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Stratified medicine: defining the size of the market

AN OVERVIEW OF THE STRATIFIED ECONOMICS OF STRATIFIED MEDICINE

Trusheim and Berndt provide an excellent overview of the economics of stratified medicine. I have reviewed the topic before and specifically in this post. An ideal companion diagnostic perfectly identifies and distinguishes treatment responders from those who will not.Unfortunately, in practice no diagnostic performs ideally. All diagnostics experience some level of error. In the case of a companion diagnostic, some patients will receive false positive results, scores indicating they will respond, but will not when treated. Other patients will receive false negative results, scores indicating they will not respond, but if treated they would.
So what? The key issue is about the setting of the cut-off that will define the size of the market:

Under competition, three essentially identical drugs may receive dramatically different labels, incremental cost-effectiveness ratio (ICER) justified pricing, and market positioning depending on their stratification approach. It appears superior to use an imperfect biomarker to none at all. It is less obvious whether patients, payers and firms prefer the same cut-off values for the companion diagnostic, or even whether each stakeholder a priori prefers the high, low or perhaps some other CDx cut-off value.
The competing development teams may face a version of the game theory ‘prisoner’s dilemma’ in which the optimal result for patients and all firms would be to select a low or mid companion diagnostic cut-off value but the advantages of a potentially differentiating high efficacy claim may drive developers to select a high cut-off value. If all choose this approach, overall value may be reduced with many patients excluded from treatment. But the potential advantage of a higher cut-off value may prove too alluring, or the fear of a competitor selecting one, may drive all to do so. Each situation will depend on the specific facts of the indication, therapeutic, companion diagnostic and competitors

The implications for regulating and financing of companion diagnostics are immediate. In Europe current legislation is as old as of 1998, the year that Herceptin entered into the market and the begining of stratified medicine. New regulation is still pending and there are  no perspectives about a unified approach to lab tests assessment. European regulator is still on vacation.

Lab on a chip concept, the future of diagnostics?

Future vision: next generation lab on chip concept from imec on Vimeo.
Imec develops the next generation of “lab on a chip” concepts. The idea is that such a disposable chip could be loaded with a sample of blood, saliva or urine and then quickly analyzed using a smartphone, tablet or computer, making diagnostic testing faster and easier for applications such as disease monitoring and management, disease surveillance, rural health care and clinical trials.

The market for health insurance price comparison

Internet has provided multiple option for price comparison through website aggregators. On health insurance you can find several alternatives. Is this market competitive? Who wins and who losses?. This is the question asked in a recent article in The Economist:

Consumers should celebrate that; the firms’ losses are their gains. But there is a catch. Comparison sites, whether for insurance or something else, introduce a new layer of costs, including their own splashy advertising campaigns. In theory, competition in the market for comparison sites ought to keep those costs down. But in a recent paper, David Ronayne of Warwick University argues that consumers often lose out from comparison sites. They earn a commission for each shopper who uses them to buy insurance. That referral cost is incorporated into the price the consumer ends up paying. If the increased costs outweigh the saving the comparison enables, consumers end up worse off.

And the proposal:

How can you ensure the market for price comparison is competitive? Asking consumers to check multiple websites defeats the point of using them. One solution is to have only one site, but regulate it as a public utility. Alternatively, the government could run the site itself—much as the American government now runs comparison websites for health insurance under Obamacare.

I think that this is the right approach, why not apply it here?

Regulating sugar sweetened beverages

Searching for Public Health Law’s Sweet Spot: The Regulation of Sugar-Sweetened Beverages

Nowadays, obesity prevention lies at the heart on any public health policy. If sugar sweetened beverages contribute decisively to obesity, then something should be done. What?. A recent PLOS article explains the options:

The main regulatory approaches are taxes, restrictions on the availability of SSBs in schools, restrictions on advertising and marketing, labeling requirements, and government procurement and benefits standards.

