Health Business Blog

Todd Seavey from the American Council on Science and Health has himself worked up into a lather about Thailand’s willingness to break drug company patents to cut its spending on AIDS drugs: (Drug Patent Violations, Knock-Offs Harm Us All)

Contrary to the assertions of the Thai government and Doctors Without Borders.. violating drug companies’ patents and making knock-offs of their drugs is not in the long-term best interest of patients. Just as letting people shoplift today can drive stores out of business tomorrow — and just as price controls make customers happy for a day but produce long-term shortages — so too do patent violations gut the incentive to invest millions in researching the even better drugs of tomorrow…Economically and scientifically ignorant moves like this could shrivel or destroy the pharmaceutical industry, and that will not make the Thais or anyone else healthier in the future.

(Actually, the drug companies have a lot more to fear from today’s Supreme Court decision that will make it harder for them to patent obvious inventions for extended release formulations.)

But let’s examine Seavey’s arguments for a minute:

• Is breaking a patent like shoplifting? Will it “drive stores out of business”?
• Will moves like Thailand’s “shrivel or destroy the pharmaceutical industry”?

Shoplifting hurts stores because they get zero revenue for goods they paid for. It raises their cost of doing business by forcing them to pay for security measures and to raise prices to make up for their losses. I’m not sure what the “stores” are in Seavey’s analogy. In general, drug wholesalers and pharmacies are pleased to stock and sell generics, which tend to be as or more profitable than branded products. (Drug stores don’t tend to allow shoplifting of generic or brand drugs.)
Thailand isn’t going to be stealing pills from Abbott, it’s just not going to place any orders.

Thailand’s moves aren’t going to affect whether companies continue to develop new drugs and certainly won’t destroy the industry. That would only happen if the US, Europe or Japan eliminated patents. Thailand doesn’t factor into the go/no-go decision for pharmaceutical development. Sure, Thailand is freeloading –but look at the benefits they’re already deriving in the form of lower prices from the branded players.

The best hope the drug makers have to keep Thailand and other developing companies from breaking their patents is to find other pressure points besides the unpersuasive (not to mention untrue) argument that they are destroying incentives for drug development. That’s why the pharmaceutical industry pays such close attention to trade legislation.

There’s a self-correcting mechanism that makes Thailand and its ilk less of a threat to the pharmaceutical industry than it may seem. Once a country starts producing substantial intellectual property of its own it begins to be more respectful of patents. That transition is highly correlated with an increase in national wealth that makes a country able to pay for high-priced drugs in the first place.

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An article in today’s Boston Globe announces that new Joslin Diabetes Center CEO Ranch Kimball has canceled plans to build a $225 million expansion and is instead selling the parcel of land where it was planning to build.

Kimball declined to discuss what he saw as the project’s flaws or why Joslin had not yet started construction in four years since winning approval. He said he scrapped the plan “to get all of us a clean start.”

The article then summarizes Kimball’s resume without providing any insight into the reasons behind the decision. So here’s a little hint: Joslin financial position isn’t strong enough to support the project. The balance sheet isn’t particularly robust, and diabetes treatment isn’t well enough reimbursed to allow Joslin to generate a positive margin on patient care.

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I’m planning to begin offering podcasts on this blog. This is a test post to see if i can do it.

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Podcast test Play Now | Play in Popup | Download

..if he ever did.

From A Healthy Blog:

Romney is distancing himself from the MA health reform law that he earlier championed as a once in a generation achievement.

Of course, this makes sense. Turns out the MA law — including the individual mandate — is far more popular with Democrats and Independents than with Republicans. It’s turning out to be a harder sell in conservative circles than Romney imagined — individual responsibility is not a big enough calling card to surpass the other parts that make Republicans cringe.

Blogger John McDonough expects Romney to start taking credit for the law again if (a big if) he gets the nomination.

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Another radiation dosage reduction article from AuntMinnie:

In one of the first head-to-head comparisons of radiation dose between dual- and single-source CT, a multi-institutional research team has concluded that for a given noise level, images can be obtained at comparable or lower doses using dual-source CT versus single-source 64-slice CT.

