BB&T Contributing Editor

In a keynote presentation during the BMO Capital Markets Focus on Healthcare Conference in New York last month, Dr. Peter Orszag, director of the Congressional Budget Office, dismissed the view promulgated by the media that attributes rising healthcare costs to demographics and the "tsunami" of baby boomers. Rather, he said that the aging population contributes only about 2% to the overall cost.

A much greater factor in the growth of healthcare spending is due to technology changes in medical practice, Orszag said (see Table 4). The fiscal problem was attributed to the rising cost per beneficiary, and not the number or type of beneficiaries.

Also, the increased costs of Medicare and Medicaid were projected to result in a long-term budget problem (see Table 5 on next page). He reviewed Medicare spending per beneficiary in the U.S. by hospital referral region. Interestingly, the regions with higher cost-per-beneficiary did not correlate with better healthcare.

Healthcare was said to contain the largest inefficiencies in the U.S. economy, with 5% of gross domestic product being spent on costs that don't improve healthcare overall. Thus, the challenge, Orszag said, is how to improve efficiency of our healthcare system without compromising care.

Noting that "we have a payment system that promotes more care rather than better care," he also observed that most workers don't realize how much healthcare costs them, since their take-home pay is adjusted for payments of healthcare coverage made by their employers.

The costs of pharmaceuticals often are cited as main contributors to the rising health costs, but Orszag said that drugs represent only 10% of total healthcare spending and "get way too much attention just like aging."

He said the healthcare economy is "stymied" by short-term and piecemeal efforts at reform and the inability to deal with long-term problems. And he called as incorrect the notion that universal health insurance will reduce costs, because uninsured people spend less on healthcare than do the insured.

An analysis of total Medicare spending at leading medical centers revealed widely different figures, with costs at UCLA Medical Center (Los Angeles) being twice that of the Mayo Clinic (Rochester, Minnesota). This observation had prompted the query by Professor Uwe Reinhardt, a noted healthcare economist at Princeton University (Princeton, New Jersey): "How can it be that 'the best medical care in the world' costs twice as much as the best medical care in the world?"

'Waiting' preferable for prostate cancer in elderly

Can diagnosis and therapy be worse than the disease that they attempt to assess and treat?

Yes, according to the U.S. Preventive Services Task Force (USPSTF), at least in the case of prostate cancer in the elderly . The USPSTF last month issued a recommendation against the screening of men 75 or older for prostate cancer, given the evidence of more harm than benefit from carrying out this procedure and providing therapy based on a positive diagnosis. The task force made its recommendation, based on evidence that the benefits of treating prostate cancer are "small to none" in older men because of the slow advance of the disease.

The task force also noted that even if prostate cancer screening is effective, the disease usually takes at least 10 years to result in the patient's death. Because a 75-year-old man has an average life expectancy of about 10 years, very few men over 75 would experience a mortality benefit from the screening.

Similarly, younger men with chronic medical problems and a life expectancy of fewer than 10 years are also unlikely to benefit from screening and treatment.

The USPTSTF said that treatment based on routine screening causes "moderate-to-substantial" harm to men of all ages, such as erectile dysfunction, urinary incontinence, bowl dysfunction, and death. These harms are especially important, the task force notes, because some men who are treated for prostate cancer would never have developed symptoms during their lifetime. And the screening process itself can cause pain and discomfort, such as those associated with prostate biopsy and the psychological effects of false positive results, the task force said.

For men younger than 75, the issue falls into a very grey area, the group said. It said that for this age group, there is not enough evidence to recommend either for or against prostate cancer screening.

As for detection, the task force did find convincing evidence that prostate-specific antigen (PSA) screening can detect some cases of prostate cancer, which it called the most common non-skin cancer and the second leading cause of cancer death in men in the U.S.

A previous review of the issue performed for the USPSTF in 2002 found insufficient evidence that screening for prostate cancer improved health outcomes, including mortality, for men of all ages. However, that review also found little evidence concerning the possible downsides of the screening process or the natural history of prostate cancer cases detected with screening.

'White' technology coming to polymers

The newest technology "bubble" is obviously the drive to fine alternatives to oil. And that effort can now include the medical polymer sector. But instead of calling this "green," Principia Consulting (Exton, Pennsylvania) refers to it as "white" white technology used to find alternatives to develop plastics and polymers from petrochemical sources.

