Category: Health Care Finance

Wednesday @ 8pm – Thomas Pogge: Effective Altruism or Mobilization for Institutional Reform?

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Harvard High-Impact Philanthropy presents

Effective Altruism or Mobilization for Institutional Reform?

a lecture by Thomas Pogge

Director of the Global Justice Program and Leitner Professor of Philosophy and International Affairs, Yale University

Wednesday, October 9, 8 PM Sever 214

Professor Pogge will discuss whether some institutional reform efforts may be as effective or more effective than “effective altruism” and also whether effectiveness is the only standard by which such alternative ways of protecting people are to be compared.

Thomas Pogge is the Director of the Global Justice Program and Leitner Professor of Philosophy and International Affairs at Yale University. Additionally, he is the Research Director of the Centre for the Study of the Mind in Nature at the University of Oslo; a Professorial Research Fellow at the Centre for Applied Philosophy and Public Ethics at Charles Sturt University; and Professor of Political Philosophy at the University of Central Lancashire’s Centre for Professional Ethics. He is also an editor for social and political philosophy for the Stanford Encyclopedia of Philosophy and a member of the Norwegian Academy of Science and Letters.

Planning on coming? RSVP here. 

Economics, Morality, and End of Life Care

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By Nathaniel Counts

Over a quarter of Medicare spending goes toward a patient’s last six months of life.  This monopolizes limited resources, both in the hospital and in the federal budget.  Much of the blame for this overspending is placed on institutional incentives or medical training for promoting aggressive end of life care, but some would also place the blame on patients or their families, arguing that this behavior is a flaw in our culture.  The argument goes that if people would learn to be less afraid of death, then they would forego this costly life extending care and die peacefully, while allowing these resources to be available for use elsewhere with greater utility.  In this argument, there is potentially a worrying conflation of moral and economic reasoning, which would be problematic if applied in other contexts.

It would be one thing to say that, given a limited pool of resources, a cost-benefit analysis indicates that end of life care is inefficient and quality-adjusted life years across the system would best be maximized if the money was spent elsewhere, and those in need of end of life care and their families will need to adjust their expectations.  But integral to the argument in the first paragraph is that this misallocated spending is the result of a moral failing, perhaps not of the individual but of the society that imbued the person with the preference for aggressive treatment, and that this failing is worth changing, not only because it will save money and make individuals more comfortable with the fact that there are no longer the resources to support end of life care, but because it will provide some moral benefit to those whose values are changed.

My curiosity is how the economic argument (that it would be a better use of resources to spend money elsewhere) informs the moral argument (that it would be better if people accepted their death).  This is peculiar to me because this type of reasoning does not show up consistently throughout health rationing: if a country decides to spend limited resources on HIV prophylactic drugs rather than HIV treatment drugs, no one would argue that it was in any way unreasonable for the HIV positive individuals to want treatment and that they should be more at peace with a terminal illness.

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The Spillover Effect of Medicare FFS on MA Negotiations

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By Jeremy Kreisberg

The Congressional Budget Office (CBO) recently released an assessment of two illustrative versions of premium support for Medicare.  The report is interesting for many reasons, but I want to focus on one issue that Austin Frakt at The Incidental Economist raised.

Among the assumptions in the report, CBO “estimate[d] that in most counties the percentage of beneficiaries enrolled in the [Medicare Fee-For-Service (FFS)] program would decline once either premium support option took effect. . . . [T]he reduced market share of the FFS program would tend to boost the rates that private insurers paid to health care providers and thereby lead them to raise their bids” (pg. 39).

In a very thoughtful post, Professor Frakt questioned this assumption:

I read the details in the report that follow, but they didn’t help me with my fundamental objection. There’s a lot of verbiage about the (non-Medicare Advantage (MA)) commercial market paying higher prices than MA or FFS. The idea seems to be that Medicare private plans would tend to resemble the commercial market, if not for FFS. Hence, prices would go up if FFS became less of a threat, as it would under premium support.

This may be true, but not enough was said about why. The commercial market and the Medicare one serve different consumers, are challenged by different competitors, and are constrained by different regulations. They are different markets. Why should prices in one have any relation to those in the other?

I agree with Professor Frakt that there is no easy answer here, but I’m a bit more confident that CBO has a sound theoretical justification for its assumption.  After the jump, I’ll explain what I perceive as CBO’s theoretical justification, and I’ll note one interesting application of CBO’s reasoning to another controversial policy proposal.

