An Englishman in New York


Part I: A letter from America.

Andrew Briggs  by Professor Andrew Briggs

“A cynic knows the price of everything but the value of nothing.”
Oscar Wilde, Lady Windermere’s Fan

 

HealthcareReformAs a left-leaning economist with a bachelor’s degree in economics from a liberal arts college (or what might be considered the UK equivalent) I have always had a morbid fascination for the market-based economy of the United States.  While I loathe, in the philosophical sense, the emphasis on the individual in the US, the inequality, the apparent lack of federal support for higher education and health care, I have always enjoyed travelling to the states, meeting the people, enjoying the hustle and bustle.  And I have always been fascinated by the fact that despite the apparent inequalities in the US health system, many of my US friends and colleagues are convinced that the US has the greatest health care in the world, and they seem profoundly suspicious of ‘European-type’ systems of social medicine.

 

So after 10 years running a small Health Economics and Health Technology Assessment research group at University of Glasgow, when the opportunity for a sabbatical presented itself, spending a year in the US to learn more about your health system, seemed an obvious choice.  The widespread rejection – at least at the system level – of metrics such as the cost-per-Quality-Adjusted-Life-Year (QALY) that have gained widespread acceptance in the UK – deserved further inspection.  This is a metric that generates such profound fear among some sectors of US society that it was felt necessary to outlaw its use under the Affordable Care Act – at least for services provided by CMS http://bit.ly/29VbLUk.  Indeed, such is the fear of socialized medicine that the US Preventative Services Task Force is itself prevented from explicit discussion of cost when making recommendations about national screening strategies http://bit.ly/2aftHrJ .

 

Dr. Peter Bach

But where to go in the US and what to focus on?  After a close call with the commonwealth fund’s Harkness fellowship scheme (I suspect for both them and myself – I was shortlisted but not selected)  I began a conversation with Dr Peter Bach from Memorial Sloan Kettering Cancer Center.  Peter had recently developed his DrugAbacus tool to start a discussion about runaway drug prices for oncology products.  It seemed to me that if any part of the US health system was going to crack under the strain of health care costs, it was the going to be  oncology related.  Indeed, the American Society for Clinical Oncology (ASCO) had also just released another framework for looking at value.  But this sudden focus on value: isn’t that precisely what we have been trying to do in Europe for the last twenty or so years?  Yet it was clear the cost-per-QALY framework was not a contender – so what are these value frameworks about and do they have any credibility in terms of traditional economic thinking?  So a focus for the sabbatical was born and with Peter and MSKCC playing host, I was all set.

 

Arriving in New York in December of 2015, Peter immediately bundled me off to a two-day ‘Health Care Summit’ organized by the Forbes media group, where he had just five-minutes in a packed program to talk about drug prices in oncology.  This was a fascinating induction into the US system.  It quickly became clear that unlike the academic conferences I was used to – this was a health care business conference, with CEOs from all kinds of health related activity both on the stage and in the audience.

Martin_Shkreli_House_Committee_on_Oversight_and_Government_Reform_2016

Martin Shkreli

Most newsworthy were the two key interviews live on stage with Martin Shkreli of Turing Pharmaceuticals and Elizabeth Holmes of Theranos.  When asked if he had any regrets about his strategy on raising the price of Daraprim, Shkreli replied “Yes, not raising the price even higher”, which was accompanied by a collective sharp intake of disgusted breath from the audience.  This was a baptism of fire into the realities of a US system where excessive profits are seen as legitimate, but profit gouging is not (though most would favour self regulation rather than any federal intervention).  Before the end of the year Shkreli had been arrested – though for an alleged Ponzi scheme related to his previous hedge fund business – not for his pharmaceutical business (from which he has now resigned as CEO).  Less dramatic perhaps, but no less important, was Elizabeth’s defence of the new finger prick drug tests offered by her company.  Having raised an astonishing $700M in capital for the idea against a reputed $9B valuation – Theranos was running into trouble with the FDA over whether results against competitors blood tests had been properly validated.  Six months later and it has become clear that there is a fundamental problem with Theranos’s ‘disruptive technology’ and Holmes has now been barred from owning a diagnostic company by CMS for the next two years.

 

AB_CALLOUT_ONEAside from the headline grabbing CEOs, the real message for me of the conference was around new technological solutions to manage the huge information requirements of the US system.  Integration of electronic medical records, hospital accounting systems and billing information seems to offer the potential for streamlining and cost-saving with many new companies entering the space between the provider and the payer.  This raises a fundamental question of who owns these data, and what else, beyond cost-savings, this information might be used for.  The possibility of ‘big data’ leading to real benefits for the health system, as well as individual patients, remains intriguing.  And quips about the similarity between big data and teenage sex aside, it is an area where we might hope to see real improvements over the coming years.  But to do so, we need to see much, much more transparency.

 

Nationalflagonstethoscopeconceptualseries-UnitedStatesAs I started my sabbatical in the US, one question arose more than any other when people asked about my initial reaction to the US system.  “What surprises you most about US health care?”.  That was surprisingly easy to answer.  As a UK economist, brought up on the notion that the US prefers market-based solutions more than socialised, government regulated, solutions, it seems to me, and in direct contrast with the Oscar Wilde quote above, that consumers in the US health care system do not know the cost of anything – at least not prior to the point at which they have to choose whether to consume it.  The lack of price transparency in the US is astonishing.  Without an understanding the cost of health care, how can we hope to get a handle on value?

 

Written by Andrew Briggs, DPhil, MSc. Visiting Investigator, Center for Health Policy and Outcomes, Department of Epidemiology & Biostatistics, Memorial Sloan Kettering Cancer Center, New York, NY,

Chair in Health Economics (Health Economics and Health Technology Assessment), University of Glasgow

 

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  1. #1 by Dan Huse on November 29, 2016 - 4:06 pm

    Professor Briggs is at risk of serious injury due to the contortions required to pat himself on his European back. As an American health economist I am acutely aware of the limitations of our commercial health care system. While taking pot shots at how we do things here, Briggs does not offer any evidence that the policies he favors would improved efficiency or equity. For example, QALYs are an interesting intellectual exercise, but are too subjective (in my opinion) to be used in resource allocation decisions.

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