Health Business Blog

Gasping for breath

Medicare has decided it is spending too much on home oxygen service, which it probably is. But instead of using its mammoth negotiating power and ability to set the rules to rein in costs, it wants patients to negotiate the price of their oxygen service with providers once they’ve had the equipment for 13 months.

Just to be clear we are talking about people who are crippled by respiratory problems to the point where they can’t breathe well on their own.

Here’s my question — is Grandma allowed to keep breathing oxygen while negotiations are underway, or does she have to give up the tank until she reaches a deal?

“Republican delusions that health care can work like any other market apparently know no bounds,” says Robert Berenson, a senior fellow at the Urban Institute and a top Medicare administrator under President Clinton. “They now even extend their notions of an ownership society to people in their last months of life.”

See ‘Ownership’ Dose for Medicare in the Wall Street Journal for more.

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Even better

The wave of Tablet PCs for doctors seems to be coming. I’ve described the Motion Computing LS 800 and new Microsoft offering before. Now from Intel, courtesy of Digital Lifestyle Magazine:

A prototype of the tablet shown by Louis Burns, vice president and general management of Intel’Â’s digital health group, includes a slot with docking Bluetooth-enabled stethoscope, a touch screen, phone jacks, USB plugs, video conference capability, and other health related electronics. ““It’Â’s a device designed for doctors and nurses, with doctors and nurses. We have spent a lot of our time listening to and working with healthcare experts to come up with solutions.”” Louis Burns said.

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Why tobacco has been such a profitable business

How many industries could claim this kind of loyalty to their products? From MedPage Today:

For fully half of longtime smokers, neither an MI, nor heart failure, nor hypertension alone was enough of a wake-up call to make them quit, German researchers reported.

Even among smokers who had three or more circulatory disorders, 28% still could not kick the habit, according to a study published online by BMC Public Health by epidemiologist Ulrich John, Ph.D., and colleagues at the University of Greifswald here.

The authors points to denial and lack of knowledge about the relationship between smoking and poor health and suggest that counseling might help.

Seems to me that addiction is the more likely reason not to quit.

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Grand Rounds is up at A Chance to Cut is a Chance to Cure

Check out Grand Rounds, the best of the week’s medical blogging, at A Chance to Cut is a Chance to Cure.

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This could be a nice new device for docs

The Microsoft Origami Project seems to be a nice little tablet-style PC along the lines of the Motion Computing LS800 that I have described before. It’s the kind of hardware that makes electronic medical records, e-prescribing and decision support tools all the more practical for physicians by making it possible to carry a full-featured device in a lab coat pocket.

See here and here for more.

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Nipple confusion

The author of the letter An oddly timed aside in debate over formula in yesterday’s Boston Globe may know about breast feeding, but has an incomplete grasp of marketing. She writes about the recent decision to allow formula maker-sponsored goodie bags for new moms to return to Massachusetts hospitals. (I’ve posted on the topic here and here.)

Although it’s not completely clear from the letter, the author seems to be saying that moms can make the choice of whether to breast or bottle feed and are not unduly swayed to bottle feed by the formula makers. (Not sure I agree with that.) Instead she asks us to consider the motives of the formula makers as they compete against one another.

Imagine no one breast-fed. Formula manufacturers would still want to give out free gift packs, because when women take their brand home from the hospital, this appears as hospital endorsement, and they are likely to keep using that product instead of another. Are we so naive that we cannot spot this strategy? Does anyone really think the formula companies are doing this to be nice to people?

Boston Medical Center serves low-income families with pride, and we have not given out these free bags to our new families for almost a decade. Why? Because it is not the hospital’s job to help market formula. We market health.

Let’s examine this a bit:

• Yes, the formula makers like the implicit hospital endorsement. But a more powerful hook is that once baby is used to a specific brand, there is a strong tendency to continue on it. If baby seems to like whatever brand of formula that’s used in the hospital, why risk changing it upon discharge?
• The same sort of argument works for other products, like diapers and creams. If the parents get used to Pampers, why switch to Huggies?
• Boston Medical Center has taken one approach –which is to remove itself from the marketing game completely. Nothing wrong with that. But there are other ways to deal with the situation. If one formula manufacturer is actually better than another, the hospital could say so and provide bags only from that company. If the products from different manufacturers are essentially equivalent (which is my impression) then why not let the companies compete for the rights to sponsor the bags and extract a better deal for the hospital or its patients? This could be done by insisting on more free product, bigger coupons, additional goodies, or cash to the hospital. It’s the same concept as naming rights for stadiums, and the money could be big if this marketing tactic is really as effective as the letter writer seems to fear.

