Fasten seat belts (2)

Let me ask you a question: Do you agree that your government spends 12% of the pharmaceutical budget in a new drug? I understand that if the answer is yes, you also agree to reduce 12% of current expenditures in patented drugs, reducing quantity, price or the benefit. Otherwise you have to explain clearly where to find 12% of additional resources.
This is what is happening in the UK NHS on new Hepatitis C drug. Have a look at this site for the details. And by now the decision is that it is "prohibitive" and "unaffordable".
Last Sunday CBS 60 minutes broadcasted an interesting report on "eye popping" cost of cancer drugs. I suggest you spend 15 minutes of your time watching it:



Don't miss the details on "financial toxicity" as WSJ highlights. How this can be true?
Nearby, new drug benefits are approved without any known cost-effectiveness-budget impact consideration. This is an example of  alleged "responsive government".

PS. My former post on the same issue.

PS. On bribes, again.

PS. Today this blog has reached the 100.000 visits. That's excellent!!!. I really appreciate your interest in my posts.

The seven damaging dilemmas

Rock, Paper, Scissors: Game Theory in Everyday Life

Let me pick the seven deadly social dilemmas from this book:

• Prisonner Dilemma, when communication between two people is not possible and this prevents any cooperation that would end in mutual profit.
• The Tragedy of the Commons, which is logically equivalent to a series of Prisoner’s Dilemmas played out between different pairs of people in a group.
• The Free Rider problem (a variant of the Tragedy of the Commons), which arises when people take advantage of a community resource without contributing to it.
• Chicken (also known as Brinkmanship), in which each side tries to push the other as close to the edge as they can, with each hoping that the other will back down first. It can arise in situations ranging from someone trying to push into a line of traffic to confrontations between nations that could lead to war, and that sometimes do.
• The Volunteer’s Dilemma, in which someone must make a sacrifice on behalf of the group, but if no one does, then everyone loses out. Each person hopes that someone else
will be the one to make the sacrifice, which could be as trivial as making the effort to put the garbage out or as dramatic as one person sacrificing his or her life to save others.
• The Battle of the Sexes, in which two people have different preferences, such as a husband who wants to go to a ball game while his wife would prefer to go to a movie. The catch is that each would rather share the other’s company than pursue their own preference alone.
• Stag Hunt, in which cooperation between members of a group gives them a good chance of success in a risky, highreturn venture, but an individual can win a guaranteed but lower reward by breaking the cooperation and going it alone.

Think for a similar situations in recent cases in close politics and health policy and management. For sure the improvement on the final resolution is related with this statement:

Cooperation would lead to the best overall outcome in all of these cases, but Nash’s trap (which is now called a Nash equilibrium) draws us by the logic of our own self-interest into a situation in which at least one of the parties fares worse but from which they can’t escape without faring worse still.

And if this is so, what then must we do?

• Changing Our Attitudes: If we came to believe that it was immoral to cheat on cooperation, for example, that would obviously help to resolve many social dilemmas.
• Benevolent Authority: Relying on an external authority to enforce cooperation and fair play.
• Self-Enforcing Strategies: Developing strategies that carry their own enforcement so there is no incentive to cheat on cooperation once it has been established. 

And if this is so, how can we implement it?
And so on... 

