U.S. Healthcare – Moving Forward

Last week I gave a presentation to the leaders of some women’s health advocacy organizations about where the U.S. healthcare system is heading, i.e., where we go from the current situation with the A.C.A. We had a great discussion, and the organizer of the event emailed me afterward to say, “Amazing is all I can say. You are the first person who could speak to [the] ACA in which people listened and engaged.”Blog-2-17-Picture

Some of the key points I made included:

  • Focus on the future. Don’t relive the past.
  • Move forward from today’s strengths and weaknesses. The slide below describes health insurance coverage for 2015 showing dramatic increases in coverage in individual insurance and Medicaid, and a decrease in the uninsured. [Note: The Census data indicates any insurance status during the year, which is why the total is more than 100%.]Blog-2-17-Slide1
  • Are we more of less broken? Some “so-called” pundits have characterized the current situation as “broken.” To move forward, it is important to consider whether or not the current system is more or less “broken” than it was in 2010 when the A.C.A. was enacted, or in 2014 when most of its provisions started.Blog-2-17-Slide2

Several of the less broken aspects of the current situation are:

  • The business model for health insurance is now based more on managing risk rather than avoiding risk, which was a major focus before the A.C.A.
  • Access to insurance – particularly for individuals – is now much more reliable and dependable. The A.C.A. created a national floor for insurance practices, with state level implementation and augmentation. This was the focus for the “Patient Protection” part of the A.C.A. i.e., the original title of the law was the Patient Protection and Affordable Care Act.
  • Descriptions of insurance plans are now more standardized and easier for consumers to understand.
  • Medicare’s Hospital Trust Fund is now projected to be solvent for 11 more years than before the A.C.A., and the Medicare Part D benefit was significantly improved, with the coverage gap (a.k.a. “donut hole”) being filled.

Several of the still broken or problem areas in the current situation are:

  • Affordability is still a major problem. This is – and was – a problem for many individuals, as well as some companies that discovered in the midst of the Great Recession (2008-2010) that their healthcare costs were eating deeply into their profits. [Note – polling has long indicated affordability as a priority issue, which is why it was called the “Affordable Care Act.” However, affordability takes much longer to achieve than access, which was the case for the A.C.A.’s model in Massachusetts, where affordability is still being addressed.] Within the A.C.A., affordability for lower income people was addressed with subsidies, but overall costs are slowly being addressed with improvements in healthcare delivery – primarily through public-private alignment in new payment models that are driving greater “value” in healthcare. It is also worth noting that this concept of value is at the core of the new Medicare physician payment framework created in the MACRA law, which had large bipartisan support in Congress.
  • State-to-state implementation has been very variable, with some states doing a good job in creating more stable insurance markets, and others facing low numbers of insurers in their individual markets.
  • Requirements for coverage of certain benefits, and how risks are segmented or shared across populations, are potential areas where changes could be made to address perceived inequities, reduce government spending, and lower costs for some people – but also increase costs for other people. For example, changing the age ratings from 3:1 to 4:1 or 5:1 would expand risk stratification with younger people paying less and older people paying more. Similarly, excluding certain types of benefits from the required “Essential Health Benefits” (which are currently set at the state level within federal guidelines), would decrease costs for people who don’t ever use those benefits (such as contraception or organ transplantation), while increasing costs for people who do use those services. However, such “insurance by body part” practices could also cause insurers (and at risk providers) to build business models around avoiding risk rather than managing it.

