Can Our Dysfunctional Health Care System Contain Ebola?

Not to bury the lede, I think it can, but it will be a lot harder than the talking heads on television predict.

I have been writing about health care dysfunction since 2003.  Lots of US politicians would have us believe we have the best health care system in the world (e.g., House of Representatives Speaker John Boehner (R-Ohio), here),   Much of the commentary on Ebola also seems based on this "best health care system in the world" notion.  For example, in an interview today (5 October, 2014) on Meet the Press, Dan Pfieffer, "senior White House adviser," said

There is no country in the world better prepared than the United States to deal with this.  We have the best public health infrastructure and the best doctors in the world.

However, at least the statistics say compared to other developed countries, US processes and outcomes are at best mediocre using the best of some admittedly flawed metrics (look here), yet our costs are much higher than those of comparable countries.  Furthermore, on Health Care Renewal we have been connecting the dots among severe problems with cost, quality and access on one hand, and huge problems with concentration and abuse of power, enabled by leadership of health care organizations that is ill-informed, incompetent, unsympathetic or hostile to health care professionals' values, self-interested, conflicted, dishonest, or even corrupt and governance that fails to foster transparency, accountability, ethics and honesty.

Thus there is reason to worry that it will be harder than many expect for the US to deal with Ebola.  There is already some evidence that some of the sorts of problems we have been discussing for years made it harder for the US to cope with even the so far limited incursion of Ebola.

Financialization of Pharmaceutical and Biotechnology Companies

George W Merck famously said,
 

We try never to forget that medicine is for the people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered it, the larger they have been.

In the pharmaceutical industry, the era of George W Merck is over.  The failure to have access to an effective Ebola virus vaccine exemplifies how things have changed.

If we were to have an effective Ebola virus vaccine, we could have likely used it to vaccinate health care workers and contacts of infected patients and likely thus halt the epidemic early.


A story in Modern Healthcare suggested that now many of the big experts on Ebola and public health are concluding having a vaccine available would be very helpful,

 As West Africa's Ebola outbreak continues to rage, some experts are coming to the conclusion that it may take large amounts of vaccines and maybe even drugs — all still experimental and in short supply — to bring the outbreak under control.

Specifically,

'It is conceivable that this epidemic will not turn around even if we pour resources into it. It may just keep going and going and it might require a vaccine,' Dr. Anthony Fauci, director of the U.S. National Institute for Allergy and Infectious Diseases, told The Canadian Press in an interview.

The main reason we do not yet have such a vaccine does not appear to be scientific, but economic.

Here we posted discussion of arguments that pharmaceutical and biotechnology companies up to now have been uninterested in developing Ebola vaccines because they did not anticipate that such vaccines would produce a lot of revenue.  About one month ago, the Independent ran yet another story about an Ebola expert who believed this was the main reason for the lack of effective vaccine development up to now.

The scientist leading Britain's response to the Ebola pandemic has launched a devastating attack on 'Big Pharma', accusing drugs giants including GlaxoSmithKline (GSK), Sanofi, Merck and Pfizer of failing to manufacture a vaccine, not because it was impossible, but because there was 'no business case'.

West Africa's Ebola outbreak, which has now claimed well over 2,000 lives, could have been 'nipped in the bud', if a vaccine had been developed and stockpiled sooner – a feat that would likely have been 'do-able', said Professor Adrian Hill of Oxford University.

The US health care system is now heavily commercialized.  Health care corporations, including pharmaceutical and biotechnology companies, are often lead by generic managers who subscribe to the business school dogma of the "shareholder value theory," which seems to translate into putting short-term revenues ahead of all other goals.  Thus they have been "financialized."  At least in the pharmaceutical and biotechnology sector, such financialization appears to now be global. 

It may now be too late to contain this particular Ebola virus epidemic using a vaccine.  But unless we change how decisions are made about vaccine development, and end the dominance of financialization over drug and vaccine development, we may not be able to control the next deadly epidemic using vaccines either.

Generic Management Deluded by Business School Dogma

On 2 October, 2014, InformaticsMD posted on Health Care Renewal his speculation that the Ebola patient now hospitalized in Dallas was not identified on his first emergency department visit to Texas Health Presbyterian hospital even though a nurse apparently found out he had recently traveled from Liberia because of problems with how the hospital's electronic health record (EHR) transmitted or displayed this information.  This supposition was later apparently confirmed, but then the hospital system CEO retracted this explanation, leaving the reason he was sent home from the ED, thus risking infection of more contacts, unclear (see this post).

I now speculate that the larger reason for the problems the hospital had and is having both handling this patient, and explaining how it handled the patient is hospital leadership by generic managers who do not really understand the relevant health care issues.


Mr Barclay E Berden, the CEO of Texas Health Resources, has had a long career in hospital management.  However, his most advanced degree was "a master's degree in business administration with a specialization in hospital administration from the University of Chicago Graduate School of Business."   His official biography suggests that he has no direct experience or training in medicine, health care, or biological sciences.  Nonetheless, when he became CEO this year, according to Modern HealthCare, the chairperson of the hospital system board thought he was fully qualified,

'He brings a well-rounded perspective and unique leadership strengths to the CEO position,' board Chair Anne Bass said in a news release. 'At the same time, he represents stability and continuity that will be critical to advancing our strategy as we confront the challenges of a rapidly changing healthcare environment.'

Nonetheless, the hospital systems seems to have had trouble confronting the challenges of the change in environment due to Ebola.  Also, according to a very recent story in the Dallas Morning News, there have been performance issues at Texas Health Resource hospitals, and specifically at Texas Health Presbyterian,

Texas Health Presbyterian Hospital — under fire for releasing a Liberian man who later turned out to have the Ebola virus — has lagged behind its peers on emergency room care and lost some federal funds the past three years because it had high discharge rates of patients who later had to return for treatment.

The hospital scored significantly worse than the state and national averages in five of six emergency care indicators, with emergency room wait times twice as long as the averages, according to data from the U.S. Centers for Medicare & Medicaid Services.

The hospital also was the most penalized in Dallas under a three-year program designed to reduce the number of patients readmitted for care, according to the data.

The delays in patient treatment in the emergency room, in particular, raise important questions about Presbyterian’s emergency care, said Dr. Ashish Jha, a professor at Harvard University’s School of Public Health and a practicing general internist.

In 1988, Alain Enthoven advocated in Theory and Practice of Managed Competition in Health Care Finance, a book published in the Netherlands, that to decrease health care costs it would be necessary to break up the "physicians' guild" and replace leadership by clinicians with leadership by managers (see 2006 post here). Thus from 1983 to 2000, the number of managers working in the US health care system grew 726%, while the number of physicians grew 39%, so the manager/physician ratio went from roughly one to six to one to one (see 2005 post here). As we noted here, the growth continued, so there are now 10 managers for every US physician. 