Principia is currently exploring the area of what it calls "bio-based" plastics, as well as those that are biodegradable via composting, meaning those other than the standard kinds which are derived from petrochemicals, that is, based on oil. The company currently is doing two studies on the plastics market outlook, said Dr. Ashish Aneja, a principal at Principia.

The first is looking at the opportunities for the standard petro-based plastics, titled Plastics in Healthcare 2008, the second exploring long-term possibilities for the bio-based type and the oil-based types that are "compostable."

Principia puts the demand for standard plastics/polymers as growing twice as fast as U.S. gross domestic product and currently a $4 billion industry in North America. And as in many other areas of med-tech, this demand is fueled by aging demographics and longer lifespans, broadening the needs across all areas, including implants, according to the company.

Pincipia says: "In addition, procedures that utilize plastic-intensive devices, such as joint replacements, cosmetic surgeries, and advanced prosthetics are more affordable and in greater demand than ever." And it notes that the range is technologically very wide: "from commodity resins to high-performance plastics" used "in many of the 5,500 FDA-regulated medical devices." And Principia points to the broad benefit of plastic materials in terms of "flexibility of fabrication" and "end-user characteristics" and that "engineers continue to learn how to leverage material attributes like transparency, chemical resistance, autoclavability, and biocompatibility to create products with new performance benefits."

This study will provide forecast estimates out to 2013.

More recently, the company has launched plans to study the current global effort to bypass dependence on oil and find alternatives. Rather than focusing on oil-based sources, this study, titled "Bio-based and Biodegradable Polymers 2008," will focus on developments in "white biotechnology" and the use of renewable resources, such as corn-based feedstock and starch and cellulose derivatives to produce plastics. Additionally, the report will look at petrochemical-based polymers that can be retrieved vs. composting.

"Under the right temperature and humidity conditions, these plastics degrade," Aneja told Biomedical Business & Technology.

As just one example of this, Dow Chemical last month reported a joint venture agreement with the Brazilian firm Crystalsev to develop a facility to manufacture polyethelene from sugar cane. The facility will use ethanol derived from sugar cane to produce ethylene, the raw material required to make polyethylene, the world's most widely-used plastic and produced using either naphtha or natural gas liquids, both petroleum products. The new process, Dow and Crystalsev said, will produce significantly less CO2 compared to the traditional polyethylene manufacturing process.

Aneja puts the market for alternative polymers currently at less than $1 billion worldwide, "but expected to grow 20% to 30% every year." And Principia estimates the global demand for these polymers at $6 billion by 2015.

Aneja said this research will examine how these products will move into a range of complex uses, such as in healthcare. These first medical uses will probably be in packaging, Aneja said, since not requiring heavy regulatory oversight, but that there is opportunity "absolutely," he affirmed longer-term in the advanced clinical uses, such as implants.

Counterpart device safety act version proposed

Two senators have followed the lead of House lawmakers and introduced a Senate counterpart of the Medical Device Safety Act of 2008 to ensure individuals are not prevented by the Food, Drug and Cosmetic Act (FDCA) from suing device makers under state tort laws. Sens. Edward Kennedy (D-Massachusetts.) and Patrick Leahy (D-Vermont.) introduced the companion bill to H.R. 6381, which has 62 co-sponsors in the House, last month.

Introduced in the House in June by Reps. Frank Pallone (D-New Jersey) and Henry Waxman (D-California), the bill seeks to reverse the Supreme Court's decision in Reigel v. Medtronic, which confirmed preemption of state tort suits for FDA-approved medical devices. Following the Riegel decision, Kennedy, who chairs the Senate Health, Education, Labor and Pensions Committee, threatened to create legislation to override the court. He said Congress never intended for FDA approval to give immunity to manufacturers from liability for injuries caused by faulty devices.

"The FDA used to be the gold standard, but the agency has come under scrutiny recently. If manufacturers are putting faulty devices on the market, they must be held accountable to the patients who use them, the way Congress always intended. I will continue to fight for legislation like this that puts the health and safety of Americans ahead of manufacturers' interests," Sen. Barbara Mikulski (D-Maryland), a co-sponsor of the bill, said.

Countering that view, many in the device industry warn that the bill would result in more lawsuits and ultimately higher healthcare costs.

"If enacted, this legislation would create a patchwork approach to medical device approvals where state courts would effectively review and regulate medical devices," said Strephen Ubl, president/CEO of the Advanced Medical Technology Association (Washington), in an association statement.

