McCain's Progress

The Grand Guignol between Hillary Clinton and Barack Obama has to end eventually, and then the public discomfort over health care will resurface as a genuine policy dispute between the Democratic and Republican nominees. For a man whose heterodoxies have no doubt triggered GOP heartburn, John McCain delivered another speech yesterday on health care that offered a sophisticated set of policies that could lead to some of the most constructive changes to the system in decades.

It is good news for his candidacy if Mr. McCain is making space now for political creativity and policy risks. Last week he laid down an economic plan, even venturing to Democratic redoubts like Youngstown, Ohio, and New Orleans's Ninth Ward. Now he has returned to his health-care reform, based on market principles and increased consumer choice, which he first outlined during the primaries.

The Senator is also starting to enfold these ideas in a larger narrative that will be indispensable in the philosophical fight that is so clearly ordained for the general election between private and government health care. Mr. McCain undertook yesterday to recast this looming argument in a new mold. He contended that the health insurance and delivery system is in fact failing many Americans - but that it was failing because of market distortions mostly created by the government itself. Fixing these irrationalities would both make insurance more affordable and increase overall coverage in the bargain. Nor would it require the vast new entitlement programs Democrats are eyeing.

His major proposal would change the tax treatment of insurance. To review: Today's tax code permits businesses to deduct the cost of providing insurance to their employees, but it doesn't do the same for individuals. This creates third-party payment problems; workers aren't aware of the full, true costs of many treatment decisions, part of the reason the U.S. has double-digit health-care inflation. And it makes insurance less affordable for everyone outside the employer-based system, who must pay with after-tax dollars besides. Mr. McCain would correct this imbalance with a refundable tax credit, restoring the parity of health dollars.

As the Senator argued, coverage shouldn't be "limited by where you work" and said that "Americans need new choices beyond those offered in employment-based coverage." Focusing on equity is a canny political argument. For those who don't get insurance through their employers, the current system is patently unfair. As the private market for health insurance became revitalized, everyone else would be more liberated from their bosses' system. A significant portion of the uninsured population at any given point is people who left or lost employment; but portable individual policies would follow them from job to job.

That's a broader political and economic argument than the exclusive liberal concentration on the uninsured. Mr. McCain is saying that the health-care system isn't working as it should, or delivering the quality it should, for the large majority of Americans. "The real reform," he noted, "is to restore control over our health-care system to the patients themselves," introducing more competition on price into the system.

It's true that individual subsidies might be required for some people with severe chronic illnesses who might have a harder time finding private insurance in this kind of world. So Mr. McCain sharpened his proposal for high-risk pools to cover "uninsurables," building on current insurance experiments in about two dozen states. Such provisions are crucial to a functioning market but also blunt a political liability that Democrats were eager to exploit in the fall's debates, suggesting that Mr. McCain is preparing to frontally assault liberal health-care assumptions.

If Mr. McCain's plan is short of ideal, the innovative portions outweigh its false lunges. It also energizes the intellectual progress conservatives have made in recent years in their health-care thinking. Not least, it marks significant progress for Mr. McCain, who often hasn't seemed as engaged with domestic policy as he ought to be. Fortunately, it looks as though the curtain is rising for a necessary debate about the role of government in health care.

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Drug companies win appeal against arrogant and secretive British drug regulator

NICE did not want to reveal details of the "model" it uses. Not surprising given the erratic results obtainable from such models

Tens of thousands of Alzheimer’s sufferers and their families had their hopes raised yesterday as two drug companies won a landmark victory in the Court of Appeal. The court ruled that the powerful body that controls the prescription of new drugs must give up its most precious secrets — how it measures the benefits that novel treatments bring.

The ruling is the first case that NICE, the National Institute for Health and Clinical Excellence, has lost in court. It means that in future it will have to be completely transparent in the way it reaches its decisions, revealing the inner workings of the computer models it uses to measure value for money.

Drugs are approved if they cost the NHS less than about 30,000 pounds per quality-adjusted life year. That means for every 30,000 spent prescribing them, the benefit enjoyed by patients must add up to the equivalent of a single patient living an extra year of good-quality life.

NICE was adjudged to have acted unfairly in making an appraisal of the Alzheimer drug Aricept, which works by increasing levels of a brain chemical linked to memory and decision making. NICE had ruled that Aricept should not be prescribed on the NHS to patients with mild Alzheimer’s disease because the model failed to show that it provided good value. But it refused to allow Eisai and Pfizer, who market the drug, full access to the model. The Court of Appeal yesterday ruled that refusal unlawful. The judgment said that the two companies were disadvantaged in appealing against the guidance by NICE’s refusal to let them have a “fully executable” version of the economic model.

Had the companies had the full version, they could have tested it using a variety of assumptions and been in a better position to challenge the guidance. NICE must now make such a version available. Lord Justice Richards, giving the ruling of the appeal judges, said NICE had supplied a spreadsheet of the economic model and had refused a request from Eisai for full details. He allowed the appeal by Eisai/Pfizer, which will receive the full details and make new representations to NICE, which will then make a fresh appraisal of the drugs.

The ruling could influence many other appraisals made by NICE. For example, last year it issued guidance over drugs for osteoporosis that similarly relied on an economic model. When the National Osteoporosis Society appealed against the guidance, it complained that it had never had access to the economic model, despite several requests. “It always seemed to us that this public policy should have been subject to proper scrutiny,” said Nick Rijke, of the NOS. “It is a pity it took a court case to establish that.”

Economic models of this sort can be very sensitive to the precise details that are entered into them. The drug companies will want change the starting points and the assumptions built into the models to see if that produces a different answer. Potentially, it opens up a large and controversial area of public policy to greater scrutiny. NICE has been criticised widely for its propensity to reject new drugs. Companies disappointed by its rulings will in future be able to judge whether, for example, treating different groups of patients with a particular medicine might result in it being found more cost-effective, the Association of the British Pharmaceutical Industry said yesterday. “This judgment provides further momentum behind the drive to make NICE processes more transparent,” said Richard Barker, director-general of the association.

NICE could appeal to the House of Lords and seek a reversal of the ruling. Andrew Dillon, its chief executive, said: “We will be considering very carefully the findings and the implications for the time it takes us to provide advice to patients and the NHS on the use of new treatments. The ruling will increase the complexity of our drug appraisals in some cases and they may take longer as a result.” The ruling will not make Aricept available to new patients. It will simply enable Eisai and Pfizer to search for any flaws in NICE’s reasoning.

The drug acts against a key process of the disease. In Alzheimer’s, the damage is caused by the loss of brain cells that produce a transmitter, acetylcholine, that carries signals from cell to cell. When it has finished transmitting its messages, it is broken up by an enzyme, acetylcholinesterase. Aricept inhibits the action of this enzyme, thereby slowing progression of the disease.

Nick Burgin, managing director of Eisai, said: “We believe that this decision represents a victory for common sense. As soon as we have reviewed their cost-effectiveness calculations we will submit any new findings to NICE. We hope that this action will ultimately restore access to anti-dementia medicines for those patients at the mild stages of Alzheimer’s disease.”

John Young, managing director of Pfizer, said: “Contrary to NICE’s position that they follow a fully fair and transparent process, the Court of Appeal found that this is not the case.”

Neil Hunt, chief executive of the Alzheimer’s Society, said: “Today’s decision is a damming indictment of the fundamentally flawed process used by NICE to deny people with Alzheimer’s disease access to drug treatments.”

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