Allow Those with Skin in the Game to Help Find Quicker Cures

The New York Times devoted more than two and half full pages to the article that I quote from below. Very very few articles receive that much space. The story is meant to inspire and it does. Linde has a terrible genetic disease, as did her mother and grandmother, as do her two sisters, and as might her two daughters. She is uncredentialled, but determined. She reads scientific articles, gives talks at scientific meetings, creates a foundation to raise funds, and with her sisters gave samples from her skin to create cell lines that can be used for research to find a cure. Linde, both literally and figuratively, has skin in the game.

In the article, victims of the disease wish that there were more clinical trials to test more possible cures. If the price of clinical trials were lower, more of them would be supplied. One way to reduce the price would be for the F.D.A. to only mandate testing for safety, not to mandate testing for efficacy. After all, it was concerns over the safety, not the efficacy, of thalidomide, that first accelerated the F.D.A.’s clinical trial mandates. Testing only for safety (Phase 1 and Phase 2 clinical trials), would hugely reduce the price, resulting ultimately in more and quicker cures.

(p. A1) Linde Jacobs paced back and forth across her bedroom, eyeing the open laptop on the dresser and willing the doctor to appear. Her husband was dropping off their older daughter at school. Their younger daughter was downstairs, occupied by a screen. Linde wanted to be alone when she learned whether she carried the family curse.

Linde’s mother, Allison, had died just four weeks before, after a mutant gene gradually laid waste to her brain. In her 50s, Allison transformed from a joyful family ringleader into an impulsive, deceptive pariah. She drove like a maniac on cul-de-sacs. She pinched strangers, shoplifted craft supplies and stole money from her daughter.

Now, on this morning in September 2021, Linde would find out if she had inherited the same vile genetic mutation.

. . .

The doctor finally popped up on the computer. Wasting no time on pleasantries, she shared her screen and zoomed in on one line of laboratory paperwork: POSITIVE.

. . .

Soon, Linde’s husband, Taylor, pulled into the garage and opened the car door. He could hear her sobbing.

. . .

Linde looked at Taylor. “I don’t want you to feel stuck with me,” she said.

(p. A12) Leaving had never crossed his mind. Allison’s miserable experience, he told Linde, did not have to be hers. “You have all this time,” he said. “Do something about it.”

Even as they spoke, scientists were working on projects that might one day help her. Some had discovered how to cure grave conditions with gene editing. Others were tinkering with patients’ skin cells to test experimental drugs. And pharmaceutical companies were developing new Alzheimer’s therapies, one of which happened to target the rare defect in Linde’s brain.

Linde didn’t know any of that yet. But she decided to take Taylor’s advice. She would use the time she had, somehow, to find influential scientists and make them care about what was happening to her — and what might happen to her girls.

Linde and Taylor scoured the internet for any scrap of hope about treating frontotemporal dementia, or FTD. There was little to read.

Taylor remembered a Netflix documentary about a new way to edit genes. The method, called CRISPR, had cured some children with sickle cell disease. He searched “FTD treatment CRISPR” and found the website of Dr. Claire Clelland, a neurologist at the University of California, San Francisco. She had collected skin cells from patients with FTD, reprogrammed them into neurons and tried to edit the faulty genetic code within.

The website listed a phone number. Taylor called and left a message — a Hail Mary, he figured.

Within a day, Dr. Clelland responded by email. “Happy to help if I can,” she wrote.

. . .

(p. A13) “Could I ask a question?” one young scientist said. How much risk, she wondered, was Linde comfortable taking on an experimental treatment? Editing genes with CRISPR was new, after all, and could come with serious side effects.

“Sign me up, patient zero, sounds good,” Linde said.

“What choice do I have,” she added, “if I don’t want the same future for myself as my mom had, and her mom?”

When she wasn’t working or coaching her daughter’s soccer team, Linde threw herself into the scientific research on MAPT — a niche but growing subfield. The gene provides the instructions for cells to make tau, a protein in the brain.

One day she came across news of a project investigating how tau can go awry. She wrote to the scientist leading the work, Dr. Kenneth Kosik of the University of California, Santa Barbara, describing her family and asking to talk.

