The Hippocratic Math

AALS Panel on Teaching Health Law: A Tour de Force

The first speaker was Prof. Charity Scott,  Catherine C. Henson Professor of Law and Director of the Center for Law, Health & Society at Georgia State University College of Law.  Her presentation, “Collaborating with the Real World: Opportunities for Developing Skills and Values in Health Law,” was a terrific mix of high level observation, on-the-ground experiences, practical examples from her own health law program, and articles she edited as editor of the Teaching Health Law column of the JLME.  Scott noted that experiential learning can happen in time slots ranging from an hour to a day to a semester or year, so any committed professional can fit some opportunities into their schedule at some point.  She particularly focused on how students could help attorneys, doctors, and community members solve pressing problems.  In coming weeks, I’ll blog on some of the particular programs she mentioned.

The Nirvana Fallacy Among Health Care Cost Cutters

One of my fun little Christmas presents was the Gruber/Newquist/Schreiber comic book guide Health Care Reform: What It Is, Why It’s Necessary, How It Works.   It’s wonderfully illustrated and has a lot of good information.  It offers a very hopeful vision of what health reform can do.  It patiently explains the politics and policy that led to the ACA, portraying it as a compromise that both “left and right” should be able to support.

Unfortunately, the authors have chosen to portray virtually anyone who opposes the ACA, on both left and right, as either angry, exasperated, selfish, or unreasonable.  (This animated penguin reminds me of several of the characters in the book.) There are also some questionable implications in various parts of the book.  For example, on p. 21, it’s suggested that if employers didn’t have to pay so much for health care, they’d just pay that in higher wages to employees.  But in an economy where corporate profits are capturing “88% of the growth in real national income while aggregate wages and salaries accounted for only slightly more than 1% of the growth in real national income,” why should we assume that will happen? Workers’ share of national income is declining; they have little bargaining power.  We can’t extrapolate the economic projections of the “Great Moderation” era to today’s Great Recession, where employers are exploiting the desperation caused by high unemployment to hold the line on wages and benefits.

One other objection: check out this graphic (my apologies for the poor camera-work), which suggests the deep problem in the US economy is that we’re spending too little on military or homeland security expenditures, and too much on health care:

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Secret Prices: Free Market Triumph or Tragedy?

Can a market work when buyers are kept in the dark about the prices they’ll pay? That’s an increasingly urgent question for fans of consumer directed health care. In vogue during the administration of Bush fils, CDHC is reemerging as Obamacare’s opponents seek a standard to rally around (other than “laissez mourir“). In theory, consumers could force doctors and hospitals to compete by shopping around for services. But when the rubber hits the road, informed consumption is easier said than done, as Josh Barro describes:

Recently, my employer switched to a high-deductible health insurance plan, which means I’m paying at the margin for most of my health care. As a result, I have become more aware of the true cost of the care I receive—and more aware of how difficult it is to figure out that cost. . . . if you ask doctors how much a service costs, they tend not to know. I once had an argument with my doctor, who did not want to give me a blood test for fear that my insurer would deny the claim for the expensive test. I later found out that this test costs all of $9.48 at my insurer’s negotiated rates, despite a list price of $169. When I got orthotics, my podiatrist told me they would cost nearly $600. But that was the list price; the actual insured price was less than $250. . . .

It doesn’t have to be this way. We could legally obligate hospitals and medical practices to disclose their full price lists—both the inflated list prices and the rates negotiated with each insurer that the practice accepts.

A commenter on Barro’s blog retorts:

I’m a little surprised to see a blogger at the [National Review Online] suggest that the government “require” price disclosure from private market participants. This goes well beyond the market interference that some other odious “mandates” require. Why don’t we mandate that everyone disclose exactly what they pay each employee? . . . If you have an HSA or High-deductible policy, I would suggest it’s incumbent on the insurance provider to help you figure it out. If consumers want it enough the system should respond, right? Why not switch to an HDP that is more transparent?

The problem, of course, is that lots of parties have to agree to provide transparency, and there is a great deal of inertia. If all the other insurers aren’t transparent, there’s little reason for one of them to try to distinguish itself if it already has a steady customer base. And when it stirs itself to do so, it will find a wall of resistance from providers, who say “why should we give all this information to you—no one else is demanding it?” (Moreover, the “prices” don’t really exist except on paper on a “chargemaster,” and they’re practically meaningless (except as opportunities to gouge the unlucky). The real price is the negotiated price, and that’s generated out of iterative interactions.) Moreover, many interventions involve multiple providers, as a reader of Andrew Sullivan’s blog explains:
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Health Affairs on Community Development

A Constitutional Right Not to be Bankrupted by Health Care Costs

Those challenging the ACA in court profess deep concern about government forcing citizens to buy insurance or pay a fine.  The fundamental harm here is monetary; it’s about being required to purchase insurance, not to use it (or to get any medical care at all).

If the Court agrees with them, why can’t there be a parallel monetary right not to be bankrupted by health care costs?  In the 1973 case San Antonio School District v. Rodriguez, the Supreme Court decided, by a 5-4 vote, that children did not have a constitutional right to education.  But at that time, at least four justices thought the state was obliged to make a decent education available to all.  Why can’t a future Court do the same for health care?

