Dispatches from the Field – August 13, 2007

13 08 2007

Meet the Consumer-Directed HMO

It took a while for a managed care company to combine a consumer-directed plan with a traditional HMO. Health Net of California, taking advantage of the strengths of California’s managed care market, is launching a hybrid product called OptimizerHMO that “provides tools to help [members] make better health care decisions and incentives for demonstrating healthy behaviors,” says Stephen Lynch, president of Health Net.


Health IT Businesses See Rise in Private Equity Investments
Health IT businesses are attracting investors and buyers from private equity firms, a sign that the industry is rife with growth and opportunity, Modern Healthcare reports.


U.S. Trails 41 Other Countries in Life Expectancy Rates

Life expectancy in the U.S. has reached its highest point ever, but it is exceeded by the rates in 41 other countries, the AP/Arizona Daily Star reports.



Trials and Tribulations at the FDA

4 08 2007

The Food and Drug Administration has long been criticized for the extremely lengthy review period that new medical treatments and pharmaceuticals in particular have to endure before their release to the public. The complaint is that the delays in approval costs lives. The Libertarian economist Milton Friedman once proposed that the FDA be abolished in favor of a manufacturer driven drug review process. But the agency has has historically been one of the most important watchdogs for the American public. In 1960, an FDA reviewer named Frances Oldham Kelsey refused to cave in to heavy pressure by Richardson-Merrell pharmaceutical company of Cincinnati to approve its night time sleeping aid in time for a Christmas release. Kelsey’s recalcitrance ended up being fortunate. The drug, thalidomide, was eventually implicated in birth defects that impacted over 10,000 children in 46 countries. Only a handful of the defects occurred in the US, the result of samples distributed by Richardson-Merrel to physicians on a trial basis. The FDA itself was created in response to the horrific conditions in meat-packing facilities described in Upton Sinclair’s The Jungle as well as the proliferation of “patent medicines and nostrums” that were marked as cures for various conditions. Created by small time entrepreneurs as well as companies still in business today, many of these medicines were ineffectual in treating their advertised ailments and some caused serious injury and death to consumers.

The thalidomide tragedy that impacted the global community is the oft-cited example of why we need the FDA (in fact, Friedman references it the above citation). But the FDA continues to be criticized for the delays in the approval process. The process has been blamed for creating needless suffering and death when sick patients can’t get access to life-saving but unapproved products. Also, drugs that have been approved are later to have serious side-effects that were completely unanticipated, like Vioxx, which was withdrawn from the market after being linked to increased risk for heart attacks and strokes. At the time of the withdrawal in 2004, over 100 million prescriptions for Vioxx may have been written.

Clearly, the typically lengthy FDA approval process did not catch the problems with Vioxx. The Food FDA estimates that Vioxx may have contributed to over 27,000 heart attacks and sudden cardiac deaths before it was pulled from the market. One of the main problems with FDA oversight of drugs is that it has little authority and less budget to mandate post market surveillance of drugs once they are approved. Numerous studies have outlined the obvious: compared to employees of pharmaceutical companies, FDA researchers are overworked and underpaid, and as result, turnover is high at the agency, further undermining oversight. In its report on the drug safety system in the U.S, the Institute of Medicine identified the lack of regulatory authority, the dismal lack of resources and “lack of transparency” of both the FDA’s Center for Drug Evaluation and Research and the pharmaceutical companies as well as other problems “has compromised the credibility of FDA and of the pharmaceutical industry.”

The problems with FDA are serious and will require major political will to solve. One fact is of note: in the case of Vioxx, a number of private insurers with electronic patient records systems identified the problems before the FDA did. While the post market surveillance program needs to be retooled, electronic patient records could be an important part of the strategy. In essence, monitoring the health data for patients receiving a drug could be a key strategy in post market surveillance. Pharmaceutical companies would be well served by investing in the deployment of Electronic Medical Records in doctor’s offices and by supporting more rigorous post market trials, helping to restore consumer’s trust in themselves and the FDA.