Tuesday, March 27, 2012

The problem with healthcare

Some of you might have noticed that there is a lively debate going on in the US Supreme Court over the so-called Obama-care Programme. Whilst the wife has been avidly reading the transcripts—with some interest, outrage and amusement—we have been debating the more general point of how healthcare is delivered.

It's a tricky subject—not least because it is emotive and, as such, tends to give rise to bad headlines for politicians when the inevitable rationing happens. Because the really big problem with all healthcare systems is that there simply isn't enough money to pay for what is desired (if not absolutely required).

All of these debates about the actual delivery and payment of healthcare—both here and in the US—simply doesn't address the basic problem of healthcare being massively expensive. I would like to posit some reasons, and put forward some hopes of solutions.

The first pressing problem is that healthcare services are extremely prone to Baumol's cost disease.
In line with the government’s 2% inflation target, the Treasury’s assumption is that productivity in the economy as a whole will rise at 2% a year and pay at an average of 4%. Hence, if pay in the public services is to remain competitive with that outside, it must rise on average by about 4% a year. So to be able to afford the same number of staff in any particular service, expenditure also needs to go up by 4% a year – a “real increase” of 2%. The problem for services, such as health and education, and for the armed forces, is that they need such a “real increase” to keep the same number of staff to maintain existing standards, because there is little or no room for improving productivity.

As Timmy points out, there are ways to mitigate for this—particularly in how services are delivered.
The reason being that productivity in services is merely more difficult to improve, not impossible. Only if you say that a near monolothic organisation of 1.4 million people is the most efficient manner of delivering health care to 60 million people can you say that the NHS productivity cannot be improved. And that certainly ain’t an argument I’m going to try and make.

One obvious method of improving efficiency would be to abolish national pay bargaining... but no one has the balls to try that as yet unfortunately.

There were rumours that Osborne was going to do so in this budget and certainly is seems that the government is moving that way. And there is no doubt that the NHS could be run more efficiently—especially if the providers were not run by the government and thus had some efficient way of measuring quality.

One of the biggest goals in healthcare service delivery must be to adopt the strategy of manufacturing and remove, as far as possible, as many people from the delivery as possible. Now, there are many ways to do this, but one of the most exciting is to harness new technologies as much as possible—like, for instance, being able tobuild new organs or even print new kidneys (truly amazing video)!











Just think: although it's still a prototype (both printer and organ), that machine can print a new kidney in seven hours. And that kidney can be printed from the recipient's cells.

Just consider the cost reductions over conventional treatment—no cost of keeping the patient on dialysis for months or years whilst waiting for a donor; no surgical teams required to remove the organs from the donor; no need to go through the whole thing again to replace the organ after ten years; no drugs required to deal with rejection nor having to treat the patient for the panoply of diseases inevitable with immunosuppressant therapies.

We are on the cusp of a healthcare revolution—where technology really can start to make healthcare delivery cheaper.

One of the other big costs is drugs, and this is largely a political problem. To make you marvel and to illustrate this point, I'd like to introduce you to bexarotene. Bexarotene is a cancer drug that has been approved by the US Food and Drug Administration for a decade (this is important later on).

Now, bexarotene has been shown to be immensely effective in the treatment of Alzheimer's disease—not only can it slow it, but it seems likely that the drug can actually reverse the effects.
In the study described below, the cancer drug Bexarotene quickly and dramatically improved brain function and social ability and restored the sense of smell in mice bred with a form of Alzheimer's disease.
...

Within hours of taking the drug, amyloid plaques began to clear out of the mice’s brains. After three days, more than 50 percent of the Alzheimer’s plaques had disappeared, and the mice regained some of the cognitive and memory functions typically lost in Alzheimer's disease.
...

Neuroscientists at Case Western Reserve University School of Medicine have made a dramatic breakthrough in their efforts to find a cure for Alzheimer’s disease. The researchers’ findings, published in the journal Science, show that use of a drug in mice appears to quickly reverse the pathological, cognitive and memory deficits caused by the onset of Alzheimer’s. The results point to the significant potential that the medication, bexarotene, has to help the roughly 5.4 million Americans suffering from the progressive brain disease.

