Archive for category UK National Health Service

Why the US Pays More for Drugs

MoneyThe people in the United States pay more for drugs than any other country.  And, they pay more to universities to do drug research than other countries.  In a nutshell, it is due to a lack of regulation in the U.S.

Two very insightful articles appeared in the past week addressing the inequity of global drug prices — The New York Times and the Wall Street Journal.

Drug companies constantly complain regulations are hurting profits.  Now it appears without enough regulation drug companies are hurting sick patients.  As big pharma points out, it’s all legal.  Basically, big pharma points a finger at the US Congress for not imposing restrictions common in the rest of the world.  Sounds like a circular argument!

Between the two articles linked above and this author’s experience here are the reasons:

  1. Abuse of patent laws
  2. Driving small drug  companies and generic companies out of business with frivolous but highly expensive suits.
  3. Release of a similar drug before a patent expires and manipulating doctors and patients to change to the new drug suggesting the similar drug is “MUCH” better (evergreening).
  4. Paying new drug makers to delay marketing their competitive drug (pay-to-delay).  While at the same time asking for a fast track through the FDA approval process.
  5. Claiming a new drug is novel when by any reasonable standard it is not (asthma inhalers are a good example).
  6. Coupling devices to drugs to double the difficulty for competition (like insulin pumps).
  7. Failing to pay their fair share of basic drug research, funded by the US government instead.
  8. Happily doing “inversion” deals to move headquarters to other countries to evade US taxes — into the very countries that strongly regulate drug company profits.
  9. Voluntarily limiting profits in many countries due to the threat of regulation, but failing to offer the same deal to the US.
  10. Lobbying successfully to prevent Medicare (a larger health program than the NHS in the UK) from negotiating prices as the UK has done for many years.
  11. Blackmailing patients to pay for old drugs at exorbitant prices because generic companies are afraid to compete (pricing because-they-can, oral beclomethasone is one example).
  12. Preventing drugs from other countries to be sold across borders because of unfounded safety concerns (crocodile tears).
  13. Actively avoiding drug comparison research — forcing others to do that type of research after the drug is already marketed.
  14. Doing cancer drug research with endpoints (such as tumor size) rather than life expectancy.  85% of cancer drugs now have no connection to the most basic expectation of patients, to live longer.
  15. The WSJ review of 40 drugs administered in physicians offices:  39 cost less in the UK, 37 cost less in Norway and 28 cost less in Ontario Canada.  The price gouging in the US certainly suggests racketeering.
  16. Drug company profits are 17% in the US and 7% elsewhere.
  17.  Actively avoid cost-effectiveness research — prescribers don’t know whether a new drug is better or worse than old drugs except by what is told to them by marketing.  (Unlike the UK drug system which is strongly linked to cost-effectiveness)
  18. Drug companies hide special deals with large customers so other customers have no idea of the low end of the price spectrum.  The companies are so large that a lone US State can not leverage deals needed to lower prices like countries can.

Perhaps I have missed some other corrupt practice or unethical behavior, there are just so many.  This mess needs to be cleaned up!  At very least the US Congress needs to institute controls similar to other countries.  Feel free to send this blog to your congressional representative — with a copy of your drug bills!

 

, , , , , , ,

1 Comment

Direct Primary Care — where’s the quality?

greedydoctorHappy doctors seeing fewer patients and making more money — what’s not to like?  According to author David Von Drehle’s article “Medicine Gets Personal” in Time Magazine, Dec 29/Jan 5, the results are “intriguing”.

The story is about Qliance Health in Seattle founded by two doctors who were dissatisfied with fee-for-service medicine and all the associated paperwork.  So, they developed a model of care where the patient pays $65/month and receives all the primary care they need.  And, as a twist, they also agree to see Medicaid patients for the same cash amount (the details of the arrangement were not stated in the article).  Of course, insurance and medicaid pay for all other services like tests, x-rays, drugs, hospitalizations and specialists.

The doctors are happy because they have less oversight from insurance, don’t have to collect any data to prove they are delivering quality care, get steady income, treat patients over the phone to minimize visits, and are able to “run” their own business with no boss.  For the libertarian-minded physician it’s nirvana.

Piece-work is indeed a hard life as physicians and many in the garment industry know.  A monthly salary is much easier on the worker.  And, the salary model is not new in terms of primary medical care.  The physicians working for the National Health Service (NHS) in the UK have had this system since WWII.  However, the NHS found it was necessary to add financial incentives to get the doctors to do enough work.  And, they found it necessary to monitor quality since quality slips without oversight.

So, this “Direct Primary Care” is not new in the world.  In fact, it may be an important part of an Accountable Care Organization (ACO) as being tried the US.  But, physicians need to realize they need to be part of a large organization to ensure quality care.  The future for primary care is to be an employee, not a mom-and-pop store.  Most of doctor’s patients work as employees, is that so bad?