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HBR/NEJM online forum on health care innovation

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By Nicholson Price

For those of you who haven’t seen it yet, there’s a great ongoing online forum over at the joint Harvard Business Review and New England Journal of Medicine Insight Center on Leading Health Care Innovation.  It’s online at HBR here, and will feature an ongoing series of posts about innovation in high-value health care through November 15.  Short articles from scholars in various fields will focus on three main areas: Big Ideas (foundational principles of high-value health care); Managing Innovations (organization and delivery); and From the Front Lines (stories of specific case solutions from practitioners).

They’re looking to host a lively forum, so comments seem both quite welcome and unusually thoughtful so far.

 

National Health Law Transactional Competition

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By Christopher Robertson

Our friends at Loyola University Chicago’s health law program just announced the Fourth Annual L. Edward Bryant, Jr. National Health Law Transactional Competition.   “Three-person teams of J.D. students will prepare a legal memorandum that summarizes their legal and business advice for a hypothetical health care client. These students will then appear in a boardroom environment before distinguished attorneys serving as the client’s ‘Executive Management Team’ to present their analysis of the client’s position and recommendations on how the client should proceed.”  More information is available on their website.

Coupling Genetic Counseling to Test Coverage

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By Michael Young

As debates surrounding genetic patent rights begin to settle, new questions and disputes have started to emerge around insurance coverage for genetic testing.  For the first time, a U.S. health insurance provider (Cigna) has decided to require evaluation by an American Board of Medical Genetics or American Board of Genetic Counseling certified counselor before covering the costs of genetic testing, including genetic tests for susceptibility to breast and ovarian cancer (e.g., BRCA1 and BRCA2).  Cigna specifies in its new coverage policy statement, which goes into effect on September 15, 2013, that coverage for such testing will require recommendation by a certified genetic counselor based on pre-test individual evaluation, pedigree analysis, and intent to engage in post-test counseling.

By mandating genetic counseling prior to testing, this requirement aims to reduce unnecessary tests and to increase the efficiency and efficacy of health risk management and service delivery. Earlier this week, however, the American Society of Clinical Oncology (ASCO) took aim at Cigna’s policy, claiming that it can “negatively impact the care of cancer patients by serving as a barrier to the appropriate use of genetic testing services.”  At least four key considerations appear to underpin ASCO’s apprehensions about Cigna’s new policy.

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Antitrust Implications of Reverse Patent Settlements

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By Ryan Abbott

Last month the US Supreme Court rendered its decision on the reverse payments question.  The Court held in Federal Trade Commission v. Actavis, Inc. that reverse payment settlements in patent infringement litigation may violate antitrust laws, and therefore, these settlements are not immune from antitrust attack.  Actavis, a generic drug manufacturer, settled its patent challenge against Solvay Pharmaceuticals in exchange for a share in the originator drug manufacturer’s monopoly profits. The Court found that a substantial reverse payment suggested that Solvay had serious doubts about the validity of its patent, and that by the settlement the parties intended to suppress competition. Read More

The Tylenol Debate: Can Hospitals be Sued for Excessive Markups on Medications and Devices?

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By Alex Stein

Steven Brill’s TIME MAGAZINE blockbuster article, Bitter Pill: Why Medical Bills are Killing Us, uncovers the CHARGEMASTER: a publicly undisclosed pricelist accountable for what we see in hospital bills. What we see there doesn’t look good: it includes acetaminophen sold for $1.50 a tablet (you can buy 100 of those for the same price at Amazon); $77 for a box of sterile gauze pads (Amazon’s prices vary between $6 and $11); $18 for a single diabetes test strip (sold for 54 cents by Amazon); $108 for antibacterial Bacitracin ointment (Amazon’s prices vary between $2.50 and $6.50); and so forth. Charges for stay, scans, surgeries, canes, and wheelchairs skyrocket as well.

The American Hospitals Association (AHA) rejects Brill’s analysis. According to AHA, the chargemaster aggregates the hospital’s overall costs on delivering quality care to patients: “In order to take medications in a hospital, even over-the-counter medicines, they must be prescribed by a doctor (a little bit of cost for the doctor), that order gets transmitted to the pharmacy (a little more cost), the order gets filled by a pharmacist or pharmacy tech who retrieves just one Tylenol pill and individually packages that one pill (still more cost), the pill gets transported from the pharmacy to the nursing unit where the patient resides (a little more cost), then the pill is retrieved by a registered nurse who personally gives the pill to the patient and then must document the administration of that pill in the patient medication administration record (a little more cost). All of this process to give a patient a single dose of Tylenol in a hospital bed [must also be] in compliance with all pertaining regulations (a little more cost).”

