire” if the Supreme Court upholds the earlier decision [that drug companies must pay royalties to the patent holders].

If patents are necessary for pharma companies to “recoup their costs and reinvest in other research projects,” why doesn’t the same hold for analytical tool companies?

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Blue Cross Blue Shield of Minnesota will now let members fill 90-day prescriptions in retail pharmacies rather than forcing them to use mail order, according to the New York Times (In Switch, Insurer Lets Stores Fill 90-Day Prescriptions). Patients prefer retail because of the convenience and access to pharmacists, but mail order is more cost effective. Retailers are being squeezed on price by Blue Cross, but are willing to make low margins in order to increase customer traffic.

Pharmaceutical Benefit Managers (PBMs) with mail order operations, such as Medco and Caremark, make a lot of money on mail order. One reason is that the mail order process gives the PBMs a greater opportunity to shift patients to drugs that provide higher rebates for the PBMs.

Interestingly, one of the reasons commercial payers are starting to allow 90 day prescriptions at retail is that Medicare beneficiaries will soon have the same privilege under the Medicare drug benefit. It’s just one more example of Medicare setting the pace for the industry.

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Today’s Boston Globe reports that “concierge practices” are not succeeding. The concept refers to primary care physicians who cut their panels from about 2000-2500 patients down to 300-600 patients, and charge each patient an extra $1500-4000/year in exchange for better access, longer appointments, and more personalized care.

It’s interesting that concierge medicine hasn’t caught on. Why hasn’t it?

• Many patients get good service from their existing doctors. When the first concierge practices were introduced a few years back, my primary care doctor wrote a letter to the Boston Globe suggesting that the answer was for physicians to work harder to provide excellent care to a regular sized panel of patients for regular reimbursement. (I’ve always gotten good service from him –including same-day responses to emails.) I’d rather have him as my doctor than pay extra to someone who is more concerned about his own lifestyle.
• Primary care isn’t the bottleneck. A greater problem is access to specialists
• It’s expensive

I never liked the idea of cutting a physician’s capacity by 75 percent to address quality of care. That’s not how quality is addressed in other industries, and it’s a bad idea for healthcare too. Just think what would happen if every physician, including primary care docs, oncologists, and neurosurgeons reduced their patient loads by 75 percent.

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A new NIH study, published in today’s New England Journal of Medicine suggests that patients with mild asthma don’t need to take inhaled steroids daily. They can do just as well by taking their medications only when they have flare-ups, and avoid possible complications from chronic use.

The Wall Street Journal (Rethinking Asthma Treatment) cites study co-leader Dr. Homer Boushey’s estimate that shifting from daily to intermittent use could reduce drug costs by $2 billion. But later in the article, a spokesman for inhaled steroid maker AstraZeneca says he doesn’t “anticipate any impact on our business or change in our strategy as a result of this study.”

There is a parallel to the COX-2 situation here. Vioxx, Celebrex, and Bextra –all of which are very useful drugs for some people– were over-promoted. Some patients who didn’t need the drugs ended up taking them and suffering disease or death as a result. Risks and benefits weren’t properly balanced by industry, and the FDA eventually stepped in with a heavy hand. (See my previous post on the Bextra withdrawal.) A similar situation may be brewing here. It’s likely that risks of daily use outweigh benefits for mild asthmatics. If so AstraZeneca and the other major steroid maker, GlaxoSmithKline should tread carefully in continuing to promote daily use for such patients.

The study also shows the usefulness of NIH funded research. It would be unlikely for a drug company to sponsor a study to challenge a daily dosing guideline with intermittent dosing.

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A study in this week’s New England Journal of Medicine (The Effect of Cardiac Resynchronization on Morbidity and Mortality in Heart Failure) demonstrates that bi-ventricular pacemakers for cardiac resynchronization therapy are effective in reducing death rates in heart failure patients. As the Wall Street Journal reports today (A More Affordable Cardiac Device), the effect was essentially the same as a combination bi-ventricular pacer and defibrillator.

The combination device costs about $30,000, while the pacer alone is about $12-14,000. The value of the defibrillator is that it can bring the patient back to life from a sudden, abnormal rhythm. The devices are made by Medtronic, Guidant, and St. Jude Medical.

What’s interesting to me is the different effects the study results are likely to have in the US compared to Europe:

• European health agencies are likely to refuse to pay the extra cost for the combination device –arguing that the money is better spent elsewhere
• In the US, doctors are likely to keep implanting the combination devices –arguing that some patients are saved by defibrillators. Also, there’s no global health care budget so there’s no real tradeoff being made

The difference in philosophy is a key reason why US health care spending is higher than in Europe. Here, we pay for unproven therapies if they seem plausible. In Europe, they don’t.

