The Incidental Economist

Michael Hiltzik’s article in the LA Times doesn’t pull any punches:

But you’d be hard-pressed to find a campaign against the ACA as narrow-minded and dishonest as the one mounted by medical device manufacturers.

This campaign has been largely a data-free zone:

The industry can’t cite a single objective study that supports its contentions that the tax will suppress innovation in the field and make U.S. manufacturers globally uncompetitive.

Worth reading the entire thing.

@koutterson

Fungal meningitis from improperly compounded products at NECC (NEJM article here) killed 55 people and infected more than 600 others (CDC data here). All of these products originated in Massachusetts, but all of the injuries occurred in other states. But Massachusetts felt some responsibility for the failures at NECC, as acknowledged by both Gov. Patrick and the Interim Commissioner of Public Health.  The DPH enacted emergency regulations on Nov. 1, 2012 and the Governor’s special commission delivered a comprehensive set of recommendations.  Both efforts informed the Governor’s proposed legislation in January 2013 and several bills pending in the Massachusetts House and Senate.

In the interim, the Governor boosted the budget for inspections at compounding pharmacies.  In a series of surprise inspections, just 4 out of 37 compounding pharmacies passed.  The Governor proposed an additional $1 million for pharmacy inspections next year.

So it comes as a surprise that the Governor’s requested budget was cut to zero by the Massachusetts Senate Ways & Means FY 2014 proposed budget (4510-0772).  Sen. Keenan has filed an amendment to restore about $600,000 for additional compounding pharmacy inspections (proposed amendment 513), but it is not clear whether that amendment will pass or whether that amount is sufficient. Action by the US Congress may take some time, so it is up to the states to police compounding pharmacies until we get federal legislation.

Prior TIE posts here.  I was an appointed member of the special commission.

@koutterson 

The Atlantic has a story out on delinkage, an alternative model for recovering R&D costs in drugs & devices. Delinkage relies on prizes and grants instead of patent-protected sales above marginal cost. For the definitive background on prize-based alternatives to intellectual property rights, see Jamie Love’s page.

For many goods and services, relying on patents and market prices might be a great outcome. For prescription drugs, however, the “market” rarely sets prices, at least in countries with government-funded reimbursement systems. Access is another salient issue. We might be fine with patents raising the price of an iPhone 5 to be beyond the reach of the lowest income quartile (for example), but that result seems unacceptable when the drug is lifesaving and is priced beyond the reach of several billion people. Differential pricing theoretically addresses some of these concerns, but has been very challenging in practice.

One delinkage proposal is the R&D Treat proposal floated at WHO during the last few years, coming from the CEWG process. The Atlantic article describes the strident opposition to the proposal from the Obama Administration, which seems surprising. Some major pharmaceutical companies (such as GSK) publicly support delinkage, while most do not.

Several other delinkage proposals were discussed in late February at an FDA conference at the Brookings Institute, all focused on antibiotics. As I’ve written with Aaron Kesselheim (in Health Affairs and the Yale JHPLE), antibiotics might be a particularly apt drug class to test the delinkage concept. One model (with Thomas Pogge & Aidan Hollis) is the antibiotic health impact fund, paying annual prizes to the patent holder over 10 years for the actual health impact of the drug around the world. For the first time, companies would have a financial incentive to get the drug to the sickest people able to benefit the most at an affordable price instead of overmarketing a precious exhaustible resource. Another model is the Strategic Antimicrobial Reserve, paying a company NOT to market a particularly valuable antibiotic, saving it for a time of greater need. A third might be to modify antibiotic reimbursement away from unit sales (which drive resistance) through payer-based models.

Prior TIE posts on antibiotics here.

@koutterson

Over the past 20 years, hospitals have gradually implemented many safety improvements to reduce the number of hospital-onset central line associated blood stream infections (CLABSIs). In the June 2013 issue of Infection Control and Hospital Epidemiology, Matthew Wise & colleagues at the CDC give national estimates in critical care patients over the past two decades. The good news:

Total effect of these safety efforts:  from 104,000 to 198,000 CLABSIs were prevented over the 20 years. The job isn’t done, as about 15,000 still occur each year, but this is substantial progress. This is valuable for several reasons:

1. Patients don’t suffer from unnecessary life-threatening infections.
2. Everyone saves money.
3. Patients don’t need powerful antibiotics to fight these infections, antibiotics that often trigger other unintended consequences, such as resistance. New antibiotic drugs are valuable, but avoiding infection is the best way to avoid resistance. 
4. This is strong evidence that quality initiatives can reap real results over many years.
5. Most of the remaining 15,000 annual CLABSIs are clustered in medium and large teaching hospitals, suggesting more focused ongoing quality efforts.

One final point: this is exactly the type of surveillance and research that the CDC excels at. We need more funds here, not fewer.

Previous TIE posts on antibiotics.

@koutterson

Highlights from this 2 day conference:

• Peter Barton Hutt, the dean of the FDA bar, on the last 50 years at the FDA.  For example, FDA enforcement over the years has generally shifted from litigation to guidance.
• Ted Ruger (Penn Law) wins my best comment of the day award when he noted that the FDA was one of the few federal agencies with statutory roots in the pre-1942 Commerce Clause.
• A major cross-cutting issue was greatly enhanced post-marketing studies, combined with reducing standards for initial (or conditional) approval.
• Another cross-cutting issue was transparency of clinical trials data, which will also require a transition from Data Exclusivity to Market Exclusivity regimes.
• Deborah Autor (FDA Dep. Commissioner) gave her last talk before leaving the agency for generic drug maker Mylan.  She opened our eyes to the immense globalization of the supply chain and the huge regulatory challenges that follow.
• Many talked about communication issues.  Susan Winckler (FDLA) devoted much of her plenary to FDA communication with the public in a social media world.  Many other speakers discussed the post-Caronia issues with commercial speech restrictions.  The panel by Aaron Kesselheim, Chris Robertson and Jessica Flanigan focused specifically on this issue, but many other speakers touched on these First Amendment issues as well.
• The conference was drug heavy, and light on food law and devices, with just one panel on each.  But that’s common at FDA conferences.

