Favorite story of the day

"Doctors in trouble for not giving man cervical smear"

(Hat tip: Hot Air)

Something to keep in mind

A quick break from election politics for a moment. Pfizer may be having trouble with what is supposed to be its next big drug:

"Pfizer said yesterday that clinical trials of torcetrapib — a heart medication that is the most important drug in the company’s pipeline — confirmed that it raises blood pressure, a potentially serious side effect.

Any problems with torcetrapib would be a serious setback for Pfizer, the world’s largest drug company. Pfizer has been counting on the new medicine to eventually replace the $13 billion in annual sales from the cholesterol-lowering drug Lipitor, which loses patent protection in 2010.

Cardiologists and Wall Street analysts alike have been closely watching the clinical trials of torcetrapib, a medicine intended to raise so-called good cholesterol.

Pfizer’s stock dropped 2 percent after the announcement by the company, which has been researching torcetrapib for a decade and is spending $800 million to develop it."

For every successful drug that makes it to market, and that is "high priced" during its period of patent exclusivity, there are hundreds (if not thousands) that work was done on but that don't make it. The successful drugs have to pay for them as well. In this case, if torcetrapib were to fail, nearly a billion dollars needs to be recouped. The brightest minds at Pfizer have worked on this for a decade and it still might fail. Something to keep in mind in the heat of campaigns when drug costs are invoked and drug companies are villified.

There are mistakes, and then there are mistakes

Posted by a lawyer friend of mine. I think the woman has a good case.

UPDATE: I realized after I posted this that I probably should have also included a warning. The link is really disgusting; click through at your own risk.

UPDATE 2: A doctor friend of mine writes:

"Just wanted to let you know that I've seen those surgeries, and connecting the colon to the vagina is not all that hard to do. In fact, its one of those things that surgeons 'double check' to make sure they haven't done."

I had no idea. Regardless, if you are a surgeon, for the love of god, please double check.

Health care - are we getting what we pay for?

I've been meaning to get to it for a few days, but there was an an excellent article about health care spending in the New York Times last week. The article makes the essential point that while, yes, we are spending much more than we used to on health care, we are also getting much more for what we spend:

"To understand why, it helps to look back to a time when Americans didn’t worry much about health care costs. In 1950, the country spent less than $100 a year — or $500 in today’s dollars — on the average person’s medical care, compared with almost $6,000 now . . . Most families in the 1950’s paid their medical bills with ease, but they also didn’t expect much in return. After a century of basic health improvements like indoor plumbing and penicillin, many experts thought that human beings were approaching the limits of longevity. 'Modern medicine has little to offer for the prevention or treatment of chronic and degenerative diseases,' the biologist René Dubos wrote in the 1960’s."

Let me interject here a brief observation that the accepted medical wisdom at any given time frequently turns out to be remarkably incorrect, and not always that far into the future. This is a topic I've done a lot of thinking about and want to explore more in future posts. But I digress.

"But then doctors figured out that high blood pressure and high cholesterol caused heart attacks, and they developed new treatments. Oncologists learned how to attack leukemia, enabling most children who receive a diagnosis of it today to triumph over a disease that was almost inevitably fatal a half-century ago. In the last few years, orphan drugs that combat rare diseases and medical devices like the implantable defibrillator have extended lives. Human longevity still hasn’t hit the wall that was feared 50 years ago.

Instead, a baby born in the United States this year will live to age 78 on average, a decade longer than the average baby born in 1950. People who have already made it to their 40’s can now expect to reach age 80. These gains are probably bigger than the ones the British experienced in the entire millennium leading up to 1800. If you think about this as the return on the investments in medicine, the payoff has been fabulous: Would you prefer spending an extra $5,500 on health care every year — or losing 10 years off your lifespan?"

In fact, there are economists that do exactly this type of research, trying to decide what the "value" of extra years is, for example. Morbid stuff, and we'll skip those details for now. But you get the idea. Ignoring the exact amounts, we can all agree that increased health and longevity have value, and things that have value usually cost money. No surprise there.

"Yet we often imagine that the costs and benefits are unrelated, that we can somehow have 2006 health care at 1950 (or even 1999) prices. . .

