My long-winded thoughts on healthcare topics…

[Wrong Direction]

I think taking the profit motive out of healthcare would have huge consequences, particularly for new therapies. The financial risk to develop new drugs, biologics and even DME is huge and it requires a lot of capital. It's really hard to imagine where the capital would come from if we did that unless we socialize that too.

This is similar with Docs. We already have a shortage. Making all docs work for a salary would definitely diminish the number of hours they're willing to work. So, the shortage would get worse. Ditto nurses, and this doesn't even take into account the cost of med school, nursing school, etc. Will those all now be even more subsidized? If not, how will docs pay for their education? Will they be absolved from tort risk?

The slippery slope is huge. In any event, this isn't on the table anyway, so it's probably not worth discussing much more.

Heck, we can't even agree that Europe and OECD nations have the best models, so maybe it's better to just agree to disagree.

[PeterMP]

I think taking the profit motive out of healthcare would have huge consequences, particularly for new therapies. The financial risk to develop new drugs, biologics and even DME is huge and it requires a lot of capital. It's really hard to imagine where the capital would come from if we did that unless we socialize that too.

This is similar with Docs. We already have a shortage. Making all docs work for a salary would definitely diminish the number of hours they're willing to work. So, the shortage would get worse. Ditto nurses, and this doesn't even take into account the cost of med school, nursing school, etc. Will those all now be even more subsidized? If not, how will docs pay for their education? Will they be absolved from tort risk?

The slippery slope is huge. In any event, this isn't on the table anyway, so it's probably not worth discussing much more.

Heck, we can't even agree that Europe and OECD nations have the best models, so maybe it's better to just agree to disagree.

Doctors in the European countries I know of pay little or nothing for medical school and there are state based limits on tort and or no tort at all (e.g. in Finland people that are victims of malpractice are paid out of a national compensation fund. The doctor has no direct liability).

These are two reasons why I'm dubious that European/Canadian systems are controlling costs as well as they appear to be. In the US, these component costs are going up faster than inflation (malpractice insurance and med school costs). If these countries are hiding their costs by having the funding for med school not come from their healthcare costs, but instead from education funds, then that alters the equation as compared to the US. I'd be curious to see somebody look at these countries costs for things like eduction and see if they are actually controlling them or hiding them.

I will point out that there is no reason why you can't be a non-profit, paying a good wage and incentivize work. My mom worked at a non-profit as a nurse for a number of years. She was an hourly employee. The more she worked, the more she made. The hospitial tried to minimize over time pay, but they'd allow some (even had to because being understaffed is a huge liability issue). She then left there to a for profit doctor office, where she was a salaried employee that made less real money and had less benefits. Working became desincentiviced for her (her pay was what her pay was).

Now, shk75 is really talking about not just being a non-profit, but limiting wages. There I think you'd run into some of the issues you are talking about, especially if you didn't do something about the doctors costs.

[shk75]

Now, shk75 is really talking about not just being a non-profit, but limiting wages. There I think you'd run into some of the issues you are talking about, especially if you didn't do something about the doctors costs.

No I am just talking about the difference between profit and non-profit and how neither system has been show to be head and shoulders above the other in terms of innovation

[Wrong Direction]

No I am just talking about the difference between profit and non-profit and how neither system has been show to be head and shoulders above the other in terms of innovation

Adam Smith might disagree.

[shk75]

Adam Smith might disagree.

That is because Smith believed man was primarily motivated by profit. He and other economists felt that man acted in a rational manner which was tied to how he could best maximize his utility. Unfortunately, as most economists will admit economics is not a hard science and economists are regularly stumped and feel it is not rational how man sometimes decides to maximize his utility.

The belief that those in the medical field maximize their utility by making as much money as they can is a statement many argue as false.

[PeterMP]

That is because Smith believed man was primarily motivated by profit. He and other economists felt that man acted in a rational manner which was tied to how he could best maximize his utility. Unfortunately, as most economists will admit economics is not a hard science and economists are regularly stumped and feel it is not rational how man sometimes decides to maximize his utility.

The belief that those in the medical field maximize their utility by making as much money as they can is a statement many argue as false.

I just want to point out that this isn't a belief that has no data. There are a lot of studies looking at the differences between nonprofits and profits related to different measures of success, and the vast majority don't support the idea that for profits are superior at least in the actual healthcare industry (I know less about, for example, the insurance end of things).

