OHE Lunchtime Seminar: The People’s Prescription – Re-imagining Health Innovation to Deliver Public Value

Health innovation would be futile and unjust if it does not address public health needs or ensure access to new treatments and cures by the people that need them. The current health innovation system risks becoming just that: beleaguered by increasing financialisation and the obligation to maximise shareholder value through profit, the pharmaceutical sector is increasingly under pressure to deliver short-term financial returns through raising drug prices and executing share buybacks at the expense of directing innovation towards public and long-term benefits.

Drawing on an upcoming Open Society Foundation-funded report prepared by the UCL Institute for Innovation and Public Purpose (IIPP), Global Justice Now, STOPAIDS and Just Treatment, Mariana Mazzucato (IIPP) will outline in this seminar the key problems of the current health innovation system and present, with examples, the principles that would underpin a mission-oriented approach to driving health innovation in the interest of the public. Transformative proposals that rethink value creation, distribution of labour and sharing of risks and rewards across public and private actors in health innovation are proposed in three areas: (1) delinking the cost of research and development from drug prices; (2) attaching conditions to the provision of public funding; (3) changing the rules of corporate governance.

Mariana Mazzucato (PhD) is Professor in the Economics of Innovation and Public Value at University College London (UCL), and is Founder and Director of the UCL Institute for Innovation & Public Purpose (IIPP).   She advises policy makers around the world on innovation-led inclusive growth, including a special advisory role to the EC.

She is winner of the 2014 New Statesman SPERI Prize in Political Economy, the 2015 Hans-Matthöfer-Preis, and the 2018 Leontief Prize for Advancing the Frontiers of Economic Thought. She was named as one of the ‘3 most important thinkers about innovation‘ by the New Republic.

Her highly acclaimed book The Entrepreneurial State: debunking public vs. private sector myths was on the 2013 Books of the Year list of the Financial Times. Her new book The Value of Everything: making and taking in the global economy has just been released.

If you would like to attend this seminar, please reply to ohegeneral@ohe.org.

Sam Watson’s journal round-up for 26th March 2016

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Affordability and availability of off-patent drugs in the United States—the case for importing from abroad: observational study. BMJ [PubMedPublished 19th March 2018

Martin Shkreli has been frequently called “the most hated man in America“. Aside from defrauding investors and being the envied owner of a one-of-a-kind Wu-Tang Clan album, the company of which he was chief executive, Turing Pharmaceuticals, purchased the sole US approved manufacturer of a toxoplasmosis treatment, pyrimethamine, and hiked its price from $13 to $750 per tablet. Price gouging is nothing new in the pharmaceutical sector. An episode of the recent Netflix documentary series Dirty Money covers the story of Valeant Pharmaceuticals whose entire business was structured around the purchase of drug companies, laying off any research staff, and then hiking the price as high as the market could bear (even if this included running their own pharmacies to buy products at these inflated prices). The structure of the US drug market often allows the formation of monopolies on off-patent, or generic, medication, since the process for regulatory approval for a new manufacturer can be long and expensive. There have been proposals though that this could be ameliorated by allowing manufacturers approved by other trusted agencies (such as the European Medicines Agencies) to sell generics in the US while the FDA approvals process takes place. The aim of this paper is to determine how many more manufacturers this would allow into the US drugs market. The authors identify all the off-patent drugs that have been approved by the FDA since 1939 and all the manufacturers of those drugs that were approved by the FDA and by other trusted agencies. No analysis is given of how this might affect drug prices, though there is a pretty obvious correlation between the number of manufacturers and drug prices shown elsewhere. The results show that the proposed policy would increase the number of manufacturers for a sizeable proportion of generics: for example, 39% of generic medications could reach four or more manufacturers when including those approved by non-FDA bodies.

