The Supremes Strike a Blow for Health Care Affordability

Today’s Managing Health Care Costs Indicator is $3000

All eyes are on the Supreme Court’s six hours of oral arguments on the Affordable Care Act this week – but we shouldn’t lose sight of a hugely important decision last week to limit the ability of biotechnology companies to patent “natural laws.”

The Supreme Court last week ruled that Prometheus Pharmaceuticals could not patent a test that suggests medication dose changes based on amount of metabolites in the patient’s blood.  Mayo Clinic had developed a similar test – with its own validated normal range, but Prometheus sued to stop Mayo from marketing its test.   Now there can be competition in this field, which is likely to lead to more innovation and lower price.  

This has led the Supreme Court to ask an appeals court to review its earlier finding that Myriad Pharmaceuticals and the University of Utah could continue to be the sole owners of a patent  for BRCA 1 and 2 – the genes that are associated with heightened risk of breast and ovarian cancer, especially among Ashkenazi Jews.  The  genetic test for these genes now costs $3000 – and many insurers are reluctant to provide coverage.

Advocates periodically assert that “personalized medicine” can improve quality and outcomes while lowering overall resource costs, and point to tests that can protect patients from drugs that would offer them no benefits, and help determine the best dose based on genes rather than trial and error.  There is no question that genetic testing is already saving and improving lives.   The current high expense of genetic tests makes it unlikely we can achieve the goal of cost savings  - and single source manufacturers would fight hard to maintain high “brand name” prices.  These Supreme Court decisions can inject competition in the biotechnology market,  offering the prospect of price relief in the all-important market of genetic tests and gene therapies.

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National Quality Colloquium

Today’s Managing Health Care Cost Indicator is 80%

I cochaired a mini-summit panel on value-based purchasing at the National Quality Colloquium today, and wanted to share a few elements from talks given by my colleagues.

Trent Haywood, the CMO of VHA and a former CMO of CMS, and Teresa Clark, VP of Social Science for VHA, had a pithy explanation of the market failures of American medicine, which I am paraphrasing here.

1. We link pay to cost instead of value


2. We link pay to volume instead of value


3. We have inadequate signals regarding quality


4. Consumers don’t share meaningful financial risk for the cost of care.

They pointed out that the combination of high deductible health plans and payment reform built into the Affordable Care Act addresses each of these underlying problems.

Francois de Brantes,  the Executive Director of the Health Care Incentive Institute, gave an overview of Prometheus Payment, and said that the federal government is well on the way to developing open-source episode definitions that would cover 80% of all medical expenses.  That would make episode based payment very viable in the market, and very much more likely to lead to change of clinical practice.   

He concluded that the five critical elements to the success of payment reform are

-        Full CEO engagement

-        Commitment by willing plan AND provider

-        Clean and complete claims and eligibility data

-        EMR systems

-        Sense of urgency

Leslie Curry, a researcher at Yale and RWJ, showed how her team used ‘positive deviance’ to identify approaches that the most-effective hospitals used to achieve lower risk adjusted mortality for heart attack.  She highlighted the importance of culture and leadership in creating systems that provided consistently better (and more valuable) patient care.

Many of the presentations for this conference are available at www.qualitycolloquium.com (pull down under "agenda" on the front page).  I especially recommend the presentation by Marc Roberts of Harvard School of Public Health on the political economy of quality improvement in health care.

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