If Vermont Won't Have Single Payer What Will it Have?

Wednesday night I was at a meeting of the Western Coalition for Single Payer Healthcare (a group in Western PA campaigning for a national single payer plan to be enacted).  The subject of state efforts to enact single payer came up.  I said that there were efforts in several states to enact it and Vermont passed it two years ago.  A member objected saying that Vermont's plan is not single payer because it's administered by Blue Cross.  This made me ask myself what a single payer system is.

I looked at the Vermont for Single Payer website and they do have a definition saying that "health care is financed by the public whose money is managed by the government or by a government sanctioned agency... (the full definition can be read here)."  If the government of Vermont indeed has sanctioned Blue Cross to administer their plan in a nonprofit capacity then it does meet their definition of single payer.  As TR Reid in the documentary Sick Around the World shows there is considerable variability in health care systems around the world.  Germany, Japan, and the Netherlands have systems which are administered by private insurers but heavily regulated by the government.  Does that count as single payer?  According to Vermont, yes.

Watch Sick Around the World on PBS. See more from FRONTLINE.

Canada, the United Kingdom, Cuba, and Taiwan have healthcare systems which are administered directly by the government.  This I believe is the type of single payer system which those at the Western PA Coalition would prefer.  While there are good reasons to be suspicious of the intentions of Blue Cross or UPMC.  We won't really know how it works until it is fully implemented.  

We do have working models in other nations for universal non profit systems, They are all good systems with outcomes comparable to Canada's.  The commonwealth fund has studies which show that their health and cost outcomes are roughly equivalent with the US for profit system trailing.  If you double click on the image with some comparisons between the US and other countries below you can enlarge it.

I go to discussion groups like Drinking Liberally where many on the left do not really understand what single payer is.  They ask me questions like "doesn't Massachusetts already have it?"  I tell them no because it leaves the for profit nature of the current system intact which drives up the costs.

  **Related Posts**

WaPo Interactive International Cost Graphic

 

STOP Obamacare in Pennsylvania: Where We Agree with Them

 

Aaron Carroll's Analysis of Single Payer and Wait Times

 

Protecting the Parasites: The Irony of Obamacare

 

 

 

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Evergreening

The Incidental Economist (a blog) alerted me to an article by medical student Nicholas Downing and three colleagues exposing the outrageous shenanigans of Abbott Laboratories, maker of fenofibrate, a lipid-modifying drug that claims to reduce the risk of heart disease.

In the U. S., patent protection on a new drug expires after 20 years. Since the clock starts ticking before clinical trials can begin, by the time a drug gets Food and Drug Administration (FDA) approval, it typically has seven to twelve years of patent protection. After that, other companies are free to sell generic equivalents, which usually cost less than half the price of the original. The goal of pharmaceutical houses is to extend that patent protection as long as possible by whatever means necessary.

Abbott did not do the research and development that led to fenofibrate. They bought it from another company. They marketed it as Tricor-1 in 1998. However, their patent was about to expire, and in 2000, another company, Novapharm, announced its intention to produce a generic version. Abbott then filed suit for patent infringement. This was a frivolous lawsuit, but such suits are routine because when they are filed, they automatically result in an injunction against the generic company which prevents them from marketing the generic for 30 months. Drug companies almost always lose these infringement cases, but they file them anyway because the amount of money they make during the 30 month waiting period is far greater than the cost of the lawsuit.

The 30 months also gave Abbott time to get a patent for Tricor-2 and introduce it to the market. Tricor-2 was identical to Tricor-1 except for the dosage. Because it was the same, no new clinical trials were required. By the time the 30 month period had expired, Tricor-1 was no longer available and Tricor-2 had cornered 97% of the fenofibrate market. It was useless to produce the generic version of Tricor-1 because Tricor-2 had different dosage levels, and pharmacists can only substitute generics when the dosage levels are the same.

So the generic company announced its intention to produce a generic Tricor-2. At this point, the story begins to resemble the plot of the film Groundhog Day. New lawsuit by Abbott. Another 30 month wait. Abbott announces Tricor-3. It captures 96% of the market. Generic company intends to produce generic Tricor-3. New lawsuit. Another 30 month wait. Abbott announces Filibrix. Filibrix is fenofibric acid rather than fenofibrate, which requires new clinical trials, but gets them an additional three years of patent protection extending it to 2012.

By this time, the generic companies had noticed the futility of their strategy, so they filed suit against Abbott for violation of the Sherman Antitrust Act. Abbott eventually settled that suit for $300 million, which was about 4% of what they made selling various versions of fenofibrate. The authors estimate that the cost to the public of using Abbott's versions of fenofibrate rather than their generic equivalents is $700 million a year.

This is not an isolated incident. Several other drug companies have done the same thing. When the patent is about to expire on one of their lucrative drugs, they make a trivial change and market it under a new name in order to extend their period of exclusivity. This common practice is called “evergreening.” (Get it?) It succeeds in part because doctors don't pay attention to what's going on. However, even if they had known about Abbott's psychopathic behavior, there was nothing doctors or pharmacists could do because no generic equivalent of fenofibrate has yet made it to the market.

To add insult to injury, a large outcome study published in 2005 showed that fenofibrate was ineffective in reducing the risk of cardiovascular disease. But apparently the doctors weren't paying attention to that either, because as of 2010, fenofibrate sales were still increasing.

There is a serious problem with the FDA's system of granting patents. They only require clinical trials that compare the new drug with a placebo—an inactive pill that supposedly controls for patient expectations. This allows different drug companies to market nearly identical drugs, none of which are more effective than the others. It also allows companies like Abbott to “evergreen” by relabeling old drugs under new names. A more sensible standard would be to compare the proposed new drug to the best existing treatment and only grant a patent if the new drug produces a significant improvement in patient outcomes.