We have frequently discussed how generic managers in charge of health care organizations may follow business-school dogma at the expense of patients' and the public's health.  In particular, they may also prioritize short-term revenue ahead of all other concerns, and hence may favor high-technology and procedural care, often performed electively, ahead of the the less glamorous and remunerative parts of health care, e.g., ED care of poor, uninsured, febrile patients.

Unfortunately, much of the country's efforts to ward off Ebola are likely to be lead by generic managers who may have little understanding of epidemiology, public health or virology, and little understanding of the state of health care at the sharp end.  So unfortunately I expect continuing "glitches," or worse.  Hopefully, the country, although not every single one of its inhabitants, will survive them.  Then we need to seriously reflect on the wisdom of handing control of health care over to generic managers, rather than health care professionals. 


Commercialization of Health Care Leading to Neglect of Routine Acute Care and Public Health 

Just as national politicians and government leaders have repeated the meme of the US health care system being "the best in the world," now that Ebola has come to Texas, state leaders have sung the same song.  For example, an editorial in the Baltimore Sun quoted the state health commissioner,

'This is not West Africa,' Texas health commissioner Dr. David Lakey said Wednesday at a news conference designed to dispel Texans' (and Americans') fear of an Ebola outbreak after a man there was diagnosed with the disease. 'This is a very sophisticated city, a very sophisticated hospital.'

The Texas Tribune ran a story produced in cooperation with Kaiser Health saying,

At a Wednesday press conference to discuss the Ebola case, Gov. Rick Perry said he was confident in the state’s preparedness. 'There are few places in the world better equipped to meet the challenge that is posed in this case,' he said. 'We have the health care professionals and the institutions that are second to none.'

However, another Dallas Morning News story recounted various problems in the public health response to the Dallas Ebola patient, including,

Delay in blood testing
After Duncan was admitted to the hospital, health officials waited nearly two days to test his blood for the Ebola virus. This may have delayed containment of people who had contact with him.
Slow containment and cleanup
Health officials left some of Duncan’s close contacts in the apartment where soiled linens and towels that he had used remained.
Failure to avoid contact with emergency workers
Ambulance workers and sheriff’s deputies are among those being monitored.

So, there is reason to suspect that the public health system in Texas may not exactly be the best in the world.  In fact, there seem to be systemic problems with public health in Texas that the Ebola scare is bringing to increased public notice.  The Texas Tribune/ Kaiser story went on to explain that in Texas, a state in which distrust of central government is great, and confidence in the private sector is high, public health is both decentralized and often poorly funded,

'We don’t really have a unifying construct for public health in Texas that’s comprehensive,' said Dr. Eduardo Sanchez, the former commissioner of the Texas Department of State Health Services (DSHS) and current chairman of the Texas Public Health Coalition. 'The system is not as connected as it could be.'

Furthermore,

But public health experts argue that the state’s response system is 'fragmented' and vulnerable to local budget cuts, which they say could hamper crisis-response efforts in the case of diseases that are more easily transmitted.

Texas’ local health departments, which provide services like immunizations and disaster response planning, operate autonomously and are funded primarily by local taxes but may be supplemented by state and federal grants. Because local health departments are not held to a single standard, their services and budgets vary tremendously around the state.

A report critical of the state’s public health system, prepared by the Sunset Advisory Commission, found that 'the roles and responsibilities of DSHS and local health departments remain undefined.' The Sunset Commission is tasked with highlighting inefficiencies at state agencies and recommending legislative action.

'A ‘local health department’ can be a few staff conducting restaurant inspections and animal control duties, or a large agency directing sophisticated disease surveillance, operating a public health laboratory and providing direct services to citizens,' according to the report.>

Some public health officials have criticized the state’s model as disjointed. Many local health departments operate independently; however, if local budget cuts to a public health department force it to discontinue a health service, DSHS is often required to step in and take responsibility for that service. The state is then left to foot the bill.

'In the event of a public health emergency ... the resources necessary to adequately respond to that are not all in the control of the health department,' Sanchez said. 'You have to have the money and the authority — whether it’s informal or formal — to actually lead a response and take care of business.'

Local entities have slashed funding for health departments in recent years, said Catherine Troisi, an epidemiologist at the University of Texas School of Public Health in Houston. Thirty-six percent of local health departments in Texas laid off staff as a result of budget cuts between 2008 and 2013, according to the National Association of County and City Health Officials.

'Public health is politics,' Troisi said.

In the US, we have pushed commercialization of health, health care and public health.  Much of our health insurance is provided by for-profit corporations.  Some of our hospitals and other organizations that provide direct patient care are for-profit.  As we noted above, most of our health care organizations are now run in a "business-like" manner by managers trained in business, but not necessarily in health care or biological science.  The thus revenue-focused health care system has emphasized procedures and high-technology, often at the expense of the basics.  So it should not be s surprise that Reuters just reported,

 Nurses, the frontline care providers in U.S. hospitals, say they are untrained and unprepared to handle patients arriving in their hospital emergency departments infected with Ebola.

Many say they have gone to hospital managers, seeking training on how to best care for patients and protect themselves and their families from contracting the deadly disease, which has so far killed at least 3,338 people in the deadliest outbreak on record.

Furthermore, using as an example Medstar Washington Hospital Center, the largest hospital in Washington, DC,

Nurses argue that inadequate preparation could increase the chances of spreading Ebola if hospital staff fail to recognize a patient coming through their doors, or if personnel are not informed about how to properly protect themselves.

At Medstar, the issue of Ebola training came up at the bargaining table during contract negotiations.

'A lot of staff feel they aren't adequately trained,' said [Emergency Department nurse Micker] Samios, whose job is to greet patients in the emergency department and do an initial assessment of their condition.

So Young Pak, a spokeswoman for the hospital, said it has been rolling out training since July 'in the Emergency Department and elsewhere, and communicating regularly with physicians, nurses and others throughout the hospital.'

Samios said she and other members of the emergency department staff were trained just last week on procedures to care for and recognize an Ebola patient, but not everyone was present for the training, and none of the other nursing or support staff were trained.

'When an Ebola patient is admitted or goes to the intensive care unit, those nurses, those tech service associates are not trained,' she said. 'The X-ray tech who comes into the room to do the portable chest X-ray is not trained. The transporter who pushes the stretcher is not trained.'

If an Ebola patient becomes sick while being transported, 'How do you clean the elevator?'

Nurses at hospitals across the country are asking similar questions.

A survey by National Nurses United of some 400 nurses in more than 200 hospitals in 25 states found that more than half (60 percent) said their hospital is not prepared to handle patients with Ebola, and more than 80 percent said their hospital has not communicated to them any policy regarding potential admission of patients infected by Ebola.

Another 30 percent said their hospital has insufficient supplies of eye protection and fluid-resistant gowns.

So up to now, it appears that in the state of Texas, and across the country, the preparedness of public health systems and of front-line hospitals to deal with Ebola is unclear.  This may be due to political cuts in funding of public agencies, a payment system that favors procedures and high-technology over basic care, and leadership by generic managers who prioritize making money short-term over less financially advantageous priorities like preparedness for epidemics.  

