New Prostate Cancer Vaccine : Quadrant Four Medicine

Today’s Managing Health Care Cost Indicator is $93,000

The Washington Post has a thoughtful article this morning about a new prostate cancer vaccine, Provenge.  The vaccine must be individualized for each patient, and the price has been set at $93,000 per person (each receives just a single dose). Average life expectancy increase using Provenge is 4 months.

This is great news. Individualized medicine is here!  The promise recounted in Jerry Groopman's Dr Fair's Tumor (1998,  New Yorker) is finally available for the masses.   This drug will be very desirable for people with terminal metastatic prostate cancer, their families, and their providers.   It's also good news for those of us who will get other cancers - where this type of technology could be life-saving or life-prolonging.

The good news, of course, carries a steep price tag.  The increased life expectancy means that Provenge will cost substantially over $300,000 per quality adjusted life year. ($93K *3, and assume that for someone with terminal prostate cancer, each surviving month will be at least slightly discounted because of suffering or disability associated with the cancer).     That's far more than we usually spend -and a price point that could leave us unable to invest in other health care initiatives with as much or more promise.  Even this steep price tag can be good for those with cancer, though.  Such a high price encourages more investment in future biologics to treat cancer.

Most prostate cancer is in those over 65, so Medicare's payment approach for Provenge will determine whether this drug is used commonly, or whether it is available to only the superrich.   Medicare has established  a  national coverage analysis for this product, and will have a public hearing later this month.  If Medicare makes a national coverage determination, it will be binding on all Medicare intermediaries across the country.

This is a good example of a "quadrant four" decision. It's much like Folotyn, another recent cancer therapy priced similarly.

It's easy to decide to push more quadrant one therapies (increase quality while decreasing costs). The problem is that we don't have enough of them!  It's easy to decide to prevent quadrant three therapies (increase cost while lowering quality).   It's tough to decide to push medical decisions in quadrant two (where quality is lowered a tad for a huge price savings).   It's also tough to forgo incremental quality at any price - even a high one. 

There is rumbling that having a national coverage analysis is akin to having Don Berwick, the head of CMS, convene a 'death panel.'    We need to have a sensible national discussion about what price we can afford to pay for incremental health . But it's hard to do that, especially when patients have much more compelling stories than a bunch of dry statistics that only an accountant could love.   

The conversation about limits to the resources we want to dedicate to health care will be a difficult one.  We're likely not ready for it. 

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Observations on Managing Health Care Costs (Part 1 of 2)

Happy New Year.

I’ve just finished my first full year of blogging about managing health care costs, and just completed my sixth year of teaching a course “Managing Health Care Costs” at the Harvard School of Public Health.  I wanted to share some observations from our final class of 2009.  Class slides are at this URL.  

This posting will be in two parts – I’ll post the second part tomorrow.

Observation One: Sick people are expensive to care for.

 The top 1% of nonelderly patients represent 30% of all medical costs.  We need programs to better manage those with serious illness, and a regulatory framework to discourage risk shifting and patient dumping.

Observation Two: The problem in the US is much more unit cost than utilization

In the US, we have fewer doctor’s visits, fewer prescriptions, fewer (and shorter) hospitalizations compared to all other developed countries.  But our average hospitalization costs over $12,000, compared to under $10,000 (France, Canada) and under $4000 (UK and Netherlands).

In Japan, MRIs cost under $100, compared to $1500 in the US. 

Observation Three: Our lifestyles cause large medical costs

The good news is that we smoke less than we did. The bad news is that we’re getting more and more overweight. 

Observation Four: We don’t like to make tradeoffs

Everyone agrees we should perform more care that increases quality while lowering cost.  This means we should give more vaccinations –but there aren’t many money-saving medical interventions. We also agree that we should do fewer things that raise cost while lowering quality.  So let’s not give middle aged men Vioxx, which works as well as ibuprofen but increases the risk of heart attack.  The challenge is that we are not willing to give up tiny quality increases at enormous costs. See, for instance, a new cancer drug that for $36,000 a month decreases tumor size in under 1/3 of patients.   We’re also reluctant to design systems that  are 'decrementally cost effective.'   

Observation Five: There is huge variation

Atul Gawande’s “The Cost Conundrum” in the June 1 New Yorker   brought well-deserved attention to the work of Jack Wennberg, Elliot Fisher, and others at Dartmouth who have been showing us the vast variations in utilization of health care.  In expensive areas, we have too many hospital beds and too many doctors – and we use them.  Good example of how decreasing hospital beds does not decrease quality in David Leonhardt’s column in the New York Times this past week. 

Observation Six: Fee for service is toxic

Imagine if we paid auto manufacturers by the bolt rather than for a completed car. We would have cars chock full of bolts –each one an extra cost, extra weight, and an extra ‘point of failure.’  That’s what we’ve got in a fee for service health care system 

Observation Seven: There is a cultural clash between those seeking to preserve the “art” of medicine, and those looking to create more reliability and cost effectiveness through industrial redesign

Jerome Groopman worries that electronic medical records and standardization will take the personal relationship out of medicine.  I worry that lack of accountability and standardization is responsible for many medical errors –and we just can’t rely on the extraordinary effort of individual physicians to insure quality and cost-effectiveness.

Observation Eight: We pay a heavy economic and noneconomic price in our effort to banish uncertainty

It’s our intuition that every additional piece of data increases our knowledge.  This is simply not true. We often gather data in our quest to banish uncertainty, and that data doesn’t much change the chance of real, serious, treatable disease, but does increase cost and increase the risk that we’ll do further, more dangerous tests or interventions. I’ll be blogging more on the vain quest for certainty in the coming days. 

I'll post Part II of these thoughts tomorrow.
[Addendum: thanks to Wellescent Health Blog for note, and I have finished the sentence in observation four]

Part Two of this post is here.

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