Somehow, going to the mall to buy clothes has come to be seen as a vaguely patriotic way to keep the economy humming, and taking out a risky mortgage is considered to be an investment in one’s future. But medical care? That’s just a cost.

It’s easy to be against high costs, and it will no doubt be hard to come up with a broad health care solution. But the way to start is by acknowledging that an affluent society should devote an ever-growing share of its resources to the health of its citizens. 'We have enough of the basics in life,' Mr. Cutler, the economist and author, points out. 'What we really want are the time and the quality of life to enjoy them.'"

There are a lot of complex issues here, many of which deserve to be dealt with separately. We'll get to each of them eventually, just not all today. Instead, the message I want to leave you with now is two fold:

First, the health care that we "buy" today (in aggregate) is quite different and vastly superior to what we have bought in the past. In other words, it is important to remember that we are getting something very different from what we did, say, 40 years ago. We are so used to amazing new medical technologies, that it is easy to forget how revolutionary, not even evolutionary, so many of them are.

Second, there is no specific level of health care spending that is the "right" amount to spend. Go back 100 years, and a much greater share of our national income needed to be consumed to keep everyone fed than we need to spend today. Take that change, and many others, and one consequence is that as a society we have a greater ability to devote resources to health care than we have had in the past. To say this another way, there is nothing per se wrong with a modern, prosperous society deciding (implicitly or explicitly) to spend a greater share of GDP on health care, compared to what was spent historically. In many ways, this is a benefit of having to spend a lot lower share of GDP on, for example, food.

Of course, we want to make sure we are happy with what we are getting for that money, and that we prefer consuming this amount of health care as opposed to other potential uses for the money. Also, questions of access, waste in the system, costs of specific treatments, etc. - all of these are important, but none alter the basic conclusion. You can be concerned about all of those things and others, but that is different from being alarmed that overall health care has reached some specific level or share of expenses. There is nothing wrong with investing increasing amounts in our own health, and likely a whole lot right about it.

Wal-Mart and drugs, revisited

Walgreen, while announcing their quarterly results, commented on Wal-Mart's plan to reduce the price of some generic drugs:

"Rick Hans, Walgreen's director of finance, said during the call that he believed Wal-Mart's low-price plan for some generic drugs 'won't significantly impact [Walgreen's] business.'

The Wal-Mart plan covers 291 drugs, while Walgreen pharmacies stock about 1,800 generic drugs, he said.

'About 95 percent of our pharmacy patients have prescription insurance coverage and they are only responsible for a small co-pay,' Hans said.

He added that for the drugs that Wal-Mart will sell for $4, the initial average co-pay at Walgreen is $5.30, and $3.18 for Medicare Part D prescription coverage."

This nicely - although unintentionally - demonstrates a key part of what is wrong with the way we pay for a lot of our health care. Hans is comparing the total cost that Wal-Mart is charging with the portion of Walgreen's price that consumers have to pay (i.e. the co-pay). What he is obviously ignoring is the additional amount, above the co-pay, that the insurance company or the government is paying to Walgreen as well.

Separate those who make the decision from those who pay for the decision, and you shouldn't be surprised that costs tend to rise. The interesting thing to watch here will be if insurance companies start to either require or encourage (perhaps through the waiving of co-pays?) their members to use Wal-Mart where the program is available. Given that type of development, will Walgreen then drop its prices as well? It certainly hopes not:

"'Our convenience, locations and services have proven to be bigger factors for our patients than a few dollars in price difference,' he said."

That is a reasonable and - in my mind - rather optimistic hypothesis. It is also one that seems about to be tested.

Gadfly takes requests, part II - Wal-Mart and drug prices

The second request involved this article about Wal-Mart's plan to charge $4 for about 300 generic drugs. Again, a hearty "Bravo." This is basically a case of Wal-Mart doing what it does best:

"Even company critics have praised the plan, conceding that it represents a case of the giant retailer using its size and ability to wring out costs to improve the lives of regular Americans. . .

As it has for dozens of consumer products, Wal-Mart reduced prices of generic prescription drugs by attacking the few remaining pockets of inefficiency in its operations. For example, it cut out third-party distributors that stood between the chain and drug manufacturers. . .

