Filed under: Drugs & Medical Devices, Intellectual Property, Recommended Reading
I highly recommend Benjamin Roin’s two most recent articles to anyone with an interest in the incentives for innovation set by our current, intellectual property-based system. Roin’s articles will be of particular interest to those interested in the incentives for developing new drugs and for discovering new uses for existing drugs.
In Intellectual Property versus Prizes: Reframing the Debate, which is forthcoming in the University of Chicago Law Review, Roin focuses on the longstanding debate among scholars over whether the government should replace our intellectual property-based system with a system of prizes. In the case of drugs, a system of prizes would, advocates argue, allow us “to avoid the social costs of high drug prices while still providing the same (or better) incentives for socially valuable drug development.” Under a prize-based system, the government would award a drug developer a monetary prize instead of a patent. In the absence of an intellectual property right, generic copies of the drug would soon come on line, driving the drug’s price towards its marginal cost of production and expanding access to it. According to Roin, the “unifying theme” of the prize literature is that “if the government can measure and base its incentives on the social value of an innovation without consulting intellectual property, then prizes should replace patents in order to avoid the deadweight loss attributable to [the monopoly pricing that patents make possible]” (emphasis mine).
Roin’s central argument is that prizes should not necessarily replace patents, because in the real world the distinction between our current system and a prize-based system often collapses. Health insurance that covers prescription drugs reduces the deadweight loss from drug patents. In addition, “[t]he government can and often does institute policies along side the intellectual property system that are structurally similar to prizes, including subsidies for consumer purchases of inventions, direct government purchases, and price controls.” This can be seen most clearly in countries with national health insurance systems, in which “drug patents are never used to reveal consumers’ willingness to pay and inform a market-based reward for innovation.” Instead, the government of such a country “effectively sets the reimbursement rate given its substantial buying power as the only buyer in the market in that country[,]” much as it would set the prize amount in a prize-based system. If accepted, Roin’s contention that the differences between our current system and a prize-based system are under many circumstances just theoretical could have important implications for public policy.
Roin’s second article, Solving the Problem of New Uses, is of equal potential significance. Roin explains “the problem of new uses” as follows:
“[a]lthough the patent system currently provides firms with monopoly rights over [new uses for existing drugs], those legal rights are difficult or impossible to enforce without knowing which patients are using the drug for the patented indication as opposed to some other use. Physicians and often insurers have this information, but pharmaceutical companies rarely have access to this type of data. … This gap in the patent protection for drugs is the single most widely recognized distortion in the incentives for pharmaceutical innovation[.]“
As signaled by the article’s bold title, Roin has a solution in mind. He proposes that the government close the information gap he identifies by requiring that physicians submit with each electronic prescription the indication for which they are prescribing a drug. As Roin notes, other scholars have called on the government to make better use of electronic prescribing, albeit for purposes unrelated to pharmaceutical companies’ intellectual property rights. Jennifer Herbst, for example, has recommended that patient diagnosis codes be made a condition of payment under Medicare and Medicaid Part D for pharmacovigilance purposes.
Under Roin’s proposed solution, if the indication for which a drug was prescribed was a patented new use, the pharmacy filling the electronic prescription would be required to dispense the pharmaceutical company’s brand-name drug. Pharmaceutical companies would be given access to patients’ de-identified electronic prescription information and electronic medical records as needed to ensure that physicians were accurately reporting drugs’ indications and that pharmacists were filling prescriptions for patented new uses with brand-name drugs. One advantage to Roin’s solution is that it could, in his estimation, be implemented with just “a few minor policy changes.” It also has the advantage of not requiring companies to sue physicians or patients to vindicate their patent rights. As Rebecca Eisenberg put it in her article The Problem of New Uses, “few industries prosper by suing customers[.]“
Recommended Reading: New Legal Scholarship from Ryan Abbott and Jennifer Herbst on Pharmacovigilance Topics
In his article Big Data and Pharmacovigilance: Using Health Information Exchanges to Revolutionize Drug Safety, which is forthcoming in the Iowa Law Review, Ryan Abbott argues that third parties, including academics, insurance companies, and rival drug companies, should be incentivized via an “administrative bounty proceeding” to analyze the large and rich datasets that will be generated by health information exchanges. Should a third party’s original statistical analysis reveal safety or efficacy concerns about a drug, Abbott suggests, it could submit the results to the Food and Drug Administration and be paid a taxpayer-funded bounty, the amount of which would be based on the value of the new information to the government in terms of health care dollars saved. If a drug’s manufacturer knew or should have known about the concerns brought to light by the third party, Abbott proposes that the manufacturer fund the bounty, the amount of which would be based on the drug’s sales; depending on its degree of culpability, a manufacturer could even be liable to both the third party and the government for damages.
