Eli Lilly CEO: Four Keys to Spur Innovation

April 23, 2012
8:23 am

In a Forbes commentary, Eli Lilly and Company CEO John Lechleiter underscores the need for new medicines and medical technologies to provide better healthcare to our aging society.  While U.S. healthcare innovators have an unmatched history of success in saving and improving lives – testing more potential new medicines each year than the rest of the world combined – the challenges posed by illnesses like diabetes, osteoporosis and neurodegenerative diseases threaten millions of people throughout the world.  And, unless successfully addressed, they will place unprecedented stress on our healthcare system.

In his Forbes op-ed, Lechleiter outlines four vital components that must be in place in order to have a vibrant, successful “innovation ecosystem” to tackle these illnesses.  They include:

  • Intellectual property protection to enable scientists and investors to stay in the business of innovation.
  • Open access to healthcare markets, a component that is threatened by new public policies like the creation of the Independent Payment Advisory Board (IPAB), which could slash Medicare spending and limit seniors’ access to healthcare innovations.
  • Free-market pricing, which hinges on the avoidance of real or de facto government price controls on medical innovators.
  • A regulatory system that is “timely, predictable, consistent, transparent and scientifically rigorous.”

The agenda Lechleiter has outlined should be at the forefront of Washington, DC health policy discussion.  As he put it, entirely correctly, “Our policymakers must do everything they can to….ensure that the dreams and discoveries of today turn into the lifesaving treatments of tomorrow.”

Just the Facts…..Please

April 10, 2012
10:10 am

Today, I saw an argument in support of the Independent Payment Advisory Board (IPAB) – the 15-member board of political appointees with unprecedented power to reduce Medicare expenditures – that was so off the mark one would think it came from some sort of fringe website.  In fact, it was found on CBS News’s Marketwatch site.

CBS provided webspace for a consulting actuary to argue that there is really no difference between IPAB and private insurers.  IPAB will, he said, “assess whether certain procedures will be denied reimbursement, either due to ineffectiveness or excessive costs,” the same as private health insurers.  IPAB members may be unelected, but, he argues, private insurance claims adjusters aren’t elected either.

“It’s just a reality that any insurance program, whether commercial or governmental, will deny some claims, states this CBS News-hosted editorial.

We won’t even get into some of the obvious differences between IPAB and private coverage, such as the fact that employers can take their business to different insurers.  Or the fact that private insurers have appeals mechanisms, whereas IPAB decisions aren’t even subject to judicial review.

But that’s not even the biggest problem with this pro-IPAB argument.  IPAB isn’t structured to cut costs by denied payment for ineffective procedures.  It’s not about that at all.

As the Congressional Budget Office has made quite clear, the law creating IPAB explicitly forbids the board from rationing care, changing Medicare benefits or increasing beneficiary cost-sharing.  According to CBO, the board will, for all practical purposes, be limited to cutting healthcare provider payments to meet its cost-cutting targets.

That’s not distinguishing one treatment or therapy from another based on cost and effectiveness.  That’s simply paying physicians less to treat Medicare patients.  And, in so doing, IPAB threatens to widen the payment level gap between Medicare and, you got it, private insurers.  It will result in care for Medicare beneficiaries that is less accessible, not more cost-effective.

There is a legitimate debate to be had over whether IPAB is a wise public policy choice.  To have that debate, though, we need to be on the same platform in terms of understanding what this board will actually do.

Better Care for Dual Eligibles

April 04, 2012
9:37 am

When you examine the rising costs in our healthcare system, an important starting point is the care required by the so-called dual eligibles, those Americans who are eligible for both Medicare and Medicaid.  There are nearly 10 million individuals nationwide who fall into this category and they utilize a disproportionate share of healthcare services because of a high propensity for chronic disease and need for acute care.

Dual eligibles account for 27 percent of Medicare’s spending, although they represent only 16 percent of beneficiaries.  That gap is even wider in Medicaid.  According to a Wall Street Journal article last year, one reason costs are so high for this patient group is imperfect coordination between Medicare and Medicaid which is contributing to “hundreds of thousands of hospitalizations that could be avoided.”

A new report released this week shows that progress can be made in providing better, more cost-effective care to the dual eligible population.  Avalere Health, a highly-regarded research and analysis firm specializing in health policy, has studied an integrated care model developed by SCAN Health Plan, a health insurer serving 130,000 Medicare Advantage beneficiaries in California and Arizona.  (SCAN is also a member of the Healthcare Leadership Council.)

The Avalere study found that SCAN’s team-oriented case management approach for dual eligible patients, utilizing individually-tailored care plans, has resulted in hospital readmission rates that are 25 percent lower than traditional fee-for-service Medicare.  SCAN also outperformed conventional Medicare by 14 percent in prevention indicators, maintaining patient wellness and keeping them out of the hospital.

As Avalere senior vice president Bonnie Washington put it, “Better coordinated care for low-income elderly patients is a critical imperative for federal and state governments.  This study shows that well-developed care management models can result in measurable differences in quality, hospitalization and rehospitalization – and cost savings – for a vulnerable population in need of close care coordination.”