Dr. Kosik was sitting in his home office when her note landed in his inbox. “It was the second time in my life that I realized, I’ve got to get back to this person in, like, a nanosecond,” he recalled.

. . .

Dr. Kosik told Linde that an elite group of researchers, known as the Tau Consortium, would gather in Boston in a few months for its annual meeting. Dr. Clelland would be there, as would other “Michael Jordans” in the field. We should try to get you there, he said, so the scientists can be reminded of the human toll of tau-related diseases.

A few weeks later, Linde received an invitation to be the keynote speaker. Jenica and Ashlyn could come, too.

She texted her sisters, “Holy shit.”

One morning in Boston in June 2023, Linde and her sisters got all dolled up, only to arrive in a grand hotel ballroom filled with 100 scientists in oxfords and sneakers.

Dr. Kosik introduced Linde to the members of the Tau Consortium. Too nervous to look anyone in the eye, she stared at a screen showing her slides and read from her prepared remarks.

“You will notice the lack of credentials following my name,” she began. But she said her life had brought her other titles: Caregiver. Jail-Bailer. Carrier. She was the heartbeat, she said, of the cells they studied.

. . .

After the Boston talk, Linde received a flurry of invitations to tell her story. She was interviewed on YouTube by Emma Heming Willis, the wife of the actor Bruce Willis, the most famous person known to have frontotemporal dementia. She came face to face with monkeys that carried MAPT mutations in Madison, Wis. And though she detested the crowds and grime of big cities, she flew to places like Philadelphia and Washington, D.C., to at-(p. A14)tend scientific meetings.

Linde, who by then had moved to River Falls, Wis., always returned home exhausted. But the trips were also fortifying. Learning about the latest research quelled her anxiety — and her husband’s.  . . .

During her travels, Linde met other families with MAPT mutations. They were all frustrated by the lack of clinical trials for their genetic glitch, especially because several promising treatments were in the pipeline for other dementia genes. Linde and the others started a global survey of people with MAPT mutations. If an opportunity came along for a clinical trial, they would make it as easy as possible for scientists to find volunteers.

. . .

A few months later, Linde and the group started a nonprofit, called Cure MAPT FTD. They have since found more than 500 people with confirmed or possible MAPT mutations in 10 countries, all of whom have expressed interest in participating in future clinical trials.

In March of this year, Linde got an astonishing offer from Dr. Clelland. Along with collaborators at Washington University and the Neural Stem Cell Institute in New York, she wanted to collect skin cells from Linde and her sisters and turn them into clusters that divide infinitely, known as cell “lines.”

“We propose to make new lines that can be shared with academics and also with industry so that people can do drug screening” and CRISPR projects, Dr. Clelland wrote.

. . .

Based on what happened to Allison and Bev, Linde figures she has at least 10 more years before she starts showing symptoms. But there’s no guarantee; some MAPT carriers begin to change in their 20s. Whenever Linde tells a joke a little too loudly, or has a dulled emotional response to a dramatic event, she worries: Is this tau?

That anxious metronome never shuts off. It compels her to fill any moment of downtime reading the latest study or sending another email. She has spent thousands of dollars and hundreds of unpaid hours on travel. But sometimes, like when she finds herself alone in a hotel room, FaceTiming her daughter about a rough day at school, she questions whether these scientific pursuits are really the best way to run out the clock.

. . .

Dr. Clelland said designing a CRISPR molecule that could precisely excise the MAPT mutation from a cell’s genome was not the hard part. The major unsolved challenge is delivering those molecular scissors into the brain. Still, she and her colleagues at U.C.S.F. have set an ambitious goal of getting MAPT therapy into clinical trials within four years.

For the full story see:

Virginia Hughes. “A Mother’s Race to Beat a Genetic Time Bomb.” The New York Times (Wednesday, December 25, 2024): A1 & A12-A14.

(Note: ellipses added.)

(Note: the online version of the story was updated Jan. 2, 2025, and has the title “Fighting to Avoid Her Mother’s Fate, for Her Daughters’ Sake.” I have omitted a few subhead titles that appear in both the online and print versions.)