Conclusions: The A.C.A. fixed several problems with the U.S. health insurance markets and improved access to health insurance. However, it also accentuated or created some other problems because of its innate structure (e.g., “inartful drafting”), hyper-partisan political advantage seeking, and the normal evolution of insurance business practices. For example, those three factors combined to undermine individual insurance markets in some states because of HHS’ inability to fully make risk corridor payments: The law was not explicit about HHS’ authority, Congress specifically prohibited HHS from shifting funds to make those payments, and many insurers had business plans for the A.C.A. marketplaces with losses in early years to build market share, while expecting to recoup those losses both through the risk corridor payments and higher premiums in later years. The result has been that most of the new non-profit insurance companies created under the A.C.A. (COOPs) failed, and many existing insurers pulled out of markets where they had significant losses, leaving fewer options for consumers. It should also be noted that some insurers have done well in the marketplaces using networks and benefits more similar to Medicaid than large company group health insurance plans, while at least one insurer apparently pulled out of several markets as a positioning strategy to try and bolster their merger plans.

Thus, the A.C.A. transformed what was essentially becoming a two-tiered health insurance market (Medicaid and group health insurance plans) into a three-level system, with a more structured middle tier for individual insurance that looks like a hybrid between Medicaid and large employer health plans. One of the A.C.A.’s successes (although perhaps temporary) was this middle tier, which had been rapidly disappearing in most parts of the country as premiums escalated and people with non-trivial pre-existing conditions were excluded from buying insurance. In 2010, when layoffs were common and the “gig-economy” was expanding, the shrinking supply side of the market for individual insurance not only accentuated the problem of “job lock,” but it also undermined state and federal efforts to control health spending since so many people were “out” of the insurance system.

Are “we” better off than “we” were four years ago? That depends on who “you” are, and what you expect your situation to be in the future.

  • For individuals with health insurance through large groups (such as large companies), things are probably about the same as they would have been without the A.C.A. While premiums and deductibles are almost certainly higher, better information about quality of services is available, and there is more access to things like telemedicine – both of which would have occurred to a similar degree without the A.C.A.
  • For low income individuals, there are now subsidies to buy insurance, or access to Medicaid (in some states).
  • For middle-class people buying insurance on their own, they now have assured access to buying and keeping insurance, although in some cases their costs have increased more than what would have occurred without the A.C.A. in part because they have expanded benefits under the A.C.A.’s requirements. But without the A.C.A., costs for individuals and small groups could have been very dependent upon their age, costly illnesses, or injuries, which could have dramatically increased their premiums, or caused them to lose insurance coverage for specific body-parts or entirely.
  • For people with Medicare, things are better since the Part D donut hole is getting filled, and Medicare is driving new quality improvement initiatives, which are also benefiting people who are not on Medicare since many are being done in conjunction with Medicaid programs and private payers.

Bottom Line:

  • So, are “we” as a nation better off? Overall, we have a clearer picture of the problems and more tools to try and improve (if not totally solve) the problem areas like affordability and quality.
  • Will making productive changes be easy? No.
  • Can positive changes be made while extracting great savings from the health insurance and healthcare delivery systems? Not quickly – but possibly over the long term.
  • Can changes be made in 2017 so that no other changes will be necessary for many years? No. Like trauma surgery, the patient needs to be stabilized, and then multiple surgeries (targeted towards the problems of greatest urgency and long-term benefit) need to be done over time to improve the functioning and long-term capabilities and viability of the patient. Trying to do everything at once can lead to serious morbidity and mortality, and would be more traumatic and expensive, and waste more resources than a measured and planned approach.

Health, Healthcare, and Government Spending (and a Culture of Health)

Why governments care about health and healthcare, how they are connected to government spending and priorities, and why addressing social determinants of health is so important for making lasting improvements, were the subjects I covered in a presentation at George Mason’s graduate policy school in September. My goal was to provide the soon-to-be policy analysts and advisers with a framework for understanding those issues so they will be able to provide useful recommendations to their future decision making bosses. (See the slide below for the topics covered in the presentation.) Links to videos of the talk are below, along with short descriptions – I think that Part 6 is particularly good. (Embedded views of the videos are at the end.)

I’ve had discussions with policy makers and corporate executives about these issues since their organization’s value propositions increasingly require demonstrating individual and population outcomes with specific metrics. Those requirements are part of the broader rapid movement of the U.S. healthcare system towards more accountability. Consequently, the connections among health, healthcare delivery, spending, community organizations, and social determinants of health are becoming a top priority for healthcare and life science leaders in companies and government agencies as they seek to increase value for their organizations and the people they serve.