Just as an example, before wrong direction was essentially talking about the discovery process in health care advances. What most people don't realize is a lot of those discoveries and therefore the patents are from non-profits.

http://www.ncbi.nlm.nih.gov/pubmed?term=patent%20nonprofit%20healthcare%20innovation

Luckily, people didn't stop studying economics and especially healthcare economics in the the 1700s.

[shk75]

I just want to point out that this isn't a belief that has no data. There are a lot of studies looking at the differences between nonprofits and profits related to different measures of success, and the vast majority don't support the idea that for profits are superior.

Just as an example, before wrong direction was essentially talking about the discovery process in health care advances. What most people don't realize is a lot of those discoveries and therefore the patents are from non-profits.

http://www.ncbi.nlm.nih.gov/pubmed?term=patent%20nonprofit%20healthcare%20innovation

Luckily, people didn't stop studying economics and especially healthcare economics in the the 1700s.

I can't tell if you are agreeing with me or not since you quoted me but you are basically making my original point so good job lol.

Furthermore, it seems wrong direction is not a fan of government involvement in private markets but I am sure Big Pharma would not be very happy if all of a sudden the NIH stopped funding the vast amounts of R&D that they currently do.

[PeterMP]

I can't tell if you are agreeing with me or not since you quoted me but you are basically making my original point so good job lol.

Furthermore, it seems wrong direction is not a fan of government involvement in private markets but I am sure Big Pharma would not be very happy if all of a sudden the NIH stopped funding the vast amounts of R&D that they currently do.

I'm supporting your point.

[shk75]

I'm supporting your point.

Sorry for the confusion I just got in to France last night for some research and I am so bad with jet lag, its 5 am and I am wide awake this sucks, so nothing better to do then kill some time on ES

[LadySkinsFan]

My main problem with for profit, private health insurance is that the bottom line, profit, is the main object of that kind of corporation and not the healthcare of its policy holders. In fact, we have heard testimony in Congress over and over that these types of corporations employ many people whose job is to delay and/or deny paying for healthcare services and to cancel policies when the corporations have deemed that they have wrung all the money out of a policy holder that they can.

So profit is my biggest problem. The other problem is that the insurance companies are an unnecessary 3rd/4th party in the healthcare transaction. The health insurance industry arose when they convinced people that people would pay into a "plan" and then the plan would take care of paying for whatever was needed. What happened was the corporations began to limit what they would pay, label procedures experimental for long periods after the procedures became ordinary, and do anything they could to keep as much money as possible, thus increasing said bottom line, profit.

We need 1 form, public option to bring costs down, use the power of large numbers of policyholders to negotiate for lower prices on everything including drugs, and cover everyone. That takes away one argument they have that they have to charge high rates for things like tissues and bandaids because they have to absorb the cost of the poor who drive up their overall costs.

[chipwhich]

We need 1 form, public option to bring costs down, use the power of large numbers of policyholders to negotiate for lower prices on everything including drugs, and cover everyone. That takes away one argument they have that they have to charge high rates for things like tissues and bandaids because they have to absorb the cost of the poor who drive up their overall costs.

Until you fix pharmaceutical costs, nothing else matters.

It wont be fixed by a public option.

Pharmacy is destroying american health care. the rest of this thread is just noise without correcting that.

[shk75]

Until you fix pharmaceutical costs, nothing else matters.

It wont be fixed by a public option.

Pharmacy is destroying american health care. the rest of this thread is just noise without correcting that.

This is a pretty dangerous claim to make. While prescription drugs account for the third highest health care cost, they are still only roughly 10% of the pie. It is true that the portion they occupy is increasing and pretty rapidly but this is true in all OECD nations and not just the US.

I would like to hear your argument as to why you think they are the prime reason that our system is malfunctioning. While I do not agree with many of their policies, I think they are too often targeted as an easy scapegoat when the truth is they do a lot of good too.

[PeterMP]

This is a pretty dangerous claim to make. While prescription drugs account for the third highest health care cost, they are still only roughly 10% of the pie. It is true that the portion they occupy is increasing and pretty rapidly but this is true in all OECD nations and not just the US.

I would like to hear your argument as to why you think they are the prime reason that our system is malfunctioning. While I do not agree with many of their policies, I think they are too often targeted as an easy scapegoat when the truth is they do a lot of good too.