Fasten seat belts

We have entered into an unknown new world: drug prices -for innovative drugs- are on track to disappear. The NHS has agreed a cap on expenditure for a hepatitis C (sofobusvir) new drug in €125m without disclosing the unit price. Some people may consider it an opaque strategy in times that politicians claim transparency.
In my opinion, such a situation allows to understand better that the pharmaceutical market for innovative drugs is mostly a monopsony (one buyer) in a monopoly (one seller), it is not a competitive market - and this is what I have always considered. Therefore, resource allocation is the result of a bargaining between both parties, and the unit price is irrelevant. The buyer wants to maximize health,  the seller is maximizing income, this is exactly the struggle.
The key question is: How much is NHS willing to pay for better health?. As far as  the budget is limited, the number of treatments times the price is not the right way to proceed to maximize health under constrained resources.
Any government has to set priorities for expenditure according to expected health value created. This information should be public. In any case, when a new drug is available the government should clearly define which benefits are cancelled and which are acceptable. A responsible minister can't  agree new expenditures without any budget.
Therefore, innovative pharmaceutical market is not really a market -right now is clear- and governments should set priorities according to resources available -right now is also clear that they haven't done it-.
Fasten seat belts, we are entering into trying times without any political compass-gps. Citizens are expecting something different. I still remember when Victor Fuchs told long time ago: usually health economists discuss incremental cost-effectiveness in limited marginal terms, the real issue appears when such an amount is enormous. The case of hepatitis C is the example of such a situation, and only health policy and deliberative democracy are the tools to confront it. Unfortunately, this was not the strategy applied nearby.

PS. Catalonia in contention, at Harvard Political Review. Must read, if you are interested on what's going on. Otherwise, try Bloomberg op-ed or LAtimes.

PS. Reading Francesc-Marc Alvaro op-ed I always learn something.

PS. Rating catalans' well-being by OECD.

Ricard Molina. Muntaner-Velódromo. Galeria Barnadas

Bundled payments, update

While I was reading the HA blog I  thought that the word innovation is like a joker, when somebody has a real concern about potential income in the future, any change may harm innovation. The current situation in US of bundled payments is still embryonic and biased towards certain services. Bundled payments need to be holistic, not partial in order to deliver clear results. Otherwise, incentives in non-regulated areas increase. Maybe those that are concerned with innovation will move towards such areas...

Fines, settlements and reputation

Reputation Capital: Building and Maintaining Trust in the 21st Century

In the last decade there has been a proliferation of cases of fraudulent marketing practices and bribery in pharmaceutical industry. In the case of US you may check the details at Propublica. In EU we don't have a similar summary (as far as I know). The latest case in EU involves 6 companies and fines of €427m . In China, the latest case is about $500m fines for bribery. This case was started by an anonymous whistleblower.
While it is no surprise that pharmaceutical industry reputation is weak, corporate social responsibility is still supported by the firms. I can't understand why. In the page 347 of this book you'll find a chapter on this issue: "Is there no prescription? Reputation in the pharmaceutical industry". It says:

If the pharmaceutical industry does not present itself in an active and self-confident way, it cannot expect the situation to improve. For, apart from itself, it has no other advocates

Behavioral Forensics: Why Good People Do Bad Things

A.B.C.'s of Behavioral Forensics: Applying Psychology to Financial Fraud Prevention and Detection

The fraudsters paradigm explained in one book: the bad Apple (rogue executive), the bad Bushel (groups that collude and behave like gangs), and the bad Crop (representing organization-wide or even societally-sanctioned cultures that are toxic and corrosive). As far as fraud and corruption is a nowadays critical issue, understanding what to do about it, is required.
A remarkable statement from the book:

Being curious is indispensable, and asking the right questions is the only way to get to the bottom of things. Once fraudsters realize that they are not dealing with fools, they are usually smart enough to back off. The potential fraud is then nipped in the bud or successfully foiled. The power of asking the right question increases logarithmically as one moves up the organization; indeed, the most important omission is the unasked question.

 Didier Lourenço at Galeria Barnadas                        

Unwarranted variations, what's next?

Geographic Variations in Health CareWhat Do We Know and What Can Be Done to Improve Health System Performance?

We all know that there are unwarranted variations in health care. Unfortunately we haven't the same analysis about the drivers and its impact on health outcomes for such variations. OECD has just released a report on this topic, and suggests the following:

Eight types of policies might be envisaged:
• Public reporting on geographical variations, in order to raise questions among stakeholders and prompt actions, particularly in “outlier” regions.
• Setting targets at the regional level can support public reporting and help promoting  appropriate use.
• The re-allocation of resources to increase (or reduce) supply of resources (e.g., beds, doctors) in regions with low (or high) utilisation rates.
• Establishment and implementation of clinical guidelines in order to promote greater consistency in clinical practice.
• Provider-level reporting and feedback to improve clinical practice and discourage unnecessary provision of health services.
• Changes in payment systems to promote higher (or lower) use when there is high suspicion of underuse (or overuse).
• The measurement of health outcomes, to promote greater consistency in clinical practice that ensures improved patient outcomes.
• The utilisation of decision aids for patients, to promote more informed decisions about benefits and risks of various interventions, and to better respond to patient preferences.

