Wednesday, October 17, 2007

Government meddling inhibiting complex modern medicine

In the early 1920s, Quaker Oats offered $900,000 to buy a new method to enrich the vitamin D content of food. Sensing an opportunity to peddle health and pleasure in a single package, cigarette and beer companies also wanted the patent. The inventor, Professor Harry Steenbock of the University of Wisconsin, opted instead to set up an independent foundation to license the technology and return the proceeds to his lab. Ten years later, the foundation had earned more than $17 million on the patents—and rickets had almost disappeared from the United States.

Much as vitamin deficiencies did back then, chronic obesity now destroys joints, breaks bones, swells body tissues, and causes heart disease. For one exhilarating decade, Pfizer made a fortune suppressing just one molecule in the long, toxic list of things we shouldn’t consume but often do. Then statin patents began to expire. On June 22, 2006, Merck still owned a statin, Zocor, that earned the company over $3 billion a year in the United States alone. The next day, the formula belonged to humanity.

Lipitor, though introduced later, had quickly eclipsed Zocor in the market, and its patent still had five years to run. But Zocor was now set to take a Pyrrhic revenge. U.S. insurers immediately began jiggering co-pay schedules to migrate patients to generic versions of Zocor. Consumer Reports estimated that a wholesale shift would save $7 billion to $11 billion a year. Lipitor’s market share dropped 4 percentage points in the first half of 2006. Wall Street saw it coming: a few months earlier, Pfizer’s stock price had hit an eight-year low, almost 50 percent below its Lipitor peak. Zocor still sold at about $3 a pill in early 2006; generic copies now sell for as little as 50 cents.

Statins end up very cheap for much the same reason that cholesterol did: there are huge economies of scale in farming cows for milk and fungi for statins, or in brewing up synthetic versions of almost anything. But it takes a delicate choreography of patent-protected monopoly and cutthroat competition to get the innovation first and the rock-bottom prices later. At present, the front end is financed mainly by the United States. Drug companies introduce most new drugs here first, and affluent Americans pay premium prices while the patents last. Less affluent Americans, along with public and private insurers in the United States, Britain, Canada, and the rest of the developed world, get a sharply discounted ride on their economic coattails. Three-dollar statins in New York in 1996 get 30-cent statins to London in 2006 and three-cent statins to Kuala Lumpur a few years later.

Governments are impatient, however, especially when they have promised to supply what they can’t possibly afford but can readily seize. The promise of universal care implies state-of-the-art care, so governments’ principal response has been to skip straight to the three-cent pill. In the developing world, the authorities just fail to notice when pirates manufacture knockoffs. Most developed countries have gone halfway there, by instituting a monopoly buyer to bargain against the monopoly patent. Some members of Congress want to let U.S. patients order drugs from Canadian pharmacies, so that Ottawa will bargain with Pfizer on behalf of the poor in Oshkosh. Others want to set Washington up as the monopoly buying agent for all drugs that it pays for.

Drug companies, however, are quite smart enough not to develop three-dollar pills for three-cent buyers. Collectively, these price-depressing strategies already make it unprofitable to pursue many drugs that treat rare diseases, and drugs for all but the most common diseases earn most of their profit in the unregulated U.S. market. From Big Pharma’s perspective, we are now about half a country away—the rich-America half—from making most diseases too thrifty to bother with. Wherever it’s implemented, every new scheme to undercut the value of an existing patent lowers the incentive to discover new drugs. Every such scheme sacrifices long-term global health for short-term political gain. Every last one of them is ice cream today, and never mind about tomorrow.

That is the real crisis in health care—not medicine that’s too expensive for the poor but medicine that’s too expensive for the rich, too expensive ever to get to market at all. Human-ity is still waiting for countless more Lipitors to treat incurable cancers, Alzheimer’s, arthritis, cystic fibrosis, multiple sclerosis, Parkinson’s, and a heartbreakingly long list of other dreadful but less common afflictions. Each new billion-dollar Lipitor will be delivered—if at all—by the lure of a multibillion-dollar patent. The only way to get three-cent pills to the poor is first to sell three-dollar pills to the rich.