The conference was live blogged at Bill of Health.  Papers will end up in a Oxford Univ. Press book, but you could email individual authors for working paper versions.

@koutterson

In a rare display of unanimity, the Supreme Court today ruled 9-0 that the “state action doctrine” did not apply to protect a Georgia hospital merger from antitrust scrutiny.
If a state wants to displace competition, that policy must be “clearly articulated and affirmatively expressed.” The general statute in Georgia did not meet that test.
Doesn’t mean the merger is blocked, just that state action isn’t the defense.

Previous TIE coverage here.  Full disclosure:  I signed an amicus brief supporting the FTC.

@koutterson

Robots in your chest, repairing your heart vessels.This study (Robert Poston is the corresponding author) finds that DTCA of r-CABG is effective in bringing patients to the hospital:

Between July 2008 and July 2009, a total of 103 potential patients, or their representatives, contacted our office as a consequence of the DTCA campaign, and requested a formal consultation from our office. Most of these were considered a “second opinion” consultation. After completing the consultation, 71 of the DTCA responders were found to be appropriate candidates for r-CABG and 54 (76%) went on to have r-CABG surgery at BMC, while the remainder chose to not have surgery at our center. Additionally, two patients had self-referred to the center in response to the ad, though for cardiac surgical procedures other than CABG (valve replacements).

During the study period, there were 934 CABG procedures in Massachusetts involving 1 or 2 bypass grafts. Assuming that most of these cases would have been candidates for r-CABG, the DTCA campaign generated 71 qualified leads (a 7.6% potential share of the market) with 54 actual converted leads (a 5.1% actual share of the potential market).

Moving 5.1% of the Boston CABG market via DTCA is a strong marketing result.

In other results, the r-CABG patients were younger, healthier and wealthier.  After controlling for these factors, clinical outcomes were similar but the r-CABG patients were slightly less satisfied after 6 months, having expected smaller skin incisions and quicker recovery from the robotic surgery.

In short:  effective marketing, but no proof of  superior efficacy. People buy robots, even absent evidence that they are better.

See the prior TIE coverage of agency cost issues in robotic surgery.

@koutterson

The Final Rule on the Physician Payment Sunshine Act was published last week. 284 pages, including the helpful Preamble. The law was designed to create a public website for all “payments and transfers of value” to “covered recipients” (physicians & teaching hospitals) by “applicable manufacturers” (generally, drug and device companies selling a prescribed product covered by Medicare). The theory is that transparency might mitigate potential financial conflicts of interest in Medicare. Any payment or transfer of value over $10 will be reported, as will smaller payments that aggregate over $100 per year.

Some highlights to the Final Rule:

• Data collection begins August 1, 2013, with the first report due to HHS on March 31, 2014. The law (s.6002 of the ACA) wanted data collection to start on January 1, 2012 with the first full year report on March 31, 2013. These rules are twenty months late in the data collection process.
• The law defined “physicians” as defined in s.1861(r) of the SSA, which excludes many categories of mid-level practitioners with limited prescribing authority, such as physician assistants. The Final Rule was sympathetic with the need to cover all prescribers, but felt constrained by the text of the statute. One alternative not explored would be to attribute these payments to the physician associated with these mid-level practitioners.
• The Preamble extensively discussed how to identify physicians to enable aggregation of data from various manufacturers by physician. The National Physician Identifier will be used, where available.
• All reporting is done by “applicable manufacturers,” not physicians or teaching hospitals. Reporting can be on a consolidated basis within corporate groups, and the Final Rule contains elaborate provisions to prevent transfers from being unreported through corporate affiliates, including offshore firms.
• If a company meets the definition of an “applicable manufacturer,” it must report all payments to covered persons (physicians and teaching hospitals), not just payments relating to a covered drug or device. Firms who meet a de minimum standard (10% of revenues in covered products) need only report payments related to covered products.

This should be a rich data set for researchers, available on the CMS website at some point in 2014.

I’ll post more on the Final Rules as I work my way through them.

@koutterson

The HHS contraception mandate rule out today is simpler and more flexible for actual religious organizations, but doesn’t do anything to resolve the issue for secular employers.

NYTs gives positive coverage here. The Notice of Proposed Rulemaking is here (but the website seems down at the moment). My prior TIE coverage of the secular employer suits is here.

@koutterson

More than half of the states challenged the ACA in various suits; they ultimately prevailed only in finding the Medicaid expansion unconstitutionally coercive. Justice Roberts’ opinion made the Medicaid adult expansion to 138% FPL optional on a state-by-state basis (the Red State Option).

Yesterday, Arizona’s Governor stopped pointing her finger and joined the Medicaid expansion. Pundits expressed shock, but no one should be surprised. Most of the plaintiff states will ultimately follow suit, for two reasons: politics & money. First, in most counties, the local hospital is one of the largest employers and these hospitals want the Medicaid expansion. The political pressure will be intense, well-connected, and local. Second, the federal match rate is indeed generous. It is hard to justify turning down such largess. But as the plaintiff states jump on ship voluntarily, it undermines their prior claims of unconstitutional coercion.

Meanwhile, in Oklahoma, the Governor is sticking to her guns.  200,000 Oklahomans will lose (or fail to obtain) coverage as a result. The state authorized $500,000 for a consultant to study options to cover these people. Will the report recommend the expansion?

@koutterson