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Reinforcing bad habits

A major reason that health care costs are high and rising is that there are perverse incentives that cause higher spending. Health insurance is a tax free benefit, which has encouraged companies to spend money on comprehensive policies rather than paying the equivalent amount in wages. Increasing demand leads to increased costs. Just as employers have started to realize that this system is flawed and have started to change it, along comes the government with policies that add fuel to the fire.

Two current examples:

• Rather than eliminating the deductibility of health insurance (an idea that had been floated a while back), the Bush Administration has proposed extending the deductibility to health care costs not paid for by employers
• The so-called “Wal-Mart” laws in Maryland –and as proposed in California– mandate a minimum percentage of wages that big companies must spend on health care

I’d like to see an end to policies that mandate spending levels or that encourage increased spending by providing a tax shield.

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In my post yesterday, I described some of the steps that the FDA is taking to unclog the backlog for generic drug approvals. A new report published by Datamonitor – Is the biogenerics battle about to heat up? - talks about biogenerics as the next battleground.

“Espicom Business Intelligence reports that biological drugs account for 10% to 15% of the world pharmaceutical market, about $30 billion in the US alone. Datamonitor’s analysis concludes that global sales of biologics by top pharma and biotech companies reached $56.2 billion in 2004, up 18.3% from 2003. And the biologicals sector is outperforming the pharma industry as a whole, Espicom says. But the development of the biogeneric sector faces significant obstacles, the group predicts. While generic versions of off-patent chemical-based products have had great success, biogenerics, Espicom says, are expensive to develop and the nature of the current regulatory system precludes approval in most cases, particularly in the US, where the FDA has yet to issue detailed guidance on biogenerics.”

There is already great opposition from the branded pharma community, which claims a biogeneric product (a protein) cannot be considered an bio-equivalent without a full clinical trial. In addition, branded pharma companies are likely to deploy many other defensive maneuvers, such as litigation and lifecycle management strategies.

This will be an important area to watch over the next few years.

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Last week, the FDA’s deputy commissioner for medical and scientific affairs, Scott Gottlieb announced that the FDA would begin a new program to unclog the generic drug approval backlog. I hope it unclogs soon enough. According to IMS Health and SG Cowen estimates, “there are 72 major drugs, each with 2004 US sales of $100M or greater, that will lose patent or exclusivity protection through 2009. These drugs represent combined 2004 US sales of approximately $61B, which amounts to 27% of the total US retail pharmaceutical market.”

The part of the program which received the greatest attention last week was the user fee program. The user fee program which is modelled after the Prescription Drug User Fee Act (PDUFA) which hit the branded pharma world in 1992.

In the recent Washington Post article FDA to Explain Need to Charge Fees for New Generic Drugs, you can read about the complaints from the generics industry association president, Kathleen D. Jaeger:

“Our problem with user fees is that they currently would not guarantee that generic drugs would be reviewed and approved any faster. There are many other legal and regulatory obstacles — ways for the branded industry to keep our competition off the market — and they would have to be addressed before the industry could feel comfortable with any user-fee program.”

This is a valid concern, and according to the Washington Post, “there will be a number of agency initiatives to speed generic reviews. One is a formal lifting of a ban on direct telephone conversations between FDA reviewers and generic drug makers. Another involves grouping bioequivalence review applications for the same or similar drugs.”

I was interested in learning how PDUFA was received by the branded pharma manufacturers. According to the Pharmaceutical Research and Manufacturers Association (PhRMA), they cite:

“PDUFA is a shining example of public policy that has produced positive and tangible results. PDUFA has provided FDA with needed revenue to hire additional reviewers and upgrade information technology, thus enabling the agency to conduct more timely reviews for human drug and biological products without compromising review quality and consumer safety. PDUFA has provided FDA with over 1,000 new drug reviewers and reduced drug review times from 30 months to less than 18 months. PDUFA has largely eliminated the drug lag that existed between the U.S. and the rest of the world. Today, roughly half of all new drugs are approved first in the U.S., and less than 30 percent are marketed in Europe for over a year prior to U.S. approval.”

The results of PDUFA are clearly impressive and tangible. I understand that there are other issues that need to be addressed for speedier generic drug approval, but I hope that this will move things in the right direction.

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British Medical Association takes a cue from pub louts

When I was in my early 20s I spent some time in England. At Oxford (or was it Cambridge?) I remember being in a pub where a big wall of severed neckties was displayed. Apparently it was considered an affront to the pub spirit to wear a tie.

Now the same rules are being recommended for British hospitals. According to the USA Today the British Medical Association says, “Doctors should stop wearing ties and traditional white coats to work because they might be responsible for spreading deadly hospital superbugs… Ties performed no beneficial function in treating patients and, as they are rarely washed, are a potential bug haven.”

The only problem with this proposal is that patients are reassured by the white coat and tie, which also conveys status.

Disposable (or washable) neckwear anyone? Could be an interesting little business.

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