If the current Supreme Court were to declare the ACA unconstitutional, it would need to abandon several landmark precedents.  That’s not a problem for the Roberts Court; it’s already jettisoned once-venerable holdings on campaign finance, equal protection, antitrust, and voting rights.

For many Americans in these tough economic times, rights to education, housing, health care, and food are a lot more meaningful than the right to be free of an insurance mandate.  We the people can locate these ideals in a Constitution and a Declaration of Independence rich with grand and sweeping language.  If the ACA’s opponents can use our nation’s founding texts to undermine the ACA, those who care about meeting basic human needs need to gear up to use them to do quite a bit more.

CLASS Agonistes

This week the Obama Administration formally abandoned the CLASS Act, a component of the ACA designed to provide long-term care. Robert Reich explains why it was doomed from the start:

First, it required beneficiaries to receive at least $50 a day if they had a long-term illness or disability (to pay a caregiver or provide other forms of maintenance). That $50 was an absolute minimum. No flexibility on the downside.

Second, insurance premiums had to fully cover these costs. In budget-speak, the program was to be self-financing. Given the minimum benefit, that meant fairly hefty premiums. Third, unlike the rest of the healthcare law, enrollment was to be voluntary. But given the fairly hefty premiums, the only people likely to sign up would know they’d need the benefit because they had or were prone to certain long-term illnesses or disabilities. Healthier people probably wouldn’t enroll.

The failure of CLASS has led to a flurry of proposals for alternatives to long-term care insurance. Some want a purely private sector solution. Maybe a new Rube Goldberg financing scheme could be implemented as a part of 401(k) plans. Perhaps Wall Street could sell disability derivatives and ability default swaps, engineering away the “risk of non-use” that keeps people from enrolling in programs like this.

In thinking about these proposals, my mind turns back to Robert Bork’s Antitrust Paradox. For Bork, antitrust law was “at war with itself” because it professed to promote simultaneously 1) a cutthroat competitive process that would encourage firms to maximize efficiency and 2) the threat of penalties for any firm that succeeded in being so efficient that it outcompeted all or nearly all of its rivals, if its efforts to do so stepped over the line into monopolization. Of course, one could resolve the so-called paradox if one recognized that the Sherman and Clayton Acts were passed not merely to maximize “consumer welfare,” but also to prevent concentrations of economic power from exercising excessive influence. But as the judicial interpretation of antitrust law took on more of the assumptions of the Chicago school, the paradox loomed ever larger in efforts to characterize antitrust as futile in an era of consolidation.

So what’s the CLASS paradox? There are actually several. Those who are not so well off (such as the 50% of American workers who made less than $26,000 last year) are likely to be the most in need of the program, but have the least amount to spare for premiums. Those in the top 1% (that is, those who make over $506,000 annually) will probably want to use their own savings and investments, rather than an insurance program, to pay for LTC. That leaves a middle 49%, making between $26,000 and $506,000, who are the most likely participants. But among that group, the more healthy, well-connected, wealthy, and younger you are, the less likely you are to buy in because the benefits are speculative, distant, and/or unneeded. And by and large, the sicker, more isolated, poorer, and older you are, the less likely you are to have the resources to participate now.

The question finally becomes: are we serious about social insurance in this country, or are we content with treating the very frail elderly like possessions in the home, to be insured as need and whim allow? The solution to the LTC crisis is a right to basic care and residence, funded by general tax revenues. Sure, we can have extensive and difficult debates about the obligations of individuals and families to contribute to long-term care, particularly in order to make better-than-basic options available. But the general focus needs to be on redistribution from the currently well-to-do to the currently needy, rather than an ownership society mirage of individuals anticipating distant futures that may never materialize (and that many or even most can’t very well prepare for even if they do materialize).

We should also consider funding more of Medicare out of general tax revenues, rather than from dedicated payroll taxes and premiums. Richard Kaplan has argued that this shift could better serve both equity and cost-control goals:

The use of general tax revenues, moreover, would make clear that financing the health care needs of the Medicare population is a societal undertaking, much like the Medicaid program, which targets low-income individuals of any age. At a minimum, eliminating the separate taxes for Medicare would simplify the lives of employees and employers alike and would additionally reduce the cost to employers of adding new employees. Perhaps changing the financing of the Medicare program along the lines just suggested might also make its beneficiaries less inclined to protest every proposed programmatic restriction and to understand that their benefits are indeed coming from a communal funding source. The resulting change in budgetary debates can only be salutary for the republic as a whole.

Health care finance in general must adopt to a world of massive and growing income and wealth inequality. From 1947-1980, when Americans’ incomes more or less grew together at the same rate, there was some justification for modeling the purchase of long term care as an investment that individuals would manage one by one, to reflect their tastes and preferences. Since 1980, the divergence in fortunes has become so great that such choices far more reflect ability-to-pay rather than taste for risk or comfort. It is unfair to expect struggling middle and lower class individuals to continue with such burdens. And to the extent tough choices need to be made, they ought to better reflect the collective wealth of the nation, rather than the tragic choices that can befall an individual forced to choose between preparing for bleak penury in old age or investing in present purchases that could make that neediness less likely.