Surgeons Respond More to Individual Incentives Than to Group Incentives

Medicare introduced a new billing code that reimburses surgeons more for repairing hernias that are at least 3 cm long. As a result the percent of repaired hernias that were less than 3 cm dropped from 60% to 49%. It is probably not too hard for surgeons to justify this change. Probably surgeries on hernias just under 3 cm, are just as hard to do as surgeries on hernias that are just above 3 cm. So probably it seems arbitrarily unfair to reimburse more for the slightly larger ones. So look at the close calls closer until you find an angle where one that on first glance was less than 3 cm, now appears to be more than 3 cm.

On the other hand, consider the response when Blue Cross Blue Shield in Michigan offered to pay more to urology group practices that had more patients on active surveillance for prostate cancer. (A growing consensus suggests that most low-risk prostate cancer patients would be better off with active surveillance, rather than quick prostate surgery by urologists.) The response by Michigan urologists–no change in the percent of prostate cancer patients on active surveillance.

Why the difference? I suggest that surgeons, like other people, respond more to individual incentives than to group incentives. A person who responds to group incentives bears the costs themselves, but shares the benefits with others who may be free-riders. If the incentive is individual, no one free rides.

I became aware of the recent academic articles on how incentives do or don’t influence surgeons by reading:

Millenson, Michael L. “It’s Money That Changes Everything (or Doesn’t) for Surgeons.” Forbes.com, Jan. 26, 2025 [cited Jan 27, 2025]. Available from https://www.forbes.com/sites/michaelmillenson/2025/01/26/its-money-that-changes-everything-or-doesnt-for-surgeons/ .

The academic article showing that individual incentives matter to some surgeons is:

Hallway, Alexander, Erin Isenberg, Ryan Howard, Sean O’Neill, Jenny Shao, Leah Schoel, Michael Rubyan, Anne Ehlers, and Dana Telem. “Medicare Coding Changes and Reported Hernia Size.” JAMA (published online on Jan. 16, 2025).

The academic article showing that group incentives don’t seem to matter to surgeons is:

Srivastava, Arnav, Samuel R. Kaufman, Addison Shay, Mary Oerline, Xiu Liu, Monica Van Til, Susan Linsell, Corinne Labardee, Christopher Dall, Kassem S. Faraj, Avinash Maganty, Tudor Borza, Kevin Ginsburg, Brent K. Hollenbeck, and Vahakn B. Shahinian. “Physician Payment Incentives and Active Surveillance in Low-Risk Prostate Cancer.” JAMA Network Open 8, no. 1 (Jan. 8, 2025): e2453658-e58.

Patients Are Too Patient About the Time They Waste in Worthless Healthcare

Healthcare appointments are often too numerous, too time-consuming, too stressful, and too harmful. Journalist Paula Span, often citing the words and research of MD Ishani Ganguli, presents this as an outrageous revelation. Dr. Ganguli tells us “there are opportunity costs” and “you don’t have infinite time, energy and attention” (Ganguli as quoted in Span 2024, p. D3). Outrageous it is, but to few of us is it a revelation. Patients know because they experience. If they are smart (I am often stupid) they will stifle their complaints so they do not annoy their care-givers. But care-givers know also. Those implementing the time-wasting or onerous practices are not evil. But they often do not have the incentive, or sometimes even the power, to change.

Every time I go into a doctor’s office, I am weighed. I always ask, “Do you want me to take my shoes off?” The nurse or medical assistant always shrugs and says they do not care. If my weight mattered, shouldn’t it be taken consistently, either always with shoes on or shoes off? I have had my weight taken countless times but I cannot remember a single time when the doctor mentioned the weight measure from earlier in the appointment. Prescription lists are endlessly requested, even by those who do the prescribing. Many lab tests are done out of the inertia of routine. In many hospitals sleeping patients are interrupted by a “care-giver” who comes in and performs a routine task, like asking them how much pain they are feeling. The “care-giver” records the answer and departs, taking no other action, but in the meantime diminishing the healing sleep of the patient. Tasks of this sort must be damaging to the morale of the care-giver. They signed up to do good, not to do harm. But they must do harm to follow the mandated protocol, or they risk being punished.

