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Saturday, May 29, 2010

Medicine - When Push Comes To Shove

The alternative title for this post would be "Why You Really Don't Want To Go Greek".

Novo Nordisk is going to stop supplying most diabetes meds to Greece:
Novo Nordisk, a Danish company, objects to a government decree ordering a 25% price cut in all medicines.
...
A spokesman for the Danish pharmaceutical company said it was withdrawing the product from the Greek market because the price cut would force its business in Greece to run at a loss.

The company was also concerned that the compulsory 25% reduction would have a knock-on effect because other countries use Greece as a key reference point for setting drug prices.
There is much outraged rhetoric talking about brutal capitalists due to this move. Other companies make glucagon, but I guess they were charging more, so Novo Nordisk was the only supplier for Greece according to this forum. So now Novo Nordisk is the bad guy, and some Greek diabetics may be in great difficulties:
The Greek diabetes association was more robust, describing the Danes' actions as "brutal blackmail" and "a violation of corporate social responsibility".
No one ever explains how those brutally blackmailing corporate irresponsibles are supposed to keep producing medications without the cost of production being paid.

Basically, the Greeks are telling everyone else to pay for their medications, but does anyone think that all these other countries with socialized medical buying cooperatives or price-setting schemes are going to pay more so that Greeks can pay less? No, so what it's really down to is that this company should charge Americans more (since we don't have that system), so that the Greeks can get their medicine for what they want to pay. Of course that isn't going to work long term, because other companies make the medicine, and they aren't selling to Greece, so they could undersell Novo Nordisk.

To understand why diabetics are so worried:
Glucagon is another hormone secreted by the pancreas. It is involved in fat metabolism and raising low blood sugar, so it works in tandem with insulin (which lowers blood sugar). Type I diabetics, particularly children, may need this to avoid low-blood sugar comas or correct one. If your pancreas is so impaired that it doesn't produce insulin, it probably can't do the glucagon either:
An injectable form of glucagon is vital first aid in cases of severe hypoglycemia when the victim is unconscious or for other reasons cannot take glucose orally. The dose for an adult is typically 1 milligram, and the glucagon is given by intramuscular, intravenous or subcutaneous injection, and quickly raises blood glucose levels. Glucagon can also be administered intravenously at 0.25 - 0.5 unit.
Is Greece really going to save money on this move? Probably not, good blood sugar control for diabetics lowers net treatment costs, and the rescue injectable can and will prevent many very costly hospital stays. Use of glucagon can prevent brain and organ damage that might be irreversible if one waited for an emergency medical unit to arrive. Also, it can prevent death. Since it is much harder to control blood sugar in children, many parents of diabetic children walk around with this stuff.

(My younger brother had a friend who had juvenile diabetes. He never had good control, and he died in his twenties. The better products and medications we have now, although expensive, save many, many lives.)

Anyway, this is the type of thing that the health care reform bill in the US basically did. Because it capped medicare expenditure increases with a formula relating to the productivity of the economy, but that formula blithely ignored the fact that our population on Medicare is due to rise drastically as a proportion of the economy. So a lot of treatments will have to be cut out to keep to the formula, which means we are planning to cut Medicare coverage dramatically.

I looked various stuff up in some journals, and I already know that one medication that the Chief takes will probably not be covered when the cuts begin to be instituted. We'll pay for it, although it is expensive. But many older people would not be able to pay for it.

In the US, state Medicaid and other aid programs have also begun reducing payments for drugs, and some pharmacies are refusing to take new patients covered by these programs because they can't afford it.

Another move in multiple states is aimed at requiring doctors to take Medicare/Medicaid patients as a condition of getting or keeping their medical licenses. Needless to say, there will be an acute doctor shortage in a few years in such states.

When push comes to shove, you have to cover the economic costs of making a service or product available to keep that service or product available.

BTW, the Massachusetts "universal" coverage program is running into a wall. Rate increases requested by companies who provide the subsidized insurance coverage were refused this year. The companies went to court arguing that they would run up losses and couldn't afford the rates the state regulator wanted. The court refused an injunction in their favor. In the first quarter, they ran up some hefty losses.

So the handwriting is already on the wall, and unfortunately when reality is avoided, the most vulnerable pay the price.

Comments:
It is the most vulnerable who indeed bear the brunt always MoM.

While I harbour no illusions about markets being omniscient or omnipotent, I think they offer the best price discovery mechanism on offer.

