The growth in healthcare spending in the U.S. slowed for the second straight year in 2004, according to a report released by the Centers for Medicare & Medicaid Services (CMS; Baltimore). CMS said that 2004 spending rose 7.9%, as compared to 8.2% growth in 2003 and 9.1% growth in 2002.

The report, issued annually by CMS’ Office of the Actuary, was published in the journal Health Affairs. It describes healthcare spending of $1.9 trillion in 2004 – $6,280 per person.

The share of the nation’s Gross Domestic Product (GDP) spent on healthcare grew 0.1 percentage point to 16% in 2004, an increase smaller than that experienced in recent years as economic growth in 2004 grew at its fastest rate since 1989.

“While the growth rate is declining, the cost of healthcare continues to be a concern for government, business, individuals and families,” HHS Secretary Mike Leavitt said. “We must build on steps already taken – the new Medicare prescription drug benefit, advancing health information technology and encouraging a prevention-oriented society – to find innovative, market-based ways to control costs.”

“As we move forward, the new Medicare law and the new prescription drug coverage will help even more to keep costs in line while improving quality,” said CMS Administrator Mark McClellan, MD, PhD.

The report highlights a shift in growth between hospital and prescription drug spending. In the mid-to-late 1990s, managed care, coupled with the effects of the 1997 Balanced Budget Act, suppressed hospital spending growth.

In 2004, prescription drugs accounted for only 11% of the growth in national healthcare expenditures, smaller than its share of the increase in recent years, and the rate of growth in prescription drug spending – at 8.2% in 2004 – is slower in absolute terms than previously.

Other highlights from the report:

  • Prescription drug spending had accounted for 23% of the growth in personal health spending between 1997 and 2000, but by 2002-2004 it accounted for only 14%.
  • Hospital spending accounted for 28% of the growth in personal health spending between 1997 and 2000 and increased to 38% by 2002-2004.
  • Physician services accounted for 29% of the growth in personal health spending in 2004, up from an average 25% share in 2000-2002.
  • Out-of -pocket payments grew 5.5% in 2004, slower than aggregate health spending growth and slower than private insurance premiums, both in aggregate and on a per-enrollee basis.
  • Federal, state and local government healthcare spending rose 8.2% in 2004. Public spending continues to be dominated by Medicare ($309 billion in 2004), whose growth rebounded in 2004, CMS said, “in part due to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 that raised payments for physicians, capitated health plans, and rural and other providers.”
  • Medicaid spending reached $291 billion in 2004, 15% of national health spending. In contrast, Medicaid spending growth decelerated from 8.8% in 2003 to 7.9% in 2004, reflecting cost-containment efforts, CMS said.
  • Hospital spending, nearly one-third of total national health expenditures, increased 8.6% in 2004. The ‘04 growth in hospital spending accounted for 33% of the overall increase, greater than its 30% share of aggregate spending.
  • Spending for physician services grew 9% percent in 2004, nearly the same as the 8.6% increase in 2003.
  • Spending for freestanding home health agencies rose more rapidly than any other service category, increasing 13.3% in 2004. Public spending rose 17.6% for home health services, accounting for 74% of such spending.

With chest X-rays, many false positives

A study from the National Cancer Institute (NCI), part of the National Institutes of Health (NIH; both Bethesda, Maryland), indicates that screening for lung cancer with chest X-rays can detect early lung cancer but also can produce many false-positive test results, causing needless extra tests, the NCI said.

This report, which summarizes preliminary results from the Prostate, Lung, Colorectal and Ovarian (PLCO) Cancer Screening Trial, appeared in the Dec. 21 Journal of the National Cancer Institute.

Christine Berg, MD, lead investigator of the study, told Biomedical Business & Technology that the researchers don’t yet have an answer as to what the reduction in mortality rate will be by undergoing chest X-rays to detect lung cancer.

“I anticipate that chest X-ray may very well lower the risk of dying from lung cancer; however, if it does so, it is going to be a very small effect, which by that I mean at most a reduction of 10%,” she said.

Currently, there is “no accepted early screening technique for lung cancer,” Berg said in a prepared statement.

About 170,000 people in the U.S. are diagnosed with lung cancer each year. Most are diagnosed when their disease is advanced, and nearly 90% die within two years, according to the NCI. But catching lung cancer early – when surgery is a treatment option – improves survival substantially, and 70% of patients who are diagnosed early may survive at least five years.