Sounds pretty cool, yes? Alzheimer's is not only an incredibly expensive disease to treat, it is extremely distressing.

When I worked as an Auxiliary Nurse in a medical centre, I saw people with progressive brain disorders such as Alzheimer's. One woman was nothing more than a still moving shell of a human being—no thinking human being existed inside her. She simply wandered about making a soft ululation day after day: when she got to a wall, like a wind-up toy, she just kept walking and walking against the wall.

Another time, I had to comfort a twelve year old boy because his father no longer recognised him. These patients had been there for years—at a cost of more than £1k a week—and would be there for years more.

A drug that could stop all of this would be amazing. But there are a couple of problems.

First, bexarotene is pretty expensive.
How much does Targretin (Bexarotene) cost?

Targretin is a tier 5 drug, this means it is very expensive. An Internet search indicated that 30, 75mg capsules cost $1,156.64.

Now, we might guess that this is probably still considerably less than £1,000 a week (minimum) in a nursing home but actually we don't know—and herein lies the rub.

Despite being approved for the treatment of cancer at specified doses, bexarotene, and the dosage, would need to be re-approved by the FDA for the treatment of Alzheimer's. And, as we all know, that kind of testing costs a lot of cash.

Will the drug company stump up for it? No. Why? Because bexarotene is about to come out of patent.
Unfortunately, the drug is going to have to go through several rounds of clinical testing before the drug is approved for Alzheimer's. This will takes years.

Will the drug ever get tested and get approved by the FDA for Alzheimer's? The current drug Targretin is scheduled to lose its patent in 2016. So, in order for Targretin to be financed into a Phase 3 clinical trial it will need to be re-engineered and re-patented to make the numbers work. In other words, it is unlikely that anyone is going to step up and finance the testing of a drug that is likely to be an available generic by the time it is approved for Alzheimer's patients.

And there we have the big problem with drug development.

It takes something like 8 years and $600 million to get a drug approved by the FDA for the treatment of humans. Those are big numbers, and it is why we have Big Pharma. I know a couple of people in Edinburgh who run small drug research labs; when they find something promising, they sell the patent to Big Pharma because only big corporations have the colossal amounts of cash required to get a drug to market.

And the patent life for a drug is, if I recall correctly, about 14 years. So, you spend 8 years bringing a drug to market and then you have about 6 years to recoup over half a billion dollars. As the Americans would say, you do the math.

This problem is only going to get worse as we move towards personalised treatments; if the regulatory agencies insist that every drug tailored to an individual—because that is the kind of breakthrough that we are looking at—need to go through this kind of approval process, then we may as well kiss tailored treatment goodbye.

There needs to be a fundamental rethinking of drug regulation: either it needs to be relaxed, or the patent life needs to be extended.

So, both technology and relaxed regulation can play a part in ensuring that we—the customer—get more healthcare for our limited resources, i.e. cash. But, you can bet that these innovations will be fought tooth and nail.

The medical establishment and the unions will fight to the bitter end to protect their own interests—as we have seen with the Healthcare Bill in this country. After all, the bastards of the BMA were happy to destroy the Friendly Societies and oppose the NHS because they believed that each of them were opposed to doctors' interests—they couldn't care less about patients and never have. The same applies to all of the other trades unions.

And governments love their regulation, oh yes. And so do big corporations because they are set up to deal with them. The people who lose out are... well... we poor idiots who pay for it all.

Technology will make us freer, happier and richer than ever before: the forces of conservatism will stop that if they can...

12 comments:

alan said...

And at the same time "Snow White and the Seven Dwarfs" is still protected by copyright until 2032. Makes you wonder who spends the most money on lobbyists.

Also the rarer the disease the less number of people are taking the drug, so the prescription cost goes up.

This has also made drugs more expensive as drugs have become more specific with advances in medical knowledge.