AND they are not rising as fast as other components of the system.

http://www.phrma.org/catalyst/part-1-gao-report-finds-drug-prices-increasing-lower-rate-medical-inflation

"Yesterday, the Government Accountability Office (GAO) released a report on drug prices. A key finding in the report shows prices are increasing at a rate lower than medical inflation. According to GAO, when accounting for “the growing national shift in consumer utilization from brand-name to generic versions of drugs,” prices for the top 100 medicines increased 2.6 percent annually between 2006 and 2010. Over this period, medical inflation increased 3.8 percent."

And it is likey to get better over the very near future.

http://abcnews.go.com/Health/Drugs/prescription-drug-prices-plummet/story?id=14152014

"Ten of the world's top-selling prescription drugs are about to get cheaper.

Over the next 17 months, the patents on brand-name medications like the cholesterol-lowering drug Lipitor and the blood thinner Plavix will expire, opening the door for generic versions that could cost up to 80 percent less. Name brand drug costs could also fall because of the new competition. It might be bad news for drug makers, but good news for patients. "

I'm more convinced than ever that advances in technology and science driven by advances in computers, robotics and automation drove the discovery of a new set of drugs that with respect to pharmaceuticals drove up the number and utility of patent protected drugs, which caused increases in inflation of pharmaceutical prices.

However those initial advances lead to the picking of low hanging fruit that have now been depleted (for a number of years now), and the difficulty and costs of developing new drugs is going to be higher.

And we are seeing a real decline in the productivity of the pharma commuinty and a concominant reduction in the inflation of pharmaceutical prices.

http://blogs.forbes.com/sciencebiz/2010/06/04/the-truth-about-the-new-drug-drought/

At this point in time, Pharma is the least part of the issue we need to be worrying about fixing IMO.

**EDIT**

And of course the Pharma industry made some pretty wide spread bad decisions in terms of R&D during the peak of the patent protection (in 20/20 hindsight), but that ties into the idea of it getting harder.

[Wrong Direction]

I just want to point out that this isn't a belief that has no data. There are a lot of studies looking at the differences between nonprofits and profits related to different measures of success, and the vast majority don't support the idea that for profits are superior at least in the actual healthcare industry (I know less about, for example, the insurance end of things).

Just as an example, before wrong direction was essentially talking about the discovery process in health care advances. What most people don't realize is a lot of those discoveries and therefore the patents are from non-profits.

http://www.ncbi.nlm.nih.gov/pubmed?term=patent%20nonprofit%20healthcare%20innovation

Luckily, people didn't stop studying economics and especially healthcare economics in the the 1700s.

I'd like to read that paper. Do you have access to the full version? I can't seem to find it.

[PeterMP]

I'd like to read that paper. Do you have access to the full version? I can't seem to find it.

Yes, I have access to the full version. Here is a direct link to the journal page, if that helps.

http://onlinelibrary.wiley.com/doi/10.1111/j.1748-720X.2009.00364.x/abstract

**EDIT**

Here is some of their results:

"Between 1969 and 1994, the USPTO

granted 56,410 patents relating to

drug products, of which 44,287 (79%)

were initially assigned to a particular

institution (Figure 1). The non-profit

sector accounted for 3,971 patents during the study period, while industry accounted for

the remaining 40,316 patents."

"The distribution of subsequent citations is skewed;

among non-profit sector patents, 588 (15%) received

no subsequent citations during the study period, while

9,167 industry-sector patents (22.7%) received no subsequent

citations (see Figures 2a and 2b).

Non-profit sector patents received a median of 4.0

subsequent citations and an average of 7.0 citations

each (95% confidence interval 6.7-7.3). Patents arising

from industry sources had a lower median (2.0)

and average citations per patent (5.4, 95% confidence

interval 5.3-5.5). The differences were both statistically

significant (p<0.001). Self-citations accounted

for just 14% of citations received by patents assigned

to the non-profit sector, compared to a self-citation

rate of 22% for industry patents.

Since older patents are more likely to receive forward

citations, and since a substantial percentage of

patents receive no subsequent citations, we repeated

these calculations after excluding patents that received

no subsequent citations. Among the 34,532 remaining

patents, the 3,383 patents arising from the

non-profit sector received a median of 5.0

forward citations, while the 31,149 patents

arising from industry received a median of

4.0 forward citations (p<0.001)."