Summary
Thus again there is reason to fear that our commercialized health care system run by generic managers, and our neglected public health system scorned because it is not "business-like" may not be fully up to the task of containing Ebola.  Again, hopefully this too will pass, without too many casualties.  However, one, maybe the only silver lining in the dark clouds of the Ebola crisis seem to be its capacity to challenge the pompous certainty by those invested in the status quo that we have the best health care system in the world.

The Ebola crisis should, again, lead to serious reflection on true health care reform, reform that would address concentration and abuse of power, reform that would enable leadership of health care by  well-informed people who are devoted to patients' and the public's health, who are honest and ethical, who are willing to be held accountable, and would shrink the size and power of individual health care organizations to make them truly responsive to patients' health care needs and the public's health needs. 

ADDENDUM (10 October, 2014) - This post was re-posted on the Naked Capitalism blog, and on OpEdNews.com

Price Fixing, Regulatory Capture, Crony Capitalism - Will the New Public Citizen Report Succeed in Outing the RUC?

Just last month the RUC made it back into the headlines.  Then we posted  Politico made another attempt to shed some light on this obscure committee and its outsize effect on health care. Now the watchdog organization Public Citizen has stepped into the breach, publishing a report on the RUC (Research Based Relative Value Scale Update Committee), with an accompanying press release and op-ed. 

Introduction - Why the RUC is Important

To explain why this issue is important, I can simply repeat what I wrote before. 

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

The article in the Annals, however, proposed one conceptually simple answer.  The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, congressional hearings in 2013, and yet another major expose in Politico in 2014.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)

Once Again...  the Public Citizen Report

The latest report draws on the earlier exposes and journal articles, and repeats again all but one of the major points in the Washington Monthly 2013 article.  Here are the points with quotes from the new report.

The RUC is Well Hidden

After describing the RUC as "secretive" in its introduction, the report reviewed the specifics:

most of its proceedings occur behind closed doors and without public scrutiny. Minutes from each of the RUC’s three annual meetings are not made publicly available. Additionally, when the RUC votes each spring to assign work RVU values to CPT codes, the voting results are not released to the public.

Also,

One critical piece of information that is not disclosed to anybody (including RUC members) is any indication of how each member of the RUC voted.

The RUC Fixes Prices

The RUC has enormous power in setting health care prices,...

The Government Enables the RUC to Fix Prices

The key data point in the formula that is used to set Medicare payment rates is largely determined by a secretive committee that is managed and funded by the American Medical Association....

Also,

CMS is not required to accept the RUC’s recommendations. In fact, the RUC is insistent that its role in the process is only to exercise its right to petition the government. However, studies have demonstrated that CMS accepts RUC recommendations at overwhelmingly high rates.

The Government Fixed Prices are Endorsed by the Private Sector

The RUC’s influence over physician payments extends well beyond Medicare payments because private insurers also use the Medicare payment framework as a baseline for determining their payments. Private insurance companies often set their payments based on the underlying Medicare fee schedule.

The Price Fixing Drives Up Costs and the Use of Services

The RUC has been accused of overstating many of the factors used to determine a physician payment.

Also,

When the RUC has recommended adjusting the values that determine physician payments, it has been more than five times as likely to increase pay for a procedure as decrease it.

These Incentives Cripple Primary Care

To the extent that the RUC’s members are biased towards their own specialties, this results in the overvaluing of specialty procedures at the expense of primary care. Because there are significantly more specialty procedures than primary care procedures, the overvaluation of specialty and procedural services has caused U.S. specialists’ pay to rise much more rapidly than primary care physicians since the formation of the RUC.

Higher pay to specialists creates greater incentives for medical students to practice specialty or procedural medicine, resulting in a shortage of primary care physicians.

These Incentives Benefit Big Corporations, not just Medical Specialists

This was the only issue not directly addressed in the 2014 Politico article or in the new Public Citizen report.  (But see our 2013 post.)

Anechoic So Far

So in some sense the Public Citizen report on the RUC sang the same old song.  However, as the report itself noted, previous attempts to inspire action about the RUC have generated no echoes.  Thus, maybe it should be no surprise that so far there has been no press coverage of the Public Citizen report (at least as far as I could tell by using my usual search techniques as of this morning). 

Of course, as we have discussed ad infinitum, that which discomfits those who are making so much money from our current health care system often manages to create few echoes, that is, what we have dubbed the anechoic effect.

This is all the more interesting because there are aspects of the RUC that could outrage both left- and right-wingers.  First of all, the RUC is a major component in a system of government price fixing.  Enabled by the RUC, CMS fixes the prices of medical care.  Many on the right, but particularly those of the more libertarian or free market fundamentalist persuasion say they hate government price fixing.

Second of all, the RUC exemplifies regulatory capture.  The report quoted

 Thomas Scully, an administrator of the Centers for Medicare and Medicaid Services under President George W. Bush, also has been highly critical of the RUC, and particularly the power the AMA has over the process. 'The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild,' Scully said in 2013.

Again, many on the right, and also, probably many on the left worry about regulatory capture.

Third, the RUC represents a particular species of regulatory capture, crony capitalism.  This was not emphasized in the report, but we have written before about how many RUC members have personal financial ties to health care corporations, and how these constitute conflicts of interest (look here).  The Washington Monthly noted that RUC members are sponsored by medical societies that in turn have institutional conflicts of interest involving big health care corporations, and that the way the RUC sets prices could benefit such health care corporations (look here.)  Both left- and right-wingers say they loathe crony capitalism, although the left emphasizes the undue influence of big business, and the right emphasizes the bad actions of government resulting from it.

Yet very few on the right or left seem to have noticed, much less have become outraged by the RUC

The new Public Citizen report suggested

The most important policy change is for CMS to stop relying on the AMA to maintain the existing system for determining the value of Medicare payments to physicians.

Maybe this time someone will listen.  As I have written too often, I hope the latest attempt by Public Citizen to make the RUC less anechoic will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.



APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

The RUC. "an Independent Group of Physicians?" - But It Includes Executives and Board Members of For-Profit Health Care Corporations and Large Hospital Systems

Introduction

We just discussed how a major story in Politico has once again drawn attention to the opaque RUC (Resource Based Relative Value System Update Committee) and its important role in determining what physicians are paid for different kinds of services, and hence the incentives that have helped make the US health care system so procedurally oriented.  (See the end of our last post for a summary of the complex issues that swirl around the RUC.)

The Politico article covered most of the bases, but notably omitted how the RUC may be tied to various large health care organizations, especially for-profit, and how the incentives it creates may benefit them. When the RUC membership first became public in 2011 due to efforts by Wall Street Journal reporters, I used internet searches to find that nearly half of the RUC members had conflicts of interest (look here).  Most of them were part-time paid consulting relationships, paid speaking engagements, and memberships on advisory boards involving drug, device, biotechnology and occasionally health insurance companies, or personal stock holdings in such companies.

