• Paying for things that work

    I’ve received a number of emails about Ezekiel Emanuel’s and Steven Pearson’s op-ed in the NYT on Monday. I admit, part of the reason I haven addressed it is because I’m a little annoyed that so many of you thought this was a new idea. How many times have we written here about paying for things that work and not paying for things that don’t?

    But I guess it isn’t “real” if it isn’t published in the NYT. (That was sarcasm).

    Now to their argument. Here’s the setup:

    Proton beam therapy is a kind of radiation used to treat cancers. The particles are made of atomic nuclei rather than the usual X-rays, and theoretically can be focused more precisely on cancerous tissue, minimizing the danger to healthy tissue surrounding it. But the machines are tremendously expensive, requiring a particle accelerator encased in a football-field-size building with concrete walls. As a result, Medicare will pay around $50,000 for proton beam therapy for a patient with prostate cancer, roughly twice as much as it would if the patient received another type of radiation.

    For a few pediatric brain cancers, this type of therapy seems to be better than what we would otherwise do. Fantastic. The problem is that the centers, in order to make the machines profitable, have started to used them on cancers where there is no evidence that they do a better job. Should insurance have to pay for that extra cost? Should Medicare?

    We could say no, but then we won’t ever know if the things work. We could say yes, but only for studies. I’m more inclined to get behind that, especially if we agree that if the studies re negative, we stop paying. Or, we could go with the plan that I’ve been advocating for some time:

    The most promising option is a new approach called dynamic pricing. Medicare would pay more for proton beam therapy, but only for diseases that are proven to be treated more effectively by the therapy than by other forms of radiation. For cancers like prostate, it would pay only what it pays for the cheaper alternatives. But if studies were done showing that proton beam therapy was better than other treatments, the payment would go up. If no studies were done, or the new evidence demonstrated no advantages, then coverage would continue, but at the lower reimbursement.

    Of course hospitals could continue charging patients more for proton beam therapy, and patients who wanted the treatment could pay the difference themselves. But this should not be seen as unfair to those who can’t afford it, because there are alternatives that are just as effective.

    I have absolutely no problem with people paying for stuff they want. This is the United States of America, and you should be free to pay for things with your own money. But I also have no problem saying that we shouldn’t use taxpayer money to pay for things that are more expensive, yet no better. I think I’ve been pretty consistent in saying that.

    My problem with op-eds like this, though, is that they always focus on new, rare things. Oh, the outrage of proton beam therapy! It’s $50,000 per patient (versus $25,000 for non-proton beam therapy).

    So, yes, this makes for a great piece in the NYT. But it ignores the millions of smaller things we do every day on a much larger scale that don’t work. The half-million arthroscopic knee surgeries to correct osteoarthritis of the knee, at a cost of $3 billion. The hundreds of billions of dollars we spend on drugs that are absolutely no better than other, cheaper ones. The MRI tests we order and the procedures we do that likely aren’t necessary. The mammograms, PSA tests, and PAP smears that can’t even be discussed without outrage and death panels being brought into play.

    It’s a cultural problem as much as a medical one. It won’t be fixed by focusing on a rare treatment for a fatal disease. That makes for a great op-ed, but it’s not going to change the way we do things.

    • Agree with you completely Dr. Carroll, & understand your annoyance. However I think the value of the NYT op-Ed is wide exposure to people who have not as yet begun thinking about what we must do to rein in healthcare costs. Too many people are uninformed, or, worse yet, misinformed. Much education & discussion is needed if we are to improve our healthcare system and reduce costs.

    • This is the problem our society has when it uses other people’s money to pay for medical care–it leads to unlimited demand, which, of course, is unsustainable.

    • C’mon man, insurance is NOT the problem. (It’s not the solution, either.)

      Proton-beam therapy and other costly treatments don’t get overused because people have health insurance. They get overused because doctors prescribe those treatments, often employing expensive technology in which doctors or hospitals have invested large sums of money. In the US, health care demand is largely created by individuals and organizations that own the supply, not by the patients they are treating.

      The most expensive tool in American health care continues to be the pen in a doctor’s hand, which is too often wielded in ways contrary to or unsupported by evidence of positive patient outcomes. You can’t restrain the medical-industrial arms race without changing supplier (i.e., provider) behaviors.

      • And providers orders “force” insurance companies to pay? Are you kidding? Make patients cover more of their own costs, and demand WILL fall.. C’mon yourself.

        • One reason people purchase health insurance is to hold down out-of-pocket costs, knowing that their insurance company will sign contracts with providers to pay various amounts when doctors prescribe various treatments and procedures. Sure, if you do away with health insurance, or reduce its role, “demand” will go down — but mortality and morbidity and lots of other undesirable outcomes will increase.