Why do these practices continue? Because they have been done in the past. No one will be rewarded for dropping them, and the care-giver who fails to do them is at risk of being criticized or punished. In a non-entrepreneurial, litigious, and highly regulated system, much that is done is not done for the benefit of the patient. It is done for CYA (“Cover Your Ass”).

But hope abides. We could deregulate healthcare. Then doctors could tell their nurses to only take the patient’s weight when it is actually needed. Hospital entrepreneurs could tell staff to only ask patients of their pain when they are awake and complaining of pain. Options in healthcare would be more diverse. But some of the options would actually make sense. Care-givers providing options that make sense would expand their own practice and be imitated by others. We would have better care and less wasted time.

The commentary by Paula Span, mentioned above, is:

Paula Span. “Too Much Time Spent on Doctors.” The New York Times (Tuesday, November 26, 2024): D3.

(Note: the online version of Span’s commentary has the date Nov. 23, 2024, and has the title “So Many Days Lost at the Doctor’s Office.”)

An academic article co-authored by Ganguli presents empirical evidence on how much time patients spend in healthcare activities:

Ganguli, Ishani, Emma D. Chant, E. John Orav, Ateev Mehrotra, and Christine S. Ritchie. “Health Care Contact Days among Older Adults in Traditional Medicare: A Cross-Sectional Study.” Annals of Internal Medicine 177, no. 2 (Feb. 2024): 125-33.

In an academic op-ed piece, Ganguli justly laments how the healthcare system often wastes patients’ time, sometimes even resulting in worse health. She uses the example of the severe cardiac side-effects from the eight weeks of Monday through Friday radiation that her 81-year-old father was given for his recently discovered prostate cancer:

Ganguli, Ishani. “How Does Health Care Burden Patients? Let Me Count the Days.” New England Journal of Medicine 391, no. 10 (Sept. 7, 2024): 880-83.

L.E.D. Pioneer Akasaki’s “Perseverance — Sheer Doggedness — Paid Off”

(p. B10) Isamu Akasaki, a Japanese physicist who helped develop blue light-emitting diodes, a breakthrough in the development of LEDs that earned him a Nobel Prize and transformed the way the world is illuminated, died on Thursday [April 1, 2021] in a hospital in Nagoya, Japan. He was 92.

. . .

Bob Johnstone, a technology journalist and the author of “L.E.D.: A History of the Future of Lighting” (2017), said in an email, “The prevailing opinion in the late 1980s was that, because of the number of flaws in the crystal structure of gallium nitride, it would never be possible to make light-emitting diodes from it, so why would you even try?”

Dr. Akasaki, he continued, “was willing to stick at what was almost universally recognized to be a lost cause, working away long after researchers at RCA and other U.S. pioneers of gallium nitride LED technology had given up.”

“Eventually,” Mr. Johnstone said, “his perseverance — sheer doggedness — paid off.”

. . .

Dr. Akasaki was awarded hundreds of patents for his research over the years, and the royalties from his groundbreaking work with Dr. Amano eventually funded the building of a new research institute, the Nagoya University Akasaki Institute, completed in 2006.

. . .

When asked in a 2016 interview with the Electrochemical Society to summarize the philosophy guiding his many years of single-minded research, Dr. Akasaki replied, “No pain, no gain.”

“I say this to younger people: Experience is the best teacher,” he continued. “That is, sometimes there is no royal road to learning.”

For the full obituary see:

Scott Veale. “Isamu Akasaki, 92, Nobel Laureate Whose LED Breakthrough Rippled Around the World.” The New York Times (Wednesday, April 7, 2021 [sic]): B10.

(Note: ellipses, and bracketed date, added.)

(Note: the online version of the obituary has the date April 6, 2021 [sic], and has the title “Isamu Akasaki, 92, Dies; Nobel Winner Lit Up the World With LEDs.”)

The book by Bob Johnstone mentioned above is:

Johnstone, Bob. L.E.D.: A History of the Future of Lighting. Scotts Valley, CA: CreateSpace Independent Publishing Platform, 2017.