In preparing my latest post, I found that to its credit, the AMA now makes the RUC membership more accessible (look here, free registration required.)  So I decided to check whether the current RUC roster still seems so conflicted.

As I did in 2011, I ran internet searches on all new RUC members since 2011, and updated searches on the continuing members.  Results are below.  Information new since 2011 is highlighted thus.  Note that I believe all the listed relationships are or were actual, but cannot rule out errors, especially given some RUC members have common names.  Any corrections are welcome.


The RUC Members and Their Financial Relationships

- Barbara S Levy, MD

Chair, RVS Update Committee
Federal Way, WA 2000

Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per UptoDate


-Margie Andreae MD
American Academy of Pediatrics
Ann Arbor, MI

Chief Medical Officer of Integrated Revenue Cycle and Billing Compliance, University of Michigan Health System, per University of Michigan Health System

- Michael D. Bishop, MD
American College of Emergency Physicians (ACEP)
Bloomington, IN 2003

- James Blankenship, MD
American College of Cardiology (ACC)
Danville, PA 2000

Lecture fees from Sanofi-Aventis per New England Journal of Medicine
Financial relationships with  The Medicines Company, Abbott Vascular, Conor Med Systems, Portola Pharmaceuticals, Schering Plough, AGA Medical, Astra Zeneca, Abiomed, Bristol Myers Squibb, Tryton Medical, Kai Pharmaceutical, Novartis (Grants or Research Support) per Society for Cardiovascular Angiography and Interventions Disclosure Summary


- Robert Dale Blasier, MD
American Academy of Orthopaedic Surgeons (AAOS)
Little Rock, AK 2008

-Albert Bothe Jr MD
CPT Editorial Board
Danville PA

Executive Vice President and Chief Medical Officer, Geisinger Health Systems, per Geisinger

- Ronald Burd, MD
American Psychiatric Association (APA)
Fargo, ND 2006

-C Scott Collins MD
American Academy of Dermatology
Rochester, MN

- Thomas P Cooper MD
American Urological Association
Everett, WA

General Partner, Aperture Venture Partners LLC, (health care focused venture capital firm) , per Aperture
Member, Board of Directors, Kindred Healthcare, per Kindred
Member, Board of Directors, Hanger Inc (orthotic and prosthetic care), per Hanger
Member, Board of Directors, IPC/ the Hospitalist Company, per IPC


-Anthony Hamm DC
Health Care Professional Advisory Committee
Goldsboro, NC

- David F. Hitzeman, DO
American Osteopathic Association (AOA)
Tulsa, OK 1996


- Charles F. Koopmann, Jr., MD
American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS)
Ann Arbor, MI 1996

- Robert Kossmann, MD
Renal Physicians Association (RPA)
Santa Fe, NM 2009

Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per Renal Physicians Association

- Walter Larimore, MD
American Academy of Family Physicians (AAFP)
Colorado Springs, CO 2009

-Alan E Lazaroff MD
American Geriatrics Society
Denver, CO

- J. Leonard Lichtenfeld, MD
American College of Physicians (ACP)
Atlanta, GA 1994

Member, Physician Advisory Board, Aetna per Aetna 
Deputy Chief Medical Officer, American Cancer Society, per ACS

- Scott Manaker, MD, PhD
Practice Expense Subcommittee
Philadelphia, PA 2010

Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per Chest

-William J Mangold Jr MD
American Medical Association
Tuscon, AZ

Vice President, Board Developer Inc (health care management consulting firm), per Board Developer
Senior Advisor, ADVI (health care management consulting firm), per ADVI
Member, Board of Directors, Sante (post-acute health care company), per Sante

-Geraldine B McGinty MD
American College of Radiology,
New York, NY

- Gregory Przybylski, MD
American Association of Neurological Surgeons (AANS)
Edison, NJ 2001

Stock Ownership: United Healthcare (300 shares); Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per NASS meeting

- Marc Raphaelson, MD
American Academy of Neurology (AAN)
Leesburg, VA 2009

personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per AAN

- Sandra Reed, MD
American College of Obstetricians and Gynecologists (ACOG)
Thomasville, GA 2009


GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through here

-  David H Regan MD
American Society of Clinical Oncology
Portland, OH

Payment from Cephalon in 2009 for $2200, per ProPublica search 


-Chad A Rubin MD
American College of Surgery
Columbia, SC

-Joseph R Schlecht
Pimrary Care Seat
Jenks, OK 

- Peter Smith, MD
Society of Thoracic Surgeons (STS)
Durham, NC 2006

Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through here
Advisor or consultant to Bayer per Medscape

-Samuel D Smith MD
American Pediatric Surgical Association
Little Rock, AK

-Stanley Stead MD
American Society of Anesthesiologist
Encino, CA

-  J Allan Tucker MD
College of American Pathologists
Mobile, AL

- James Waldorf, MD
American Society of Plastic Surgeons (ASPS)
Jacksonville, FL 2008

- George Williams, MD
American Academy of Ophthalmology (AAO)
Royal Oak, MI 2009

Advisory Team, RetroSense Therapeutics
Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per Review of Opthamology
Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per AAO meeting

Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through here
Member, Medical and Scientific Committee, Pixium Vision Inc, per Pixium 
Member, Board of Directors, Macusight Inc, per BusinessWeek.  


Summary 

The membership of the RUC continues to have a considerable number of apparent financial conflicts of interest.  By my count, in 2014, nearly half, 15/31 members had such conflicts.

Again, most of the conflicts were financial ties such as part-time paid consulting relationships, paid speaking engagements, and memberships on advisory boards involving drug, device, biotechnology and occasionally health insurance companies, or personal stock holdings in such companies.  A number of members who had such ties known in 2011 have several more such ties in 2014. 

In 2014, new kinds of conflicts of interest that appear even more intense have appeared.  Several members are now known to also be members of the boards of directors of for-profit health care corporations, including biotechnology, device, health care provider, and health care management services companies. 

We have been writing about the severe conflicts of interest presented by service on the boards of  health care corporationa.  In 2006 we first discussed a newly discovered species of conflict of interest in health care, in which leaders of medical or health care organizations were simultaneously serving on boards of directors of health care corporations.
 
We posited these conflicts would be particularly important because being on the board of directors entails not just a financial incentive.  It ostensibly requires board members to "demonstrate unyielding loyalty to the company's shareholders" [Per Monks RAG, Minow N. Corporate Governance, 3rd edition. Malden, MA: Blackwell Publishing, 2004. P.200.]  Of course, after the global financial collapse of 2008 made us sadder and a little wiser, we realized that many board members actually seem to have unyielding loyalty to their cronies among top management.  However, in any case, the stated or actual interests of a member of the board of a health care corporation, like a pharmaceutical company or medical device company, could be very different and at odds with the mission of an academic medical institution or a non-profit ostensibly dedicated to improving health care quality, like in this case, the RUC of the American Medical Association.

