Prime Time Replay:
Peter Neumann
on the economics behind healthcare decisions
MsgId: *breakthrough(1)
Date: Wed Nov 5 20:44:36 EST 1997
From: moderator At: 152.163.201.136
Hi, I'm your moderator, Madeleine Lebwohl, and tonight I'll be speaking with Peter Neumann of the Harvard School of Public Health.
MsgId: *breakthrough(2)
Date: Wed Nov 5 20:55:28 EST 1997
From: Peter_Neumann At: 128.103.80.21
Hi Madeleine
MsgId: *breakthrough(3)
Date: Wed Nov 5 20:58:53 EST 1997
From: moderator At: 152.163.201.136
Tonight we'll be discussing the economics behind healthcare decisions, such as what technologies get developed and used, and how the government decides to allocate resources for health care, and medical technology in particular.Peter, you have an interesting method for how the cost benefit is decided. What is it?
MsgId: *breakthrough(5)
Date: Wed Nov 5 21:02:40 EST 1997
From: Peter_Neumann At: 128.103.80.21
There are standard techniques that my colleagues and I use to measure health care costs and health benefits. For example, in terms of costs, we try to identify health care costs (e.g., hospitalizations, physician services, medications) and non-health costs (e.g., caregiver time) that are associated with the use of different health care interventions.In terms of health benefits, things are sometimes a bit trickier. For example, how to you value a medical technology that extends human life? There again, there are some standard (though sometimes controversial) methods. For example, we can compare different health programs or interventions in terms of their ability to save lives. We can try to further quantify benefits by estimating the number of life years saved and even try to "quality-adjust" those life years.
MsgId: *breakthrough(7)
Date: Wed Nov 5 21:06:24 EST 1997
From: moderator At: 152.163.201.136
When you talk about life span, is it the U.S. health criteria that you use? Is your data only applicable to the U.S.? And does everything have to be changed every time life span goes up?
MsgId: *breakthrough(8)
Date: Wed Nov 5 21:09:36 EST 1997
From: Peter_Neumann At: 128.103.80.21
Good question! The context of the decision and the "perspective" of the decision maker will dictate the nature of the evaluation. For example, the U.S. government might decide among different programs to improve health. Does it allocate resources to programs which would educate people about the need to exercise or eat healthy foods, or should it put money into smoking cessation programs. In another context, an HMO might have to choose how to allocate resources from its limited resources. In that case, the relevant perspective is the HMO's.If programs are being evaluated for a developing country, it would be more appropriate to use data on that nation's population. As far as whether things should be changed when lifespan changes, the answer is that evaluations should be done with the most recent and accurate data. If key parameters for the evaluation (e.g., mortality, health costs, etc.) change, then the evaluation may need to be redone.
MsgId: *breakthrough(10)
Date: Wed Nov 5 21:14:29 EST 1997
From: moderator At: 152.163.201.136
Do new technologies ever just tumble into the market, and everyone is surprised by either how effective or how ineffective they are as far as costs, or saving lives go? And do surprises like mess us forecasts? Is there room for innovation?
MsgId: *breakthrough(11)
Date: Wed Nov 5 21:18:15 EST 1997
From: Peter_Neumann At: 128.103.80.21
The diffusion of medical technology is a very dynamic and unpredictable phenomenon. Technologies are often adopted and used before they have been formally evaluated (this is less of a problem with drugs, because they must be approved by the FDA first, but it is a problem with many medical procedures. In addition, technologies are often used by certain centers or certain physicians who know what they are doing. But soon, the technologies begin to be used more widely, often by practitioners who don't have the same experience. Costs and effects can differ widely by site of care. Finally, technologies are continually changed and improved so costs and effects change frequently.
MsgId: *breakthrough(12)
Date: Wed Nov 5 21:19:54 EST 1997
From: moderator At: 152.163.201.136
People gripe about the slowness of new drugs or technology entering the market. How do you feel about it?
MsgId: *breakthrough(13)
Date: Wed Nov 5 21:23:48 EST 1997
From: Peter_Neumann At: 128.103.80.21
There is a need for balanced regulation. On the one hand, we must ensure that prescription drugs available in the marketplace are safe and effective. On the other hand, we must also ensure that people have access to new treatments that can improve health. The only way to ensure that absolutely no harmful products are approved is to prohibit all new therapies. Obviously, that is not a reasonable policy. Where does the correct balance lie? That is a much-debated policy question.
MsgId: *breakthrough(15)
Date: Wed Nov 5 21:28:16 EST 1997
From: moderator At: 152.163.201.136
You've written about the costs associated in vitro fertilization. How has economics this procedure?
MsgId: *breakthrough(16)
Date: Wed Nov 5 21:31:14 EST 1997
From: Peter_Neumann At: 128.103.80.21
In vitro fertilization is a very interesting example of a larger phenomenon: expensive medical technologies that are in great demand and, which -- by their very existence -- raise difficult (sometimes wrenching) ethical, economic, and social questions. In terms of the economics of in vitro fertilization, there are a couple of things to note. One, the procedure is not cheap. Costs vary by patient, by geographic area, and by the number of attempts or cycles patients undergo.A study my colleages and I did a few years ago estimated that costs per attempt were $8,000. The probability of success with each try also varies by type of fertility problem, by a woman's age, by setting, etc. It is probably in the neighborhood of 15 to 20% per "try", though again, rates vary and some centers report higher rates. Is this a worthwhile use of resources? How should we even evaluate this question? How can you put a dollar value on a baby?