Any thoughts you have about this talk, the connections among health, healthcare, spending, and community health factors (a.k.a. social determinants of health), would be greatly appreciated. And if there are any aspects of these issues where I can be of help to you or your colleagues – or you know of organizations or audiences that would also benefit from a similar presentation – please just let me know as I’d be happy to discuss that with you.

GMU - 9-29-16 Overview Slide

Part 1: Introduction. Why Governments care about health and healthcare. What is health. What is healthcare. https://youtu.be/KvDVcBGOePc

Part 2: Insights into healthcare spending with a particular focus on the Medicare and Medicaid programs. https://youtu.be/6Onuae2c0Xw

Part 3: Why spending on (and budgeting for) health and healthcare programs are unlike almost all other Federal programs, and why projecting spending is so challenging. https://youtu.be/lyaAjRzD0ic

Part 4: How government and private payers are seeking greater value and better clinical outcomes from their healthcare spending, and how data and analytics are increasingly important components of developing and evaluating those initiatives. https://youtu.be/7abj14xIcMw

Part 5: Examples of value based pricing initiatives and the importance of data and analytics for managing such programs, determining “success”, and sharing savings with physicians, other providers, or patients. https://youtu.be/MeLZA5wcpG8

Part 6: How health, healthcare, and spending on government health programs (and private insurance reimbursements) connect to each other, and how social determinants of health can drive clinical and economic outcomes, i.e., how a culture of health can be so important for transforming health in a community. This Part concludes with a brief discussion of the Affordable Care Act and the future of that program and the U.S. healthcare system. https://youtu.be/66zt_Rqf9hA

Enjoy. Pass along to your colleagues and friends. And as always, constructive comments are welcome!

Medicaid Fiscal Issues, and Changing U.S. Healthcare System

Medicaid Fiscal Issues and the Changing U.S. Healthcare System are the topics for the final two videos from my George Mason guest lectures, which are now posted. (See below.)

Discussing the evolution of U.S. healthcare delivery and financing was particularly challenging because of the many ongoing and approaching changes, such as the Medicare Part B Drug Payment Model, the implementation of MACRA, the launch of CMMI’s Oncology Care Model, and the steady expansion of value-based arrangements in the private market.

Overall, I hope the the background information and perspectives from this guest lecture will be useful for people looking for a better fundamental understanding of the fiscal and operational dynamics of the evolving U.S. healthcare system. And specifically, this type of knowledge base will be useful for appreciating how initiatives and proposals (like those mentioned above) will significantly alter the U.S. healthcare system in the coming years – and affect patients, clinicians, health systems, biopharma companies, researchers, and payers.

The topics for all five videos are listed below, and are available on the HealthPolCom YouTube Channel.

  1. U.S. Spending on Health and Healthcare
  2. Medicare and U.S. Healthcare Spending
  3. Challenges for Estimating Future Healthcare Spending
  4. Medicaid: Federal and State Fiscal Issues
  5. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy. Pass along to your colleagues and friends. And as always, constructive comments are welcome!


Medicaid: Federal and State Fiscal Issues


Changing U.S. Healthcare System: New Payment and Delivery Models

Challenges Estimating Future U.S. Healthcare Spending

The challenges of estimating future U.S. healthcare spending (and why projections are so often so inaccurate) is the focus of the third video segment from my guest lecture at George Mason University about Health and Budget Policy – see below. (The first two are in previous blog posts and are on the HealthPolCom YouTube Channel.)

The final two video segments on the topics of Medicaid, and the Changing U.S. Healthcare System will be posted next week. The five subjects covered in the video segments from the guest lecture are:

  1. U.S. Spending on Health and Healthcare
  2. Medicare and U.S. Healthcare Spending
  3. Challenges for Estimating Future Healthcare Spending
  4. Medicaid: Federal and State Fiscal Issues
  5. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy. Pass along to your colleagues and friends. And as always, constructive comments are welcome!