Also, one new RUC member is apparently a top executive of a health care management services company, and another new RUC member is apparently a general partner of a health care venture capital firm. Again, such leadership roles create responsibilities that could be very much at odds with a leadership role in a very influential committee run by a physicians' society.

Finally, two new members are top executives of large, although admittedly non-profit hospital systems.  One member is now known to be a full-time executive of a large, non-profit disease specific patient advocacy organization.  While hospital systems' interests may overlap those of physicians, modern  hospital systems are often run by generic managers who put revenues ahead of all else.  Furthermore, in pursuit of revenues, hospital system leaders may be very interested in increasing utilization of the most lucrative, usually high-technology and procedural services, and thus in structuring physicians' incentives accordingly.  While disease-specific patient advocacy goups' interests may also overlap those of doctors, they may tend to be more interested in their diseases than all others.

By the way, note that AMA and RUC leaders often defend the RUC as purely physician run organization, e.g., the testimony of the RUC leader, Dr Barbara Levy, at a Senate hearing, per MedPage Today in 2011, (see this post),

The RUC is an independent group of physicians from many specialties, including primary care, who use their expertise on caring for Medicare patients to provide input to CMS [the Centers for Medicare and Medicaid Services],' RUC chair Barbara Levy, MD, said in a statement. 

But now it is clear that the RUC includes corporate executives and board members, and top hospital system executives.  These people may have MDs, but their loyalties appear divided.

We have questioned the tremendously influential role the RUC plays in setting the incentives that drive the US health care system.  Now it appears that the RUC membership remains conflicted.  Almost half work part-time for drug, device, biotechnology, and health insurance companies.  Several are in the top leadership and/or governance of various health care corporations and large non-profit hospital systems.  Thus it seems that the incentives that drive are health care system are under the influence of people who may put corporate or organizational revenue ahead of patients' and the public's health.

As we wrote before, the prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.

As a first step, I submit that all RUC members who are executives or board members of for-profit health care corporations or large hospital systems step down from the RUC, or resign these positions.

Now Politico Tries RUC Raking

It has been a year since we wrote about the RUC, the American Medical Association's Relative Value System Update Committee.  There is only one thing new since then.  Politico just made another attempt to shed some light on this obscure committee and its outsize effect on health care. 

To summarize the events so far, all I need to do is cut and paste from our last post on the topic, from July, 2013...

In 2007, readers of the Annals of Internal Medicine could read part of the solution to a great medical mystery.(1)  For years, health care costs in the US had been levitating faster than inflation, without producing any noticeable positive effect on patients.  Many possible reasons were proposed, but as the problem continued to worsen, none were proven.

Prices are High Because They are Fixed That Way

The article in the Annals, however, proposed one conceptually simple answer.

The prices of most physicians' services, at least most of those that involved procedures or operations for Medicare patients, were high because the US government set them that way. Although the notion that prices were high because they were fixed to be so high was simple, how the fixing was done, and how the fixing affected the rest of the health system was complex, mind numbingly complex.

Perhaps because of the complexity of its implementation, the simplicity of the concept has not seemingly reached the consciousness of most American health care professionals or policy makers, despite the publication of several scholarly articles on the subject, efforts by humble bloggers such as yours truly, a major journalistic expose in the Wall Street Journal in 2010,  another major expose in Washington Monthly in 2013, and congressional hearings in 2013.  The lack of much public discussion of this issue despite its importance and the above attempts to start discussion seemed to be a prime example of what we have called the anechoic effect, that important causes of health care dysfunction whose discussion would discomfit those who are currently personally profiting from the current system rarely produce many public echoes.  (For a review of what is known to date about how the offputtingly named Resource Based Relative Value Scale Update Committee (RUC) works, and previous attempts to makes it central role in fixing what US physicians are paid public, see the Appendix.)


Politico's Turn


Now an article by Katie Jennings in Politico brings up some of the issues about the RUC that we have dealt with again and again. These included six of seven major points discussed in the Washington Monthly article, and that have been discussed multiple times on Health Care Renewal.  I will list the seven points, with supporting quotes for the first six from the Politico article.  (Our post in 2013 on the Washington Monthly article had supporting quotes for the last point.) 


The RUC is Well Hidden

 And yet even many doctors are not aware of the hidden hand of the AMA-run committee in perpetuating this costly crisis. The panel, with very little transparency or public discussion, continues....

Also

RUC meetings were closed, invitations had to be approved by the AMA, the charter had not been made public and there were no minutes or public documentation of what was said at the meetings. (Last year, under pressure, the RUC announced it would post meeting minutes on the AMA website.)

The RUC Fixes Prices

a secretive committee run by the American Medical Association (AMA) ..., with the assent of the government, has enormous power to determine Medicare prices by assessing the relative value of the services that physicians perform.

The Government Enables the RUC to Fix Prices

the role of the AMA’s secret committee [dates] back to 1992, when the U.S. government sought to overhaul the entire Medicare fee system and decided it didn’t have the right personnel to conduct extensive surveys of physicians. So the federal agency tasked with overseeing the program, the Centers for Medicare and Medicaid Services, enlisted the AMA and the committee it had formed to determine what’s known as the relative value of physician work, meaning the amount of time, effort and skill that goes into performing a procedure. Each procedure had a corresponding code in the AMA’s Current Procedural Terminology coding system, which the government had already adopted nearly a decade before, in 1983, as the standard for physician billing and reimbursement for Medicare.

Also,

Above all, the RUC appeared to be dictating solutions to the government. Since 1992, the RUC has submitted more than 7,000 recommendations to the Centers for Medicare and Medicaid Services. The agency has accepted 87.4 percent of the recommendations, according to a study published in Health Affairs.

The Government Fixed Prices are Endorsed by the Private Sector

Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect,...

The Price Fixing Drives Up Costs and the Use of Services

For decades the committee has ... [set prices] done so in a way that has skewed Medicare fees in favor of expensive specialists over ordinary general practitioners like Fischer, who are the nation’s first line of defense against serious illness. Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect, contributing to a situation where primary care doctors are in general underpaid, underappreciated — and in critically short supply as medical students flock to where the money and opportunity are.

These Incentives Cripple Primary Care

And because the 31-member committee was – and still is — made up of a majority of specialists who typically sought to maximize their own share of the pie (26 of the 31 are appointed by the major national medical associations), it was no surprise who the losers turned out to be. 'The specialists know what the game is,' said Dr. Robert Berenson of the Urban Institute in DC, who was a member of the RUC in the early 1990s. 'The [RUC’s] basic method of relying on a specialty society to give a non-biased appraisal … is fundamentally a flawed concept.' Dr. Grant Rodkey, the first chair of the committee that came to be known as the RUC, described the scene of the inaugural meeting as 'reminiscent of a group of dogs on leash eyeing a platter with a not-too-generous bone,' in a 1997 interview in the Bulletin of the American College of Surgeons.

These Incentives Benefit Big Corporations, not just Medical Specialists


This was the only issue not directly addressed in the 2014 Politico article.  (But see our 2013 post.)


