WASHINGTON — A recent article published by the Kaiser Family Foundation (Menlo Park, California) raises yet again the theoretical debate concerning the role of device and drug investment in driving cost increases.

The article, "How Changes in Medical Technology Affect Health Care Costs," cites the usual figures on healthcare inflation, citing an average increase of 9.8% per year since 1970.

The analysis covers synthetic pharmaceuticals, biologics, devices, diagnostics and even electronic medical records, the authors saying that advances offered by novel technologies have yielded real gains, such as cutting in half the "the overall mortality rate" between 1980 and 2000.

New devices and drugs "can also reduce utilization" and exert a prophylactic effect — as with vaccine use — and replace more expensive technology or procedures, all of which make strong arguments for continued medical advances.”

"Research shows that the use of medical care rises with incomes," the article says, and that the presence of health insurance provides assurance that payers will pay. Conversely, "the promise of better health through improvements in medicine may increase the demand for health insurance."

The authors note that "an estimated $111 billion was spent on U.S. health research in 2005," including $40 billion from governments, primarily the National Institutes of Health. Medical device firms invested an average of 11.4% of sales on R&D, and a category called "drugs and medicines" invested nearly 13% of sales on R&D, according to the authors. The national average for all industries was 3.5%.

The article says: "compared to other high-income countries, the U.S. spends more" without getting a proportional value, but that "on average, increases in medical spending as a result" of technological innovation "have provided reasonable value."

When using between $50,000 and $100,000 as the value of a year of life, the $19,900 attributed to health spending seems a good deal.

The question is: How much of a good deal can the nation's pocketbook stand and just how rational are some of the decision-making mechanisms for allocating resources?

On the question of establishing a return on investment for devices and drugs, Uwe Reinhardt, professor of economics and public affairs at Princeton University (Princeton, New Jersey), told Biomedical Business & Technology: "When we look at new technology, we must distinguish between cost-saving technology and cost-increasing — but quality-increasing — technology."

Reinhardt said that many drugs and devices save considerable sums, but that the benefits accrue principally to the patient and his/her employer and, hence, fall into the category of spillover benefits that healthcare systems can't recoup.

Imaging technology, he said, "is very expensive per se," reducing exploratory surgeries "that are hardly done anymore." On the other hand, many new technologies "vastly enhance life but costs more. Then you get in the area of benefit/cost analysis," Reinhardt said.

When the value of a quality-adjusted life year is set at $25,000, most technology is seen as "adding more value to society than most of the consumer goods we produce," he said.

One of the sticking points is that those who are healthy do not benefit from such advances, and "they're being asked to step up to the cashier's window to pay for it," which is "where the controversy lies."

As for the alleged overuse of some devices in the U.S., Reinhardt said that "Americans are vastly under-served in primary care relative to other nations and use fewer drugs, but vastly over-served in heroic medicine and in technology such as defibrillators."

"We pay much higher prices for anything, whether it be stents, drugs, physician visits and even healthcare economists," he said, noting also that salaries in the U.S. tend to run 30% to 50% higher than in Europe, while medical school is also free in many parts of the EU.

Another side of this coin, he said, is that "nobody teaches doctors as well as in the U.S."

Asked whether the coverage decision mechanism used at CMS in lieu of pre-certification is an incentive to over-treat, Reinhardt said, "Yes, it is. In this country, you cannot mention the phrase ‘cost-effectiveness’because any bureaucrat who ever raised it would be canned," citing the controversy faced by former CMS administrator Thomas Scully when he criticized the use of Nexium when the older and cheaper treatment for acid reflux, Prilosec, was largely equally effective and about to go generic.

Offering an alternate view, David Nexon, senior executive VP at the Advanced Medical Technology Association (AdvaMed; Washington) told BB&T that a variety of studies "have shown that the return on spending on medical technology overall far exceeds the cost," but that such analyses are "too costly to do . . . routinely on individual technologies, and there are a number of technical reasons why this analysis is problematic even apart from the cost."

On the question of over-treatment in the U.S., Nexon said that the increases in U.S. healthcare spending are "hard to attribute . . . to speculative investment, particularly since the biggest sector in the healthcare system, the hospital sector, is predominantly non-profit."

He said that the most recent evidence, "i.e., the RAND studies on quality of care, suggests that Americans are under-treated rather than over-treated. Americans receive recommended care only slightly more than half the time for the illnesses RAND studied."

Nexon also said that "[c]omparisons with other western nations have to be taken with a grain of salt" because other factors play into longevity and because "international measures of outcome are relatively crude — longevity, infant mortality — and do not capture many critical health outcomes."

"That being said, there is no question that we can and should work to improve both the quality and efficiency of healthcare in the United States," Nexon said.

Nexon had a different take from Reinhardt on the question of CMS's national coverage decision mechanism, saying: "[m]ost private insurers have actually abandoned pre-certification for most procedures, because it has been found not to be cost-effective."

On the other hand, coverage decisions "bring consistency to the treatment of beneficiaries who live in different parts of the country but have similar medical needs."

House subcommittee advances genetic discrimination measure

A bill to prohibit employers and insurance companies from discriminating because of an individual's genetic makeup is continuing to move through the House of Representatives, with an Energy and Commerce subcommittee approving it recently.

This is the latest hurdle for the legislation, which has always stalled in the past. Still, the measure must clear three panels before it reaches a floor vote in the House.