Inspirational Healthcare In(ter)ventions

The New York Times has an excellent section on “low-cost innovations that can save thousands of lives.” A conversation today focuses on Dr. Paul Polak, a 78-year-old former psychiatrist.

[Dr. Polak] has focused on creating devices that will improve the lives of 2.6 billion people living on less than $2 a day. But, he insists, they must be so cheap and effective that the poor will actually buy them, since charity disappears when donors find new causes.

His greatest success has been a treadle pump that lets farmers raise groundwater in the dry season, when crops fetch more money. He has sold more than two million, he said. He also helped develop a $25 artificial knee and a $400 hospital lamp to save newborns with life-threatening jaundice.

Dr. Polak’s work reminded me of an inspirational conference in Boston, organized by Kevin Outterson, the Ewing Marion Kauffman Foundation, the Rhode Island College of Pharmacy, Universities Allied for Essential Medicines & Mind the Health Gap. Una Ryan, President & Chief Executive Officer of Diagnostics for All, gave a powerful presentation on her company’s quest to bring tests to individuals for pennies. Developments like these indicate that conditions for the world’s poorest can actually improve.

X-Posted: Concurring Opinions.

The Hippocratic Math: Bioethics, Choice, and the Bottom Line

How does American society address the vulnerability of the body? We rarely stop to think about how quickly a disease or accident can derail even the best of lives. For the hundreds of millions of people who live on a few dollars a day, medical care is rare and haphazard. The US has gradually put in place a vast infrastructure of law and institutions designed to provide its citizens with quality, affordable, and accessible care. The proper limits of such care are hard to discern. Gregg Bloche’s book The Hippocratic Myth gives some excellent examples to reflect upon as the Affordable Care Act slowly begins to influence the health care delivery system.

Not many policymakers or scholars can write with the authority of Gregg Bloche. Bloche is not only a law professor, but also a physician, who knows his way around a hospital. Throughout The Hippocratic Myth, Bloche cements his authority in the mind of the reader by relating stories of his experience as a clinician. In each of these stories, his humane and insightful approach as psychiatrist shines through. I do not say this to imply that block uses his book to brag about his own abilities. Rather, these fluently written passages strike one as the work of one of those rare practitioners who manages to care deeply about the patient at hand while simultaneously contextualizing the encounter in a larger framework. Thus The Hippocratic Myth should take its place among other well-received books by physicians with a sense of the big picture (including Atul Gawande’s Checklist and Better and Jerome Groopman’s How Doctors Think.)

In The Hippocratic Myth, Bloche leverages this authority to advocate for a more cost sensitive health care system where individuals frankly acknowledge that they should expect trade-offs between cost and access to certain forms of care. My concern in this review is that Bloche the caring and expert physician would have a tough time in a health care world too deeply influenced by Bloche the cost-conscious author. To be sure, Bloche consciously shies away from proposing particular limits to care, and sets forth a surprisingly wide array of topics his work will not cover:

What does it take to make a health plans cost-benefit balancing principles so vivid and clear to consumers when they sign up that we can say they have consciously chosen to abide by them? Should the health plans be required by law to adopt a single, shared way of declaring their trade-off policies— say, maximum dollar amount per expected life year that they’ll spend on tests and treatments? How about a checklist of representative services, ranging from urgent care services to screening tests, that are or aren’t covered? And how much choice between health plans (and trade-off rules) is enough to make for a decent menu of options? Finally, what should be done about disparities in wealth? is there a decent minimum of buying power (and public subsidies) below which real choice between trade-off rules isn’t possible? these are matters of policy and politics, beyond my scope in this book. But they’ll need to become the focus of public attention, leading to agreements, if we are to enlist the nation’s support for limit setting by health plans and their doctors. (107)

Nevertheless, it is clear throughout the book that Bloche is deeply concerned about cutting costs. The question is whether we can, in good conscience, rally behind his crusade for cuts based on individual choices without coalescing beforehand on the types of specific mechanisms or redistributive measures that would cushion the blow of a transition to more restrictions on care in America’s comparatively market oriented healthcare system.

Mrs. Pearson’s Dialysis Appointments

Dialysis is a thorny issue in American health care. The US guarantees payment for dialysis care for anyone with kidney failure. Robin Fields at ProPublica has exposed massive failings in our system: “the United States continues to have one of the industrialized world’s highest mortality rates for dialysis care,” even though the “two corporate chains that dominate the dialysis-care system are consistently profitable, together making about $2 billion in operating profits a year.” Fields notes that, “if our system performed as well as Italy’s, or France’s, or Japan’s, thousands fewer patients would die each year.” Thus dialysis has become for many a case study in both the pathologies of a profit driven health care system and the willful weakness of a national government that guarantees payment for care, but fails to ensure that it is high quality or up to international standards.

Few people realize how tiring and stressful life can be for those subject to dialysis sessions. In an excellent article on racial disparities in kidney transplants, Vanessa Grubbs discusses the travails of one dialysis patient she is close to:

The weekends were hardest for Robert. Without functioning kidneys, he struggled with limiting his liquid intake in the face of constant thirst. The stretch from late Friday morning to Monday morning, his longest time between [dialysis] sessions, was the worst. Without fail, Monday mornings I would wake to the sounds of Robert vomiting, even though he shut the bathroom door, ran the exhaust fan, and turned on the shower to drown out his retching as he prepared to leave for dialysis. His body was ridding itself of the excess fluid the only way it could.