Abbott believes that the bounty system he proposes would level the pharmacovigilance playing field in a way that would redound to the benefit of consumers. In his words: “The public deserves an advocate as equally committed to challenging the safety and efficacy of approved drugs as product sponsors are to maintaining these drugs on the market.” Writing about Abbott’s proposal at the Bill of Health blog, Dov Fox distills it down to the following provocative question: Are we “better off evaluating medicines under an inquisitorial system or an adversarial system”?
I also recommend Jennifer Herbst’s article How Medicare Part D, Medicaid, Electronic Prescribing and ICD-10 Could Improve Public Health (but Only if CMS Lets Them), which is forthcoming in Health Matrix: Journal of Law-Medicine. While the title might seem daunting, the article itself brings clarity to a murky, highly-technical area of the law with enormous significance for public policy. As Herbst explains, although both Medicare Part D and Medicaid limit reimbursement to drugs prescribed for “medically accepted indications,” this limitation is not enforced, at least not at the time of payment. And, while the government’s attempts to enforce it retroactively have led to headline-making settlements with pharmaceutical companies, they have not resulted in a significant dent in the rate of unscientifically-supported prescribing.
Herbst recommends that the government take advantage of the inroads made by electronic prescribing and require that patient diagnosis codes be made a condition of payment for outpatient prescription drugs. Linking drugs to diagnoses in this way would allow pharmacists to do a more thorough safety review of the prescriptions they fill and it would give the government a powerful pharmacovigilance tool. Of course, it would also allow the government to decline to provide reimbursement for drugs prescribed for indications that are not “medically accepted.” Herbst argues that this would be a mistake because it could lead to widespread miscoding – there’s a disconnect between what the government deems medically accepted and what providers consider sound medical practice – which would undermine the value of the data being collected. I wonder, however, whether it would be politically feasible for the Centers for Medicare & Medicaid Services “to continue its current policy of paying for all outpatient prescriptions not subject to prior authorization (contrary to the letter of the Medicare Part D and Medicaid statutes)” in the face of the data Herbst’s proposal would generate.
Since its release last month, Sheryl Sandberg’s bestseller Lean In has attracted seemingly continuous attention and controversy. Critics charge that the book encourages women to “lean in” to their outside-of-the-home work without fully addressing the barriers that might be impeding women’s advancement. They express concern that too intense a focus on what individual women can do to address the persistent achievement gap between women and men will only result in women blaming themselves for structural, societal problems. Similar concerns underlie the controversy over workplace wellness programs. While almost no one is against “wellness,” there is concern that emphasizing what individuals should do to achieve it, potentially on pain of losing their jobs, could be ineffective and even counterproductive.
Workplace wellness programs run the gamut from providing more nutritious food in the office cafeteria, to building an on-site gym, to providing counseling and other supportive services, to positive financial incentives keyed to achieving goals such as blood pressure control or smoking cessation, to negative incentives including hiring bans, health insurance surcharges, and, ultimately, termination. With regard to variations in the price of health insurance, Tara Ragone has explained that “[a]lthough the [Patient Protection and Affordable Care Act] prohibits issuers in the individual and small group markets from basing premium variations on health status or claims experience, Federal law permits insurers to offer premium discounts to enrollees in the small and large group markets based on participation in certain wellness programs.” The statute provides for wellness rewards of up to 30 percent of the cost of coverage, and the Secretaries of Labor, Health and Human Services, and the Treasury have discretion to increase the rewards to up to 50 percent.