What to Do and What Will Happen?


The Politico article concluded on an optimistic note, suggesting that increased transparency about what Medicare pays physicians might help.

One key moment came in a court ruling this year: For 35 years until last April, all the Medicare billing practices of physicians had been kept private by a court injunction granted to the AMA. But after an appeals court ruled that such information must be made public, the 2012 billing data was released, showing that the top 1 percent of doctors, mostly specialists, accounted for an outsized portion —14 percent — of Medicare billing.

Or perhaps Congress might ride to the rescue,

Today ironically, the renegade primary care doctors see hope on Capitol Hill—and in the Obamacare law that so many on Capitol Hill have demonized. In April, seeking to avoid impending cuts to physician Medicare reimbursements, Congress passed the “Protecting Access to Medicare Act.” The new law expands on a provision already included in the Affordable Care Act that gives the secretary of Health and Human Services greater authority to identify and correct misvalued Current Procedural Terminology codes. Spurred by Congressman McDermott — who told me in an email that he still wants “major changes that make the RUC’s process more transparent” — Congress also commissioned a report from the Comptroller General to study the process by which the RUC provides recommendations to the government on Medicare fees.

And there is even one - one out of very many - health care insurance companies that might finally deviate from the Medicare fee schedule as influenced by the RUC,

Even some medical insurers, like CareFirst in the Washington, D.C. region, have begun to rebel against the old system and to push the savings that might come from paying primary care physicians more. As long as I can remember, family physicians and general internists have been financially at the low end of the totem pole,' even though they’re the ones who perform the critical if unglamorous work of preventing serious illnesses, former CareFirst Chairman Michael Merson told The Washington Post recently.

But there have been only tiny changes in the RUC since the Washington Monthly article last year, and actually since we first wrote about the RUC in 2007.

The AMA, of course, fails to see anything wrong with the RUC.  On the AMA Wire blog appeared an  anonymous but apparently official post that sought to refute most of the the points made in the Politico article.

Well Hidden

The title of the blog post included the phrase "and it's no secret," but as far as I can tell, the AMA post never directly addressed the secrecy issue, especially involving the secrecy of RUC proceedings, whose location on the AMA website is not obvious to me.  I must admit that the list of members of the RUC is no longer secret, but can be found here (with a log-in, but no subscription required, and minus any biographical information, or conflict of interest disclosures).

Price Fixing

The AMA blog post stated

the RUC does not control the Medicare payment system, nor does it set rates for medical services

That is true as far as it goes, but totally ignores how the RUC's determination of the relative values indirectly sets payment rates.

Government's Uncritical Acceptance of the RUC's Recommendations

The AMA blog post included,

The RUC's recommendations are thoroughly reviewed by government officials who have the final say.

That failed to acknowledge how rarely the government officials have altered the RUC's findings in the past.

Effects on Primary Care

The AMA blog post stated

The RUC values all physicians’ cognitive work and role tackling the growing number of Americans with long-term health problems that need continuous care. The committee’s work reflects the continued importance of services that all doctors—including primary care physicians—perform.

Again, this ignores the small representation of primary care physicians, and of physicians who perform only cognitive, as opposed to procedural services on the RUC, and the data, starting with the Annals of Internal Medicine article from 2007, that suggests the RUC's updates favor procedural services.

Presumably as long as the leadership of the AMA sees no problems with the RUC, not much is likely to change.    

Summary

So since 1992, the RUC has had an outsize role controlling what Medicare pays physicians, and hence physicians' pay in general.  Over this time, the playing field has become increasingly tilted in favor of procedural services and away from cognitive services, especially primary care.  The result is that the US has the most expensive health care system in the world, but hardly the best health care or health care results in the world. 

Economists have beaten us over the head with idea that incentives matter.  The RUC seems to embody a corporatist approach to fixing prices for medical services to create perverse incentives for physicians to do more procedures, and do less conversing with and examining patients, examining the best clinical research evidence about their problems, and rigorously thinking about how best to help them.  More procedures at higher prices helps physicians who do procedures.  It may help even more the corporations that provide the devices and drugs whose use is necessitated by such procedures, and the hospitals who can charge a lot of money as sites for performance of procedures.  It may even help insurance companies by driving ever more money through the health care system, and thus allow rationalization for higher administrative expenses as a function of overall money flow.

Yet incentives favoring procedures over all else may lead to worse outcomes for patients, and more costs to patients and society.  If we do not figure out how to make incentives given to physicians more rational and fair, expect health care costs to continue to rise, while access and quality continue to suffer.

Since we started writing about the RUC in 2007,  there have been some small changes in the RUC.  It has slightly more primary care representation, and its membership is no longer secret.  That is, however, about it.

As I wrote last time, hopefully the Politico article, added to all the other attempts to shine light on the RUC, will succeed in increasing awareness of the RUC and its essential role in making the US health care system increasingly unworkable.  Of course, such awareness may disturb the many people who are making so much money within the current system.  But if we do nothing about the RUC, and about the ever expanding bubble of health care costs, that bubble will surely burst, and the results for patients' and the public's health will be devastating.


ADDENDUM (28 August, 2014) - This post was re-posted on the Naked Capitalism blog, and on the NBCH Newsletter blog. 

APPENDIX - Background on the RUC

 We have frequently posted, first here in 2007, and more recently here,  here, here, and here, about the little-known group that controls how the US Medicare system pays physicians, the RBRVS Update Committee, or RUC.

Since 1991, Medicare has set physicians' payments using the Resource Based Relative Value System (RBRVS), ostensibly based on a rational formula to tie physicians' pay to the time and effort they expend, and the resources they consume on particular patient care activities. Although the RBRVS was meant to level the payment playing field for cognitive services, including primary care vs procedures, over time it has had the opposite effect, as explained by Bodenheimer et al in a 1997 article in the Annals of Internal Medicine.(1) A system that pays a lot for procedures, but much less for diagnosing illnesses, forecasting prognoses, deciding on treatment, and understanding patients' values and preferences when procedures and devices are not involved, is likely to be very expensive, but not necessarily very good for patients.
 
As we wrote before, to update the system, the Center for Medicare and Medicaid Services (CMS) relies almost exclusively on the advice of the RBRVS Update Committee. The RUC is a private committee of the AMA, touted as an "expert panel" that takes advantage of the organization's First Amendment rights to petition the government. Membership on the RUC is allotted to represent specialty societies, so that the vast majority of the members represent specialties that do procedures and focus on expensive, high-technology tests and treatments.
 
However, the identities of RUC members were opaque for a long time, and the proceedings of the group are secret.  As Goodson(2) noted, RUC "meetings are closed to outside observers except by invitation of the chair." Furthermore, he stated, "proceedings are proprietary and therefore not publicly available for review."
 
