The Economics of Medicare Accountable Care Organizations.

BACKGROUND: Accountable care organizations (ACOs) have been created to improve patient care, enhance population health, and reduce costs. Medicare in particular has focused on ACOs as a primary device to improve quality and reduce costs. OBJECTIVE: To examine whether the current Medicare ACOs are likely to be successful. DISCUSSION: Patients receiving care in ACOs have little incentive to use low-cost quality providers. Furthermore, the start-up costs of ACOs for providers are high, contributing to the minimal financial success of ACOs. We review issues such as reducing readmissions, palliative care, and the difficulty in coordinating care, which are major cost drivers. There are mixed incentives facing hospital-controlled ACOs, whereas physician-controlled ACOs could play hospitals against each other to obtain high quality and cost reductions. This discussion also considers whether the current structure of ACOs is likely to be successful. CONCLUSION: The question remains whether Medicare ACOs can achieve the Triple Aim of "improving the experience of care, improving the health of populations, and reducing per capita costs of health care." Care coordination in ACOs and information technology are proving more complicated and expensive to implement than anticipated. Even if ACOs can decrease healthcare costs and increase quality, it is unclear if the current incentives system can achieve these objectives. A better public policy may be to implement a system that encompasses the best practices of successful private integrated systems rather than promoting ACOs.

The health and economic effects of counterfeit drugs.

BACKGROUND: Counterfeit drugs comprise an increasing percentage of the US drug market and even a larger percentage in less developed countries. Counterfeit drugs involve both lifesaving and lifestyle drugs. OBJECTIVE: To review the health and economic consequences of counterfeit drugs on the US public and on the healthcare system as a whole. METHOD: This comprehensive review of the literature encompassed a search of MEDLINE/PubMed, Google Scholar, and ProQuest using the keywords "counterfeit drugs," "counterfeit medicines," "fake drugs," and "fake medicines." A search of the various FiercePharma daily newsletter series on the healthcare market was also conducted. In addition, the US Food and Drug Administration and the World Health Organization websites were reviewed for additional information. DISCUSSION: The issue of counterfeit drugs has been growing in importance in the United States, with the supply of these counterfeit drugs coming from all over the world. Innovation is important to economic growth and US competitiveness in the global marketplace, and intellectual property protections provide the ability for society to prosper from innovation. Especially important in terms of innovation in healthcare are the pharmaceutical and biopharmaceutical industries. In addition to taking income from consumers and drug companies, counterfeit drugs also pose health hazards to patients, including death. The case of bevacizumab (Avastin) is presented as one recent example. Internet pharmacies, which are often the source of counterfeit drugs, often falsely portray themselves as Canadian, to enhance their consumer acceptance. Adding to the problems are drug shortages, which facilitate access for counterfeits. A long and convoluted supply chain also facilitates counterfeits. In addition, the wholesale market involving numerous firms is a convenient target for counterfeit drugs. Trafficking in counterfeits can be extremely profitable; detection of counterfeits is difficult, and the penalties are modest. CONCLUSION: Counterfeit drugs pose a public health hazard, waste consumer income, and reduce the incentive to engage in research and development and innovation. Stronger state licensure supervision of drug suppliers would be helpful. Technological approaches, such as the Radio Frequency Identification devices, should also be considered. Finally, counterfeit drugs may raise concerns among consumers about safety and reduce patient medication adherence.

Will comparative effectiveness research finally succeed?

Autonomy, innovation, and drug access may be at stake along with personalized medicine. Can all stakeholders be satisfied and should cost be a factor?

Innovation and Competition: Will Biosimilars Succeed?: The creation of an FDA approval pathway for biosimilars is complex and fraught with hazard. Yes, innovation and market competition are at stake. But so are efficacy and patient safety.

Biosimilars are here, but there's no clear pathway yet for their approval. Difficult realities about their effect on drug prices, innovation, and competition need to be faced.

Biosimilars and innovation: an analysis of the possibility of increased competition in biopharmaceuticals.

The USA is now developing a process for expedited approval of biosimilars. Biopharmaceuticals are far more complex and costly to develop and produce than chemical drugs. Biosimilars raise greater safety issues owing to possible immune responses, are likely to offer smaller percentage price reductions than chemical generics and will probably obtain smaller market shares. Patents may not be as strong for biopharmaceuticals, which are often made by small firms, suggesting the desirability of greater data exclusivity protection. This article suggests that it is better to err on the side of too much protection than too little, given the uncertainties involved.

Biosimilars and follow-on biologics.

This was the Center for Business Intelligence's 2nd Annual Summit on Biosimilars. The participants included industry, government, academics and private professionals involved in the myriad issues of biosimilars. Its purpose was to present a dialogue to evaluate the legal, regulatory and economic landscape in the USA and abroad and prepare for the anticipated US legislation that will enable the entry of biosimilars. Another conference will be held in September to discuss the various pending biosimilar bills in more detail or the new law, if passed.