In Bloche’s book, we get another intimate look at dialysis, through the eyes of a Mrs. Pearson (a pseudonym), who has been undergoing the treatment for several years. Narrative matters in bioethics and health policy, and Bloche is a master at evoking critical details in Pearson’s story. Described as a “trim African-American woman in her late 50s,” Pearson decided at one point to discontinue dialysis. Her doctor called Bloche, a psychiatrist, to interview Pearson to assure that she was competent to make a decision that would result in her death within a few weeks. Bloche conducts a routine mental status exam, and quickly determines that Pearson is fully mentally competent to discontinue treatment. She states that she simply cannot continue to be jabbed with thick needles, often leading to painful wounds, to endure hours of blood filtration day after day. She is neither agitated nor depressed, but rather appears to be quietly resigned to the fatal consequences of giving up on the treatment. As Bloche observes,

From an ethical point of view, my duty was clear. If Mrs. Pearson grasped the stakes, and was alert and oriented, she had a right to refuse treatment. She passed these tests easily. The dialysis would have to stop. It was my job to write the note saying so. Without a competent patient’s informed consent, no test or treatment is ethical – at least none more intrusive than a needlestick or Tylenol at bedtime.

Bloche then adds the requisite note to Pearson’s file. But he has lingering doubts about her decision, articulating his unease in a question—was her response to her predicament “too rational?” This question reminded me of literature on the pathologization of shyness—do we need an emotional performance nowadays to have evidence of a sound mind? But Bloche is the psychiatrist, not me, and it’s a good thing he was in charge of this situation: his hunch panned out. In a follow-up interview, Bloche finds that a scheduling decision by the hospital sparked Pearson’s desire to quit dialysis.

She had been going during the day; they wanted her to come at night. Pearson felt powerless and angry. To Bloche, the decision to discontinue dialysis was the only way in which she could register a protest against authorities who were distant and arbitrary. Behind the scenes, Bloche arranges to keep the daytime scheduling, despite the extra costs it may incur.

Archimedean Points for Health Care Debates: Cost-Containment or Equity?

Here Bloche puts into action a conviction he had raised earlier in the book. It’s worth quoting the context in full, to give a sense of the minefield of advocacy contemporary health policy encompasses.

That distrust, and the trials and humiliations that many experience when making their way through our health system, depresses the level and quality of the care that African-Americans receive. . . . [But] it’s been urged that African-Americans and others who don’t seek the best, life-prolonging care for themselves and their loved ones act irresponsibly and have themselves to blame. . . . Clark Havighurst, a retired law professor at Duke who was once Ronald Reagan’s health policy advisor, complained to me that [those who complain about health disparities] missed the real unfairness: blacks who prefer less care pay the same insurance premiums as whites and thus subsidize whites’ higher use of health services. The remedy, he told me, is cheaper health plans for those who want less care.

Whether clinical judgment should corporate these purported African-American “preferences” for less care or aspire toward therapeutic equity is a political question. It’s my belief that we owe black Americans— and members of other disadvantaged groups— an effort to address the fear and distrust that have led so many to miss out on life extending care and clinical relationships. (92-93)

Bloche is right to state that, given the endless series of studies documenting health disparities, the US as a society owes underprivileged minorities special efforts to provide care.

But Bloche chooses a strange locution for this call to justice. Whereas he has apodeictic certainty that health care costs must come down, he treats his commitment to equality as merely one “political” view. I believe that precisely the opposite is the case: we can engage in endless political arguments about the overall level of health care spending, but these debates must be grounded in a social commitment to a certain baseline of care for all. Nevertheless, I greatly appreciate the careful and sensitive attention that Bloche gives these topics.

Recommended Blog and Podcast: The Incidental Economist

For those interested in health economics, I cannot recommend highly enough the Incidental Economist blog and podcast. Featuring an economist, a physician, and law professor Kevin Outterson, the IE blog has offered invaluable commentary on a number of vexed policy issues. The podcast has taken on issues ranging from all-payor rate setting to the rationale for randomized clinical trials.  Austin Frakt and Aaron Carroll offer an entertaining and educative experience in their podcasts.  If you’re already listening to Health Affairs events or the JAMA and NEJM line-ups, this is an excellent in addition to your iPod playlist.

New Profit Opportunities In American Health Care

I notice there is a lot of handwringing over the Affordable Care Act’s “government takeover” of the health care system. So let’s take a look at some exciting new markets that are still thriving.

1) At the beginning of the summer, I noted some problematic drug shortages (bottom half of post). The problem keeps getting worse. There is a steady stream of heartrending stories about care being compromised. Reform measures to assure an adequate supply are moving at a snail’s pace, thanks both to truculent manufacturers and the bipartisan drumbeat to “cut health care costs.” But at least some folks are thriving: as the NY Times notes, ‎”Unscrupulous wholesalers have made matters worse by scooping up scarce drugs and offering them to hospitals at markups that often reach 20 times the normal price or more.”