Medicare and U.S. Healthcare Spending

The second video from my guest lecture at George Mason University about Medicare and U.S. Healthcare Spending in now available – see below. (The first was an overview of Health Spending in the United States, and is in the previous blog and also on the HealthPolCom YouTube Channel.)

The other video segments from my guest lecture that I’ll be posting over the next week or so will be on the following subjects:

  1. Challenges for Estimating Future Healthcare Spending
  2. Medicaid: Federal and State Fiscal Issues
  3. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy. pass along to your colleagues and friends. And as always, constructive comments are welcome!

 

U.S. Spending on Health and Healthcare & Update

Sorry to have been so delinquent in publishing new posts.  For most of 2015 I was busy working with the National Governors Association and the Institute of Medicine organizing State Health Leadership Retreats for the Governors of 4 states. Those retreats were modeled on a pilot retreat we conducted in late 2013, and in late 2015 we did a culminating meeting for officials from all the states. Right after that I joined Foley Hoag as their Senior Health and Life Sciences Advisor.

All that has kept me rather busy, but in February I again guest lectured at George Mason about Health Reform and Fiscal Challenges (a.k.a “Health Policy is Budget Policy”). An edited video from the first part of the lecture about U.S. Spending on Health and Healthcare is below, and over the next couple of weeks I’ll be posting additional videos from that talk on the topics of:

  1. Medicare and U.S. Healthcare Spending
  2. Challenges for Estimating Future Healthcare Spending
  3. Medicaid: Federal and State Fiscal Issues
  4. Changing U.S. Healthcare System: New Payment and Delivery Models

Enjoy – pass along to your colleagues and friends – and as always, constructive comments are welcome!

 

New Direction for Health Reform Book

In 2005 I started writing a book about health reform.  As I was working on it, the structure and framework of the U.S. healthcare system kept shifting. I am now returning to work on this book, with the new working title, “Pivoting the U.S. Healthcare System: A Guide to Making Health Reform Work.” Below is a brief overview of the background about the book, which can also be found on my main website.

Comments, suggestions, and general inquiries about this project are welcome.

Overview – “Pivoting the U.S. Healthcare System: A Guide to Making Health Reform Work”

In my very first class in medical school, one of the first things the Professor said was, “Half of what we’re going to teach you is wrong. We just don’t know which half.”  That admission is not something you will hear in political or policy pronouncements, even though in the rapidly evolving U.S. healthcare systems situations change, preliminary data is corrected, projections turn out to be wrong in meaningful ways, and “solutions” fix problems but also lead to new ones.

To provide people with a framework for improving the quality of care and controlling costs for themselves and their communities in this shifting world, this book will examine important ideas, issues, and trends, and the steps individuals can take to help achieve better health, access, and affordability. To do that, I will provide my synthesis of observations and information focusing on policy, political, scientific, and medical changes that are building upon one another. Thus, the book will not be an academic treatise, nor adhere to specific ideological, philosophical or political lines. Rather, it will reflect what I have learned in in more than 25 years of clinical, scientific, and health policy work, and my vision for achieving a better, stronger, more vibrant, and healthier healthcare system.

Long Look Forward

In June 2003, I was invited to address the Presidents of the State Medical Societies about “The Future of the US Healthcare System.” To help these physician leaders see the future more clearly through murky waters, I discussed how the trajectories of the major US healthcare programs (including Medicare and employment-based insurance) were leading to greater transparency and accountability for both clinical and economic outcomes.  I then described a future where clinicians and providers would be responsible for the outcomes their care was producing, how payments would be tied to those outcomes, and how documenting those outcomes would be facilitated by electronic medical records and population-based analytical systems.