Between 1993 and 2001, PLCO investigators enrolled 154,942 men and women who were 55 to 74 years of age. These participants included current and former smokers, as well as individuals who never smoked. These findings, the first published lung cancer screening results from the PLCO, are based on an analysis of the trial participants’ initial chest X-rays. It is the first large, controlled study to evaluate screening for lung cancer in women, whose smoking rates have increased in recent years.

“The participants underwent three years of screening if they were non-smokers and four years of screening if they were smokers,” Berg said. “So, the screening finished up for the very last individuals last year. We anticipate publishing the results from all of the screening rounds in the next year to a year and a half. Because it takes a while to find out, given the number of false positives, we need to have all of these participants continue to be evaluated.”

The results are the product of an interim analysis, which is conducted annually to follow the participants.

“If there does emerge a difference, we would know that as rapidly as possible; however, since it’s a small difference that we’re expecting, it could take a number of years,” she said.

Berg emphasized the need for caution, given that the PLCO is not the first study to look at the usefulness of chest X-ray and that none of the previous studies, albeit smaller, showed a benefit in reducing mortality from routine X-ray screening.

“The last study to be completed, which was the Male Lung Project, showed that there were actually more deaths from lung cancer in the group that was actively screened,” Berg told BB&T. “That persisted follow-up for 20 years. It was quite worrisome.”

She continued, “That’s why we really want to be cautious and make sure we know what, if any, benefit there is, because if there isn’t a benefit, or if it is harmful, we don’t want to recommend it . . ..”

One of the long-term goals of the PLCO trial is to determine whether chest X-rays can reduce lung cancer mortality in men and women 55 to 74 years of age.

Of the 67,038 men and women who received a baseline chest X-ray upon entering the trial, 5,991 (8.9 percent) had abnormal results that required follow-up, which in some cases included a second chest X-ray to compare to the baseline, computed tomography or in some cases, biopsy, she said. After undergoing additional tests, 126 (2.1 percent of the 5,991 participants with abnormal X-rays) were diagnosed with lung cancer within 12 months of the initial chest X-ray.

“The positive predictive value was low,” said Berg. “That means there were a lot of false positives on the initial X-rays. If you get a positive result from a chest X-ray, the message is ‘don’t panic.’” She noted that tissue variations and other benign factors can resemble tumors on an X-ray.

She said that some healthcare provider recommend chest X-rays for smokers or former smokers, while others do not. And, for example, she said, the U.S. Preventive Services Task Force took a “neutral” position on chest X-rays in its most recent report.

Of the cancers detected, though, 44% were stage I, meaning those patients were good candidates for surgery. “The rate of early cancer detection was better than what we see in the general community,” said Berg. “But it remains to be seen if that translates into a mortality benefit. It is too early to make any recommendations regarding chest X-rays as a lung cancer screening tool in the general population.”

The current analysis confirmed that smoking vastly increases the risk for lung cancer. Of current smokers in the trial, 6.3 people per 1,000 screened were diagnosed with lung cancer. For former smokers (those who quit for less than 15 years), the lung cancer detection rate was 4.9 per 1,000. Among non-smokers, lung cancer was diagnosed in 0.4 individuals per 1,000 screened. Lung cancer rates were similar for men and women smokers, but, for unknown reasons, men had more positive X-rays , or 9.6%, than women, who had 8.2%.

“The take-home message is to never start smoking, and if you do smoke, to quit,” Berg said.

She told BB&T, “Unfortunately, we’re seeing lung cancer at about the rate we had expected . . . and we think we have enough power in the study to come to a definitive answer about the usefulness of chest X-ray.”

Another NCI-supported study on which Berg is working, the National Lung Screening Trial (NLST), is comparing two ways of detecting lung cancer: spiral computed tomography (CT) and standard chest X-ray. Both chest X-rays and spiral CT scans have been used to find lung cancer early. So far, neither chest X-rays nor spiral CT scans have been shown to reduce a person’s chance of dying from lung cancer. This study will aim to show if either test is better at reducing deaths from this disease.

She said it may be “several years” before the NLST study concludes.

Flu plans funded under defense bill

The pandemic influenza plan proposed by the White House will get funded, following last-minute congressional passage of a defense appropriations bill to which the measure was attached. “We need to put the wheels in motion,” Senate Majority Leader Bill Frist (R-Tenn.) said on the floor, “so that when and if the avian flu hits, America is prepared.”