"Patents from non-profit sources, although

fewer in number than patents from the commercial

sector, were significantly more likely to receive a citation

by subsequent patents, an indication of value and

the importance of the innovation to the field. Previous

research has suggested that differing patent citation

rates may reflect the nature of the work that occurs

in industry settings, which is relatively less likely to

be employed by other researchers because it is more

likely to be “downstream” and focused on a specific product.20 Our study, however, found that even among

“downstream” discoveries — in the patent categories

covering drug products and drug delivery systems —

patents arising from the non-profit sector still receive

proportionately more subsequent citations. These

results cannot be explained by differences in the tendency

to make citations, because there was no difference

between the two groups in the average number of

citations per patent.

While patents emerging from the non-profit sector

may be on average more scientifically useful according

to these measures, industry accounts for a substantially

larger number of patents. This high volume of

patents probably results from several sources. First,

the amount of dollars reportedly spent on research

and development in the pharmaceutical industry (over

$30 billion)21 is higher than the entire research budget

for the NIH.22 Second, there may well be a higher level

of concern within industry about protecting intellectual

property, compared to non-profit organizations.23

Our finding that industry patents were more likely to

receive no citations than patents originating in nonprofit

settings also suggests that researchers in industry

(or their employers) may have a lower threshold for

pursuing a patent. In some cases, this tendency might

be part of a deliberate strategy to obtain patents of limited

value for defensive purposes to help protect the

widest amount of intellectual property around a useful

invention."

In industry, patenting is a measure of productivity so they have many more patents. In academia publishing is a measure of productivity so you have more publications, but fewer patents. But if you look at the importance of the patents (which they are doing through citations of the patent in other patents, the nonprofits (including academia) have the more important patents vs. industry has a bunch of patents that nobody ever cites.

http://en.wikipedia.org/wiki/Paclitaxel#The_plant_screening_program.2C_isolation.2C_and_preclinical_trials

Taxol is a great (but admittedly extreme) example of innovation by the nonprofit sector. The original discovery was made by people working for the US federal government. A scientists in working for the French government originally came up with a method to synthesize it starting from a related plant speices, which meant you needed less of the actual taxol producing plant, and then scientists at FSU developed even a better process to produce.

And Bristol Meyer Squib was the overwhelming beneficiery (in terms of financial gain) of this innovation by people working at nonprofits.

[Wrong Direction]

I just want to point out that this isn't a belief that has no data. There are a lot of studies looking at the differences between nonprofits and profits related to different measures of success, and the vast majority don't support the idea that for profits are superior at least in the actual healthcare industry (I know less about, for example, the insurance end of things).

Just as an example, before wrong direction was essentially talking about the discovery process in health care advances. What most people don't realize is a lot of those discoveries and therefore the patents are from non-profits.

http://www.ncbi.nlm.nih.gov/pubmed?term=patent%20nonprofit%20healthcare%20innovation

Luckily, people didn't stop studying economics and especially healthcare economics in the the 1700s.

So, I've read the paper. Before I comment, can you do me a favor and tell me your position on the relative value of non-profit research (quantify)?

I just want to be fair to you. I don't want to read too much into your posts, and I think I may be.

[PeterMP]

So, I've read the paper. Before I comment, can you do me a favor and tell me your position on the relative value of non-profit research (quantify)?

I just want to be fair to you. I don't want to read too much into your posts, and I think I may be.

I'm not sure I understand the question. Relative to what? Quantify what how?

[Wrong Direction]

I'm not sure I understand the question. Relative to what? Quantify what how?

Are you claiming that, in total, non-profits provide more R&D value than industry or are you simply claiming that they provide some real (non-neglible) value, or something in between?

[PeterMP]

Are you claiming that, in total, non-profits provide more R&D value than industry or are you simply claiming that they provide some real (non-neglible) value, or something in between?

How do you want to define the term value? Is it an independent number that has no association with the input required to achieve the goal or do you want to measure the ability to achieve the goal as a function of the input required to do so?

Nonprofit research has multiple goals that aren't necessarily related to one another or related to the goals of industry (for example, goals of nonprofits are frequently tied to education and inclusion and not just drug discovery). In addition, it is generally accepted that for profits spend more money on R&D than the nonprofit community as a whole (the part I quoted talks about how industry R&D is more than the entire NIH budget (and the NIH budget is larger than the other non-defense research funding mechanisms by the US government combined)).

Given these differences and limitations, the nonprofit sector does quite well when trying to measure innovation with respect to the for profit sector directly in the field related to the goals of the for profit sector. The idea that nonprofits aren't innovative and that there isn't competition is just wrong.