What a great business model! So glad the “free market” is working its magic on health delivery. While we’re at it, let’s allow ER docs to force patients to sign over half their bank accounts before treatment. That will certainly increase the supply of emergency rooms, even if the transition is a little bumpy for some people.

By the way, I’m sure some will argue that, if only Medicare weren’t paying for many of these drugs, we’d be fine. (Or at least the “we” capable of paying for the drugs at a “market price,” whatever that is, would be fine.) Query: Would there have been adequate incentive to create the drugs if a major purchaser like Medicare hadn’t paid what it did while the drug was on patent? No, I didn’t think so. Income and wealth in our society is still equally distributed enough (and coordination problems severe enough) that the top 1% won’t sustain a thriving hospital and drug research system all by themselves, even if they are the critical factors in one’s policy calculus. As I noted earlier, it’s hard to imagine individuals, or even wealthy groups, stockpiling all drugs they might need, particularly the sterile injectables or biotech solutions that are critical to advanced medicine. Even the very wealthy must rely on a steady, more general demand for these products. They can’t just order them up for just-in-time delivery, like a Tiffany watch. Public subvention—ranging from research grants to Medicare and Medicaid funding for the products research generates—provides that demand.

2) Pauline Chen reports on an “insurance maze” for US doctors, based on a new Health Affairs study comparing their practices to those of their neighbors to the north:

Physicians in Canada, where health care is administered mainly by the government, did spend a good deal of time and money communicating with their payers. But American doctors in the study spent far more dealing with multiple health plans: more than $80,000 per year per physician, or roughly four times as much as their northern counterparts. And their offices spent as many as 21 hours per week with payers, nearly 10 times as much as the Canadian offices.

Clearly the US has a comparative advantage in generating insurance-based hassles. Maybe we can keep specializing there, and aim to spend five times as much as the Canadians by 2014. The more choice, the better, whatever the cost, right? Think of all the people employed by this gauntlet of private sector checks and balances:

A young patient complaining of extreme fatigue, for example, might benefit from a $40 blood test that could confirm infectious mononucleosis in 10 minutes. But a doctor cannot order the simple test without first checking with the insurance company to see if it is covered and if there are any constraints on where the patient’s blood can be drawn and the test run.

Tracking down answers often means phone calls with long periods on hold, digging up old patient information and even recruiting office workers to act as specimen couriers to other labs and hospitals in order to expedite results or save frail patients or harried family members the hassle of traveling to an “approved site” for a test or procedure. “If someone comes in with a sick infant who needs a test, we often eat the costs and draw the blood ourselves,” Dr. Star said. “We aren’t going to tell them to put that kid in a car seat, drive a mile to an approved lab, park, register, then wait in line.”

If you’re an insurer (or the insurance industry), you’ve “won” to the extent you’ve foisted these costs and inconveniences onto doctors and patients. You certainly don’t want to abide by new Medical Loss Ratio requirements that limit the extent to which you employ these strategies of cost-shifting, delay, and denial of needed care. The “free market” is your friend, as is anyone who insists that health care delivery can be guided by the same economic principles that govern every other commodity.

Reflections on Some Failures of Medicaid Managed Care

The Washington Post has featured two interesting pieces recently on Medicaid managed care. Christopher Weaver reported on a battle between providers and insurers in Texas. Noting that “federal health law calls for a huge expansion of the Medicaid program in 2014,” Weaver shows how eager insurers are to enroll poor individuals in their plans. Each enrollee would “yield on average $7 a month profit,” according to recent calculations. Cost-cutting legislators see potential fiscal gains, too, once the market starts working its magic.

There’s only one problem with those projections: it turns out that “moving Medicaid recipients into managed care ‘did not lead to lower Medicaid spending during the 1991 to 2003 period,’” according to a report published by the National Bureau of Economic Research this month. Sarah Kliff is surprised to find that this is “the first national look at whether Medicaid managed care has actually done a key thing that states want it to do.”
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The Changing Landscape of Health Information Regulation

There is an impressive new issue of the American Journal of Law & Medicine out, with top names in the field participating in a symposium entitled “Marketing Health: The Growing Role of Commercial Speech Doctrine in FDA Regulation.”  I also wanted to recommend a piece from Simon Stern and Trudo Lemmens on pharma ghostwriting, which is getting a lot of play in Canada.  Titled “Legal Remedies for Medical Ghostwriting: Imposing Fraud Liability on Guest Authors of Ghostwritten Articles,” the piece could lead to some interesting litigation opportunities.  Here is the abstract:

Ghostwriting and guest authorship of medical journal articles raise serious ethical and legal concerns, bearing on the integrity of medical research and evidence used in legal disputes. Ghostwriting involves undisclosed authorship, usually by medical communications agencies or a pharmaceutical sponsor of the published research; guest authorship involves taking authorial credit for the published work without making a substantial contribution to it. Commentators have objected to these practices because of concerns involving bias in ghostwritten clinical trial reports and review articles. We also note the effects of ghostwritten articles on questions involving the legal admissibility of scientific evidence. Efforts to curb ghostwriting practices, undertaken by medical journals, academic institutions, and professional disciplinary bodies, have thus far had little success and show little promise.These organizations have had difficulty adopting and enforcing effective sanctions, for specific reasons relating to the interests and competencies of each kind of organization.