On taxes:

Savvy regulatory design has tremendous potential. For example, there is growing evidence that taxes that are more salient to consumers, such as those included in a good’s posted price (rather than being levied at the register), are more likely to influence purchasing behavior

On public procurement, a practical suggestion for immediate application:

Restrictions on which beverages may be purchased using government funds are a less visible form of regulation, but one with potential to change the consumption patterns of large numbers of people. Outside public schools, these standards are most germane in two areas: procurement standards for public institutions (e.g., government agencies, hospitals, and prisons) and restrictions on what recipients of government benefits for the indigent may buy with those funds.
The UK’s Government Buying Standards prohibit central government bodies from  procuring SSBs larger than 330 ml and encourage the wider public sector to follow the guidelines. Massachusetts  and many US counties and cities have adopted nutrition standards for government contracts, but most apply to a limited set of institutions, such as childcare facilities or youth centers.

PS. My former posts on the same topic.
PS. Article: The impact of sugar sweetened beverages on depression risk in adults.
PS. Report: Scenarios of Macro-economic Development for Catalonia on Horizon 2030
PS. Report: FBBVA Essential Public Services.
PS. Report: Chronicle of a premeditated offensive.

Efficiency in drug patents buyout

Panning for gold: sourcing pharmaceutical innovation

Once upon a time there were pharmaceutical firms that invested mostly in internal R+D departments. Long time ago, the door was opened to contracting out, buying patents and licensing. The most recent step is to the acquisition of firms with promising molecules.
A short article in Nature sheds some light about the efficiency of recent mergers and acquisitions. And the summary is:

Our analysis suggests that most companies have a considerable opportunity to get better at deploying capital and resources efficiently when sourcing innovation externally. In our experience, we have found that the best performers develop robust forecasts for the key assets, are fiscally disciplined, and set up their innovation-sourcing teams and transaction capabilities to ensure that the right internal expertise is brought to bear and to ensure smooth hand‑offs through the life cycle of a deal.

The success lies within, the internal expertise is crucial. Have a look at the figure and you'll notice that the most efficient (defined as the commercial impact of the products acquired relative to capital deployed in M&As) is Roche. This is not by chance.

PS. Unfortunately, the study doesn't reflects any consideration to value in health or lobbying efforts in drug prices.
PS. FT's summer books 2015 

A closely guarded secret (2)

Direct Access Testing is the next battle for a new market for lab testing. This is at least what Theranos considers and has been lobbying for. Last December in The New Yorker there was an explanation about the firm and its goals. Afterwards JAMA added some caveats on the secretive way of conducting business and I wrote a post on that. Now The Economist has published an article with the details of the current situation about their business model.
Selling tests directly to the patient is a controversial issue. As in most of prescriptions, patients don't know enough to prescribe for themselves. However, how much is enough?. Arizona is starting to liberalise such prescriptions after Theranos successful lobbying efforts. Professional societies reflect in a position paper their perspectives on the issue.
My view is very straightforward: avoiding commercialism in health care. Under insurance coverage, prescriptions should be required after being cleared by regulators. Without insurance coverage, recreational tests have also to be licensed by regulatory authorities under a disclosure process that has not been the Theranos case. Nowadays, it still remains a secret. Selected tests could be accepted without prescription according to its implications on Health and information accuracy.

Beware of competition in healthcare

Competition among Health Care Providers – Investigating Policy Options in the European Union

Let's imagine an official in European Commission. They are in favour of more competition in health care and asks an expert committee to assess the issue. This is the concrete answer in selected statements from the report:

First, and foremost, introducing or increasing competition in the provision of health care services is a delicate policy exercise. The conditions for success and risks for failure need to be carefully assessed. In the right context, introducing competition may help to meet some health system objectives, although it is unlikely to contribute simultaneously and positively to all.

Neither economic theory nor empirical evidence support the conclusion that competition should be promoted in all health services

Neither competition nor strict reliance on government regulation will solve all health system problems. Attempts to avoid or correct market failure can result in government failure and vice versa.

Provider competition can contribute to improving value in health service delivery, but details about where, when and how to introduce competition are critical. Competition in health care provision will not solve all health system problems and may have adverse effects.

Competition is unlikely to achieve improvement in all aspect of health system performance at the same time. It will not solve all the trade-offs policy makers face between different, sometimes conflicting, health system objectives.