State health reforms termed 'placebos'

Citing the failure of seven state-based health reforms over the past two decades initiatives that bear a strong resemblance to the Massachusetts health reform of 2006 a group of Massachusetts-based researchers cautions that early declarations of the latter's success may be premature. In an article titled "State Heath Reform Flatlines," published in the most recent issue of the International Journal of Health Services, three researchers, two of whom teach at Harvard Medical School (Boston), examine the experiences of earlier reforms in Massachusetts, Oregon, Minnesota, Tennessee, Vermont, Washington state and Maine. The plans were enacted from 1988 through 2003.

All seven reforms, which when launched were widely lauded by political leaders and leading newspapers as breakthroughs in providing universal healthcare, were based on the expansion of private insurance coverage, the authors said. But in each case the plan had little impact on the state's number of uninsured persons and produced no sustained improvements in delivering care.

David Himmelstein, MD, a study co-author, said the 2006 Massachusetts reform appears poised to follow the pattern of the 1992 Tennessee plan, which featured a large expansion of coverage under a Medicaid-like program. "In Tennessee, the number of uninsured dipped for two years, then rose to levels higher than ever," he said. "And the plan proved to be unaffordable in the long term." He added that the latest figures on Massachusetts from the National Health Interview Survey indicated the uninsurance rate fell only 2%, from 7.7% to 5.8% since the reform was passed, with the plan already $147 million over budget."

Himmelstein, associate professor of medicine at Harvard and a primary care physician in Cambridge, said the seven failed plans incorporated virtually all of the reform elements being advanced by leading Democrats, including the party's presidential candidate, Sen. Barack Obama (D-Illinois). The problem, he said, is that such reforms leave the private health insurance industry in a dominant position.

"Politicians like to claim they've passed bold health reforms, but they're afraid to rock the private insurance boat," he said. "So they keep pushing gussied-up versions of reforms that have failed time after time. Our healthcare system is sick to death, and our politicians keep prescribing placebos."

CMS in two-state PHR pilot program

The Centers for Medicare & Medicaid Services last month reported a pilot program in Arizona and Utah to test options for beneficiaries with original Medicare to maintain their health records electronically. In these states a beneficiary may choose one of the selected commercial personal health record (PHR) tools, and Medicare will transfer up to two years of the individual's claims data into the individual's PHR.

Medicare's administrative contractor, Noridian Administrative Services (NAS), released a solicitation to potential PHR vendors. The program is scheduled to begin in January and is expected to offer Medicare beneficiaries in the two states a choice of PHR options.

"This exciting pilot will be a major step forward for Medicare. We believe that it will provide information and tools that will empower consumers to manage their health," said HHS Secretary Mike Leavitt. "Importantly, we intend for the pilot to provide beneficiaries with a choice of products that will make it possible for beneficiaries to meet their individual needs."

PHRs are characterized by being under the control of the individual rather than the clinician. Sometimes it only contains data entered by the individual or his or her provider, but it also can include information from a health plan the case for this pilot, where Medicare provides health information from its claims data base.

Beneficiaries who select one of the participating PHR vendors also can add other personal health information if they choose. Depending on the specific product, they may be able to authorize links to other personal electronic information such as pharmacy data. PHRs can offer links to tools that help consumers manage their health such as wellness programs for tracking diet and exercise, medical devices, health education information, and applications to detect potential medication interactions.

A beneficiary also can elect to allow family members and healthcare providers to have access to their PHR.

CMS Acting Administrator Kerry Weems said, "This pilot is designed to evaluate how well PHRs meet the needs of our beneficiaries and whether PHRs can improve health outcomes and lower costs."

CMS also reported in August that all physician groups participating in the Physician Group Practice (PGP) Demonstration improved the quality of care delivered to patients with congestive heart failure, coronary artery disease, and diabetes mellitus during performance year two of the demonstration.

As a result, the 10 groups earned $16.7 million in incentive payments under the demonstration that rewards healthcare providers for improving health outcomes and coordinating the overall healthcare needs of Medicare patients assigned to the groups.

"We are paying for better outcomes and we are getting higher quality and more value for the Medicare dollar," said Weems. "And these results show that by working in collaboration with the physician groups on new and innovative ways to reimburse for high quality care, we are on the right track to find a better way to pay physicians." All 10 of the participating physician groups achieved benchmark or target performance on at least 25 out of 27 quality markers for patients with diabetes, coronary artery disease and congestive heart failure.