Fasten seat belts (3)

In former posts I have argued that pharmaceutical pricing is forging a new trend. The summary is in this figure (US prices):

The latest FDA approved drug is Harvoni, for hepatitis C. This new drug will compete with Sovaldi, the best drug launch ever made by the same manufacturer, 9.000 million $ in sales in 9 months.
The soaring costs of drugs is also affecting the generics market in US. Have a look at this blog.
As far as the economy is not growing at the same pace, new resources are needed and this may come from reductions on current drug benefits (price or quantity) or less expenditures in non-pharmaceutical goods. Otherwise the option is to delay access. Is this an option for cost-effective therapies?

A milestone for health insurance reform

INFORME Estudio y Propuesta de un Nuevo Marco Jurídico para el Sistema Privado de Salud

If you look at health care financing in OECD countries you'll find an outlier: Chile. This is the country with the largest private financing, 47%. The reason behind such a number is the current system of ISAPRE coverage. A clear explanation of the current situation is shown in this presentation by Camilo Cid, the chairman of the commission for a review of the private health system.
The new chilean government created a commission to get recommendations about what to do with ISAPREs, and the result was that this report was released some days ago.
The trend is clear, opt-out from a single pool is not an option for the future. The Netherlands made the same reform in 2009, Germany constrained its possibilities, and now Chile has decided exactly the same. If there is only a single pool for financing health, this exactly means that the role of the market is going to change at the same time. Insurance price-competition vanishes, and the profit motive is under close scrutiny. Let's see what happens. All this recommendations should be included in the legislation. Anyway, the report is a milestone for the next health reform in Chile. An excellent reference for anyone interested in this topic. Good job.

PS. Values and economic crisis, a report. Have a look at this slide p.31, impressive. Is it possible?

Manuel Castro at Galeria Barnadas 

A healthy recession?

WSJ headlines announce a new economic slowdown. Concerns about the current state of worlwide economy and the financial sector are growing again. A special report by The Economist talks about the third great wave:

A third great wave of invention and economic disruption, set off by advances in computing and information and communication technology (ICT) in the late 20th century, promises to deliver a similar mixture of social stress and economic transformation. It is driven by a handful of technologies—including machine intelligence, the ubiquitous web and advanced robotics—capable of delivering many remarkable innovations: unmanned vehicles; pilotless drones; machines that can instantly translate hundreds of languages; mobile technology that eliminates the distance between doctor and patient, teacher and student. Whether the digital revolution will bring mass job creation to make up for its mass job destruction remains to be seen.

Some years ago  I explained how Iceland economic crisis had no negative effect on health. Now we can confirm the impact in our country in a new report and presentation. The quick answer is that unemployment and poverty have a clear impact on health. As far as the crisis implies raising both determinants, then the result is clear: poor and unemployed population are the target to monitor and improve health. You can discuss over the trend of one specific indicator or its significance. That's a minor issue. In general, average longevity and health is improving, although average doesn't mean everybody. The only way to have a good answer is a cohort study with microdata. I think that somebody should start doing it now, it's crucial.
This report is the best exercise one can do to introduce some common sense in any debate about the crisis and its impact on health: go to the facts and data. Therefore, if somebody talks about negative effects of the crisis on health, now you have to be precise, there is a selective impact.
Some months ago, I considered that what we need is a continuous monitoring of health status in any situation. As far as nobody knows if we are still in crisis, or how many years it will take to recover, monitoring is the right word.
My impression is that we had a crisis in 2008 and a new economic model has emerged. The current situation is unstable, uncertain and unpredictable. That's why the WSJ has anounced a new slowdown today. It's not a crisis, it's a new slowdown (again).

The role of Public Service Mutuals

PUBLIC SERVICE MUTUALS:The Next Steps

Let's start with the concept:

Public Service Mutuals are organisations which:
1. have left the public sector (also known as ‘spinning out’), and
2. continue to deliver public services, and
3. in which employee control plays a significant role in their operation.

This is exactly the same as"Entitats de Base Associativa" for Primary Care (p.38 of this journal). Only 3% of all primary care teams follow such model after 18 years (11 out of 369). Only 2 new firms were created in the last decade. It seems that there are some constraints on their development but hardly anybody is working to remove such barriers and others are creating new ones. I have always considered that this model fits perfectly with the engagement of the health professionals in the system instead of being civil servants.
In the UK, the taskforce created to analyse the situation has set up clear recommendations for the future (p.29). Maybe, right now we should replicate something similar that could reverse the trend.

PS. Another report from the King's Fund.

PS. Excellent documentary on ebola outbreak, yesterday at TV3 30 minuts, you can watch it until October 19th.

Regulation and low-value care

Swimming against the Current — What Might Work to Reduce Low-Value Care?

While reading this NEJM article on strategies to reduce low value care, I was wondering why the author has not included any regulatory tool. He explains demand and supply side strategies, as usual, and forgets the crucial role of government. It says:

Public acceptance of a role for policy in reducing the use of low value care in the United States is tenuous but increasing with growing awareness of the burden that health care spending places on federal and state budgets and with patients’ increasing exposure to health care costs.

This is a fact or an opinion of the author?. It is not an argument to avoid a key instrument widely recognised by scholars. An appropriate regulatory role is crucial to provide information and signaling the value of health benefits. No regulation or bad quality regulation contributes to a perfectly designed and costly mess.

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.