          No one knows when he/she or a family member will become ill, and medical expenses remain a major cause of individual bankruptcy in the US (but not in countries with universal coverage). There’s lots of evidence that when people are forced to spend more out of pocket, they choose not to receive effective care as well as “unneeded” care. But when doctors prescribe a drug or a treatment, most patients don’t have sufficient information to make a different choice.

          Most people simply do not have the resources to pay cash for medical treatment of serious illnesses. Perhaps Ron, like libertarian standard-bearer Ron Paul, is willing to let their bodies pile up outside hospitals where they can’t afford to be admitted, but most Americans aren’t. Even Tea Partiers warn “Don’t touch my Medicare.”

          • Don’t forget that a lot of health care expenditures really don’t make a difference in overall mortality or morbidity. So, if people have to pay more out of pocket before they reach their deductible limits, it really won’t make a difference in real outcomes, but will make a tremendous difference in overall health care spending.

    • It sounds ridiculous.

      Until we remember that one day, computers (less powerful than your cell phone) occupied similarly ridiculous structures, and until we consider that the rate of increase in the price/performance of technologies (including medical technologies) is at a very steep point on an exponential curve.

      Progress has a price tag. I certainly don’t know whether this device represents “progress” or not, but we’re not going to find out unless we can test it in these expensive facilities, which have to be paid for by someone. Unless, of course, we just opt out of innovation.

      The US is one of maybe 15 countries with one or more of the 40 or so of these facilities in existence.

      The problem with government run health care is NOT found with Proton beams. It is waste, fraud, abuse, inefficiency and market-disrupting price controls (in no particular order). Let’s solve those problems and allow technical innovation to proceed.

      The same applies to the expensive drugs you complain about: If you don’t have expensive drugs, you won’t one day have cheap generics.

    • If we need to invest in pharmaceutical research for truly innovative drugs, then we, as a country should choose to do so. Maybe we need to have a pharma tax or something. But we should be honest and clear about what we’re investing in.

      I know of no good arguments to be made that the health care system should cost more so that I can have a me-too drug that isn’t really better. Otherwise, you’re making an argument that we simply cannot spend less on health care or we will have no innovation.

      • Dr. C,

        We invest in, and reward the creation of innovative drugs by purchasing them. We buy products that work, and avoid those which don’t. Just as we do with thousands of other products.

        When it comes to pharmaceuticals and “me-too” drugs, what we’re really talking about is patent policy. If you provide only a 10 year (average effective) patent for a particular drug, you induce companies to this behavior in order that they are able to maximize their returns on investment. Had there existed a more reasonable patent policy in the first place, drug manufacturers would be pushed toward true innovation — both as a measure to maximize returns on a given drug, but also to insure new drugs are sufficiently innovative to take full advantage of a longer patent life.

        Eventually, all worthwhile drugs become generic and society as a whole benefits when that day comes (Prozac is a perfect example: a true life-saving innovation in its time, now available to the masses at relatively low cost — even though they may try to make extra money out of it with Sarafem).

        A rational view of pharma, or biotech, or any of these firms, finds that they have to be able to hold a promise of profits to attract investors — and without that, they’re useless (a great example is the CT scanner, which EMI commercialized — only after it was sold to GE, which had the capital to make something of it, did CT scans become routine).

        Electronics technology is a great model for what truly free markets can do when unleashed. This month, LG will unveil its 55″ OLED television at a cost of $5,000 — almost unimaginable 10 years ago. It would not be unreasonable to believe that television could be under $2,000 within two or three years. The rapid developments in nanosciences and biotech could create the same kind of innovation, but not without free markets to provide the capital to innovate and market new products. This is a function our government just cannot contribute to beyond basic research.

        While I don’t want government to needlessly waste money, the truly huge savings are available in other areas like waste, fraud, and government inefficiency, which serve no positive purpose at all. Spending too much for a given medication at least furthers the cause of innovation.

        • “Electronics technology is a great model for what truly free markets can do when unleashed. This month, LG will unveil its 55″ OLED television at a cost of $5,000…”

          I don’t know what you mean by “truly free market” but every TV I’ve ever bought has a sticker on the back that tells me all the FCC regulations that the TV complies with. And I imagine this 55″ OLED will have the same sticker. So, it’s not a truly free market unless you consider a heavily regulated market free. And, if that’s so, I don’t see what the problem would be with a heavily regulated pharmaceutical market either.

          I don’t think Dr. Carroll has any problem with investment in or profit from truly innovative drugs that actually provide significant improvement over currently available options. I know I don’t. But too many drugs or devices or procedures are marketed that are not improvements though the cost differential over current options is large and, sometimes, huge. Pointing out that new treatment options may not be an improvement at all and that neither public nor private payors should have to pay a premium price for no added value isn’t a problem in my book.