The reaction of the assembled physician leaders was one of dismissive disbelief. This was 2003. The world had come through Y2K unscathed, the dot-bomb recession was over, and the stock market was rising every week.  Their primary question was ‘who will pay us to put in electronic medical records and to provide information about quality and costs?’ They didn’t believe my answer that those who wanted the information – such as health insurance companies and government agencies – would pay them to provide data and information about quality and costs. Those reactions were not unreasonable at the time, since I suspect most of this group was planning to retire within the next 10 years. (This was before the Great Recession turned their 401k accounts into 101k amounts.)  However, while 2003 was generally a time of great uncertainty for the U.S. healthcare system, the year ended with the passage of a new law – the Medicare Modernization Act (MMA) – that included the new Medicare prescription drug benefit, and it was the first of several major laws driving fundamental transformation of the US healthcare systems.

Slow Turns

The 2003 passage of the MMA, the 2008 election of President Obama, the 2009 stimulus law (ARRA) that included the HITECH Act to support the implementation of electronic health records, and the 2010 passage of the Affordable Acre Act (ACA, or ObamaCare), have all promoted significant changes in the U.S. healthcare system.  But since it is a huge and extensively connected but disjointed set of enterprises, turning the U.S. healthcare system is a slow process. Even policy focused physicians and senior health managers have been slow to accept or react to those changes.  For example, in March 2009, I gave a Grand Rounds presentation at a hospital in Boston. Like my 2003 presentation to the Medical Society Presidents, I described a future with greater transparency and accountability, and the increased use of electronic health systems – particularly since the HITECH Act had become law the month before. The responses included a “rebuttal” from the Canadian-born Department Chair arguing for a single payer system, and a Resident who felt that the Geisinger model in Danville, PA wasn’t replicatable or relevant because – unlike most of the rest of the U.S. – Geisinger dominates its geographically insulated area.

But the more things change, sometimes they don’t.  For example, I recently heard about a senior manager at a large integrated health system that refused to consider planning for the implementation of the ACA’s many provisions: First, Congress would repeal it. Then, it wouldn’t be implemented because Mitt Romney would win the 2012 election.  And lastly, the Supreme Court would overturn the entire law.  Of course, none of those things happened, so this large health system is now playing catch-up with their regional competitors.  Similarly, in early 2014 I spoke with the physician leadership from a state that has not embraced improvements in their clinical care systems or changing incentives for physicians, hospitals, or patients to improve the quality of care or control spending.  Their attitudes reflected a strong desire to maintain their status quo of autonomy, and particularly to not be held accountable (or responsible) for their patients’ clinical outcomes or the health of their communities. Basically they had healthcare delivery and insurance structures that hadn’t changed much since the 1980s, and such physician-centered care is much better for physicians than patient-centered care.

Health Reform Pivots at the Local Level

While my 2003 presentation to the Medical Society Presidents was in many ways a nexus for the work I’d been doing for more than 15 years, it also led me to start writing a book that had the working title “Fixing the US Healthcare System.” The 2008 election of President Obama (and the subsequent passage of the ACA/ObamaCare) led me to change the title to “Making Health Reform Work.”

Now in mid-2014, with many of the major components of the ACA having begun to be implemented – and their effects starting to be seen – I’ve returned to the book and the pieces I’ve been writing for almost 10 years. With the dramatic shifts that have occurred in that time, I’ve pivoted the book’s focus to explore more directly the important changes occurring at the local level and within healthcare delivery. Therefore, I’ve also changed the working title to “Pivoting the U.S. Healthcare System: A Guide to Making Health Reform Work.”

Goal of the Book

The goal of the book will be to provide readers with insights and greater understanding of how to evaluate and influence the rapidly changing healthcare world that encompasses delivery, financing, public health, and information technology – particularly at the local and personal level. The book will explore how initiatives at the local level are what will primarily improve the health of people and communities in the coming years. Specifically, while ObamaCare and governmental activities are changing the framework and the contours of the playing field, how local leaders, organizations, and communities are allocating their resources, setting their priorities, and improving their practices involving health benefits, clinical services, and public health activities are what will most dramatically effect the lives of people and communities.