Why internists might want single-payer health care. Annals of Internal Medicine [PubMedPublished 20th March 2018

The US healthcare system has long been an object of fascination for many health economists. It spends far more than any other nation on healthcare (approximately $9,000 per capita compared to, say, $4,000 for the UK) and yet population health ranks alongside middle-income countries like Cuba and Ecuador. Garber and Skinner wondered whether it was uniquely inefficient and identified or questioned a number of issues that may or may not explain the efficiency or lack thereof. One of these was the administrative burden of multiple insurance companies, which evidence suggests does not actually account for much of the total expenditure on health care. However, Garber and Skinner say this does not take into account time spent by clinical and non-clinical staff on administration within hospitals. In this opinion piece, Paul Sorum argues that internists should support a move to a single-payer system in the US. One of his four points is the administrative burden of dealing with insurance companies, which he cites as an astonishing 61 hours per week per physician (presumably spread across a number of staff). Certainly, this seems to be a key issue. But Sorum’s other three points don’t necessarily support a single-payer system. He also argues that the insurance system is leading to increasing deductibles and co-payments placed on patients, limiting access to medications, as drug prices rise. Indeed, Garber and Skinner note also that high deductibles limit the use of highly cost-effective measures and actually have the opposite effect of reducing productive efficiency. A single payer system per se would not solve this, it would need significant subsidies and regulation as well, and as our previous paper shows, other measures can be used to bring down drug prices. Sorum also argues that the US insurance system places an unnecessary burden from quality measures and assessment as well as electronic medical records used to collect information for billing purposes. But these issues of quality and electronic medical records have been discussed in the context of many health care systems, not least the NHS, as the political and regulatory framework still requires this. So a single-payer system is not a solution here. A key difference between the US and elsewhere that Garber and Skinner identify is that the US permits much more heterogeneity in access to and use of health care (e.g. overuse by the wealthy and underuse by the poor). Significant political barriers stand in the way of a single payer system, and since other means can be used to achieve universal coverage, such as the provisions in the Affordable Care Act, maybe internists would be better directing their energy at more achievable goals.

Social ties in academia: a friend is a treasure. Review of Economics and Statistics [RePEcPublished 2nd March 2018

If you ever wondered whether the reason you didn’t get published in that top economics journal was that you didn’t know the right people, you may well be right! This article examines the social ties between authors and editors of the top four economics journals. Almost half of the papers published in these journals had at least one author with a connection to an editor, either through working in the same department, co-authoring a paper, or PhD supervision. The QJE appears to be the worst offender with (if I’ve read this correctly) all authors between 2000 and 2006 getting their PhD in either Harvard or MIT. So don’t bother trying to get published there! This article also shows that you’re more likely to get a paper into the journals when your former PhD supervisor is editing it. Given how much sway a paper published in these journals has on the future careers of young economists, it is disheartening to see the extent of nepotism in the publication process. Of course, one may argue that it just so happens that those that work at the top journals associate most frequently with those who write the best papers. But given even a little understanding of human nature, one would be inclined to discount this explanation. We have all previously asked ourselves, especially when writing a journal round-up, how this or that paper got into a particularly highly regarded journal, now we know…

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Chris Sampson’s journal round-up for 25th September 2017

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Good practices for real‐world data studies of treatment and/or comparative effectiveness: recommendations from the Joint ISPOR‐ISPE Special Task Force on Real‐World Evidence in Health Care Decision Making. Value in Health Published 15th September 2017

I have an instinctive mistrust of buzzwords. They’re often used to avoid properly defining something, either because it’s too complicated or – worse – because it isn’t worth defining in the first place. For me, ‘real-world evidence’ falls foul. If your evidence isn’t from the real world, then it isn’t evidence at all. But I do like a good old ISPOR Task Force report, so let’s see where this takes us. Real-world evidence (RWE) and its sibling buzzword real-world data (RWD) relate to observational studies and other data not collected in an experimental setting. The purpose of this ISPOR task force (joint with the International Society for Pharmacoepidemiology) was to prepare some guidelines about the conduct of RWE/RWD studies, with a view to improving decision-makers’ confidence in them. Essentially, the hope is to try and create for RWE the kind of ecosystem that exists around RCTs, with procedures for study registration, protocols, and publication: a noble aim. The authors distinguish between 2 types of RWD: ‘Exploratory Treatment Effectiveness Studies’ and ‘Hypothesis Evaluating Treatment Effectiveness Studies’. The idea is that the latter test a priori hypotheses, and these are the focus of this report. Seven recommendations are presented: i) pre-specify the hypotheses, ii) publish a study protocol, iii) publish the study with reference to the protocol, iv) enable replication, v) test hypotheses on a separate dataset than the one used to generate the hypotheses, vi) publically address methodological criticisms, and vii) involve key stakeholders. Fair enough. But these are just good practices for research generally. It isn’t clear how they are in any way specific to RWE. Of course, that was always going to be the case. RWE-specific recommendations would be entirely contingent on whether or not one chose to define a study as using ‘real-world evidence’ (which you shouldn’t, because it’s meaningless). The authors are trying to fit a bag of square pegs into a hole of undefined shape. It isn’t clear to me why retrospective observational studies, prospective observational studies, registry studies, or analyses of routinely collected clinical data should all be treated the same, yet differently to randomised trials. Maybe someone can explain why I’m mistaken, but this report didn’t do it.