The Education and Labor Committee already has approved it, and the recent subcommittee endorsement would seem to signal pending success before the Energy and Commerce Committee.

Action before the Ways and Means Committee has yet to begin.

The bill, the "Genetic Information Nondiscrimination Act," or H.R. 493, was introduced by Rep. Louise Slaughter (D-New York). It establishes protections against using someone's genetic information in making decisions about health coverage or jobs.

Advocates such as Francis Collins, director of the National Human Genome Research Institute, a unit of the National Institutes of Health have testified that without such protections the full potential of genomic research and personalized medicine may never be realized.

A companion bill sponsored by Sen. Olympia Snowe (R-Maine), S. 358, cleared the Senate's Health, Education, Labor and Pension Committee in January. Sharon Terry, president/CEO of the Genetic Alliance, said the Senate is soon expected to bring it to the floor for a vote.

Twice before, in 2003 and 2005, the Senate has unanimously passed it, but the House has never voted on the matter.

This year's progress in the House represents a reversal of previous years, when opposition from large employer groups held up any advances. Of note, President Bush has voiced his support for such legislation.

Study: Bariatric surgery, as safe for teens as for adults

Reports have sounded the alarm far and wide about the risks associated with obesity to adults, children and teens. But some encouraging news has been delivered for teenagers, and the physicians who treat them, facing this dilemma.

A new study focusing on morbidly obese teenagers who have had last-resort bariatric surgery found that the procedure poses no greater risks for them than for adults, and in fact, they have a zero death rate and faster recovery.

Researchers at the Robert Wood Johnson Medical School (New Brunswick, New Jersey) and Cincinnati Children's Hospital Medical Center (Cincinnati) used a large national database to examine nationwide trends from 1996 to 2003 in the use of adolescent bariatric surgery, described as the first effort to compare the early post-operative results following bariatric surgery in adolescents and adults.

The study, published in the March issue of Archives of Pediatrics & Adolescent Medicine, shows that surgery among teens has more than tripled in recent years, increasing in the U.S. from an estimate of just over 200 procedures in 2000 to nearly 800 procedures in 2003.

When researchers compared early post-operative results in teens and adults, they found that teens appear to handle the surgery better than adults. The study found that adolescents, ages 12 to 19, had shorter hospital stays and no in-hospital deaths, whereas a 0.2% mortality rate was recorded for adults.

Morbidly obese adolescents are at risk for Type 2 diabetes, sleep apnea and heart disease, but the study found they had significantly fewer co-morbid conditions prior to bariatric surgery compared to adults.

The study also compared the costs of surgery for adults and teens, finding that adolescents had lower hospital charges. Total hospital charges in 2003 for adolescents undergoing bariatric surgery were $23.6 million and for adults was $3.8 billion. The average hospital charges associated with these procedures were 15% lower for adolescents than for adults. Similar to adults, most adolescents had private insurance.

Although bariatric surgery among adolescents has increased, it is not common, representing fewer than an estimated 1% of the bariatric procedures performed nationwide. The study found that although the majority of surgery recipients are female, more male adolescents are requesting it.

At Cincinnati Children's, bariatric surgery is used as a "last resort" for morbidly obese teens who have tried unsuccessfully to lose weight through diet and/or exercise, the center said. More than 70 patients have had bariatric surgery at Cincinnati Children's since the medical center began performing weight loss surgery in 2001.

The center's bariatric research program reports ongoing research studies sponsored by the National Institutes of Health, examining the metabolic, psychological and surgical outcomes of teens undergoing weight loss procedures.

Grassley warns Eschenbach against censoring FDA staff?

Senate Finance Committee ranking member Chuck Grassley (R-Iowa), ranking member of the Senate Finance Committee, reportedly has sent a letter to FDA Commissioner Andrew von Eschenbach to clarify his statements appearing to suggest that agency employees cannot testify before Congress

Grassley warned von Eschenbach that "interfering with a congressional inquiry is against the law" and punishable by fines or as many as five years in prison and that he could lose his salary.

Grassley's letter addresses quotes recently attributed to von Eschenbach in the Newark Star-Ledger. According to the Star-Ledger, von Eschenbach on Feb. 21 in reference to FDA whistleblowers said, "To go outside the process is destructive, not constructive. . . . I expect people to adhere to that because that's the way to do business. Otherwise, it's chaos."

Grassley cited previous reports that von Eschenbach has told FDA staff that they risk their jobs if they express disagreements with FDA officials publicly. According to Grassley, "individuals, both inside and outside of FDA," have raised concerns that von Eschenbach's statements "are being interpreted to prohibit FDA employees from talking to Congress and threaten FDA employees who choose not to abide by your decree."

Grassley wrote, "The danger is that FDA employees interpret this to mean they can't talk with Congress if they want to about problems inside the agency, and, as a result, those problems are less likely to see the light of day and be fixed."

Mann Foundation donates $100M to Purdue U. for tech transfer

The Mann Foundation for Biomedical Engineering (West Lafayette, Indiana) reported a $100 million gift that it will make to endow an Alfred Mann Institute at Purdue University. The university-based institute is designed to enable the commercialization of biomedical technologies designed to improve human health.

The $100 million endowment is the largest single endowment ever created for Purdue, the foundation said. Jischke, president of Purdue, said the gift will allow the university to pursue a "new model of university technology transfer."

Alfred Mann, described as a "serial medical device entrepreneur," according to the foundation, said his goal is to build a bridge between academia and industry to move health-related product into use in an accelerated process.

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