$65 per month would be too much to pay for poor quality care (the cost of poor care is always too high!)  So what does “Direct Primary Care” need to do for patients and payers to be confident quality care is being delivered?

  1. Measure and report quality in a transparent way — like on the office website.  And, keep it updated.
  2. Deliver patient-centered care and prove it.  Survey patient’s expectations and record whether the expectations are met with office visits.
  3. Report quality indicators other doctors must do like for diabetes, hypertension and smoking.
  4. Report primary care specific indicators regarding the most common diagnoses — skin conditions, joint pains and respiratory infections.
  5. Take a financial stake in what is prescribed or ordered.  Pay some fraction of the cost of all medications prescribed and all tests ordered.  They need to have some “skin in the game”.  (So there is a connection to the larger world of health care cost — ordering a $1000 MRI scan for every ache and pain must have some consequence).

, , , , , , , , , ,

Leave a comment

Improve ACA — so says USA Today

peopletowerKelly Kennedy of USA Today published the story “Finding Consensus on How to Improve the ACA” 2/28/14.

Here is the list:

  1. Pay doctors more
  2. Let the government pay subsidies to families not covered by the employee’s health insurance.
  3. Get rid of fee-for-service payments
  4. Smooth the transition from Medicaid to subsidized health insurance
  5. Transparent pricing

There are obviously some problems with this “consensus”.  To begin with, who is part of the consensus?  And who benefits from the 5 suggestions?  On the face the ideas seem OK but where is overall cost reduction — the real crux of our health care problem?

So, to address each point:

  1. Pay doctors more — if the payment is not tied to reducing health care costs and increasing quality then it is money down the drain.
  2. Covering families — seems simple enough but why should business be exempt from doing what they have traditionally done?  Employer insurance needs to cover the whole family — that’s simple.
  3. Get rid of fee-for-service.  Yes that payment method  is a problem but there must be an incentive for health care providers to provide a high volume of work and an incentive to do quality work.  The simple solution is to pay a health care system (an accountable care organization) to provide care for a large group of people for a yearly fee.  The organization must meet quality and budget constraints as opposed to our current “the sky is the limit” fee model.
  4. Smooth the the transition away from Medicaid.  At this point Medicaid is less expensive than standard indemnity plans — why think about a change?  If the person enters the workforce the employer just pays the cost — simple.  Changing providers is not easy but if quality is uniformly better there would not be such concern.
  5. Transparent pricing.  This is presented to suggest people could decide on what tests and treatments to buy if only they knew the prices — patients have never had the knowledge to make that decision and never will.  The transparency of pricing should be the price for ALL the healthcare a person needs per year.  Market forces may be helpful on the macro level (like for a healthcare system) but there is no free market for healthcare on the micro level — imagine a person being asked  to choose between various methods of treating diabetes or the best way to remove an appendix (the decision is either random or biased by what the very person asking the question tells them).

The U.S. is experiencing something its citizens have not witnessed before:  the transition away from population healthcare decisions being made behind closed doors at insurance companies to those decisions being made in the political arena.  Other countries experience this all the time — just look at newspaper headlines in the UK or France over the past 20 years!

, , , , , , , , , ,

Leave a comment

US and UK Drugs — cost control solutions

Rx_symbol

The per capita annual drug cost in the US is about $900 and in the UK about $200.  How can this be?  Drug companies are multinational so we all purchase from the same sources.

There are 2 types of drugs in all countries:

  1. Generic drugs:  no basic research cost, multiple manufacturers and generally low cost.   80% utilization but only accounts for about 20% of national drug costs.
  2. Brand name drugs:  still protected by patent, price includes significant research cost, one manufacturer and generally high cost.  20% utilization but accounts for about 80% of national drug costs.

The formulary:  this is the list of drugs provided by a pharmacy or hospital.  Although there are thousands of drugs manufactured only a small group are included in a given formulary.  A formulary usually includes the least expensive drugs and avoids drugs with duplicate actions.  Brand name drugs cause problems since they may be a one of a kind without alternatives.

Prescriber intent: prescribers anywhere usually try to minimize drug costs for the patient by prescribing the lowest cost drugs that treat the medical problem adequately.  Unfortunately,  US doctors often don’t know which drug is most cost effective and succumb to the advertising of  manufacturers.

How it works in the US:

Hospitals must include drugs in the price of hospitalization so hospitals have a restricted formulary  constructed to minimize cost.  Outpatients are different, insurance companies that pay for drugs usually expect the patient to pay a percentage of the price:  1) generic drugs — small copay  2) moderate price drugs — medium copay  3) expensive drugs — high copay (or no coverage at all).