In our capitalist wonderland, it's useless to urge “corporate persons” such as Abbott to behave more responsibly. They will pursue profit however they can. It's probably also unrealistic to expect doctors to read medical journals or prescribe available generics. They get their pharmaceutical information from drug salespersons bearing gifts—everything from ballpoint pens to free trips to Las Vegas (to attend a medical “seminar,” of course). It would be nice if Congress would make this legalized bribery illegal, but since they're doing the same thing, that's not likely to happen.

Downing and his colleagues only suggest one governmental remedy—elimination of the 30 month hold on the generic during a lawsuit. Otherwise, they just recommend consciousness raising among patients, doctors, and pharmacists. Good luck with that.

Overall Health System Performance - The Commonwealth Fund

The Commonwealth Fund has come out with a studies showing long gaps in health insurance coverage in the US and comparing regional healthcare systems on Access, Avoidable Hospital Use and Costs, Healthy Lives, and Prevention and Treatment.  The regional You can see the full interactive maps and zoom in on Pennsylvania and focus on the various measures that make up the ranking.  The map below shows the breakdown by state. Pennsylvania ranks 15th out of 50 or in the second quartile.  The regional map above shows that there is variation in PA with the central part raking in the top quartile (shown in white), the southwest in the third, and the rest of the state in the second quartile shown in light blue.

Overall Health System Performance - The Commonwealth Fund

**Related Posts**

County Health Rankings

 

Correlating PA County % Uninsured Rates with Other County Level Measures

 

Correlating PA's Uninsured with Sen Pat Toomey's 2010 Vote

 

Questioning Effectiveness

The Need for an Economic Impact Study in Pennsylvania

In my posts on the STOP Obamacare in Pennsylvania group, I commented on their analysis of the uninsured and how Obamacare would not control skyrocketing healthcare costs.  My expertise is in health statistics and not in economics.  In many ways there is no separating the health effects from the economic effects of a single payer system as the video clip below shows.  An economic impact study by William Hsiao which showed how it would benefit Vermont was one of the main catalysts for them enacting the first Single Payer System in the nation.  Healthcare for all PA, PUSH's statewide organization, is raising money for one such study here in Pennsylvania.  You can donate to it here at the link below or at the education fund site link on the upper right hand corner on this page.

Why Pennsylvania Urgently Needs a Single Payer Healthcare Economic Impact Study

**Related Posts**

STOP Obamacare in Pennsylvania: Where We Agree with Them 

 

STOP Obamacare in Pennsylvania and the Uninsured

Questioning Effectiveness

To save both lives and money, most countries with single payer health care systems support, or at least monitor, research on the cost-effectiveness of drugs and medical procedures. One of the less well known provisions of the Affordable Care Act is a plan to support comparative effectiveness research. The bill creates a Patient-Centered Outcomes Research Institute, a nonprofit organization charged with conducting research on the comparative cost-effectiveness of various medical treatments and making recommendations to health care providers.

An Associated Press article reports that, beginning in 2012, the government will collect a fee of $1 per person from health insurance companies to cover the cost of the new agency. The fee goes up to $2 in 2013, and rises with the inflation rate in subsequent years.

I can remember a time when virtually everyone agreed that program evaluation—now called comparative effectiveness research—was an important scientific endeavor. Why should anyone suffer through and pay for a drug or medical treatment that doesn't work? If two treatments are equal in effectiveness, shouldn't only the cheaper one be covered by insurance? By coincidence, today's newspaper has two articles implying that current evaluation research is inadequate. All-metal hip replacement implants are breaking down after a few years, causing endless suffering to those who have received them. And Chantix, a quit-smoking drug that is only slightly better than a placebo, apparently has adverse side effects that include violence, depression and suicide. (“The good news, Mrs. Obama, is that your husband has quit smoking . . .”)

But the consensus over evaluation research began to break down when American corporations and their friends in the Elephant Party declared “war on science.” Although its origins can be traced to the 1960s “debate” over the health effects of cigarette smoking, the war began in earnest about a decade ago. As a result, many Americans believe that scientific research is inevitably biased, that scientists discover non-existent problems just to supplement their incomes, and that the consensus conclusions of experts are just another opinion, no better or no worse than, say, Rush Limbaugh's opinion.

Combine this with a distrust of government and you get claims like that of the Elephant beauty queen Sarah Palin that the Jackass Party is trying to set up “death panels” to ration medical care. (Yes, Gov. Palin, health care is being rationed, but not by the government.) In the current political environment, there is a very real possibility that this new agency's research will be wasted because every conclusion it draws will be endlessly disputed.

A second problem is evident in the Elephant-friendly way the AP article presents the fee—as a tax. Obviously, the research institute has to be funded. But couldn't the Obama administration have found a way to pay for it out of general revenue, without making the source of funding so explicit and obvious? You can bet the insurance companies will publicize this fee for all it's worth, hoping to get consumers to blame their next $1000/year rate increase on the government's $1/year “tax increase.”

Gail Wilensky, a former Medicare administrator who supports the agency, is paraphrased in the article as saying that it “should focus on high cost procedures and drugs on which the medical community has not developed a consensus.” I disagree. The most important thing to do is to support research with maximum potential for saving lives. By emphasizing the cost-cutting implication of their research, Ms. Wilensky probably hopes to keep the agency from being trampled by a bewildered herd of Elephants. But you can't pacify this species. If you try to save money, you will almost certainly be accused of rationing care.

One of my resolutions for 2012 is to do an occasional series of posts on the values and pitfalls of health care evaluation research.