Summer Shorts

Health policy news isn't exactly beach reading, so we've decided to offer a series of short items just to keep you current…


  • Not Too NICE: Our colleague Philip Stevens of the International Policy Network in London alerted us to an article in this morning's Times that offers fair warning to those who want to create a new government body to determine the effectiveness and value of new drugs, as many in the U.S. are proposing.

    The writer is Jonathan Waxman, a professor of oncology at Imperial College in London, who clearly is a die-hard fan of the British National Health Service. He began his article saying that "Our Government has been a fabulous custodian of healthcare…with a doubling in NHS spending" over the last decade.

    But he and millions of others are appalled by what he describes as an "absurd and arrogant" decision this week from the "bloodstained portals of the National Institute for Health and Clinical Excellence (NICE)" to deny the latest kidney cancer drugs to patients in the NHS, a decision that he says "has sent doctors into apoplexy."

    "We have recently begun to understand the molecular biology of kidney cancer, and to know of its specific characteristics. Understanding these characteristics allows us to design treatments that exploit the differences between kidney cancer cells and normal cells. As a result, we have wonderful new treatments that double life expectancy in this condition," Waxman writes.

    "NICE has evaluated these four new drugs for kidney cancer and indicated that these drugs will not be recommended for use in patients. This is against all sense, and contrary to the situation in the rest of Europe and in the United States, where these drugs are available. NICE has made its decision on the basis of an arcane and extraordinarily complex calculation which relates the benefit of treatment with these new drugs to a treatment that is comparatively ineffective," he writes.

    So the upshot here is that NICE (a flawed acronym if ever there was one) has determined that the latest and most effective drugs are "comparatively ineffective" when gauged against older drugs which, need we mention, are much cheaper.

    If patients want to pay for the drugs out of pocket, they are on their own and are forced to forgo all NHS treatment for their illness — despite paying huge tax bills to support the system.


  • Massachusetts: In our own experiment with a much bigger role for government in the health sector in the Bay State, problems are brewing.

    There is a serious shortage of dentists willing to accept newly-insured patients. Only 17% of dentists accept patients enrolled in the new Commonwealth Care program, which is designed to provide free or heavily-subsidized health and dental insurance to lower- and moderate-income residents.

    Of that 17%, one in five have already closed their doors to newly subsidized patients, The Boston Globe reports. Part of the reason is reimbursement; the state's reimbursement rate for treating adults remains at only about 50% of what private insurers typically pay. But paperwork is also a huge barrier. Karen Rafeld, associate director of the Massachusetts Dental Society, explained that the dental society has had a difficult time encouraging more dentists to join because "it's still a bureaucratic nightmare."


  • Long-Term Care: And The Wall Street Journal reported yesterday that U.S. nursing homes are "forcing out frail and ill residents" and replacing them "with shorter-term residents likely to bring more revenue." And here's the key: Medicaid reimbursements to nursing homes were $4.4 billion less than the cost of treating beneficiaries last year, the Journal reports, and approximately two-thirds of nursing home residents who stay in facilities more than 90 days depend on Medicaid to pay their bills.

    That's also fair warning to aging Americans who think the government will be there for them if they don't invest in their own long-term care insurance.


  • Galen Expands: And finally, we welcome this week to the Galen Institute our new Communications Director, Amy Menefee. Amy has a master's degree in journalism from the Missouri School of Journalism and comes to us from her last position as managing editor of the Media Research Center's Business & Media Institute. She will bring her experience in media outreach through the print and broadcast media to help with our efforts toward a more informed debate over free-market ideas for health reform. And she will also be leading us in the world of new media. Welcome Amy!

Grace-Marie Turner

Recent News Articles and Studies

Politicians Note: Drug Reimportation is Waning
Biosimilars: Policy, Clinical, and Regulatory Considerations
Biotech at Risk for Broadside Hit
State Health Care Reform: A Brief Guide to Risk Adjustment in Consumer-Driven Health Insurance Markets
The Patient Centric Health Leadership Forum: Towards a Critical Path for Patient-Centered Medicine
"Who" not "How": The Real First Step in Health Care Reform
Medicare: Covert Testing Exposes Weaknesses in the Durable Medical Equipment Supplier Screening Process


Politicians Note: Drug Reimportation is Waning
Joel White, Galen Institute
The Buffalo News, 08/04/08

Prescription drug importation introduces major public health risks with minimal, if any, cost savings, writes White. When Americans turn to Canada or Europe for drugs, it's not always clear whether the medicine they receive is safe and genuine. By contrast, thanks to America's robust regulation regime and guarded supply chains, 99% of the drugs sold in the U.S. are safe and real, according to the World Health Organization. What's more, prescription drugs are cheaper and more easily available than ever before. Prescription drug importation has actually declined over the last few years and importation programs established by various states and cities in the U.S. have been shut down for lack of demand. Illinois, for example, saw just 3,689 residents use its importation program — or 0.02% of the state population.

As hundreds of thousands of visitors descend on Beijing for the Olympic Games, they might consider steering clear of military-owned hospitals where they could run the risk of being treated with substandard or counterfeit medicines, writes AEI's Roger Bate. The Chinese military operates outside of the law, running counterfe
iting networks even though such profit-making military enterprises are technically illegal.