Many couples are willing to spend very large amounts of money to have a child through IVF. That much is clear. But should health insurance pay for it? Should the government pay for it? Should all couples have access to it, or only those who are childless, or those who have a "good" chance of success? There is no "right" answer to these questions but they are very real issues for decision makers at health insurance plans, at state health agencies, at Medicaid offices. (By the way, despite the hefty price tag, some analyses I did a few years ago suggested that, in fact, the procedure might be cost-effective under certain scenarios. Moreover, people -- even those not undergoing the procedure themselves -- seem willing to pay a lot so that they could have access to the procedure.
MsgId: *breakthrough(19)
Date: Wed Nov 5 21:40:41 EST 1997
From: moderator At: 152.163.201.136
This brings us to the fact that health technology actually changes your life. Do you have a lot of pressure on you as you apply business techniques to procedures that even though they are expensive, are so important to some people?
MsgId: *breakthrough(20)
Date: Wed Nov 5 21:43:54 EST 1997
From: Peter_Neumann At: 128.103.80.21
I try hard to keep on my analyst hat while doing these studies. It is important for analysts to be as objective as possible and try to bring the best science and the best estimates to the policy questions. Others (physicians, patients, managers, politicians, etc.) can take the results of the analysis and make more informed decisions. That is the ideal. Of course, everyone (even health policy researchers) are human and we all have our own beliefs. And obviously, we are aware of external pressures. But it is very important to separate analytic questions from "values" questions.
MsgId: *breakthrough(21)
Date: Wed Nov 5 21:46:27 EST 1997
From: moderator At: 152.163.201.136
Has there recently been a medical technology that would have been effective but didn't make it to the market because of costs?
MsgId: *breakthrough(22)
Date: Wed Nov 5 21:51:41 EST 1997
From: Peter_Neumann At: 128.103.80.21
There are probably some good examples of this: there are some drugs that might be developed but the target populations are very small, for example. More commonly, perhaps, are technologies that are developed and brought to market but not fully used because of economic considerations. This is the important gray area in which we quite possibly could do something of value but only at great cost. At an extreme, you wouldn't give an MRI scan for every minor headache. If you did, perhaps you would capture 1 in a million additional major problems. But it is not cost-effective. Similarly, you wouldn't give a mammogram every month for every woman even though you might prevent an additional cancer. It simply is not feasible.
MsgId: *breakthrough(23)
Date: Wed Nov 5 21:53:14 EST 1997
From: moderator At: 152.163.201.136
You are currently studying the benefits of new drugs for Alzheimer's disease. What are the considerations going into what is being developed?
MsgId: *breakthrough(24)
Date: Wed Nov 5 21:56:55 EST 1997
From: Peter_Neumann At: 128.103.80.21
Until recently there were no treatments for Alzheimer's disease. Now drugs are being approved by the Food and Drug Administration. Studies suggest that they slow the decline in cognitive functioning for some patients for some period of time. But are they worth their cost? This is what my colleagues and I are studying. As I've mentioned earlier, we use standard techniques to measure health costs and health benefits. We will have some results soon. But this is an important example of an important new treatment with substantial clinical and economic implications. It is important to have good analyses so that more informed decisions can be made.
MsgId: *breakthrough(25)
Date: Wed Nov 5 21:58:14 EST 1997
From: moderator At: 152.163.201.136
Could anything be held back if it's found to be too expensive?
MsgId: *breakthrough(26)
Date: Wed Nov 5 22:01:44 EST 1997
From: Peter_Neumann At: 128.103.80.21
The answer is yes, with a couple of important caveats. First, it is never a simple matter. Remember all treatments carry some risk while offering benefit. So the decision usually involves a complex series of considerations. Not only whether costs are worth the benefits, but whether the health risks AND the costs are. The very first drug approved for Alzheimer's disease was not used as widely as its advocates had hoped for several reasons: it was expensive, it produced side effects (liver toxicit) in many patients, and it required 4 times a day dosing. So even though Alzheimer's was (and is) an enormous problem, the new treatment wasn't widely used in patients.
MsgId: *breakthrough(27)
Date: Wed Nov 5 22:03:42 EST 1997
From: moderator At: 152.163.201.136
Does public need ever outweigh all costs? In the case of Alzheimer's treatments, would an expensive innovation get legislative help, because of how many people are affected?
MsgId: *breakthrough(28)
Date: Wed Nov 5 22:08:27 EST 1997
From: Peter_Neumann At: 128.103.80.21
First, unfortunately costs are always a consideration because society does not have unlimited resources (this is why economics is the dismal science). There may be tremendous public need which warrants massive investment, but dollars are limited and resources spent on one problem (no matter how big) cannot be spent elsewhere. Second, the Alzheimer's advocates have and will continue to lobby Congress not only for Medicare to pay for new treatment but for Medicare to cover home care for patients, etc. And given the devastating nature of this disease, these advocates have a good case. But so do the advocates for HIV patients, for cancer victims, and so on. As much as we may not like it, there are always tradeoffs involved in allocating resouces. That is why we need good analyses -- to inform the decision making process.
MsgId: *breakthrough(29)
Date: Wed Nov 5 22:10:06 EST 1997
From: moderator At: 152.163.201.136
Thank you for joining me tonight on Breakthrough Medicine.
MsgId: *breakthrough(30)
Date: Wed Nov 5 22:10:30 EST 1997
From: Peter_Neumann At: 128.103.80.21
Thank you very much for inviting me.
MsgId: *breakthrough(31)
Date: Wed Nov 5 22:26:07 EST 1997
From: moderator At: 152.163.201.5
Please join me next week when I speak with John Bogden, Ph.D., of the Department of Preventive Medicine and Community Health at New Jersey Medical School. Dr. Bogden will discuss trace elements in nutrition, and the effect of metals in our diet and environment.
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