This post will not try to resolve the Tylenol Debate. Nor will it say anything about the government as a plausible substitute for the eccentric chargemaster. Instead, I will raise a legal question: Can patients sue hospitals for excessive markups on medications and devices?

My answer to this question is a qualified YES. Entrepreneurial and business aspects of running a hospital fall under states’ consumer protection laws (Brookins v. Mote, 292 P.3d 347 (Mont. 2012)). Those aspects certainly include billing (Jaramillo v. Morris, 750 P.2d 1301, 1304 (Wash. App. 1988); Ambach v. French, 216 P.3d 405 (Wash. 2009)). The key question here is whether an excessive markup on medications and devices amounts to deceit or an unfair trade practice. If it does, the hospital would be in violation of the relevant state consumer protection law. This might happen to hospitals whose billing practices—to which patients gave no informed consent—are particularly aggressive. Those hospitals might face class action suits and the prospect of paying treble damages. They also may be stripped of the special protections given to defendants in medical malpractice suits (that include shortened limitations and repose periods for filing suits, caps on damages, and charitable immunities). For my account of the competition between medical malpractice and consumer protection rules, click here.

Brill and other participants in the Tylenol Debate call on the government to start regulating hospital prices. My short advice to hospitals: get rid of unconscionable markups forthwith.

Thoughts on Myriad

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By Ryan Abbott

While awaiting the torrent of academic commentary on this case that is no doubt forthcoming, for now I thought I’d highlight a few interesting aspects of today’s unanimous Supreme Court decision in Association for Molecular Pathology v. Myriad Genetics, 569 U. S. ____ (2013).

Briefly, this case concerned whether genes can be patented. The company Myriad Genetics held several patents related to two genes: BRCA1 and BRCA2. When mutations of these genes are present, it may indicate that a woman is at a high risk for getting breast or ovarian cancer. Myriad also held patents on a proprietary test to evaluate for the presence of BRCA gene mutations that costs over $3,000. This screening has been in the news recently due to Angelina Jolie’s decision to undergo preventive double mastectomy after testing positive for BRCA mutations.

In today’s case, Myriad’s patents were being challenged because they limited competition from other companies and researchers that could have independently tested for the same gene mutations. The outcome of this case has been critically anticipated for years because of its impact on patient access to medicines and funding medical research and development. Thousands of human genes have been patented in the U.S. over the past 30 years.

Before reaching the Supreme Court, a U.S. District judge in New York invalidated Myriad’s patents in 2010, ruling that genes were ineligible for patent protection as “products of nature.” However, the Court of Appeals for the Federal Circuit disagreed, holding that genes were eligible for patent protection because DNA isolated from the body is “markedly different” in chemical structure than DNA as it exists inside the body. The Supreme Court remanded the decision back to the Federal Circuit in light of its decision in Prometheus, and the Federal Circuit affirmed its decision that DNA was patent eligible.

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India Aggressively Expanding Access to Medicines

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By Ryan Abbott

The Indian Federal Department of Pharmaceuticals has released a new Drugs (Prices Control) Order that expands the list of “essential” drugs subject to government price control. Currently, a 1995 order restricts prices on 74 bulk drugs and their formulations; the new order would control prices on a total of 348 medicines that make up 60 percent of domestic drug sales. The price for these drugs will be based on a simple average of all brands with a market share of at least one percent.

The Indian Pharmaceutical Alliance (IPA), which represents major Indian pharmaceutical manufacturers, estimates that prices could fall between 20 and 90 percent. Price controls are certain to improve access to medicines in a country where two-thirds of the citizens have no health insurance and pay health care costs out-of-pocket. India spends less than 1.5 percent of its GDP on public health, ranking among the lowest spenders from developing countries.

Coming soon after India issued compulsory licenses for on-patent medicines, and the recent high-profile Glivec patent case I blogged about in April, expanded price controls reflect a growing willingness to challenge multinational corporations (MNCs). Whether this will result in backlash from MNCs remains to be seen—but they have not historically failed to respond to such challenges.

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