Medicare “Advantage” Health Insurers (Especially UnitedHealth) Pressure Doctors to Recode Patients as Having Bogus, but Lucrative, Health Problems

The “advantage” in Medicare “Advantage” health insurance plans accrues to health insurance companies, not to patients or taxpayers. In an earlier entry I discussed an earlier Wall Street Journal article documenting how health insurers (especially UnitedHealth) sent nurses to patients’ homes for the purpose of harvesting diagnoses that would add to the health insurers’ payments. In an even earlier entry I discussed a Wall Street Journal article documenting how UnitedHealth has used vertical integration to game the system of Medicare “Advantage.”

(p. A1) Like most doctors, Nicholas Jones prefers to diagnose patients after examining them. When he worked for UnitedHealth Group, though, the company frequently prepared him a checklist of potential diagnoses before he ever laid eyes on them.

UnitedHealth only did that with the Eugene, Ore., family physician’s Medicare Advantage recipients, he said, and its software wouldn’t let him move on to his next patient until he weighed in on each diagnosis.

The diagnoses were often irrelevant or wrong, Jones said. UnitedHealth sometimes suggested a hormonal condition, secondary hyperaldosteronism, that was so obscure Jones had to turn to Google for help. “I needed to look it up,” he said.

The government’s Medicare Advantage system, which uses private insurers to provide health benefits to seniors and disabled people, pays the companies based on how sick patients are, to cover the higher costs of sicker patients. Medicare calculates sickness scores from information supplied by doctors and submitted by the insurers. In the case of UnitedHealth, many of those doctors work directly for UnitedHealth.

More diagnoses make for higher scores—and larger payments. A Wall Street Journal analysis found sickness scores increased when patients moved from traditional Medicare to Medicare Advantage, leading to billions of dollars in extra government payments to insurers.

Patients examined by doctors working for UnitedHealth, an industry pioneer in directly employing large numbers of physicians, had some of the biggest increases in sickness scores after moving (p. A8) from traditional Medicare to the company’s plans, according to the Journal’s analysis of Medicare data between 2019 and 2022.

Sickness scores for those UnitedHealth patients increased 55%, on average, in their first year in the plans, the analysis showed. That increase was roughly equivalent to every patient getting newly diagnosed with HIV, the virus that causes AIDS, and breast cancer, the analysis showed.

That far outpaced the 7% year-over-year rise in the sickness scores of patients who stayed in traditional Medicare, according to the analysis. Across Medicare Advantage plans run by all insurers, including UnitedHealth, scores for all newly enrolled patients rose by 30% in the first year.

. . .

In a series of articles this year [2024], the Journal has examined the practices of Medicare Advantage companies, including UnitedHealth, the largest. Among other things, the articles showed how diagnoses added by insurers increased payments from the government.

. . .

Jones, the Oregon doctor, said UnitedHealth didn’t suggest diagnoses for patients he treated outside Medicare Advantage, where it doesn’t pay.

Traditional Medicare patients treated by UnitedHealth doctors had much lower sickness scores, the Journal’s analysis showed.

A case of hyperaldosteronism—the obscure hormonal condition that sometimes appeared on Jones’s checklists—could trigger about $2,000 a year in Medicare Advantage payments during the period the Journal studied. The Journal’s analysis showed that doctors who didn’t work for UnitedHealth seldom diagnosed that condition, which involves elevated levels of a hormone linked to high blood pressure.

. . .

“The system is not primarily about taking care of the patient,” said Dr. Emilie Scott, who worked for a UnitedHealth-owned practice in California before leaving in 2016. “It’s, how do you get the money to flow?”

The Journal analysis is based on billions of Medicare records obtained under a research agreement with the federal government. The Journal also examined internal documents from medical practices owned by or under contract with UnitedHealth.

. . .

When Dr. Naysha Isom started working at a UnitedHealth medical group in the Las Vegas area in 2019, she said, she got two days of training on how to record diagnoses. At the training, a UnitedHealth employee suggested that Isom, who had practiced for more than a decade, should consider diagnoses she had never made before.