In Jessica Roberts’ latest article, Healthism and The Law of Employment Discrimination, which is available on SSRN, she explains that while “issues of income, insurance, and health” seem discrete, in fact they are “intimately intertwined.” Wellness programs could exacerbate existing health disparities by restricting relatively unhealthy individuals’ access to wages, wellness programs, and employer-provided health insurance. Moreover, while “using tobacco and being overweight are conduct-based statuses”—and thus not fully protected under the federal statutes that outlaw trait-based employment discrimination—“the underlying choices are not simple ones.” As Roberts notes, “[t]he lack of access to healthy foods and time to work out or a longstanding addiction to tobacco may be difficult obstacles to overcome without some help.” Roberts recommends that Congress, or the substantial number of state legislatures that have not already done so, pass legislation shielding employees from discrimination not just on the basis of their health-related traits, but also on the basis of their health-related conduct. She recommends that such legislation permit employers “to promote the healthy lifestyle choices of their employees through rewards programs that do not relate directly to employment status or compensation.” I recommend Roberts’ article for its helpful (and thought-provoking) overview of the intersection between employment discrimination law, insurance regulation, and workplace wellness programs and for its nuanced legislative proposal.
I also recommend Wendy Mariner’s article, The Affordable Care Act and Health Promotion: The Role of Insurance in Defining Responsibility for Health Risks and Costs, published last year in the Duquesne Law Review. In it, Mariner argues, pithily, that “wellness program incentive systems range from minor and marginally effective, to major and possibly coercive.” She believes that the wellness rewards that PPACA permits “are likely to be too crude to significantly improve the population’s health or save money, and they pose an unnecessary threat to the [statute’s] underlying goals[.]” By fostering the idea that the unhealthy are at fault for their condition, such rewards may increase resistance to the “public programs to provide preventive services, safer social and built environments, research and education” for which Mariner advocates. She calls for the elimination of PPACA’s wellness program exception to the ban on basing the price of health insurance on health status or claims experience. With the projected cost of premiums in the new health insurance exchanges widely-reported and much decried, elimination of the wellness program exception is unlikely. Mariner’s article nonetheless offers a valuable note of caution as 2014 approaches.
Giving Patients a Piece of the Action: Appealing Proposals from Richard Frank and Christopher Robertson
Filed under: Health Law, Health Policy Community, Recommended Reading
In a recent edition of the New England Journal of Medicine, Richard Frank discussed recent efforts on the part of federal and state governments to enroll so-called “dual eligibles,” that is, individuals who qualify for both Medicare and Medicaid, into health plans that use “a strong care-management system under a unified budget.” Many believe that such plans have the potential to both save the government money and provide better coordinated, higher quality health care. (I discussed the need to better coordinate care for dually-eligible people here.) Individual beneficiaries are not necessarily convinced, however. Frank reports that it has been “very difficult to lure” them into “state-designed care coordination entities.” Beneficiaries may be hesitant to leave their fee-for-service doctors and other providers; they may also be afraid of the incentive to restrict services that a capitated global payment creates.
To get beneficiaries to make the switch from fee-for-service to coordinated care, states are taking a page from Nudge and making enrollment in a coordinated care plan automatic. The burden is then placed on the beneficiary to opt out if he or she so chooses. The use of “passive enrollment” will no doubt “work” to increase the rolls of coordinated care plans, but Frank wants states to aim higher, to strive to “promote self-determination for vulnerable populations and offer them a reason to engage with a new care delivery system with coordinated-care arrangements[.]”
As Frank explains, “[c]oordinated care for dually eligible people is built on a financial structure known as shared savings, in which three of the parties involved –- the federal government and state governments and the [coordinated care plan] –- share any financial gains from coordinating care.” Frank proposes that beneficiaries, too, be given a share of the expected savings– a share that they would be permitted to use to pay for “supplemental services and supports such as transportation, home modifications, and personal assistance with activities of daily living.” The prospect of (limited) control over a share of the expected savings would serve as an incentive to beneficiaries to engage in care coordination, while also “promot[ing] self-determination and the exercise of real options.”