Dismantle absurdly onerous licensing requirements; don't make employer provided insurance attractive via tax codes; don't inflame adverse selection with mandated identical premia even for those with pre-existing conditions, and markets will atleast be able to go about price-discovery unimpeded.

Yes there will almost certainly be dissatisfactions; but even there I'd bet on the US to throw up non-profit/charity models to redress those specific situations.

In the meantime people are being crucified on the cross of government nannyism.
 
But Glucagon is not essential to the day to day management of diabetes. In fact, it is somewhat rarely used.
Its purpose in diabetes treatment is to rescue someone from excess insulin dosage and there are other means to do so. More importantly, with the usage of glucagon VERY low, it is possible for some to buy glucagon in other countries and bring it to Greece as a charitable event or at a higher price. But the NovoNordisk company won't put itself at risk by selling it at this low price point.
 
DocJim - no, Novo Nordisk won't put itself at risk over Glucagon, but the 25% cuts were for ALL medications.

From that diabetes forum I linked, I think that Greek diabetics will buy glucagon from other countries or through mail order. I know that's what I would do if I were in their place. The cost is way less of a factor than for regular insulin.

I looked up Novo Nordisk's financials. See page 14.

Their net profit margin on worldwide diabetes meds was just about 25%. But they earned considerably more revenue from North America than all of Europe, presumably because most medication prices in Europe are price-negotiated. So previous to these cuts, their profit margins in Greece were probably running around 18-19% at best. I think they are being quite honest about the fact that they would take a loss at those prices.

And then, of course, there is the fact that other countries would want similar pricing. Novo Nordisk's move is probably aimed not at Greek pricing but European pricing.
 
And the reason this struck me so is that providing funding for the day-to-day management of diabetes is one of the ways in which a national health system really can save money.

Don't get me wrong - I realize that there are patients who will not do their part and won't have good outcomes. But patients who are willing to work at it may be financially unable to afford physcians, testing equipment and insulin, and when that happens the system is building up hefty future costs.

I believe in health care reform as a principle because of diseases like diabetes. If done correctly, health care reform could offer much better quality of life for many persons and generate long-term savings.

I was appalled to find a presentation months ago on Medscape about how physicians could help diabetics during the recession. One of the suggestions was to test once a day but cycle the testing. You know that's not going to work out very well.

Both ends of this debate ignore pressing realities, and imposing top-down cost guidelines is not going to generate a very good outcome.
 
"Don't get me wrong - I realize that there are patients who will not do their part and won't have good outcomes."

This seems to be an important part of the justification for government health programs -- if we try hard enough, we can force people to be healthier.

I live in New York where the state Medicaid program is legendary for its lavish benefits -- up to and including ambulance transportation to a doctor's appointment if requested. No one dare question it because it might be a person's life at stake.

In reality, of course, many people will not avail themselves of preventive medicine -- even if it's free. They don't look ahead; they don't care. It is not unlike the public school's being criticized for low graduation rates when the people quitting at age 16 don't give a rat's behind for their futures.

I know this was not M-o-M's theme for this post, but I really needed to vent. You can lead a poor person to the doctor's office, but you can't make him keep an appointment. And I don't think you should even try.
 
Similarly, you can give a poor person a loan, but that will not make them more responsible. You can send a poor person a check, but that will not help them to get out of debt. Some people just cannot help themselves with making harmful decisions. Of course, there are those who truly have hit on hard luck and will make the most of the safety net, but most people who are chronically in bad situations with personal relationships, economic situations, jobs, or (to a lesser degree) health are there because they are prone to making bad decisions.

Which of course raises the question of rewriting mortgages for people who cannot make their payments, or similarly bailing out companies which are going bankrupt. We view a bad balance sheet as the disease itself, and if only we could cure the balance sheet all would be better. In reality, it would be more accurate to view them as a symptom of habitual bad decision making over a long period of time.

I think the key to developing a safety net that helped those who are in a once in a lifetime mess as opposed to reaping the benefits of a lifetime of bad decisions is including the element of personal responsibility. How a government can do that without inadvertently violating an assumed civil right is beyond me.
 
25% margin on diabetes products..note that this is *operating margin*, ie before debt service costs and taxes. So it does *not* mean, as liberals tend to assume, that if the government took over the company everything could be priced 25% cheaper...even if there were no efficiency decrease.
 
David - thank you for that clarification - you are correct, of course.