[Wrong Direction]

Given these differences and limitations, the nonprofit sector does quite well when trying to measure innovation with respect to the for profit sector directly in the field related to the goals of the for profit sector. The idea that nonprofits aren't innovative and that there isn't competition is just wrong.

Right. I agree with this statement. Nobody ever said we should get rid of non-profits. All I'm claiming is we shouldn't get rid of for-profits.

[PeterMP]

Right. I agree with this statement. Nobody ever said we should get rid of non-profits. All I'm claiming is we shouldn't get rid of for-profits.

And my point is that I'm not at all sure that innovation is a good reason to keep for-profits. The evidence that for-profits are more innovative than non-profits is lacking, especially when you consider the fact that the for-profits have simplified goals and more funding.

Now, I do think acquiring funding for R&D programs might be a good reason to keep for profits (you talked about the capital required in an earlier post). Could the government acquire the same amount capital as for profits do, and if not, how would that affect real productivity?

[Wrong Direction]

And my point is that I'm not at all sure that innovation is a good reason to keep for-profits. The evidence that for-profits are more innovative than non-profits is lacking, especially when you consider the fact that the for-profits have simplified goals and more funding.

The paper you cited listed over 40,000 patents from for profits and over 3,000 from not-for-profits.

Now, I do think acquiring funding for R&D programs might be a good reason to keep for profits (you talked about the capital required in an earlier post). Could the government acquire the same amount capital as for profits do, and if not, how would that affect real productivity?

I have to run, but somewhere there's a paper about what happened to R&D in Europe...basically it was greatly diminished when crowded out by taxes/government. I understand this is me going on a potentially faulty memory, and I do have to run, but it would be a good paper to find for context.

[PeterMP]

The paper you cited listed over 40,000 patents from for profits and over 3,000 from not-for-profits.

I have to run, but somewhere there's a paper about what happened to R&D in Europe...basically it was greatly diminished when crowded out by taxes/government. I understand this is me going on a potentially faulty memory, and I do have to run, but it would be a good paper to find for context.

Yes, it does, but then goes onto look to try and measure the real value of those patents and concludes that the patents obtained by industry in general have less important. The difference in sheer number as I've already stated is mostly attributable to a few things as I've already stated.

Non-profits publish much more than for profits, but I'm not going to use those gross numbers to argue that non-profits are more productive or innovative.

For profits don't have the same incentives to publish that non-profits do. Non-profits don't have the same incentives to patent that for profits do.

That's why the effort was made to look at the value of the patents and not the absolute numbers.

**EDIT**

Not taxes, but price controls/regulation:

"We test the relation between price regulation and

R&D spending, and estimate the costs of tight EU price regulation. Although results show that

EU consumers enjoyed much lower pharmaceutical price inflation, we estimate that price controls

cost EU firms 46 fewer new medicines and 1680 fewer research jobs during the 19-year sample

period."

http://www.business.uconn.edu/users/jgolec/europe-us-differences.pdf

[Wrong Direction]

For profits don't have the same incentives to publish that non-profits do. Non-profits don't have the same incentives to patent that for profits do.

Right, there are confounders in each direction. The paper drew inferences of value based upon median # of citations, which included one more for non-profits. It didn't get into the nature of the developed products.

For example, maybe it's much more likely for orphan drugs to be developed by a non-profit that is funded through government grants? I have no idea, and the author doesn't either.

It's just a hard study to draw any hard information from other than the fact that non-profits do provide some value. But nobody's disputing that.

Thanks for posting that and the other article, by the way.

[PeterMP]

Right, there are confounders in each direction. The paper drew inferences of value based upon median # of citations, which included one more for non-profits. It didn't get into the nature of the developed products.

For example, maybe it's much more likely for orphan drugs to be developed by a non-profit that is funded through government grants? I have no idea, and the author doesn't either.

It's just a hard study to draw any hard information from other than the fact that non-profits do provide some value. But nobody's disputing that.

Thanks for posting that and the other article, by the way.

When you are dealing with thousands of data points, one more can be a big and significant difference. As it is in this case.

What difference does the nature of the developed drug have with respect to innovation?

Are you claiming it is easier to develop orphan drugs (or other drugs that are unlikely to be commercially viable)? That it requires less innovation?

In terms of hypothesis, this is data that does not support the hypothesis that for profits are more innovative.

You have a hypothesis that there is very little data to support.