If you’re a radiologist, please read on.

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From a little sign attached to my phone at the Marriott Kensington in London:

Marriott Hotels have undertaken a fundamental reassessment of telephone charges. In response to feedback from our guests, we have made our charging easy to understand and now charges [sic] on a per minute basis. Below are our rates to key destinations…

• UK Local 99 p/min
• UK National 99 p/min
• UK Mobile 299 p/min
• Europe (EEC) 299 p/min
• USA 299 p/min

That’s right, folks. Just about $6 per minute at current exchange rates for a call to the US. Meanwhile, the market rate is about 1 p ($0.02) per minute, so Marriott is charging about 300 times the going rate!

Even a jaded traveler like me is a little shocked.

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I’ve mentioned a few times on this blog that I’m concerned about the levels of radiation patients are being exposed to as a result of medical imaging, especially CT. Radiologists and referring physicians haven’t taken the issue too seriously because:

• The scans are useful and, of course, well reimbursed
• They weren’t aware of the issue
• There’s generally no easy way to track how much radiation patients have been exposed to

I’ve reported on anecdotal evidence of radiation exposure in the past, and ways to reduce dosages by adjusting scanners. Now a study has reported overall information on exposure. The numbers are high: per capita exposure is up 6x since 1980, and it’s disproportionately due to CT.

Consciousness raising among physicians is a good first step, but patients need to keep track of their own exposure and work in conjunction with their physicians to balance risks and benefits. One thing that’s really unacceptable is having a scan repeated because a previous one is lost or inaccessible.
I’ve always thought one good use of a personal health record is to keep track of lifetime radiation exposure, even if the numbers are just estimates. (The real figures would be even better.) I haven’t seen this functionality yet, though maybe it exists somewhere.

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Many people –not just proponents of consumer directed health care– liken the shift toward employee responsibility for health care costs to the shift from defined benefit to defined contribution retirement plans. I heard several times this week at the World Health Care Congress that if they’re given the tools to do so, consumers will take responsibility for their health care as they’ve taken responsibility for their retirement savings. We were reminded of how companies like Fidelity and Vanguard have prospered by offering compelling products, information and customer service.

But how well have employees actually done on the retirement front? Not too well, according to today’s Wall Street Journal (Employers Grab Reins of Workers’ 401(k)s). What’s happening?

…20-30% of eligible Americans don’t participate in their company’s 401(k) plan. Those that do often jeopardize their retirement security, such as stashing all their savings in a low-return money-market fund.

They also tend to invest too little (often missing out on their employer’s match), invest heavily in the stock of their own company (remember Enron?), and do other foolish things. So what are employers doing about it?

• Automatic enrollment, even making people opt out again and again if they insist on not participating
• Setting the contribution amounts and increasing them over time
• Picking employees’ investments or narrowing the number of available choices

Who knows, maybe someone will suggest companies look at how they administer health insurance as a model for retirement benefits!

In my view, 401(k)s are a lot simpler for employees to understand than health care. In a 401(k) you can make one or two decisions and then be on auto-pilot. For example, just contributing the maximum amount and picking a target-date retirement fund is about all that’s really needed. Results can be easily and objectively measured over time and compared with benchmarks. We’ll never be able to do that in health care.

I don’t totally discount the 401(K) analogy but when we it we should at least acknowledge that the 401(k) experience has been far from perfect and that health care is going to be a harder nut to crack.

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The latest Cavalcade of Risk, a blog carnival devoted to all things risky, is up at The Digerati Life.

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Made it home to Boston from DC last night after an enjoyable and informative World Health Care Congress and am off to London this morning. As I went through security a TSA guy asked me –just out of curiosity– “What do you do that you travel so much?”

I told him I was a health care business consultant. He told his colleague and me that health care costs are being driven up by all the spending on IT. He then told me he used to work for WebMD and shared the following:

Here’s a tip. If your clients are thinking of purchasing software make sure they check with other people who are already using it to see if it’s any good. And make sure they find out about the support.

Will do.

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