In fact, the fog surrounding the operations of the RUC seems to have affected many who write about it. We have posted (here, here, here, and here) about how previous publications about problems with incentives provided to physicians seemed to have avoided even mentioning the RUC. Up until 2010, after the US recent attempt at health care reform, the RUC seemed to remain the great unmentionable. Even the leading US medical journal seemed reluctant to even print its name.
 
That changed in October, 2010.  A combined effort by the Wall Street Journal, the Center for Public Integrity, and Kaiser Health News yielded two major articles about the RUC, here in the WSJ (also with two more spin-off articles), and here from the Center for Public Integrity (also reprinted by Kaiser Health News.) The articles covered the main points about the RUC: its de facto control over how physicians are paid, its "secretive" nature (quoting the WSJ article), how it appears to favor procedures over cognitive physician services, etc.
 
In 2011, after the "Replace the RUC" movement generated some more interest about this secretive group, and its complicated but obscure role in the health care system, the current RUC membership was finally revealed.  It was relatively easy for me to determine that many of the members had conflicts of interest (beyond their specialty or sub-specialty identity and their role in medical societies that might have institutional conflicts of interest, and leaders with conflicts of interest).  
 
Then that year a lawsuit was filed by a number of primary care physicians that contended that the RUC was functioning illegally as a de facto US government advisory panel.  It appeared that things might change.  However, it was not to be.  A judge dismissed the lawsuit in 2012, based on his contention that the law that set up the RBRVS system prevented any challenges through the legal system to the mechanism used to set payment rates.  The ruling did not address the legality of the relationship between the RUC and the federal government.  The eery quiet then resumed, only punctuated briefly in early 2013, when a Senate committee held hearings with no obvious effect.      

References
1. Bodenheimer T, Berenson RA, Rudolf P. The primary care-specialty income gap: why it matters. Ann Intern Med 2007; 146: 301-306. (Link here.)
2. Goodson JD. Unintended consequences of Resource-Based Relative Value Scale reimbursement. JAMA 2007; 298(19):2308-2310. (Link here.)

Medicare Pays $220 Million a Year for Acthar Without Any Controlled Trials that Prove it Works - While We Have No Money to Develop Ebola Vaccines or Treatment?

Introduction - No Money for Ebola Vaccine Development

While a new Ebola epidemic continues in Africa, people in developed countries are getting worried. Even the 0.1%, who may have rarely worried about our dysfunctional health care system before, are getting nervous. For example, this week, the Donald seemed panic stricken that Ebola infected American health workers might be allowed to return to the US, no matter what the precautions.  As reported by Politico,

Donald Trump has a message for the Ebola patient coming to the United States for treatment: Stay out.

'Ebola patient will be brought to the U.S. in a few days — now I know for sure that our leaders are incompetent,' Trump tweeted Thursday night. “KEEP THEM OUT OF HERE!”

Yet, as we posted here, money was the major barrier to developing treatments of vaccines that could have helped contain the epidemic in Africa, but whose availability in the US could also have reassured the Donald.  Dr John Ashton, a top public health physician in the UK, wrote in the Independent,

 

We must also tackle the scandal of the unwillingness of the pharmaceutical industry to invest in research to produce treatments and vaccines, something they refuse to do because the numbers involved are, in their terms, so small and don't justify the investment. This is the moral bankruptcy of capitalism acting in the absence of an ethical and social framework.

 

It seems that in the US and UK, our market based health care system can only cannot develop treatments for dangerous diseases when the treatments will produce huge returns on investment.   The irony is that even people (like Mr Trump) who preached market triumphalism and limiting government, presumably from doing things like developing drugs, may now fear diseases for which the market alone provides no remedy.  

 

Meanwhile, while there was no money to develop vaccines and drugs for Ebola, a story about how much money we are spending on questionable remedies has reappeared.  

 

But a Huge Increase in Money for Acthar

This week, writing in ProPublica and the New York Times, Charles Ornstein noted the huge amounts being paid by the US government for a previously obscure drug,

An obscure injectable medication made from pigs' pituitary glands has surged up the list of drugs that cost Medicare the most money, taking a growing bite out of the program's resources.

Medicare's tab for the medication, H.P. Acthar Gel, jumped twentyfold from 2008 to 2012, reaching $141.5 million, according to Medicare prescribing data requested by ProPublica. The bill for 2013 is likely to be even higher, exceeding $220 million.

Over approximately the same time course, commercial US health care insurers and the Tricare program for military dependents noted a surge in the amounts they were paying for this drug too,

 At a recent conference hosted by Sanford C. Bernstein, Dr. Ed Pazella, Aetna's national medical director for pharmacy policy and strategy, explained the shift on Acthar.

Questcor's 'combination of aggressive marketing and aggressive price increases finally caused it to become a line item that a finance guy looked at and said: 'What the hell are we paying for this? Why? What is it?' And that's when we started looking at what's our policy around this stuff,' Pazella said.

You Heard it Here First - a Huge Price Increase for an Old Unproven Drug

This problem's development took quite some time.  As we first discussed in 2007, some clever  maneuvering by corporate executives around loopholes in government rules benefited the executives, but maybe no one else.

The clinical background is that Acthar is a form of a hormone (ACTH) that stimulates the adrenal gland to produce more cortisol and other related hormones.  The formulation is made from pig pituitaries, and was developed in the 1940s.  It was approved by the US Food and Drug Administration at a time when this action did nor require proof of efficacy, that is, proof that the drug worked.  For years, the drug was only used for a rare form of infantile seizures, and occasionally for symptoms of multiple sclerosis in adults.  As noted in several reviews by the Cochrane Collaboration, there is little good evidence that the drug works for either condition, and no evidence that it is better than simpler, cheaper alternatives, like synthetic alternatives to cortisol, for the latter. (See this blog post).

The drug languished for years, but Questcor purchased the rights to it in 2001, apparently for a mere $100,000 (look here).  In 2007, the company jacked its price up in 2007 from $1650 a vial to $23,000 a vial.

A Further Price Increase, and a Big Marketing Push


As Mr Ornstein noted, its price is now $32,000 a vial.  One might expect that this huge price would quickly generate competition from generic drug manufacturers,  but, per Mr Ornstein,

Although it long ago lost patent protection, the drug is a complex biologic agent, and the manufacturing process is a trade secret. 

Furthermore, infantile spasms may be rare, but, 

Since Acthar came on the market in 1952, the rules about F.D.A. approval have changed. At the time, drug companies simply had to demonstrate that a drug was safe, rather than that it was effective. Acthar was initially authorized as a treatment for more than 50 diseases and conditions. (The list has since been cut to 19.)

Drug companies are barred by federal rules from marketing drugs for "off-label" indications, however, given the above, it was not obviously illegal when Questcor

 began marketing it for a broad menu of uses.

In addition, Medicare could not easily challenge the huge price Questcor was charging for this unproven remedy given to adults

Medicare cannot bar access to medications like Acthar, even in the face of rising expense and questions about efficacy, Aaron Albright, a spokesman for the Centers for Medicare and Medicaid Services, said in a written statement. The law mandates that Medicare's drug program, known as Part D, cover drugs for the uses authorized by the Food and Drug Administration, he said.