Anon and Craig - no, I think you two were not at all off-topic and have addressed the idea behind my post.

Feckless governments are no better than feckless individuals and generally almost infinitely worse.

Most times we can at least provide basic needs for the feckless individuals among us, as long as we take care not to generate too many.

But when a government both takes over the function of providing for basic needs, and is feckless, the result is disastrous and often irredeemable.
 
I would love to see a careful analysis of costs of insulin. I have been an endocrinologist since 1972 (first year there was an endocrine board exam) and at that time, almost 40 years ago----a bottle of insulin cost $3 at the local pharmacy. Soon after that, insulins were cleaned up, getting rid of beef and pork proteins that caused occasional mild to moderate allergic reactions. The next step was producing human insulin from new DNA techniques. It worked and it was a more consistent source. The 3rd phase has been the use of synthetic insulins that work faster in many cases and slower in 2 cases. These have some advantages. As a clinician I am convinced these later developed insulin are better for many patients, but the price of $110 per bottle may not be a truly good cost-benefit bargain.
I'm not an economist and wouldn't dare compare the value of the dollar in 1972 vs 2010, but MoM and some of her readers might provide that data. It is another part of this story.
 
Geeze. DocJim, I was just thinking that there was no way to tell whether we were getting good value for the money on insulin, because not being a doctor I could have no clue about the relative value of today's drugs versus the older versions.

I think purity and safety for insulins are very important factors, because anyone who is insulin-dependent is looking at lifetime usage, and it is very important that they not develop allergies.

But without knowing how the older insulins performed vs the newer insulins, I would have no clue.

Normally, one would assume that the cheapest useful drug would be prescribed. What is the standard protocol for insulin?

There is very obviously a cost-tradeoff; if the cheaper drugs allow diabetics to control their blood sugar by allocating more of their medical dollar toward testing, etc, they are a good deal.

Another factor could be suit costs. If insulins that work well for most persons generate enough lawsuits, the de facto will become a safer but considerably more important drug.
 
That idea of testing once a day at different times actually does work for some of us. I'm a Type II, adult onset, "fat boy" diabetic. I'm not going into hypoglycemic crisis, no matter what I do. I got down to a 72 a month or so ago, and I felt pretty bad, but that was after swimming a half mile, fasting. No Glucagon, of course. Just a little OJ. The different-times testing would only work for a small fraction of us, but it is an example of what people can do, will do, if some kind of cost awareness is imposed, whether by rigid government fiat, or by the more natural discipline of the market. What we have, now, with so long a history of government interference in the health care market, is pretty horrible for some people, and some conditions. If you've seen it up close for twenty years, as I have, or fifty or more, as have some of my ol' Doc friends, the very thought of even more government intervention just breaks one out in hives. I realize that anecdote is not the singular of data, but no one is more statistical in his or her thinking than doctors. (OK, maybe bankers;) They can see the problem in its large scale. However, it is hard to explain that to some people, so we resort to individual stories, like the current Greek difficulties, not as proof of anything, but as illustrations.
I have another over-arching theory, but it is not a very happy one. Cultures grow and progress until they reach a level of complexity that requires more than twenty five percent of the people to have an IQ above one ten. That's the bare minimum required to understand abstract concepts, and there are not that many in any population. Perhaps we could get by a little longer, if there were a true elite of smart guys who made decisions and left the slower ones at home to watch the tube. The problem is, even the smart guys don't/can't know enough to run everything for everyone.
 
Capitalism has failed us. The New America is upon us. Socialism is our only hope. We must nationalize the health industry. This is the righteous path and our guiding light to carry us forward is held high by our comrade and leader, Barack.

Vote Democrat! Vote Union!
 
socialists now running out of other peoples money.
 
Socialist want equality so bad their willing for you to die for it.
I have news to the politicians who cooked this up. One day your gonna die too matter what the medicine.
Guess who will be waiting for you?
If the social bureaucrats & diabetic society where serious they would go after their own entitlements, instead of killing others to cover them.
In the end this is what its about. Tax em till they drop, than blame them when your greed becomes insolvable.
JMO
 
Corporations do not have social responsibilities. This is the fundamental misconception behind the whole fiasco.
 
"Corporate social responsibility?"

I suppose I shouldn't be surprised to see the events from Atlas Shrugged becoming reality.
 
This is a good title behind this blog that "Why You Really Don't Want To Go Greek". I like it very much.
 
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