Because of those shortcomings, a useful deterrent in curbing the practice may be achieved through the imposition of legal liability on the ‘guest authors’ who lend their names to ghostwritten articles. We explore the doctrinal grounds on which such articles might be characterized as fraudulent. A guest author’s claim for credit of an article written by someone else constitutes legal fraud, and may give rise to claims that could be pursued in a class action based on the Racketeer Influenced and Corrupt Organizations Act (RICO). The same fraud could support claims of “fraud on the court” against a pharmaceutical company that has used ghostwritten articles in litigation. This doctrine has been used by the U.S. Supreme Court to impose sanctions on the authors and corporate sponsors of a ghostwritten article. We discuss the potential penalties associated with each of these varieties of fraud.

This promises to inspire some difficult legal challenges to industry practices that have long been considered undesirable as a policy matter.

Private Equity & British Care Homes

In earlier posts I have discussed the “care/profit tradeoff in nursing homes,” focusing on the role of private equity firms in reducing costs by limiting the liability of their enterprises. Cutting nursing staff and increasing the risk of elder neglect isn’t so costly for private equity barons when “complex corporate structures . . . obscure who controls their nursing homes.” One firm constructed a particularly notable series of corporate moats between itself and the nursing home which it first controlled, and then rented land to.

Daniel JH Greenwood has called a good deal of private equity activity a form of looting, and I have explored its shortcomings in a review of a book on the topic. Sadly, it appears that the private equity influence in Britain is undermining a key part of its health care system. Having stacked various care homes with debt in order to buy them, many private equity firms have abandoned (or are about to abandon) the homes:

[A new] report, delving into the running and funding of the care industry, reveals that the collapse of Southern Cross may not be a one-off, as a number of other social care companies are also on the brink. Private equity takeovers of public services that use similar high risk business models, could leave taxpayers picking up the bill for more company failures. The in-depth study of privatisation shows that the second largest care provider, Four Season, is also in severe financial difficulties and others may follow. If both Southern Cross and Four Seasons were to collapse, around 1,150 nursing and residential care homes would be at risk of closure, affecting nearly 50,000 vulnerable people and their families and hitting over 60,000 staff.

Another of the top four largest residential care home operators is Barchester Healthcare — a sister company to Castlebeck, the operators of the Bristol care home exposed by a Panorama documentary . . . for patient abuse. The home owners have admitted that serious wrongdoing took place at Bristol. The report shows that Barchester and other operators of care homes, have repeatedly changed ownership, often through private equity firms buying, consolidating and selling companies. The UK’s largest union is warning that the Government must tackle the crisis in the care industry.

However disruptive the private equity takeovers have been, they have fulfilled their main purpose: huge gains for a few entities that bought and sold at the right time:

Southern Cross was floated on the stock market by Blackstone, which obtained a 400% return in two years on its acquisition. Southern Cross is now at risk of collapse. Allianz Capital Partners made a return of 100% by acquiring Four Seasons in 2004 for £775 million, selling it four years later for £1.4bn - the business then collapsed in value.

3i private equity fund brought a 38% stake in Care Principles for £1.5m in 1997, the remaining amount in 2005 and sold to to Three Delta in 2007 for £270m — a return of 390%. Tunstall was acquired by Bridgepoint Capital in 2005 for £225m, merged with Bridgepoint Investment and sold on after three years for £514m.

Here are more details on Southern Cross. This story and other critical commentary suggest that the goal for owners has been rapid profit rather long term investment in more efficient processes. When the “music stopped” in the acquisition game, it was left with mounting debts.

Chris Sagers’ article “The Myth of Privatization” (59 Admin. L. Rev. 37) suggests that there is very little difference between “public” and “private” operationally, except that “one of them lacks even a nominal obligation toward the public interest.” I have seen little evidence to contradict that idea in the eldercare industry. Further research may reveal more support for Daniel JH Greenwood’s diagnosis of the rise of private equity:

The success of private equity firms challenges mainstream corporate governance theory: according to standard agency cost analysis, this should not have happened. Agency problems—the shorthand term for the tendency of fiduciaries in a capitalist system to work for themselves as well as, or instead of, their clients—cannot be solved by adding an additional layer of extremely highly paid agents supported by an ideology that justifies the most extreme forms of self-interestedness. Therefore, private equity is unlikely to be an innovative solution to the age-old agency problem.

Instead, it is better understood as a clever bit of legal arbitrage: by reclassifying agents as principals, it allows former fiduciaries to instead view themselves, and be viewed by others, as entitled to look out only for themselves. And look out for themselves they have: the private equity managers have extracted hitherto unseen sums from our corporations, appropriating for the private benefit of a handful of individuals surplus that otherwise might have gone to other corporate participants, including consumers, ordinary employees, taxpayers and investors in the public securities markets, or might have been devoted to increasing productivity or innovation for the benefit of future generations.