Isom said she was told that signs of bruising could be recorded as senile purpura, a condition that generated payments in Medicare Advantage but generally didn’t require treatment. Isom saw no point, since the finding didn’t change patients’ care: “OK, wear some sunscreen. Maybe stop bumping the wall.”

After she decided not to diagnose peripheral artery disease, a narrowing of blood vessels, based on a screening test she distrusted, she said, a supervisor pressed her to reconsider. UnitedHealth didn’t require her to make diagnoses, she said.

“You’re just encouraged to, because obviously, if you don’t, they come bothering you,” said Isom, who left UnitedHealth to start her own practice in 2022.

UnitedHealth’s doctors in the Journal’s analysis diagnosed the bruising condition, which triggered extra payments of about $1,900 a year at the time, 28 times more often with patients in UnitedHealth Medicare Advantage plans than those in traditional Medicare.

. . .

Jones, the former UnitedHealth doctor in Oregon, said the suggestions included diagnoses based on scant evidence, such as long-term insulin use for patients who had received the drug only once during a long-ago hospital stay.

. . .

The design of the system, he said, could lead to good-faith errors as doctors clicked through all the boxes. “The system is made to have these happy little accidents that end up resulting in a lot of money from taxpayers,” he said.

. . .

Andy Pasternak, an independent family doctor in Reno, Nev., has lower-than-average sickness scores across his practice, records show. He said he gets a per-patient bonus of $2 a month, or $2,256 annually, for the 94 Medicare Advantage patients covered by his contract with UnitedHealth.

Pasternak said UnitedHealth offered to send nurses to visit those patients to diagnose them more fully. The company would pay him $250 for each patient their nurses examined, he said.

“That’s more than I get paid for treating my own patients,” he said. He said the focus on diagnosing has soured him on Medicare Advantage, and made him grateful when patients younger than 65 come to his office.

One UnitedHealth document reviewed by the Journal projected Pasternak could receive as much as $23,250 a year in such payments. A UnitedHealth executive in his area told him in an email his practice also would benefit from any additional diagnoses made by the nurse.

Valerie O’Meara, a former UnitedHealth nurse practitioner, said she never provided treatment for the patients she saw in doctors’ offices in Washington state. “Your job is finding diagnoses, that was clear as a bell,” she said. “I was like, am I finding all these things that the doctors who are taking care of these people didn’t find?”

She said a Minnesota-based UnitedHealth manager urged her to make new diagnoses beyond what doctors had treated. Patients were often confused, she said, about why she, not their own doctor, was examining them. “They don’t tell the patient, the nurse needs to see you to make sure your high-scoring medical problems are checked off this year.”

Chris Henretta, a UnitedHealth Medicare Advantage plan member who lives in The Villages, a retirement community in central Florida, was suspicious when his primary-care doctor diagnosed him as morbidly obese during his annual exam in October.

He is a lifelong weightlifter, plays water volleyball five times a week and has an athletic build.

“I told her I didn’t think I was obese,” Henretta said. When she recorded morbid obesity anyway, he said, he began to “suspect my doctor may have a financial incentive to portray people as higher risk.”

The diagnosis can trigger payments of about $2,400 a year to Medicare Advantage insurers.

For the full story see:

Christopher Weaver, Anna Wilde Mathews and Tom McGinty. “UnitedHealth’s Army of Doctors Helped It Boost Medicare Payments.” The Wall Street Journal (Tuesday, Dec. 31, 2024): A1 & A8.

(Note: ellipses, and bracketed year, added.)

(Note: the online version of the story has the date December 29, 2024, and has the title “UnitedHealth’s Army of Doctors Helped It Collect Billions More From Medicare.” In the passages I quote above, I do not include any of the subheadings that appeared in both the online and print versions of the article.)

To End Drug Shortages Make Healthcare a Free Market

Drug shortages are sometimes blamed on the free market. A bum rap. In a free market when supply declines or demand increases, prices rise, and the increase in price incentivizes a greater quantity supplied, eventually ending a short-run period where quantity demanded at the going price exceeds quantity supplied at the going price (in other words, a shortage). But healthcare in America is far from a free market. Every aspect is highly regulated. Prices are negotiated, often by middlemen called (Pharmacy Benefit Managers, aka PBMs), entry is not free, and the demanders (patients) often do not know (or care) about the prices, since they are paid by a third party (insurers, employers, or the government). Perverse incentives abound.