The book will enable and empower people to alter and accelerate those important changes based upon their personal and local perspectives by working with different groups to make improvement more meaningful for them and their communities. This local multi-stakeholder engagement and alignment is increasingly recognized as crucial for improving healthcare quality and controlling costs: Large employers, insurance companies, and government programs now appreciate that they are not large enough to drive major changes in any market or at any provider organization. Similarly, large hospitals, health systems, payers, and public health agencies increasingly understand that their work and goals are interconnected so that their actions needs to be aligned, and at times even directly coordinated.

Physicians are also an important group to include in this process since physicians (and other clinicians) are primary guides for patients in making healthcare decisions, and greatly influence healthcare spending and quality.[1] And of course patients – and their indirect advocates in the media, government, non-profits, and foundations – need to be part of these intertwined dialogues and decision-making.  The bottom, middle, top, left, and right conclusions all indicate that in the struggle against rising healthcare costs and burdens of disease and disability brought on by aging populations and other factors, united we can succeed, but divided we shall continue down the same failing path.

p.s. To see an old version of the working summary click “Making Health Reform Work.” The latest summary and outline are on my whiteboard and computer.  Please contact me if would like more information about my progress, focus areas, and conclusions.


[1] As an old axiom states, “the most expensive piece of medical technology is the pen in the physician’s hand.”  Today, that prescribing and referring pen is being replaced with a keyboard, a mouse, and a touchscreen, but the effect is similar, even as electronic medical records and systems are raising their own concerns about costs and quality.

Sovaldi® and Curing Hep C – Myths and Other Facts

The introduction of new oral medicines that can cure chronic hepatitis C infections (including Sovaldi®) have led to some intense discussions permeated with misleading information about the pricing of new medicines, how such medicines are “game changers,” and the implications for budget-crunched payers.  Below I summarize some key points about those issues.

1.  Myth #1: How Medicines are Priced

One of the perpetuating myths about biopharmaceuticals is that medicines are priced to recoup research and development costs.1 It’s a myth. As I’ve written about elsewhere prescription medicine prices are set like everything else in a regulated free market: Companies set prices to maximize revenues and profits based upon the market opportunities and the value the new medicine provide compared to the consequences of the disease and other treatment options – including no treatment at all.  (See more about this in #4 below.)

2.  Myth #2: There is A Price

While the price of Sovaldi® has been widely written about in the press, in reality, there is no single price in the U.S. for almost all medicines. Rather, every medicine has a range of prices that include the discounts required by law to Medicaid, VA, DoD and other government programs, and the discounts negotiated by private insurance companies. The widely reported price of Sovaldi®, which is the starting point for those discounted prices, has been widely criticized, but a high-level examination of the situation illuminates a relatively logical picture as discussed below. Furthermore, an understanding of the overall situation with chronic hepatitis C infection and those new medicines leads to a reasonable strategic framework for payers facing significant costs for treating people with chronic hepatitis C infection.

3.  Situation with Chronic Hepatitis C Infection

A.  Most of the roughly 4 million people with chronic hepatitis C in the U.S. were infected before 1992 when a test to screen donated blood started to be used.

B.  Today, the rate of new infections is about 45,000 people per year, and those infections are acquired primarily through intravenous drug use.

C.  The older treatments for chronic hepatitis C infection largely depended on activating the patient’s immune system to clear the virus from the body, which is why the medicines in those treatment regimens, (e.g., interferon) make people feel like they have a bad flu for several/many months.

D.  Assuming patients can tolerate the side-effects and complete their course of therapy, the older treatments for hepatitis C had cure rates2 as low as 20% depending on the strain (genotype) of the virus and certain patient characteristics.