The basic private equity technique, like the basic hedge fund technique, appears to be to borrow money in order to increase potential returns or losses. If the loans were correctly priced, this would not create new value under standard valuation theories, nor would it be a service that could possibly warrant the high fees typically charged in the hedge fund and private equity worlds. The simplest explanation is that either lenders or fund investors are mispricing risk and have done so for several years at a stretch, contrary to the claims of the efficient market theorists.

This explanation suggests, moreover, that private equity is simply the modern equivalent of the pyramid schemes, margin loans and highly leveraged utility holding companies of the 1920s. Like those earlier edifices built on borrowed money, the contemporary schemes are likely to be highly unstable: if the underlying assets decline in value or fail to provide expected income by even small margins, the lenders are likely to take losses out of scale with their potential profits. Once lenders wake up to this possibility—most likely only after losses have begun—they are likely to cut back lending rapidly, which will, in turn, make the underlying assets both less valuable and less saleable still, thus beginning a new round of lender panic. Any minor downturn, in short, runs the risk of starting a self-reinforcing cycle of credit and business contraction. The rise of private equity in its present form, then, appears to be another step towards the pre-New Deal world of inequality and instability.

And don’t forget about the role of private equity in influencing our political process. Blackstone billionaire Pete Peterson helped fuel concerns about government spending, while doing very little to advocate for increased taxes on the wealthy. And now we see that the CLASS Act—an innovative program to promote full funding for future long-term-care in the US–is likely to be on the chopping block. The primary value of both care homes and care plans to P/E firms appears to be their susceptibility to rapid sales and purchases. The P/E firm’s employees can earn massive bonuses if the value of entities goes up, and can’t lose those bonuses even if things eventually fall apart. It is a heads they win, tails they win scenario. The losers include all the other stakeholders in firms which are treated primarily as ATMs for fleeting owners.

Auditing Studies of Anti-Depressants

Marcia Angell has kicked off another set of controversies for the pharmaceutical sector in two recent review essays in the New York Review of Books. She favorably reviews meta-research that calls into question the effectiveness of many antidepressant drugs:

Kirsch and his colleagues used the Freedom of Information Act to obtain FDA reviews of all placebo-controlled clinical trials, whether positive or negative, submitted for the initial approval of the six most widely used antidepressant drugs approved between 1987 and 1999—Prozac, Paxil, Zoloft, Celexa, Serzone, and Effexor. . . .Altogether, there were forty-two trials of the six drugs. Most of them were negative. Overall, placebos were 82 percent as effective as the drugs, as measured by the Hamilton Depression Scale (HAM-D), a widely used score of symptoms of depression. The average difference between drug and placebo was only 1.8 points on the HAM-D, a difference that, while statistically significant, was clinically meaningless. The results were much the same for all six drugs: they were all equally unimpressive. Yet because the positive studies were extensively publicized, while the negative ones were hidden, the public and the medical profession came to believe that these drugs were highly effective antidepressants.

Angell discusses other research that indicates that placebos can often be nearly as effective as drugs for conditions like depression. Psychiatrist Peter Kramer, a long-time advocate of anti-depressant therapy, responded to her last Sunday. He admits that “placebo responses . . . have been steadily on the rise” in FDA data; “in some studies, 40 percent of subjects not receiving medication get better.” But he believes that is only because the studies focus on the mildly depressed:

The problem is so big that entrepreneurs have founded businesses promising to identify genuinely ill research subjects. The companies use video links to screen patients at central locations where (contrary to the practice at centers where trials are run) reviewers have no incentives for enrolling subjects. In early comparisons, off-site raters rejected about 40 percent of subjects who had been accepted locally — on the ground that those subjects did not have severe enough symptoms to qualify for treatment. If this result is typical, many subjects labeled mildly depressed in the F.D.A. data don’t have depression and might well respond to placebos as readily as to antidepressants.

Yves Smith finds Kramer’s response unconvincing:

The research is clear: the efficacy of antidepressants is (contrary to what [Kramer's] article suggests) lower than most drugs (70% is a typical efficacy rate; for antidepressants, it’s about 50%. The placebo rate is 20% to 30% for antidepressants). And since most antidepressants produce side effects, patients in trials can often guess successfully as to whether they are getting real drugs. If a placebo is chosen that produces a symptom, say dry mouth, the efficacy of antidepressants v. placebos is almost indistinguishable. The argument made in [Kramer's] article to try to deal with this inconvenient fact, that many of the people chosen for clinical trials really weren’t depressed (thus contending that the placebo effect was simply bad sampling) is utter[ly wrong]. You’d see the mildly/short-term depressed people getting both placebos and real drugs. You would therefore expect to see the efficacy rate of both the placebo and the real drug boosted by the inclusion of people who just happened to get better anyhow.

Felix Salmon also challenges Kramer’s logic:

[Kramer's view is that] lots of people were diagnosed with depression and put onto a trial of antidepressant drugs, even when they were perfectly healthy. Which sounds very much like the kind of thing that Angell is complaining about: the way in which, for instance, the number of children so disabled by mental disorders that they qualify for Supplemental Security Income (SSI) or Social Security Disability Insurance (SSDI) was 35 times higher in 2007 than it was in 1987. And it’s getting worse: the editors of DSM-V, to be published in 2013, have written that “in primary care settings, approximately 30 percent to 50 percent of patients have prominent mental health symptoms or identifiable mental disorders, which have significant adverse consequences if left untreated.”