Specialty hospitals: the economics and policy issues they pose.

Specialty hospitals are not a new phenomenon. From psychiatric and tuberculosis hospitals to children's and eye hospitals, they have long existed. The current interest lies in the development of single specialty hospitals for certain conditions or illness such as cardiology or orthopedics for which such hospitals were previously uncommon or non-existent. We include physician-owned surgical hospitals in our definition of single specialty hospitals. Some have claimed that these specialty hospitals (hereafter SSH) are an efficient way of producing services by concentrating them in one institution. They argue that SSHs avoid inefficiencies of scheduling and use of facilities not expressly designed for the illness or condition. Critics contend that doctors are simply trying to get the general hospital's profits and the ultimate impact will be a financial weakening of the general hospital. They argue that the cross-subsidy from these procedures and services are necessary to give general hospitals the ability to provide services to the uninsured and the poor. This debate led to a 30-month moratorium on new specialty hospitals which was lifted in August 2006. General acute care hospitals have responded by denying privileges to physicians who own or participate in competing SSHs. The appropriateness of such economic credentialing will be investigated. Further, we shall examine issues associated with Medicare pricing structures that encourage the development of SSHs as well as self-referral rules for physicians involved with SSHs. The real issue which has not been addressed is whether specialty hospitals create more value for the patient than the traditional acute care hospitals.

Biopharmaceuticals: the economic equation.

As more biopharmaceuticals reach the market, more attention will be given to issues such as cost-effectiveness evaluations, biosimilars, and price controls. The value biologic therapies bring to the healthcare system may take years to appreciate in full -perhaps only when policy decisions allow for their economic effects to be understood.

Generic biopharmaceutical drugs: an economic and policy analysis.

Encouraging both generic drug competition and pharmaceutical innovation is difficult, especially in the case of follow-on biologics. Can the U.S. nurture a system that seeks both lower drug prices now and new and improved medications in the future?

Comparative effectiveness of total population versus disease-specific neural network models in predicting medical costs.

The objective of this research was to compare the accuracy of two types of neural networks in identifying individuals at risk for high medical costs for three chronic conditions. Two neural network models-a population model and three disease-specific models-were compared regarding effectiveness predicting high costs. Subjects included 33,908 health plan members with diabetes, 19,264 with asthma, and 2,605 with cardiac conditions. For model development/ testing, only members with 24 months of continuous enrollment were included. Models were developed to predict probability of high costs in 2000 (top 15% of distribution) based on 1999 claims factors. After validation, models were applied to 2000 claims factors to predict probability of high 2001 costs. Each member received two scores-population model score applied to cohort and disease model score. Receiver Operating Characteristic (ROC) curves compared sensitivity, specificity, and total performance of population model and three disease models. Diabetes-specific model accuracy, C = 0.786 (95%CI = 0.779-0.794), was greater than that of population model applied to diabetic cohort, C = 0.767 (0.759-0.775). Asthma-specific model accuracy, C = 0.835 (0.825-0.844), was no different from that of population model applied to asthma cohort, C = 0.844 (0.835-0.853). Cardiac-specific model accuracy, C = 0.651 (0.620-0.683), was lower than that of population model applied to cardiac cohort, C = 0.726 (0.697-0.756). The population model predictive power, compared to the disease model predictive power, varied by disease; in general, the larger the cohort, the greater the advantage in predictive power of the disease model compared to the population model. Given these findings, disease management program staff should test multiple approaches before implementing predictive models.

Use of chromium picolinate and biotin in the management of type 2 diabetes: an economic analysis.

This paper addresses the potential economic benefits of chromium picolinate plus biotin (Diachrome) use in people with Type 2 diabetes (T2DM). The economic model was developed to estimate the impact on health care systems' costs by improved HbA1C levels with chromium picolinate plus biotin (Diachrome). Lifetimes cost savings were estimated by adjusting a benchmark from the literature, using a price index to adjust for inflation. The cost of diabetes is highly dependent on the HbA1C level with higher initial levels and higher annual increments increasing the cost. Improvement in glycemic control has proven to be cost-effective in delaying the onset and progression of T2DM, reducing the risk for diabetes-associated complications and lowering utilization and cost of care. Chromium picolinate plus biotin (Diachrome) showed greater improvement of glycemic control in poorly controlled T2DM patients (HbA(1C) > or = 10%) compared to their better controlled counterparts (HbA(1C) < 10%). This improvement was additive to that achieved by oral hypoglycemic medications and correlates to calculated levels of cost savings. Average 3-year cost savings for chromium picolinate plus biotin (Diachrome) use could range from 1,636 dollars for a poorly controlled patient with diabetes without heart diseases or hypertension, to 5,435 dollars for a poorly controlled patient with diabetes, heart disease, and hypertension. Average 3-year cost savings was estimated to be between 3.9 billion dollars and 52.9 billion dollars for the 16.3 million existing patients with diabetes. Chromium picolinate plus biotin (Diachrome) use among the 1.17 million newly diagnosed patients with T2DM each year could deliver lifetime cost savings of 42 billion dollars, or 36,000 dollars per T2DM patient. Affordable, safe, and convenient, chromium picolinate plus biotin (Diachrome) could prove to be a cost-effective complement to existing pharmacological therapies for controlling T2DM.