How it works in the UK:

The NHS sets the price it will pay pharmacies for generic drugs and purchases generics in bulk for hospitals.  The UK has forced a “voluntary” agreement on brand name drug manufactures that limits the profit they may make — sometimes called a “cost-plus” arrangement.  Pharmacies and hospitals obtain brand name drugs under this national agreement.  The National Institute of Health and Care Excellence (NICE) investigates the cost-effectiveness of drugs and provides that information to prescribers.

Conclusion:    Most advanced countries like the UK limit drug company profits or simply set prices for drugs.  People in other countries enjoy lower drug costs than in the US.  Multinational drug companies make large profits in the US because of the lack of a national strategy.  And, the US supports the research of many drugs with grants to Universities from taxpayers.  The drug companies which are restricted in other countries extract a high profit from US patients and benefit from  government research.

Solution:  Restrict drug company profits in the US similar to other countries.   Mandate the FDA to provide cost-effectiveness data on drugs and devices.  Develop a national formulary for Medicare and all other government programs.

, , , , , ,

Leave a comment

Twice the Quality at Half the Price — the NHS in the UK

union-jack2-1

How do the Brits do it?  They made a healthcare system with twice the quality at half the price compared to the US (according to the Commonwealth Fund cost per person per year US $7960 UK $3487, developed country quality rank UK #2 US #7).  Simply, they do it by having original ideas and a willingness to adopt good ideas from other countries.

The National Health Service (NHS) of the UK was born in the aftermath of WWII.  Taxes pay for the system, which is free to citizens at the point of care.  Internally, the system is based on capitation — doctors and hospitals are paid by the size of the population they serve.   The system grew to be one of the highest quality and least expensive systems in the world.  In the 90’s it was bogged down by waiting lines and old facilities until a modernization push got it back on track around 2000.

The DRG example:  In 1983  Medicare adopted a way to pay hospitals with a single payment for each case based on the diagnosis of the patient.  This revolutionary idea was called the diagnosis related group or DRG.  NHS experts embraced the Medicare cost saving idea and renamed it the HRG (health resource group) and started using it in about 2003.  Consequently, by adopting what works, the UK has strikingly transformed the financial workings of the NHS.

The NHS noticed cost variations between providers and solved the problem with “Best Practice Tariffs”.  That means if the provider follows a well established guideline they get a full payment, if not, the payment is lower.  In the US we call that concept “value based purchasing” (VBP) but the US only has a few pilot projects and only dreams about making VBP happen on a large scale.

The UK decided they wanted better results.  The reform was called Payment by Results (PbR) and implemented in 2013.  The results they expected were high quality, adequate volume of services,  and cost efficiency.  The NHS basically tweaked the capitation formula with incentives for the desired results.

The US Affordable Care Act (Obama Care)  encourages the aggregation of doctors and hospitals in an economic model called an Accountable Care Organization (ACO).   The US thinks it invented the idea behind the “Accountable Care Organization”.  Actually, the concept is just a spin-off from the Primary Care Trusts and Hospital Trusts in the UK which have been functioning for over 60 years.  Think:  “Trust”=”ACO”.

The recent “Perspective” in the New England Journal of Medicine (NEJM 668;16 April 18, 2013, page 1465-1468) describes the recent IOM report requested by Congress.  The authors lament the “Geographic Variation in Medicare Services“.   The NHS is well known for controlling health care costs.  Looking across the pond to the UK,  here are some references that might be helpful to them:

  1. A simple guide to Payment by Results
  2. A person based formula for allocating commissioning funds to general practices in England: development of a statistical model
  3. Payment by Results: time for a rethink?
  4. Regional variation in the productivity of the English National Health Service.

Some understanding about how the NHS works would also be helpful.  The following diagram is an overview of how the NHS controls cost associated with hospitals and doctors.   They also have a good system for dealing with drugs and devices — a good topic for a future blog.

(figure revised 7/11/13)

High level NHS flow diagram (5)

Other charts of organization can be found at Nuffield Trust – New Structure of the NHS slideshowNHS website – new structure, and History of the NHS.

In the UK 90% of health care is controlled by the government and 10% by the private sector.  The UK Parliament sets a budget for health care which is administered by the Department of Health.  Based on the funds allocated in the budget the Department of Health makes a national price list for services (unlike the US where there is no cap on expenditure) .

The “SUS” approves payments to providers based on the national price list (national tariff) and adds the features of PbR (payment by results).   The commissioners are the paymasters and transfer funds to the providers.  The providers keep track of actual costs and must provide cost data to the Department of Health (unlike the US where real costs are proprietary information and hospitals use the  infamous “chargemaster“).

The US could learn a lot from other countries.  The NHS in the UK seems very willing to share what they have learned over the years — and it is in English.   The old saying  “America and England are two countries separated by a common language” is especially true for health care.

, , , , , , , , , ,

1 Comment