Biosimilars: Policy, clinical, and regulatory considerations
Scott Gottlieb, American Enterprise Institute
American Journal of Health-System Pharmacy, 07/15/08

An abbreviated regulatory pathway for the approval of biosimilars and a process for safely demonstrating the therapeutic interchangeability of these proteins has the potential to provide meaningful cost savings, writes Gottlieb. (Biosimilars are biopharmaceuticals that are considered similar in composition to an innovator product but not necessarily clinically interchangeable.) The economic advantage to patients of greater access to biopharmaceuticals can translate into important public health benefits. But the legal and regulatory status of biosimilars remains to be resolved in the U.S. as policymakers address the scientific and policy issues surrounding product manufacturing, patent terms, and clinical use.


Biotech at Risk for Broadside Hit
Sally Pipes, Pacific Research Institute
Boston Herald, 08/06/08

A recent bill passed by the Massachusetts legislature may inadvertently harm patients as well as one of the state's most-bustling industries, writes Pipes. Among other provisions, the bill would require public disclosure when payments of $50 or more are made between pharmaceutical research firms and health care providers. The new law poses a serious threat to the state's role in clinical trials and academic research. Fears of biotechnology firms choosing to do business elsewhere are also real and their absence would create a gaping hole in the state's economy, writes Pipes. Whereas Massachusetts lost 100,000 private-sector jobs between 2000 and 2005, the biotechnology industry created 6,100 jobs. If Gov. Deval Patrick doesn't veto the bill by Aug. 13, the law will put a needless chill on clinical research and pharmaceutical innovation in the Commonwealth.

State Health Care Reform: A Brief Guide to Risk Adjustment in Consumer-Driven Health Insurance Markets
Edmund F. Haislmaier
The Heritage Foundation, 08/01/08

Risk adjustment can improve the functioning of consumer-centered health insurance markets, writes Haislmaier. Well-designed risk adjustment mechanisms would give health plans the right incentives to provide better value to both healthier and sicker enrollees. While policymakers can design and implement risk-adjustment mechanisms that work either prospectively or retrospectively, retrospective approaches, such as risk-transfer pools for health insurers, are somewhat easier to design, can be implemented in a shorter time, and are less likely to develop significant operational problems over time.


The Patient Centric Health Leadership Forum: Towards a Critical Path for Patient-Centered Medicine
Center for Medicine in the Public Interest, 07/08

Policy changes are needed to support the inevitable move toward patient-centric medicine, and speakers described both the threats posed by inaction and the need for policy change at a conference sponsored by CMPI. The report builds on discussions with health policy experts, including the Galen Institute's Grace-Marie Turner, and describes personalized medicine initiatives already in place in three American cities. But personalized health care faces stiff resistance from the prevailing political winds that push for a bigger government role in how healthcare is paid for and delivered. "A single-payer government-run system won't achieve the kind of personalized medicine we're talking about," said Mark McClellan, former head of the Centers for Medicare and Medicaid Services and a contributor to the report.

"Who" not "How": The Real First Step in Health Care Reform
Kevin Kelleher, MD
Medical Progress Today, 08/01/08

The days of a trusted primary care doctor are numbered, writes Dr. Kelleher. The first step in returning sanity to American health care must be to decrease the need for volume-based primary care by increasing reimbursement for personalized quality care, thereby fostering the creation of a true "medical home." By increasing reimbursements, doctors gain the ability to spend more time with their patients to assess problems and concerns, discuss how lifestyle choices affect patients' risk of disease, and to reinforce the value of routine screening and prevention measures. Fundamental changes in payment systems, tax structure, and tort reforms will also be needed to support patient-centered care. If changes are not swiftly and effectively implemented over the next decade, patients' best advocate for comprehensive care will become extinct.


Medicare: Covert Testing Exposes Weaknesses in the Durable Medical Equipment Supplier Screening Process
Government Accountability Office, 07/08

The Centers for Medicare and Medicaid Service's oversight of suppliers of durable medical equipment is inadequate to prevent fraud and abuse, according to this GAO report. Specifically, weaknesses in the enrollment and inspection process have allowed sham companies to fraudulently bill Medicare for unnecessary or nonexistent supplies. GAO investigators easily set up two fictitious companies using undercover names and bank accounts and were approved for Medicare billing privileges despite having no clients and no inventory. Once criminals have similarly created fictitious companies, they typically steal or illegally buy Medicare beneficiary numbers and physician identification numbers and use them to repeatedly submit clams. (Nonetheless, Congress voted before leaving for recess to block administration efforts to curtail the fraud and abuse.)

Upcoming Events

Oklahoma Health Care Reform Task Force Meeting
Oklahoma House of Representatives Event
Tuesday, August 12, 2008
Oklahoma City, OK
Grace-Marie will speak at a meeting of the Oklahoma Health Care Reform Task Force.

Differing Approaches to a National Crisis: Presidential Candidates' Health Care Plans Debated
Oregon Health Forum Event
Tuesday, August 19, 2008, 7:00 a.m – 9:00 a.m. (Breakfast included)
Portland, OR


Health Policy Matters is a weekly newsletter containing summaries of timely and informative studies and articles on free-market health reform. It features a commentary by Grace-Marie Tur
ner on the major developments and issues of the week as well as summaries of writings by participants in the Health Policy Consensus Group and other articles of interest from the health policy world, plus announcements of coming events. Health Policy Matters is published by the Galen Institute, a not-for-profit public policy organization specializing in information and education on health policy. For more information about the newsletter and our organization, please visit our website at

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The views expressed in this newsletter are the opinions of the authors and do not necessarily reflect the views of the Galen Institute or its directors.