The company also introduced rapid, automated machines into its pharmacy distribution centers that had long relied on workers to fill orders. In doing so, Wal-Mart reduced the amount of time that costly drugs sat in warehouses, rather than on store shelves where they could create revenue. 'It is not glamorous,' said Bill Simon, an executive vice president at Wal-Mart. 'It’s pennies at a time.'"

The generic drug market is already incredibly competitive at the manufacturing level; it's great to see Wal-Mart bring some old fashioned market pressures to bear at the distribution end of the market. Hmm, how long will it be before we hear calls of "unfair competition," since smaller pharmacies likely wouldn't be able to benefit from (and then pass along) similar economies of scale? Maybe the company's critics will skip this one. . .

Let me take the opportunity, by the way, to draw a distinction between these generic medicines and newer ones that are still under patent protection. Basically, we have to be willing to stomach high drug prices for the first 10 years or so that treatments are on the market. That's the price we as a society pay for the remarkable amount of money that is spent on medical research and development each year. These investments have no guarantee of return, and very often wind up amounting to no benefit for the companies involved. Limit the ability to earn economic rents during patent protection periods, and the level of resources devoted to new treatment development will drop.

As for those drugs whose patents have expired, however, let competition drive down the prices as far as possible.

Gadfly takes requests, part I - HIV testing changes

One of my earliest and most loyal readers has requested comments on two recent pieces in the New York Times. As I try to be as customer-friendly as possible, I am only too happy to oblige.

The government has recommended HIV tests as part of routine medical care, a change from their historical position. Bravo. We're 25 years into this thing, AIDS is a disease with existing but imperfect treatment options, and it is time we regularly treated it as such.

Not everyone agrees, however:

"Rose A. Saxe, a staff lawyer with the AIDS Project of the American Civil Liberties Union, said her group opposed the recommendation because it would remove the requirement for signed consent forms and pretest counseling. In settings like emergency rooms where doctors are strapped for time, Ms. Saxe said, 'we’re concerned that what the C.D.C. calls routine testing will become mandatory testing.'

Patients, particularly teenagers, she said, 'will be tested without an opportunity for understanding the magnitude of having a positive result.'"

I think this type of testing should follow the model of blood work, which gets screened for lots of things (doctors in the audience, help me out with other examples of things blood is normally tested for). If I ran the world, someone who consents to blood work consents to the rest of the medical tests that would normally go with it (unless they specifically ask to opt out, I guess) What could a rational, intelligent, defensible position be for not knowing one's HIV status, especially in 2006? I don't sign a special consent to find out my cholesterol levels, and I see no need to do so for an AIDS test.

As for the idea of the need for deep, pretest counseling? Nonsense. What other diseases do we require this type of approach for? I go in for a check-up, and might wind up having a prostate exam. The doctor doesn't spend time with me beforehand to explain that - even if he feels something and even if it eventually turns out to be prostate cancer - in general prostate cancer grows very slowly, and if we catch it early there are a variety of courses of treatment available, etc. No, that is not done; instead we cross that bridge when we come to it. Of course it would be terrific if we all had lots of pretest counseling, became perfectly-informed patients, etc. But to stipulate it as a requirement, and by extension prevent testing when it does not occur, is in my mind wrong.

Once again, AIDS is a disease. We all benefit - those who are or will be sick most of all - from people knowing when they are infected/sick with a disease. Attempts to continue to treat AIDS as in a "special" category are wrong-headed, and a long time past their prime.

Depressing, but predictable

What do you can get when you combine 1) an industry with incredibly long development cycles, complex products and high investment costs with 2) an inefficient political process that couples bureaucracy with a lack of real understanding of the industry in question.

This is what you get.

Drug development is incredibly long, costly, and unpredictable. Even worse, there are rarely clear cut home runs. Almost any treatment has side effects of some sort, the question is always whether or not the benefits outweigh the costs. There are reasons that biotech and pharmaceutical companies get it wrong so often, and that billions and billions of investor dollars are spent each year on programs that eventually wind up failing (many miserably). In short, this stuff is really, really hard to do, even for the smartest people out there.

This is not a "point the fingers" post. This is a "this is scary for all of us" post, perhaps even more so for those of us who live in Manhattan or other likely targets. And a large part of the scariness is how little can really be done about it.

Depressing, but predictable. Or maybe predictably depressing.