E.  The new medicines for chronic hepatitis C infection are “game changers” since they have reported cure rates of 90-95+%. Ray Chung, MD, a hepatitis C expert, has described these new medicines as a clinical paradigm shift from treating a liver disease to curing hepatitis C infection.

F.  These medicines are also “game changers” because this is the first time biomedical science on earth has developed a cure for a chronic viral infection. (I can’t speak for other planets, galaxies, or other spatial dimensions.)

G.  The low rate of new infections in the U.S. means that if people currently infected with hepatitis C are treated and cured (and the new medicines seem capable of curing people by eliminating the virus from their bodies), then – in theory – hepatitis C infections could be eliminated, or at least driven down to very low numbers.

H.  Physicians (particularly gastroenterologists and hepatologists) were aware that new – and much better – medicines to treat (and hopefully cure) hepatitis C infections were expected to be approved in late 2013/early 2014. Therefore, many patients weren’t started on the older therapeutic regimens that had significant toxicities and low cure rates.

I.  The people who deferred treatment in 2013 were lined up to be treated in early 2014, and this produced a large wave of new patients (and sales) for the new medicines in early 2014.

4.  Rationale for Pricing of Hepatitis C Cures

I stated above that companies price new medicines to maximize revenues and profits.  That’s only sort of true. New medicines are really priced to maximize the value the company will get from selling the medicine over the entire effective life of the product.  Economists refer to this as the “Net Present Value” (or NPV), which takes into account expected revenue in future years, discounted by how much less a dollar in the future will be worth than it is today because of inflation, and other factors such as competition from other treatment options. For Sovaldi® the most significant factors are competition and substitution due to other medicines expected to be approved in 2015 and beyond, AND the limited number of people with chronic hepatitis C infection.

The relatively finite pool of patients means that NPV calculations for Sovaldi® do not look like other medicines to treat chronic diseases or to keep cancers in remission, because those types of medicines have large (and probably growing) patient populations that will be taking those medicines on an ongoing basis. Therefore, the “value” of Sovaldi® in the latter years of its 14-year effective patent life3 will be much, much, much less compared to those other medicines. This front-loaded fiscal/value situation means that setting a ceiling price at the higher-end of the comparable range for treatments for a serious illness that will be taken as a single course for a shrinking population is a logical outcome.

5.  Path Forward for Budget-Crunched Payers

Because Medicaid programs, the VA, and state/local prison systems have significant numbers of people with chronic hepatitis C infection – and they have fixed or semi-fixed budgets – treating everyone infected with hepatitis C all at once would be a significant budget buster. Below I describe a framework for logically approaching this situation.

But first, it is also important to recognize some other factors about chronic hepatitis C infections and Sovaldi® and other medicines that are expected to be approved to treat/cure hepatitis C in the coming months/years:

A.  Of the estimated 4 million people in the U.S. with chronic hepatitis C infection, most do not have significant liver disease characterized by changes in the structure and function of the liver that ranges from various degrees of fibrosis and cirrhosis to full liver failure or liver cancer.

B.  People with more advanced disease are already costing the health system significant amounts and have the most health and quality of life problems.

C.  While the exact percentage of people with chronic hepatitis C who have advanced disease is unknown, a reasonable guess might be about 20-30%.

D.  People who do not have advanced disease will most likely progress to advanced disease, and there are known risk factors that increase the likelihood of more rapid progression.

Given those factors, a reasonable approach for payers with limited resources would be to put those people with advanced disease in the front of the queue for the cure. Other people who should be included in this “first to treat” group would be individuals who have certain criteria that increase their risk for rapid progression of liver problems, or are having health problems from the infection outside the liver (i.e., extra-hepatic manifestations) such as renal, hematologic or rheumatologic problems, or are symptomatic.

Other groups that could be considered for priority treatment could include people in prisons (or being released from prisons) who might be at increased risk of transmitting the virus to others.  (People who are cured of their chronic hepatitis C infection can be reinfected.)

After this first group’s treatment is addressed, the next group of individuals with risk factors for more rapid progression to advanced disease (such as longer time since their estimated date of infection) could be eligible for treatment.