Competition can at the same time increase the number of services provided and billed, creating uncertainty in relation to overall health care costs. That is, the introduction of competition may well result in increased costs and add to fiscal pressures. Increased costs may, or may not, be justified by additional health benefits to the population (or some parts of the population).

As competition is an instrument, sound policy evaluation studies are needed to assess and judge its effects. Such empirical studies are currently rare and even absent in some countries.

The introduction of competition has uncertain effects on equity of access to health care, as it is conditional on the effects above and on the heterogeneity of patients. Empirical work has found that the introduction of competition among hospitals, in the UK, produced little or no result in equity terms. This limited evidence does not allow for general presumptions about the effects of competition on equity of access to health care.

Now it is crystal clear. The official has had a precise answer that it is exactly the opposite they were expecting. I've said the same in this blog several times. Take care.

Implications of real world data

Breaking New Ground with RWE

Some decades ago evidence based medicine was the key issue in understanding effectiveness in health care and drugs. Right now the new term is Real World Evidence. You'll not find it in the wikipedia, instead I would suggest you look at this IMS report:

RWE is drawn from robust anonymous patient-level data using sound scientific and commercial analytics. It is not about amassing "Big Data" so much as performing targeted analyses on ever expanding healthcare datasets.
While RWE is known to complement data from Randomized Clinical Trials (RCTs), its real potential is in moving decisions away from perceptions and broad extrapolations to the actual facts about patient journeys and outcomes. With innovations in data and technology, RWE is replacing other information sources such as non-behavioral primary market research (PMR), standard market reports, consumption/market data purchases, observational studies, and even selected spending on RCTs.

Its impact could be large if drug prescription decisions and pricing takes into account the outcomes from the "patient journey" as they say. This is a new paradigm with uncertain spillovers. The true evidence based medicine with the power of big data. We must be aware of it and follow it closely.

PS. How to introduce innovative medicines?. Have a look at this workshop.

Organising genetic testing

Finally the government has decided to organise genetic counseling and testing. A recent instruction determines who does what. As you may remember I've said several times that government was on permanent holiday on this issue.
In this new instruction, at least two issues are forgotten: the tests that are covered, and the proliferation of sequencing instruments outside the lab. These are not minor issues.
Somebody should decide asap wether a test it is worth to be prescribed. Right now, there are no explicit constraints under the current instruction. And DNA sequencing instruments may be found in many departments under the consideration of research. If there is no clear split between research and care, I can imagine a close future with many messy labs within any hospital. Concentration of knowledge and specialisation provides wider guarantees for quality. Unless there is any mentorship program by clinical laboratories, things will go down the wrong path. Today I'm more worried than yesterday, unless these two issues are fixed.

Changing health behavior (once again)

World Development Report 2015: Mind, Society, and Behavior

Understanding human behavior is one of the main scientific endevours of our current times. As I have explained before, psychology, economics and neurosciences are making great progress in the last decades. Now the annual report by the World Bank puts all this stuff in one publication:

Three principles stand out as providing the direction for new approaches to  understanding behavior and designing and implementing development policy. First, people make most judgments and most choices automatically, not deliberatively: we call this “thinking automatically.” Second, how people act and think often depends on what others around them do and think: we call this “thinking socially.” Third, individuals in a given society share a common perspective on making sense of the world around them and understanding themselves: we call this “thinking with mental models".

In chapter 8 you'll find the application to health issues. A clear warning:

Telling people that there is a way to improve their health is rarely sufficient to change behavior. In general, successful health promotion campaigns engage people emotionally and activate or change social norms as much as they provide information. The message disseminated should be that others will support you or even applaud you if you do it, not just that something is good for you. Successful campaigns address many or most of the following: information, performance, problem solving, social support, materials, and media . A campaign should tell people that a behavior will improve their health (information), demonstrate and model the behavior (performance), reduce barriers to its adoption (problem solving), create a system for supporting people who choose to adopt it (social support), provide the materials necessary to begin adoption (materials), and provide a background of support through in-person, print, radio, television, and other approaches (media).