Questions about Questcor's Marketing

In fact, while it appears legal to promote Acthar for uses for which it has no proven efficacy, there are some questions about Questcor's marketing practices,

The company has disclosed in filings with the Securities and Exchange Commission that two United States attorney's offices and the S.E.C. are investigating its promotional practices.

A possible reason why was supplied by a companion ProPublica article, also by Charles Ornstein,

 Many of Medicare's top prescribers of the expensive specialty drug H.P. Acthar Gel have financial ties to the drug's maker.

Only 18 practitioners wrote 15 or more prescriptions for the drug in 2012. At least nine — and all of the top four — were promotional speakers, researchers or consultants for Questcor Pharmaceuticals, a ProPublica analysis shows.

Also, there are questions about whether Questcor has been concealing adverse events related to the increasing use of Acthar.  Until recently, as noted by Gretchen Morgenson in the NY Times in July, 2014,

For years, Questcor Pharmaceuticals has highlighted the potential benefits of Acthar, its immune-system drug, while saying little about its ill effects.

But as had been noted also by Gretchen Morgenson in the NY Times in June, 2014, more information about adverse events began coming out, not mainly for the benefit of patients, but apparently due to questions by investors about a pending takeover of Questcor by Mallinckrodt,

Since 2012, the events, as reported to the Food and Drug Administration’s Adverse Event Reporting System, or Faers (pronounced 'fares'), have included 20 deaths and six disabilities among patients reported to have been using Acthar and in which Acthar was recorded as 'suspect,' or the drug most likely to have been associated with the event. From January 2000 through 2011, by contrast, 13 deaths involving Acthar were reported to the F.D.A.’s system.

Although Questcor has reported some of these events to the F.D.A., as required, the company has not discussed the adverse outcomes in its financial filings. A Supreme Court ruling in 2011 concluded that reports of adverse events among patients using a drug, even if few in number, are of interest to investors weighing whether to buy or sell shares in the manufacturer.

The July, 2014 article by Gretchen Morgenson in the NY Times noted further,

according to a regulatory filing made by Questcor early Thursday, the number of patients reporting a so-called adverse event while using the drug last year represented almost 5 percent of prescriptions dispensed. The total number of events in 2013 reported by patients, who can experience multiple ill effects, was almost 14 percent of prescriptions, up from 9.1 percent in 2011.

 It was the first time Questcor, which has received a $5.6 billion takeover bid from Mallinckrodt Pharmaceuticals, had disclosed any problems experienced by Acthar patients, even though such information is of keen interest to investors.

That information might also be of interest to patients and doctors. 

Questions about Questcor's Executive Compensation

While Questcor brought in huge amounts of money from an old unproven drug using aggressive marketing that did not dwell on the drug's adverse effects, its executives have been making lots of money, sometimes in questionable ways.  For example, in February, 2014, Jesse Eisinger also reported for ProPublica that the timing of Questcor CEO Don M Bailey's stock sales has seemed unusually fortuitous,

Questcor Pharmaceuticals is a biotechnology company with a $4 billion market capitalization. Good things keep happening to Questcor in the middle of the month. Here’s what’s notable: The middle of the month just happens to be the time that the company’s chief executive, Don M. Bailey, sells stock through his regular selling plan.

The question is whether the company timed its favorable press releases to coincide with the times its CEO was known to be selling his shares?

Also, in May, a blog on The Street noted that the CEO's daughter also appears to have been quite fortunate, for no obvious reason,

As reported this morning by my colleague Herb Greenberg in his "Reality Check" newsletter (subscription required), Kirsten Fereday, a Questcor employee who also happens to be Bailey's daughter, received a huge salary bump in  in 2013, according to the compensation portion of its yet-to-be-filed proxy two days ago in an amended 10-K.

According to the filing:

Kirsten Fereday, the daughter of Don M. Bailey, our Chief Executive Officer, was employed by us during 2013 as our Senior Director, Business Analytics and Evaluation, and received total cash and equity compensation for the year ended December 31, 2013 equal to approximately $1,035,246 in cash compensation and $200,000 in restricted stock grants (value based on intrinsic value method). Ms. Fereday's employment was approved in accordance with the Related Party Transaction Policy and our Chief Executive Officer is not involved in the determination of Ms. Fereday's compensation. [Emphasis added.]

Why did her pay go up so much compared to that received in the previous year?

Furthermore, while Questcor derives a tremendous amount of revenue from the US government, a deal is in the works for it to be acquired by Mallinckrodt, now based in Ireland, which, if successful, will make top Questcor executives even richer, as Gretchen Morgenson wrote in the NY Times in June, 2014,

If the acquisition by Mallinckrodt goes through, Questcor’s top six executives could receive severance packages totaling $63.5 million under the terms of their contracts, the merger proxy shows.

Also,

During the time that adverse events involving Acthar have risen, Questcor’s top executives have been actively selling shares. So far this year, securities filings show, sales by the top five executives at the company, four of them under prearranged selling plans set up last year, have generated gains of $39 million.

Summary

As Andrew Pollack wrote in the first NY Times coverage of how Questcor used an old unproven drug to generate huge returns,

How the price of this drug rose so far, so fast is a story for these troubled times in American health care — a tale of aggressive marketing, questionable medicine and, not least, out-of-control costs.

 The sorry case of Questcor and Acthar reveal how crazy the costs of health care in the US have become, driven now by a system that itself now seems crazy.  Through clever use of regulatory loopholes, the company acquired rights to an old drug whose efficacy was unproven, hugely increased its price, began aggressive marketing even though the drug's efficacy was completely unproven, while remaining largely silent about the drug's substantial risks.  Fueled by hundreds of millions of dollars in revenue thus generated, mainly from the US government, the company richly rewarded its top hired executives, who then have decided to sell it to a company outside of the US in a deal that will make these executives millions more.  So patients received a drug whose benefits are unknown, and whose risks may be much higher than they were told, at a cost of hundreds of millions of dollars, much of it borne by US taxpayers, while company executives got rich.


Just coupling for now the story of how we spent hundreds of millions on Acthar to enrich company executives with the story that we have no money to develop vaccines or treatments for Ebola virus (look here) demonstrates the massive failure of our experiment to turn our health care system over to market triumphalists and laissez faire mercantilists.  As long as we let the health care system be run by people who put their own enrichment ahead of patients' and the public's health, things will only get crazier.  And even the rich may not be immune from the results of that craziness

So to repeat, true health care reform would put in place leadership that understands the health care context, upholds health care professionals' values, and puts patients' and the public's health ahead of extraneous, particularly short-term financial concerns. We need health care governance that holds health care leaders accountable, and ensures their transparency, integrity and honesty.

But this sort of reform would challenge the interests of managers who are getting very rich off the current system.  So I am afraid the US may end up going far down this final common pathway before enough people manifest enough strength to make real changes.