Cost-benefit analysis of chlorhexidine gluconate dressing in the prevention of catheter-related bloodstream infections.

OBJECTIVES: To compare the costs with the benefits of using chlorhexidine gluconate dressings on central venous catheters and to determine the effectiveness of these dressings in reducing local infections and catheter-related bloodstream infections (CRBSIs), costs, and mortality. DESIGN: Cost-benefit analysis using randomized, controlled trial data on chlorhexidine dressing prevention of local infection and CRBSI, data on cost of chlorhexidine dressing versus standard treatment, data on averted cost of treating local infection and CRBSI, and data on mortality attributable to CRBSI. Decision analysis evaluated averted CRBSI treatment cost per patient resulting from chlorhexidine dressing use. Sensitivity analyses demonstrated net benefit of chlorhexidine dressing, varying baseline rate of CRBSI, incremental cost of treating CRBSI, and number of catheters, and evaluated mortality preventable through chlorhexidine dressing use, varying baseline rate of CRBSI, number of catheters, and mortality attributable to CRBSI. PATIENTS AND SETTING: Patients of all Philadelphia area hospitals and one Philadelphia academic medical center. RESULTS: Estimated potential annual U.S. net benefits from chlorhexidine dressing use ranged from $275 million to approximately $1.97 billion. Cost-benefit findings persisted in sensitivity analyses varying baseline rate of CRBSI, incremental cost of treating CRBSI, and overall number of catheters used. Preventable mortality analyses showed potential decreases of between 329 and 3,906 U.S. deaths annually as a result of nationwide use of chlorhexidine dressing. CONCLUSIONS: Chlorhexidine dressings would reduce costs, local infections and CRBSIs, and deaths. Use of chlorhexidine dressings should be considered to prevent infections among patients with catheters.

Diagnosing Crohn's disease: an economic analysis comparing wireless capsule endoscopy with traditional diagnostic procedures.

The purpose of this study was to review economic considerations related to establishing a diagnosis of Crohn's disease, and to compare the costs of a diagnostic algorithm incorporating wireless capsule endoscopy (WCE) with the current algorithm for diagnosing Crohn's disease suspected in the small bowel. Published literature, clinical trial data on WCE in comparison to other diagnostic tools, and input from clinical experts were used as data sources for (1) identifying contributors to the costs of diagnosing Crohn's disease; (2) exploring where WCE should be placed within the diagnostic algorithm for Crohn's; and (3) constructing decision tree models with sensitivity analyses to explore costs (from a payor perspective) of diagnosing Crohn's disease using WCE compared to other diagnostic methods. Literature review confirms that Crohn's disease is a significant and growing public health concern from clinical, humanistic and economic perspectives, and results in a long-term burden for patients, their families, providers, insurers, and employers. Common diagnostic procedures include radiologic studies such as small bowel follow through (SBFT), enteroclysis, CT scans, ultrasounds, and MRIs, as well as serologic testing, and various forms of endoscopy. Diagnostic costs for Crohn's disease can be considerable, especially given the cycle of repeat testing due to the low diagnostic yield of certain procedures and the inability of current diagnostic procedures to image the entire small bowel. WCE has a higher average diagnostic yield than comparative procedures due to imaging clarity and the ability to visualize the entire small bowel. Literature review found the average diagnostic yield of SBFT and colonoscopy for work-up of Crohn's disease to be 53.87%, whereas WCE had a diagnostic yield of 69.59%. A simple decision tree model comparing two arms--colonoscopy and SBFT, or WCE--estimates that WCE produces a cost savings of 291dollars for each case presenting for diagnostic work-up for Crohn's. Sensitivity analysis varying diagnostic yields of colonoscopy and SBFT vs. WCE demonstrates that WCE is still less costly than SBFT and colonoscopy even at their highest reported yields, as long as the diagnostic yield of WCE is 64.10% or better. Employing WCE as a first-line diagnostic procedure appears to be less costly, from a payor perspective, than current common procedures for diagnosing suspected Crohn's disease in the small bowel. Although not addressed in this model, earlier diagnosis with WCE (due to higher diagnostic yield) also could lead to earlier management, improved quality of life and workplace productivity for people with Crohn's disease.

Failed hospital mergers.

The spate of hospital mergers in recent years has yielded both substantial increases in market power and many divestitures. These seemingly contradictory results stem from the pressures imposed by stakeholders of merging hospitals and the inability of those stakeholders to exert control over nonprofit institutions prior to the effectuation of a merger. This Article examines several recent mergers, analyses their failures, and recommends that the judiciary and state attorneys general look carefully at merging nonprofits so as to fill the void left by the lack of market control mechanisms.