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For the past four years, Medicare has proposed cuts in the fee schedule for physicians. And for the past three years, the AMA has prevailed upon Congress to turn those cuts into 1.5%increases. However, this time the proposed 4.3% cut may stick. The last time it happened this way was 2002, when reimbursement rates were cut by 5.4%.

Why the tough news for doctors now?

• Utilization has been increasing, so total payments to doctors (reimbursement rate x volume) are rising much faster than the fee schedule
• The overall budget is under pressure (think Iraq and tax cuts)
• Reversing the decrease will cause pain elsewhere: by making Medicaid cuts deeper, or making the premium increase for Medicare recipients even higher
• As I’ve written before, the Medicare Drug Benefit is going to start squeezing out other benefits over time –although there won’t be much affect next year

The one year cut isn’t a big deal. The real question is whether in the coming years we’ll see fees brought back to the baseline as happened after the last cut, or whether it’s the start of a downward ratchet.

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Nevada legislators are pushing forward a bill to require hospital to treat patients within 30 minutes of their arrival at the emergency room by ambulance. The bill wouldn’t impose any penalties, but supporters say it would shine a spotlight on wait times because none of the hospitals would want to perform poorly.

I’ve posted on this topic before, but usually about hospitals taking the initiative. This bill seems well intentioned, and maybe it will work. It may produce some unintended side effects, however.

• By only covering patients arriving by ambulance, it may encourage abuse of the EMS system by patients who could get to the ER under their own power
• It could cause busy ERs to divert patients to other hospitals, which could increase the total wait time

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I’ve been reading a good book about the Framingham Heart Study (A Change of Heart, How the People of Framingham, Massachusetts Helped Unravel the Mysteries of Cardiovascular Disease) and yesterday I went to a talk by its author, Daniel Levy, the current director of the study.

I’ve learned some interesting things:

• The study, which began in 1948 and continues to this day, is the first epidemiological study to focus on chronic disease. In the past, such studies were used only to locate sources of outbreaks such as cholera, the plague, and TB
• The term “risk factor” was coined by the original directors of the study in 1961. The study has been responsible for identifying a number of risk factors for heart disease that we take for granted now, including hypertension, high cholesterol, and obesity
• The study, which enrolled over 5000 people in the original recruiting cycle, recruited an equal number of the original participants’ children, and then grandchildren. It’s the only study in the world that has data on three generations of people at the same points in their lives (e.g., blood pressure for three generations at age 40)
• The study enrolled an equal number of men and women from the start, although the original motivation was to understand why women didn’t seem to get heart disease. (It turns out they do get it, just later in life)

I recommend the book.

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A close friend of mine has rheumatoid arthritis. Under the supervision of her rheumatologist she’s tried all the prescription and OTC options and found that Pfizer’s Bextra –and not any other COX-2 inhibitor or other medication– worked well for her. I know someone else with a similar story about Vioxx.

Yesterday the FDA asked Pfizer to withdraw Bextra from the market. A number of cardiovascular, gastro-intestinal, and dermatological adverse events –some fatal, along with Bextra’s failure to prove its superiority to other treatments, doomed the drug. In an unusual move, the FDA overruled its Advisory Panel, which had recommended that the drug be allowed to stay on the market. The only hope the FDA left for patients who feel they need Bextra was to state that a proposal for a compassionate use program would be received favorably, if Pfizer wants to propose one.

Something’s gone terribly wrong here. The pharmaceutical companies made a big mistake by promoting COX-2 inhibitors to the widest possible customer base. As a result it looks like a number of people who should have been treated with the occasional Tylenol or nothing at all ended up sick or dead. And after the FDA was caught asleep at the switch, it may have overreacted to the latest data. As I wrote last month, J&J is taking the lead in balancing risks and benefits in its direct to consumer advertising –this is in the industry’s own best interest.

I read Marcia Angell’s book, The Truth About the Drug Companies when it came out, and there is a lot of truth in there. But I disagree with one of her main arguments –that me-too drugs (similar drugs in the same class) are bad and should not be allowed. Celebrex, Vioxx, Bextra, and the rest may be quite similar, but for whatever reason each seems to work better in some patients than others. There are similar stories in other drug classes, notably in drugs for depression. It doesn’t matter to me whether the motives of the drug companies are pure; I’d rather have more choice than less.

In 20 years or so, when pharmacogenomics and personalized medicine are the norm, we won’t have to go through trial and error treatment with many different drugs. But for now it’s the best we can do.

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