These proposals fall short in my opinion. After a decade of publishing information on variations, public reporting has not raised deep questions for "stakeholders", at least as far as I know. Incentives have not changed substantially in order to reduce differences in utilization. Current payment systems require a redefinition from scratch in order to take into account such issues. Any citizen should be concerned about the results of the report. Something should be done.

PS. By the way, regarding OECD recommendations, they have not explained clearly what Wennberg suggested: shared decision making

PS. Bad journalism at LV. Why CAC doesn't care about complaints on written press.

Ferrando at Galeria Barnadas

How newcomers become bureaucrats?

Becoming Bureaucrats Socialization at the Front Lines of Government Service

It is quite surprising how public service management usually is considered from a reductionist perspective. Some people think that if we understand the rules and incentives that underlie in public service, then we can understand its performance. The constraints to change the factors that drive performance are well known and it seems that nothing can be done to surpass inertia.
A new book provides fresh air on this issue. It argues that:

Bureacratic behavior follows a logic of appropriateness (LOA). This decision-making theory, developed by James March and Johan Olsen, suggests that organizational behavior is associated with norms that individuals develop about what constitutes appropriate, exemplary behavior

A key message:

The traditional understanding that bureacracies change people may be true but beside the point. More important , in this account, is how bureacracies find people and how people find them.

I still don't understand why most physicians-nurses-... in NHS must be civil servants. I have said that many times and nobody has been able to find an argument. In my opinion this is one of the pieces that reflects an outdated system without the possibility to break its inertia.

Outsourcing boards of directors?

BOARDS-R-US:RECONCEPTUALIZING CORPORATE BOARDS

A comment in The Economist suggests a new approach: outsourcing boards of directors. Such a strategy would be justified to solve the current widespread and deep-rooted problems. They provide some examples and we all know some disfunctions. However, such proposal is open to dispute and the conflicts of interest that may arise may not compensate the professional approach of such "firms". On the other hand something should be done and may be this is an interesting approach for publicly owned firms as far as they are not exposed to market competition. Health care could be an example of a sector to experiment and to improve providers' governance.
The original article is in Stanford Law Review.

Is nudging ethical?

The challenges and opportunities of ‘nudging’

A forthcoming Editorial in the Journal of Epidemiology and Community Health provides some amunition for those interested on nudging.

The answer to the question if nudging is an ethically acceptable way of governing people’s behaviour depends on the ethical principles one adheres to. Our core point is that there is no magic trick, any form of policy intervention will impose a criterion against someone’s will, and democracy requires: (1) transparency from the political system in terms of the values selected in deciding and designing an intervention; (2) and at least an evidence-based justification of choice.

If the preferences of an individual change, then we cannot state that his first choice is better/equal/worse than his second one without introducing a ranking among his preference systems. As a result, value-free interventions cannot be defined.

If no magic bullet is available on the policy side, the same applies to research. In the domain of health, behavioural approaches must cope with the challenge of not neglecting the socioeconomic and contextual determinant of health inequalities

We argue that neglecting socioeconomic variables would be clearly a mistake also in the design of nudge. However, our point is precisely that behavioural science (and nudge as its policy implication) can incorporate an analysis of social and cultural factors, and avoid cognitive universalism.

Easier said than done. For an op-ed, it fits with the audience, for a strict and concrete policy recommendation requires further elaboration. I can't see  a practical and concrete applicable approach nowadays. Let's continue waiting.

PS. Must read, on medical devices in BMJ.A systematic review of new implants in hip and knee replacement

PS. A flawed PNAS article unveiled. Again and again, where is peer-review?