Frank’s very appealing idea brought to mind the proposal Christopher Robertson makes in The Split Benefit: The Painless Way to put Skin Back in the Healthcare Game, which is forthcoming in the Cornell Law Review. While Frank would give beneficiaries an incentive to opt in to coordinated care, Robertson would give them an incentive to opt out of inefficient, high-cost care. Specifically, Robertson proposes that when a physician “prescribes a high-cost treatment that the insurer reasonably believes is inefficient[,]” the insurer would “[p]ay a small but substantial part of the insurance benefit”—-what he terms the “split benefit”—-in cash directly to the patient beneficiary. Then, “[i]f the patient chooses to proceed with the treatment, the patient takes the cash payment to the provider (along with any required cost share obligation), and the insurer matches it with the balance of the insurance benefit[.]” Patients who choose not to proceed with treatment, however, could spend the cash differently, on a “treatment that is not covered by the insurer (whether it is acupuncture, an alternative diet regimen, a concierge doctor, or visiting nursing services), paying money to a member of the family to stay home and provide care to the dying patient, or purchasing disability insurance to help cope with the symptoms of the illness.” They could even use the money to pay for non-health-related expenses. As Robertson explains, the split benefit would save insurers (and, down the line, purchasers of insurance) money by giving beneficiaries a financial incentive to turn down high-cost, low-value treatments. In Robertson’s words, the patient autonomy movement has been “cramped” by the fact that patients have been offered only “a walled garden of medical choices.” His split benefit, by contrast, “embraces a value-pluralism, respecting the patient’s weighing of medical and non-medical values.”
I highly recommend both Frank’s and Robertson’s pieces to anyone who—-like me—-is interested in ways to give patients a piece of the action when it comes to the multiplicity of current efforts to coordinate and rationalize their care.
I highly recommend Kimani Paul-Emile’s provocative article in the latest issue of the UCLA Law Review, Patients’ Racial Preferences and the Medical Culture of Accommodation, in which she “makes the counterintuitive claim … that the law does and should permit” physicians and hospitals to accommodate “patients’ racial preferences with respect to their choice of physician … in the hospital setting.” Such accommodation is, Professor Paul-Emile reports, a quiet, but routine, occurrence, one that recent studies suggest “may not only alleviate race-based health disparities but also constitute a life-saving measure for many racial-minority patients.”
Professor Paul-Emile’s article begins with a concise and helpful summary of the relevant default legal rules, in particular the right of patients to refuse medical treatment and the obligation of hospitals to provide care in an emergency. As Professor Paul-Emile explains, “[i]f a patient who desires treatment will not yield in his preference for a provider of a particular race and will not agree to a transfer, then the hospital is faced with the dilemma of choosing between (1) having a physician unwanted by the patient forcibly perform the [Emergency Medical Treatment and Active Labor Act]-mandated medical screening, thereby violating informed consent and battery laws, and (2) rejecting the patient in violation of EMTALA, thereby risking liability and the chance that this decision will cause the patient to suffer, experience grievous harm, or die.”
The article goes on to analyze hospitals’ decisions to accommodate a patient’s race-based request for a new doctor under Titles II, VI, and VII of the 1964 Civil Rights Act, and concludes that although “it is difficult to imagine preferences of this sort indulged in any other sector,” in the hospital setting such accommodation does not violate anti-discrimination laws. Professor Paul-Emile goes further, arguing that accommodation “may be one of the best available means of enforcing Title VI’s mandate to enable individuals to enjoy the benefits of a covered entity or program, regardless of race, color, or national origin” to the extent that it “counter[s] the effects of implicit bias, discrimination, and stereotyping by physicians[.]”
Professor Paul-Emile concedes that “the notion of white patients rejecting minority physicians for bigoted reasons in emergency departments and other hospital settings is deeply troubling and uncomfortably reminiscent of the type of discrimination that the civil rights statutes were designed to eliminate[,]” but she counters with empirical evidence (1) that “requests for treatment by a physician of a particular race are more often accommodated when made by racial minority patients” and (2) that the benefits of racial concordance are many, including longer visits characterized by patient-centered participatory decision-making.
Reading Professor Paul-Emile’s article, it struck me that for every patient who insists on a change of doctor, there are likely many more who assume, rightly or wrongly, that they have no choice and so endure discriminatory treatment in the hospital setting. Accommodating the demands of the few who speak up is at best a partial solution. Professor Paul-Emile does not deny this. She concludes her article with a call for an increase in the diversity of doctors and for an expansion of “cultural awareness at all levels of practice and training to enable providers to interact more effectively with various patient populations”—worthy, if daunting, goals.