This “triaging” of priorities would spread costs out over a longer period of time in a rational way. In addition, because of real-world barriers to identifying and engaging all potential patients, not all the people in those first to treat categories would get treated in the first few months or year. Therefore, the actual first year costs would be below the results from a simple calculation of the number of people multiplied by the treatment costs per person.

Such triaging would give budget-crunched payers time to plan for future budget years with the realization that the number of people with chronic hepatitis C infection will be decreasing over time.  After a few years of treating people with chronic hepatitis C infection (depending on how the triaging/staging is done, along with the effectiveness of public health outreach and screening) the annual costs for medicines for people with chronic hepatitis C infections should become relatively low even before generic versions of the new medicines are available.

6.  Cures for Chronic Hepatitis C Infection Are Not Game Changer

Some people have angsted about how the new treatments for chronic hepatitis C are harbingers of more expensive, budget-busting medicines. However, looking at the pharmaceutical industry pipeline, there are not medicines in clinical development to cure other chronic viral diseases.  Nor are there medicines to cure other serious chronic diseases.  I certainly wish there was a $100,000 cure for MS, Parkinson’s, Alzheimer’s, ALS, HIV/AIDS, or many other debilitating or degenerative conditions – but there aren’t, and there don’t seem to be any on the near horizon. Thankfully, there are compounds in clinical trials to better treat those conditions by preventing or slowing progression, as has already happened for rheumatoid arthritis and some other autoimmune diseases. Therefore, while the new cures for chronic hepatitis C are game changers for people with that specific condition, unfortunately, cures for other serious chronic illnesses do not appear like they will be available very soon.

7.  Caveats & Other Notes

I apologize for this rather lengthy post – particularly after the long time since my last post.  But there are a few other points to note:

  • These thoughts are my own, nobody has paid me to write this, and only one person reviewed it for gross factual correctness.
  • My projections and estimates of infection and cure rates etc. are derived from conversations with knowledgeable people and reading the literature, but there is clearly a significant level of uncertainty about many of those estimates, including the numbers of people infected and their stages of disease.
  • Even the best projections are off by some significant percentages.
  • The price of other medicines for chronic hepatitis C infection that are expected to be approved in the next 6-36 months are unknown, but the price range for Sovaldi® should set an upper limit based on a course of treatment to achieve a cure. Therefore, for example, if another compound is approved that achieves a similar cure rate with similar side-effects, etc., but only needs to be taken once a week for 8 weeks (i.e. 8 pills), it would likely have a higher per pill price than Sovaldi®, but a lower total cost for a course of treatment.

 Footnotes:

  1. While, the risk of biopharmaceutical R&D is borne by companies, they cannot bake the R&D costs of individual medicines (and dead ends) into the prices of those medicines.  Rather, a company’s profits are the source of funds for future R&D. Specifically, companies makes decisions about how to use their financial resources (primarily derived from profits) for R&D and other activities. R&D opportunities are evaluated based upon the projected market potential combined with the company’s expertise and capabilities that would enable the company to successfully develop a new medicine in a specific disease area of need, i.e., where there is a market opportunity.
  2. Cure is defined as no detectable virus six months after the conclusion of treatment.
  3. http://www.accessdata.fda.gov/scripts/cder/ob/docs/patexclnew.cfm?Appl_No=204671&Product_No=001&table1=OB_Rx

CER, HIT, and Women’s Health Research

Below is a video of my discussion with Phyllis Greenberger, President and CEO of the Society for Women’s Health Research, about the implications of comparative effectiveness research (CER) and information technology for women’s health and quality improvement.

What are your thoughts about CER and HIT?  Will they lead to higher quality, lower cost, or more efficient/better healthcare?  And if so, how soon?


FYI – The SWHR’s July 18-19 meeting mentioned in the video is “What a Difference an X Makes: The State of Women’s Health Research.”