Are children rational decision makers when they are asked to value their own health? A contingent valuation study conducted with children and their parents. Health Economics [PubMed] [RePEc] Published 13th September 2017

Obtaining health state utility values for children presents all sorts of interesting practical and theoretical problems, especially if we want to use them in decisions about trade-offs with adults. For this study, the researchers conducted a contingent valuation exercise to elicit children’s (aged 7-19) preferences for reduced risk of asthma attacks in terms of willingness to pay. The study was informed by two preceding studies that sought to identify the best way in which to present health risk and financial information to children. The participating children (n=370) completed questionnaires at school, which asked about socio-demographics, experience of asthma, risk behaviours and altruism. They were reminded (in child-friendly language) about the idea of opportunity cost, and to consider their own budget constraint. Baseline asthma attack risk and 3 risk-reduction scenarios were presented graphically. Two weeks later, the parents completed similar questionnaires. Only 9% of children were unwilling to pay for risk reduction, and most of those said that it was the mayor’s problem! In some senses, the children did a better job than their parents. The authors conducted 3 tests for ‘incorrect’ responses – 14% of adults failed at least one, while only 4% of children did so. Older children demonstrated better scope sensitivity. Of course, children’s willingness to pay was much lower in absolute terms than their parents’, because children have a much smaller budget. As a percentage of the budget, parents were – on average – willing to pay more than children. That seems reassuringly predictable. Boys and fathers were willing to pay more than girls and mothers. Having experience of frequent asthma attacks increased willingness to pay. Interestingly, teenagers were willing to pay less (as a proportion of their budget) than younger children… and so were the teenagers’ parents! Children’s willingness to pay was correlated with that of their own parent’s at the higher risk reductions but not the lowest. This study reports lots of interesting findings and opens up plenty of avenues for future research. But the take-home message is obvious. Kids are smart. We should spend more time asking them what they think.

Journal of Patient-Reported Outcomes: aims and scope. Journal of Patient-Reported Outcomes Published 12th September 2017

Here we have a new journal that warrants a mention. The journal is sponsored by the International Society for Quality of Life Research (ISOQOL), making it a sister journal of Quality of Life Research. One of its Co-Editors-in-Chief is the venerable David Feeny, of HUI fame. They’ll be looking to publish research using PRO(M) data from trials or routine settings, studies of the determinants of PROs, qualitative studies in the development of PROs; anything PRO-related, really. This could be a good journal for more thorough reporting of PRO data that can get squeezed out of a study’s primary outcome paper. Also, “JPRO” is fun to say. The editors don’t mention that the journal is open access, but the website states that it is, so APCs at the ready. ISOQOL members get a discount.

Research and development spending to bring a single cancer drug to market and revenues after approval. JAMA Internal Medicine [PubMed] Published 11th September 2017

We often hear that new drugs are expensive because they’re really expensive to develop. Then we hear about how much money pharmaceutical companies spend on marketing, and we baulk. The problem is, pharmaceutical companies aren’t forthcoming with their accounts, so researchers have to come up with more creative ways to estimate R&D spending. Previous studies have reported divergent estimates. Whether R&D costs ‘justify’ high prices remains an open question. For this study, the authors looked at public data from the US for 10 companies that had only one cancer drug approved by the FDA between 2007 and 2016. Not very representative, perhaps, but useful because it allows for the isolation of the development costs associated with a single drug reaching the market. The median time for drug development was 7.3 years. The most generous estimate of the mean cost of development came in at under a billion dollars; substantially less than some previous estimates. This looks like a bargain; the mean revenue for the 10 companies up to December 2016 was over $6.5 billion. This study may seem a bit back-of-the-envelope in nature. But that doesn’t mean it isn’t accurate. If anything, it begs more confidence than some previous studies because the methods are entirely transparent.

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