The COX-2s and the Future of Medicare

Here’s the label you won’t read on Celebrex, Bextra and Vioxx (if Merck decide to bring Vioxx back):

WARNING: This drug increases your risk of a heart attack or stroke. This drug provides no more pain relief than generic and over-the-counter painkillers. There is no reason to take this expensive, prescription drug unless you are among the 1 to 4 percent of people who suffer from gastrointestinal side effects from other painkillers, which are available at one-tenth the price at your local supermarket or drug store without a prescription. Nearly half of all heart attacks are fatal and those who survive must deal with the consequences for the rest of their lives. Only one in 20 ulcers are fatal and the vast majority of gastrointestinal problems are easily treated with few long-term effects.

There are two differences between that label and a typical FDA warning label. It compares the risks and benefits. And it talks about the relative economic value of the drugs.

The FDA advisory panel that met for three days last week to discuss the fate of COX-2 inhibitors never discussed the economic value of this class of drugs. As a top FDA official once described the agency’s mandate to me: the FDA doesn’t consider the relative usefulness of a new medicine within the range of potential medical approaches to a problem. It only considers whether a new drug is safe and effective.

That’s no longer an adequate mission. What a new drug, medical device or procedure is actually worth will be the most important question facing medical consumers and the health care system over the coming decades. It’s a question that is already front and center for taxpayer-financed Medicare, whose prescription drug benefit goes into effect next year.

Estimates for the ten-year cost of that program are now pushing $700 billion. In a letter to President Bush this week, Sen. Ted Kennedy (D-MA) and Rep. Henry Waxman (D-CA) urged the administration to negotiate lower drug prices, something prohibited in the Republican-backed Medicare prescription drug bill that passed in late 2003. Such negotiations, they said, could save taxpayers $190 billion. Bush appointee Mark McClellan, the former FDA commissioner and now head of the Center for Medicare and Medicaid Services (CMS), immediately rejected that approach. He claimed the insurance companies administering the benefit will wrest concessions in a competitive market.

That’s nonsense. The insurance companies, despite the huge administrative costs they add to the health care system, have proved totally inept at evaluating the relative worth of medical services as a way of holding down health care costs. Their meat axe approach on physician and hospital services wound up denying needed care to millions of Americans. The backlash against managed care became a potent political issue. Properly chastened, the insurers put down their axes and became pass-through agents for health care costs still rising at near double-digit rates. They still collect their fees, of course.

The core problem with most managed care and an unfettered drug marketplace is that they fail to deliver medical value commensurate with the increasing level of money spent. COX-2 sales reached a stunning $7 billion a year for pain relief that could have been had for a tenth the price. Even if one generously assumes that ten percent of those patients qualified for the drugs because of high gastrointestinal risk, the health care system could have saved $5 billion or more a year by making wise decisions.

Of course, the only way to ensure the health care system makes such value-oriented decisions is by establishing drug formularies with clear and enforceable usage guidelines. Unfortunately, the Medicare law restricted the use of formularies. The authors of most usage guidelines are on industry payrolls as researchers, consultants and speakers. Meanwhile, physicians in their offices are bombarded by drug industry salesmen wielding ginned up studies that impart almost no useful information and by patients clamoring for the latest, heavily advertised drugs.

Liberals who want to protect and expand the nation’s social insurance systems need to begin talking about the incredible waste in the health care system that pads the top and bottom lines of drug and device companies and other providers. Paul Krugman, in an otherwise excellent essay in the current New York Review of Books about the Bush administration’s Social Security scam, acknowledges that the real fiscal crisis caused by an aging society is in its health care programs. However, he buys into the argument that technological innovation may be driving health care costs higher. Pointing to the case of implanted cardiac devices, he says that since it saves lives, “it’s not clear that a rising share of health care spending in the economy should be considered a bad thing.”

Technological innovation is one cause of higher health care costs, but like most economists, he only sees the forest and the not the trees. As I discussed in the January 20th GoozNews (“Shocking”), the ICDs are a classic case of bracket creep in medical technology: What’s extremely valuable in some cases often gets deployed through lobbying, marketing and specious research in populations where the technology is less and less useful and in many cases totally inappropriate.

We need a regulatory system that can sort out those questions with sound and objective evidence. We need a health care delivery and payments system that can put that advice into practice. Otherwise, Medicare like Social Security will become prey to bogus privatization schemes masquerading as individual choice since “we can’t afford everything.” That will destroy the program, not save it.

Posted by gooznews at February 19, 2005 12:23 PM