As you may imagine, this is much more difficult than simply giving information. This is precisely the greatest challenge.

Health across borders

Let's think of two countries artificially separated by political borders. Both have the same income per capita (~27,700 €) and belong to the EU. The first spends 11.1 % of GDP on health (5,513€ per capita, 77.7% public funding), while the second only 8% (3,898€ per capita, 65.8% públic funding).
Both countries have roughly the same life expectancy at birth. Healthy life expectancy at 65 is better in the country that spends less. The number of visits and hospitalizations is also less. Physicians are also paid less, 18% less in general practitioners income, up to 40% in specialists income.
There is only one border between them, an artificial border created by a treaty to end a war that lasted 30 years. This is the case of part of France and Catalonia. While the first can decide over the size of resources devoted to health, the second has no role on it, by now.

PS. Today at COMB, French health reform. I'll be there. #sanitatfrança

The value of vaccination

Valuing vaccination

A PNAS article sets a broader perspective on valuing vaccines. It is of interest in light of current difteria case. My position is clear, no doubt about mandatory vaccination if its cost-effectiveness is proven.
Suggestions from the article:

Three general recommendations flow from our arguments and related synthesis of existing evidence on broad benefits of vaccination. First, many economic evaluation studies of vaccinations should be redone to capture the full benefits generated by the vaccination in question. Second, the evidence to date on the full value of vaccination has been focused on measuring the total social benefits generated. It would also be useful to explore the distribution of vaccination’s benefits among different possible beneficiaries. Third, the primary empirical evidence on broad vaccination benefits will need to be considerably expanded and improved

Framework of vaccination benefits

Perspective		Benefit categories	Definition
Broad	Narrow	Health care cost savings	Savings of medical expenditures because vaccination prevents illness episodes
		Care-related productivity gains	Savings of patient’s and caretaker’s productive time because vaccination avoids the need for care and convalescence
		Outcome-related productivity gains	Increased productivity because vaccination improves physical or mental health
		Behavior-related productivity gains	Vaccination improves health and survival, and may thereby change individual behavior, for example by lowering fertility or increasing investment in education
		Community health externalities	Improved outcomes in unvaccinated community members, e.g., through herd effects or reduction in the rate at which resistance to antibiotics develops
		Community economic externalities	Higher vaccination rates can affect macroeconomic performance and social and political stability
		Risk reduction gains	Gains in welfare because uncertainty in future outcomes is reduced
		Health gains	Utilitarian value of reductions in morbidity and mortality above and beyond their instrumental value for productivity and earnings

 

Reviewing the residency system

Let Me Heal. The Opportunity to Preserve Excellence in American Medicine

We usually emphasize the level of resources when we assess the results of our health system. Institutions matter, we already know that. And if there is one key success factor in our healthcare is the physician's residency program. Training of the physicians under "real" conditions has allowed substantial improvements in health outcomes and the progress of medicine that are difficult to measure specifically. In a new book, Ludmerer provides an excellent review of what it represents to US healthcare:

At the core of the residency system are fundamental educational principles: the assumption of responsibility by residents in patient management, and the importance of providing residents sufficient time to reflect and pursue subjects in depth. Also at the core are the moral principles of residency training: thoroughness, attention to detail, and learning that the needs of patients should come first

And considers that

The current turmoil in health care delivery offers the profession and public the opportunity to redesign medical education and practice in ways that more fully serve the needs of patients, present and future.  The opportunity is there to envision medical education and practice as they should be, not as they are,  and to work toward achieving that end. Such opportunities are to be treasured, not feared. The country will always need good doctors, and the medical profession has little to fear in the changes ahead as long as it remembers that it exists to serve, that the needs of patients come before its own, and that it always must be thinking of improving the future as well as caring for the present.

This call for a redesign of medical education and practice is a real need in our environment. The confusion between the role of  "student" and "employee" is increasing and there is no effort to clarify it.The number of physicians in the program is determined without any clear estimation of demand and rules. A total mess. That's why I consider that we should rethink it from its foundations.

PS. Must see. Documentary: Big Data, citizens under scrutiny.