Those who would defend psychopharmacology, then, seem to want to have their cake and eat it: on the one hand it seems that serious mental health disorders have reached pandemic proportions, but on the other hand we’re told that a lot of people diagnosed with those disorders never really had them in the first place.

That is a very challenging point for the industry to consider as it responds to concerns like Angell’s. The diagnosis of mental illness will always have ineradicably economic dimensions and politically contestable aims. But doctors and researchers should insulate professional expertise and the interpretation of maladies as much as possible from inappropriate pressures.

How can they maintain that kind of independent clinical judgment? I think one key is to assure that data from all trials is open to all researchers. Consider, for instance, these findings from a NEJM study on “selective publication:”

We obtained reviews from the Food and Drug Administration (FDA) for studies of 12 antidepressant agents involving 12,564 patients. . . . Among 74 FDA-registered studies, 31%, accounting for 3449 study participants, were not published. Whether and how the studies were published were associated with the study outcome. A total of 37 studies viewed by the FDA as having positive results were published; 1 study viewed as positive was not published. Studies viewed by the FDA as having negative or questionable results were, with 3 exceptions, either not published (22 studies) or published in a way that, in our opinion, conveyed a positive outcome (11 studies). According to the published literature, it appeared that 94% of the trials conducted were positive. By contrast, the FDA analysis showed that 51% were positive. Separate meta-analyses of the FDA and journal data sets showed that the increase in effect size ranged from 11 to 69% for individual drugs and was 32% overall. (emphasis added).

Melander, et al. also worried (in 2003) that, since “The degree of multiple publication, selective publication, and selective reporting differed between products,” “any attempt to recommend a specific selective serotonin reuptake inhibitor from the publicly available data only is likely to be based on biased evidence.” Without clearer “best practices” for data publication, clinical judgment may be impaired.

Full disclosure of study funding should also be mandatory and conspicuous, wherever results are published. Ernest R. House has reported that, “In a study of 370 ‘randomized’ drug trials, studies recommended the experimental drug as the ‘treatment of choice’ in 51% of trials sponsored by for-profit organizations compared to 16% sponsored by nonprofits.” The commodification of research has made it too easy to manipulate results, as Bartlett & Steele have argued:

One big factor in the shift of clinical trials to foreign countries is a loophole in F.D.A. regulations: if studies in the United States suggest that a drug has no benefit, trials from abroad can often be used in their stead to secure F.D.A. approval. There’s even a term for countries that have shown themselves to be especially amenable when drug companies need positive data fast: they’re called “rescue countries.” Rescue countries came to the aid of Ketek, the first of a new generation of widely heralded antibiotics to treat respiratory-tract infections. Ketek was developed in the 1990s by Aventis Pharmaceuticals, now Sanofi-Aventis. In 2004 . . . the F.D.A. certified Ketek as safe and effective. The F.D.A.’s decision was based heavily on the results of studies in Hungary, Morocco, Tunisia, and Turkey.

The approval came less than one month after a researcher in the United States was sentenced to 57 months in prison for falsifying her own Ketek data. . . . As the months ticked by, and the number of people taking the drug climbed steadily, the F.D.A. began to get reports of adverse reactions, including serious liver damage that sometimes led to death. . . . [C]ritics were especially concerned about an ongoing trial in which 4,000 infants and children, some as young as six months, were recruited in more than a dozen countries for an experiment to assess Ketek’s effectiveness in treating ear infections and tonsillitis. The trial had been sanctioned over the objections of the F.D.A.’s own reviewers. . . . In 2006, after inquiries from Congress, the F.D.A. asked Sanofi-Aventis to halt the trial. Less than a year later, one day before the start of a congressional hearing on the F.D.A.’s approval of the drug, the agency suddenly slapped a so-called black-box warning on the label of Ketek, restricting its use. (A black-box warning is the most serious step the F.D.A. can take short of removing a drug from the market.) By then the F.D.A. had received 93 reports of severe adverse reactions to Ketek, resulting in 12 deaths.

The great anti-depressant debate is part of a much larger “re-think” of the validity of data. Medical claims can spread virally without much evidence. According to a notable meta-researcher, “much of what medical researchers conclude in their studies is misleading, exaggerated, or flat-out wrong.” The “decline effect” dogs science generally. Statisticians are also debunking ballyhooed efforts to target cancer treatments.

Max Weber once said that “radical doubt is the father of knowledge.” Perhaps DSM-VI will include a diagnosis for such debilitating skepticism. But I think there’s much to be learned from an insistence that true science is open, inspectable, and replicable. Harvard’s program on “Digital Scholarship” and the Yale Roundtable on Data and Code Sharing* have taken up this cause, as has the work of Victoria Stodden.

We often hear that the academic sector has to become more “corporate” if it is to survive and thrive. At least when it comes to health data, the reverse is true: corporations must become much more open about the sources and limits of the studies they conduct. We can’t resolve the “great anti-depressant debate,” or prevent future questioning of pharma’s bona fides, without such commitments.

*In the spirit of full disclosure: I did participate in this roundtable.

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