The legislation, which passed just before the end of the last ’05 congressional session, provides resources to stockpile existing therapies and to accelerate the development of new vaccines and antiviral drugs that could be more effective against a pandemic flu strain. Biotechnology Industry Organization (BIO) President and CEO Jim Greenwood called it “the first step” toward developing a domestic vaccine industry “that will substantially improve our national security and our health security.”

The legislation also provides a compensation program for potentially injured parties and liability protection that the industry has fought for in order to remove some of the risk from vaccine development. That last provision, related to liability protection, has proven to be a thorny issue due to longstanding opposition from consumer advocates.

But many industry advocates have argued that drug makers need a shield from liability in order to lure them back into vaccine production in the U.S. So that part of the bill, labeled the Public Readiness and Emergency Preparedness Act, provides immunity to claims of “loss caused by, arising out of, relating to, or resulting from the administration” of a covered vaccine, countermeasure, device or other products. Such immunity covers a range of uses, including the design, development, testing, manufacturing, distribution, administration, use and other activities so that the protections can be applied as broadly as possible. But that protection is voided if one can prove willful misconduct that causes a serious injury or death.

President Bush, who first introduced his $7.1 billion pandemic preparedness plan two months ago, is expected to sign the bill soon.

More recent efforts to advance the pandemic flu bill had been stymied by a Senate vote to block the defense appropriations bill because of a more divisive measure that had been attached to it, oil drilling in the Arctic National Wildlife Refuge in Alaska. But that was pulled off just before Congress departed for Christmas break, allowing the defense spending bill, and the attached pandemic flu funding, to move forward.

“We need communication, surveillance, antivirals, vaccines, research, and stockpiling and surge capacity,” Frist said. “This may sound like a lot of moving parts, but between our researchers, entrepreneurs, and public health experts, we have the intellect, the ingenuity and the knowledge to get the job done.”

Bush signs cord blood bill

Federal funding is on the way for stem cells derived from umbilical cord blood after President George Bush signed the Stem Cell Therapeutic and Research Act of 2005 last month.

Just before the session ended, the Senate finally passed the measure, which has long had support in the House of Representatives. The bill will fund the addition of 150,000 units of cord blood to the current inventory stored in public cord blood banks, and also establish a national cord blood registry through which doctors can search for and identify matching units of cord blood and adult bone marrow donors in a single location.

“We have been working on this bill since 2001,” said its primary sponsor, Rep. Chris Smith (R-New Jersey), “and I am thankful that treatments will now, finally, be made available to patients in need.”

It includes $79 million for the collection and storage of cord blood stem cells with the goal of reaching a total inventory of 150,000 units, which would make them available to more than 90 percent of patients in need. That would more than triple the availability of cord blood as a source of stem cells, said Joanne Kurtzberg, a proponent of the bill and Duke University researcher who more than a decade ago pioneered the use of umbilical cord blood as a cure for fatal childhood cancers and genetic diseases.

The new law also reauthorizes $186 million over the next five years to be spent on the national bone marrow transplant system and combines both the cord blood and bone marrow systems into one program.

More controversial bills related to federal funding for embryonic stem cell research have yet to receive congressional clearance.

Sarbanes-Oxley reform likely

An SEC advisory committee recently voted in favor of reforming part of the Sarbanes-Oxley Act to benefit small public companies, an effort that has been led largely by the Biotechnology Industry Organization (BIO; Washington).

The trade association spearheaded a coalition of biotechnology, healthcare technology, high technology and venture capital industries to change a one-size-fits-all approach to the internal controls portion of the corporate governance law, Section 404. “We are asking the SEC to ease sections that are creating harmful, unintended consequences for small public companies,” said BIO President Jim Greenwood.

Collectively, they urged the committee to define small public companies as the bottom 6% (based on a quarterly average) of the total U.S. public market capitalization, or by a revenue threshold set by the average revenues of companies at the bottom 6% of total market cap; exempt them from having external auditors attest to internal controls, which would not exclude them from complying with Sarbanes-Oxley as a whole; and allow such companies to take a risk-based approach to prioritizing their key financial controls and to alternate the frequency of control testing to every second or third year.

Because compliance with the auditor requirement can cost upwards of $1 million, Greenwood called the 18-1 vote “an indication that the committee understands the financial burden that Section 404 of Sarbanes-Oxley places on small public companies.”

The committee’s recommendation was to be released for public comment prior to its late-January meeting, and the final recommendations are due in April.

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