Replacing 1 drug with 2 more specific drugs means the drug costs twice as much. The same R&D/approval costs have to be recovered from half the number of patients.

Patent duration should be "paused" until drug approval as R&D time can vary wildly. At approval the patent duration should be proportional to the number of expected prescriptions. It needs to be kept simple to prevent a) gaming of the system and b) dragging the approval process out even longer.

john b said...

The recent Dirk Gently BBC adaptation featured an AI capable of coming up with a coherent, logically plausible argument for any premise, no matter how insane. This piece ("healthcare is expensive because drug patents are too short and pharma companies, the poor lambs, aren't allowed to make enough money") suggests our host has access to such an AI.

john b said...

It's also worth bearing in mind that the most efficient healthcare system ever to have existed was the NHS, before Labour under Blair ruined it by throwing vast amounts of money its way.

In 1997, the UK spent half as much money on healthcare as most other western nations, and had aggregate mortality and morbidity stats that were only slightly worse than theirs. Far better than going down the US route and wasting nearly a quarter of national income in prolonging life by a year or two.

After 15 years of appeasing senior voters, the NHS is about 25% better for double the money. Score, not.

Blue Eyes said...

A couple of slight clarifications for you.

In Europe a drug patent can be extended to mitigate the time it takes to get regulatory approval. The maximum extension is five years but it's better than nothing. A patent lasts twenty years from filing.

In Europe a second medical use for a known drug is also patentable.

Anonymous said...

Clearly both the FDA and patents are sending the price of drugs up. Neither are legitimate so we can safely scrap them both. Problem solved.

Anonymous said...

BigChem makes lots of money selling expensive toxic shit to people that "treats" diseases but doesnt cure anything. This toxic shit causes side effects that more toxic shit is needed to treat.
The Bureau of Chemistry aka FDA is only there to outlaw cheap unpatentable alternative CURES to protect BigChems healthcare monopoly.
As an example, you would think that if Cancer Research charities still exist that obviuously a cure has not yet been found. You would be dead wrong, many cures have been found, they are just outlawed by the FDA to protect chemo profits.

Anonymous said...

Also "insurance". The reason an operation costs $100,000 is because the insurance company (or government) pays for it (and doesnt argue about it).
If there were no insurance they could only charge what sick people could actually pay, otherwise they would soon be looking for alternative employment.

Dr Evil said...

If it's coming off patent then a generic version will cost way much less than the price you quoted. There is a national dementia strategy in the UK and I would expect that the DH in collaboration with a big generics house would sponsor a clinical trial. The new effect against Alzheimer's plaques is wonderful if it can be relpicated in humans.

Dr Evil said...

replicated! Bugger!

the a&e charge nurse said...

"One of the biggest goals in healthcare service delivery must be to adopt the strategy of manufacturing and remove, as far as possible, as many people from the delivery as possible" - ahh, the wrong headed wigit production analogy, never fails to excite liberatarians.

In reality what the market will do, instead of improving health care as a whole, will be to sniff out were money can be fleeced from the most lucrative patient groups (production line single surgical procedures, middle class neurotics, etc).

Here is a cost comparison web site for health systems - needless to say the NHS comes out better than most when it comes to how much individuals are asked to pay for a comprehensive and life long service.
http://www.npr.org/templates/story/story.php?storyId=110997469

Of course those in thrall to the market must be pleased as punch now the likes of SERCO have been given their head - I, for one, can't wait to see how these outfits fare in Lansley's exciting HSCB environment.
http://www.ft.com/cms/s/0/97e8d96e-740d-11e1-9951-00144feab49a.html#axzz1qVyjpHFcIvwa denvothy

alejandro said...

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Alistair G said...

I don't know what the situation is in the UK, but in the US doctors can write prescriptions for off-label uses once that drug has has gone on sale. An example would be an antidepressant that the FDA approved for depression only can be used to treat all manner of other ailments such as anxiety, muscle spasms, headaches, and even as a sleeping pill.