Jordi Pintó at Galeria Banadas

Retrofuturistic payment systems (2)

Long time ago I alerted about a potential payment system that tried to convince everybody and didn't satisfied its goals for equity and efficiency. I was concerned about reproducing the mistakes of the past and creating flaws for the future. What I said more than two years ago, has been recently confirmed more or less by a recent decree. Its detailed analysis goes beyond any post in a blog. The retro part is related to an administrative discretionary classification of hospitals that was initially defined two decades ago (Decree  June 30th, 1992) and failed afterwards. The future part is related to a dual payment system: population and service based that will be defined according to idiosyncratic situations. Both are the pillars of uncertainty in the model.
Right now the most important task to accomplish will be to think about its next reform.

Recruiting and wage bargaining in health care

Wage-setting in the Hospital Sector
Huge differences in physician wages are well-known even after adjusting for PPP. Regulatory design on how recruiting and remuneration is set differs across countries and within them. Now OECD explains such differences for some of them.
If we all agree that health care management requires some autonomy level, the recruiting function should be delegated to managers. This is what happens in most OECD countries, except in Italy, Ireland, Greece, Spain, (and Israel) p. 19. Right now I remember that these are the same countries that needed some bailout... This is not by chance...it's by design...
Somebody should change such status, recruiting and remuneration needs flexibility and adaptation to local conditions.

PS. Paper from ECB  INSTITUTIONAL FEATURES OF WAGE BARGAINING IN 23 EUROPEAN COUNTRIES,THE US AND JAPAN

PS. NYT. For those with melanoma, Will the NHS be able to pay 150,000$ for living one additional year of life with a 69% probability?

Dynamic risk adjustment in provider's payment

Prevention and Dynamic Risk Adjustment

Adjusting Medicaid Managed Care Payments for Changes in Health Status

"Risk-adjustment methods have an inherent structural flaw that rewards preventable deterioration in enrollee health status and improved coding of disease burden", this is the key statement in Fuller et al. article. The answer they provide is the introduction of an additional payment adjustment according to changes in health status for similar mix of enrollees. The payment adjustment being proposed is based on changes in aggregate relative payment weights for all enrollees avoiding any individual adjustment.
This is a concrete application of the initial dynamic risk adjustment proposal that Eggleston et al. made in 2007. They suggested a two step payment system: a conventional risk adjustment (for variations in population health outside the provider’s control) and an additional one related to prevention efforts.
There is still a lot to learn about it. Let's keep an eye on this crucial topic.

PS. Have a look at Commonwealth Fund anouncement: "Our initiative recognizes that a wide range of factors influence providers’ choices, beyond financial rewards or penalties, including intrinsic motivation and medical professionalism, organizational influences, and policy" (see Box)

Our health and its determinants (2)

The Relative Contribution of Multiple Determinants to Health Outcomes

There are five major categories of health determinants: genetics, behavior, social circumstances, environmental and physical influences, and medical care. If this is so, do we know the relative importance of each factor?
Last February I posted in this blog a figure by Kindig that explains their contribution. Now a Health Affairs brief summarises different views. Check Exhibit 1, and you'll see there that behaviour represents 35-50% of health status according to different estimates.
The message is clear in our current evironment of mostly non-communicable diseases, we have to find better ways to change behaviour towards healthier people. Decisions and actions, short and long term, risk and responsibility, costs and benefits, trade-offs of every day life.

PS. Must read:  The Ethics of Ebola.

The first three doses of ZMapp were administered to the American medical missionaries Kent Brantly and Nancy Whitebol, who have recovered, and the Spanish priest Miguel Pajares, who has since died. Some offered a practical justification for the widely criticized selection of Brantly and Whitebol: It makes sense to treat health workers first, so that they can continue to help others. But this argument largely fell apart with the selection of the 75-year-old Pajares.

PS.  "Only four companies today make vaccines, compared to 26 companies 50 years ago.". My concerns about a future systemic drug industry are closer than expected (at least in vaccines).