Saturday, April 21, 2012

Research into health-care savings

Capitalism is great at providing a service when it's profitable for someone to provide it.  But what if, for one reason or another, no market exists in which it can make someone money?

Take, for example, medical research.  I have told any overseer of my education that I have no interest in any type of research, yet I still got the pleasure of mandated attendance at several lectures on how a drug goes from basic research to the patient's medicine cabinet.  The system is set up to make it easy to make money getting new therapies to market.  Companies with the ability to make huge sums from a patented medication can fund huge amounts of research to back up their claims.

These claims made in research go largely unopposed, except the rare bit of backbone from an underfunded, partly industry-funded FDA, which has an annual budget of about $2 billion in regulating industries with a $1 trillion in annual sales.  Who else would have a motivation to fund research to keep a new drug off the market?  Competing drug companies might have an interest, but would they really want to provoke responses which would lead to a system where they have to fight harder to get a product to market?  Individual insurance companies or consumer groups would run into the Free Rider problem, with insurers and consumers who don't want to pay for opposing research would benefit from the lower costs despite their lack of contribution.  So you wind up with a system with unopposed research on new ways to spend money.  Is it any wonder that medical costs are spiraling out of control?

What is needed is more research on ways to limit costs, and because of the market's failure to provide it, it must come from the government.  It might lead to a dystopian hellscape of death panels, so it would be helpful if there were already a system in place which would freak the fuck out if any government body ever said "we can save $x million for every patient we allow to die" to keep the system from ever preferring cheaper treatments which led to worse outcomes.  We can use the paranoia of Fox News and the Drudge Report for a good purpose.

The program I'm discussing, of a government body seeking ways to limit costs without affecting outcomes, is essentially the role of the Independent Payment Advisory Board, a fifteen-member body set up under Obamacare.


NWest said...

You're conflating the medical research "market" with the health care market. While there are major issues in medical research, I'm not sure it can be used as an example of where the "advisory board" would be useful.

Also, you can't seriously say there's a market failure in health care when more than half of health care is already government funded!!

The failure is the fact that there *isn't* a market in health care now. Several things:

1) By using government force to make hospitals take people who cannot pay, costs are driven up for everyone.

2) We spend way to much on drugs. My wife recently went to the doctor - they didn't believe her when they asked "so what medications are you taking" and she said "none". Drugs are not a panacea - we call undesirable things "side-effects", I just call them "effects" of a drug. Many of these studies overstate their certantity significantly.

3) Since everything under the sun gets paid for through "insurance", there's no incentive to ask "how much will this cost" or "are there alternatives that are not as expensive?".

4) Risk mitigation. If "insurance" is paying for it anyway, why not just run every test under the sun? Has no one learned about statistics and "false positives"? False Positives impose severe costs. See here for more information.

PoliticalDoctor said...

1) What's the alternative, really? Yesterday I forgot my wallet at home, which had my insurance card in it. If I'd have gotten into an accident and taken to an ER unconscious, I'd rather live in a country where I'd get care even without proof of insurance?

2) I wholeheartedly agree about overmedication. Kind of the point I was trying to make is that at least part of the reason we use too many drugs is that there's lots of research into new and expensive drug therapies because one can make money by selling a drug, but it's more difficult to make money by convincing someone to not use a drug. Providing funds/motivation for opposing research to drug company claims would help with overmedicating.

3. I have very few patients/families who would be capable of analyzing these questions themselves. It takes a fair degree of sophistication to be an informed consumer in health care. So the real place to put pressure is on the provider side, which is what the IPAB does.

4. This is more of a problem with medical education. It's also a place where pressure on providers from IPAB can help.