With almost $30 trillion under management, Wall Street could easily double the couple of trillion it currently has invested in molecular medicine. The fastest way for Washington to deliver more health, more cheaply, to more people would be to unleash that capital by reaffirming patents and stepping out of the way.

On the other side of the pill, molecular medicine can only be propelled by the informed, disciplined consumer. Any scheme to weaken his role will end up doing more harm than good. Foggy promises of one-size, universal care maintain the illusion that the authorities will take good care of everyone. They reaffirm the obsolete and false view that health care begins somewhere out there, not somewhere in here.

Neither Pfizer nor Washington can ever stuff health itself into a one-price, uniform, One America box—not when health is as personal as ice cream, genes, and pregnancy, not when every mother controls her personal consumption of carbs, cholesterol, Flintstones, and Lipitor. But the thought that government authority can get more bodies in better chemical balance than free markets and free people is more preposterous than anything found in Das Kapital. Freedom is now pursuing a pharmacopoeia as varied, ingenious, complex, flexible, fecund, and personal as life itself, and the pursuit will continue for as long as lifestyles change and marriages mix and match. Given time, efficient markets will deliver a glut of cheap Lipitor for every glut of cheap cholesterol. And given time, free people will find their way to a better mix.


Australia: NSW government caves in -- authorizes full public hospital enquiry

ROYAL North Shore Hospital's emergency department was on its knees the night Jana Horska miscarried in a public toilet of its waiting room, but the hospital has refused to concede just how overcrowded it was. The Herald has learned that at the time she miscarried about 9pm there were 43 patients in emergency and all 28 acute beds were full, including the three resuscitation bay beds.

Ms Horska waited twice as long as her designated triage category of one hour. Sixteen patients had been admitted to the hospital but were waiting for an inpatient bed, and seven of those had been waiting more than eight hours.

Yesterday, the Premier, Morris Iemma, bowed to pressure and said he would support a full, open parliamentary inquiry into systemic problems at the hospital, proposed by the Christian Democrats MP Fred Nile.

Ms Horska, 32, was 14 weeks' pregnant when she miscarried on September 25 after waiting for two hours in acute pain for medical attention. The incident led to a flood of serious complaints by doctors, nurses and patients of similar cases, but the Government had insisted it would not broaden its investigation beyond the incident to examine the entire hospital.

The Herald has repeatedly asked the hospital to explain how crowded the emergency department was that night. Yesterday, a spokeswoman for the hospital said it had already explained that the emergency department was "busy". "Clearly, it was a really busy night, but I don't know whether all the beds were full," she said. She confirmed that 43 patients were in emergency at 9.06pm on September 25. Of those, she said one was categorised as the most critical triage one - a child suffering a seizure who required immediate attention. There were seven triage two patients who needed to be seen within 10 minutes, and 14 triage three (to be seen within 30 minutes). There were 18 semi-urgent category four cases needing review within 60 minutes, including Ms Horska, and five non-urgent cases requiring attention within two hours, she said.

She said the acting director of clinical operations, Julie Hartley-Jones, had previously apologised to Ms Horska and her family. "She [Ms Hartley-Jones] mentioned that the emergency department was busy with staff treating a number of critical cases on the night Ms Horska was waiting to be seen," the spokeswoman said. An internal investigation into Ms Horska's case was launched immediately. "Royal North Shore Hospital felt Ms Horska's case was serious and deserved to be responded to in its own right," she said.

Emergency heads from several public hospitals are to meet the Health Minister, Reba Meagher, this week to discuss their concerns about staffing. Mr Nile will move a motion in the upper house today for a joint select committee to inquire into clinical management systems at the hospital, staffing, resource allocation (particularly in emergency), complaints handling, and to consider strategies for improving patient care which could also be adopted at other public hospitals.


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