(p. A26) There’s been a bombardment of bad news for drug supplies. The American Society of Health-System Pharmacists found this summer that nearly all of the members it surveyed were experiencing drug shortages, which generally affect half a million Americans. Cancer patients have scrambled as supplies of chemotherapy drugs dwindle. Other shortages include antibiotics for treatable diseases, such as the only drug recommended for use during pregnancy to prevent congenital syphilis (a disease that is 11 times more common today than a decade ago), and A.D.H.D. medications, without which people struggle to function in their day-to-day lives. The toll on Americans is heavy.

Over half of the shortages documented this summer by health consulting firm IQVIA had persisted for more than two years. But even though drug shortages affect millions of Americans, policymakers and industry leaders have provided little to no long-term relief for people in need.

Shortages have occurred regularly since at least the early 2000s, when national tracking began. Hundreds of drugs, in every major therapeutic category, have been unavailable for some period. The average drug shortage lasts about 1.5 years. Even when substitute medications are available, they may be suboptimal (for example, deaths by septic shock rose by 10 percent during a 2011 shortage of the first-line medication, norepinephrine) or have spillover effects (such as possibly increasing the risk of antimicrobial resistance). In addition to harming patients, shortages have cost health systems billions of dollars in increased labor and substitute medications.

. . .

Large hospital chains can readily monitor shortage risks and preemptively place large orders. This panic buying can wipe out inventory, and leave hospitals with fewer resources strapped since they may get notice of a drug shortage only when it’s too late. There is little penalty for over-ordering because unused drugs can often be returned.

. . .

Addressing the underlying fragility of our essential drug supply will take structural change and investments. While all industries must grapple with how to build resilient supply chains, the pharmaceutical industry is unique. The people who are most affected by supply chain vulnerabilities — patients — are also those with least say in the choice to buy from reliable manufacturers. When people buy cars, they may pay more based on company reputation, ratings by outside testers and reviews from other customers. In contrast, patients bear the harm of drug shortages, yet they cannot choose the manufacturers of their essential drugs nor evaluate their reliability.

For the full commentary see:

Emily Tucker. “We’re Stuck in a Constant Cycle of Drug Shortages.” The New York Times (Thursday, December 7, 2023 [sic]): A26.

(Note: ellipses added.)

(Note: the online version of the commentary has the date Dec. 6, 2023 [sic], and has the title “America Is Having Yet Another Drug Shortage. Here’s Why It Keeps Happening.”)

The So-Called “Inflation Reduction Act” Reduces Incentives to Develop Small Molecule Drugs and Drugs for Seniors

A recent blog entry suggested that the so-called “Inflation Reduction Act” “creates an incentive for Pharma firms to develop many middling drugs rather than a couple of blockbuster drugs.” In the passages quoted below from a different David Wainer commentary, he suggests that the Act also incentivizes pharma firms to reallocate development funds away from drugs for seniors and away from biologics. He assumes that the reallocation is “unintended” rather than based on the government believing that seniors matter less than others, or that biologics deserve more funding than the previous semi-free market allocated to biologics.

(p. B14) . . . the Inflation Reduction Act, . . . requires the federal government to negotiate prices for some drugs. Merck Chief Executive Officer Robert Davis was just one of many to warn it will be “highly chilling on future innovation.”

The 274-page legislation passed in 2022 doesn’t look likely to be a massive damper on innovation, but it will surely have an impact on how capital is allocated. When companies look at their R&D budgets, they will have to consider the law’s ramifications.

. . .

. . ., there is no arguing with the fact that the bill is reshaping many incentives drug companies face. For example, critics of the law point out that it eliminates the incentive to conduct additional research once a drug has been approved—a common strategy to extend patent protection for a drug—because prices are negotiated after nine years for small-molecule drugs and 13 years for biologics. As Kirsten Axelsen, a visiting scholar at the American Enterprise Institute explains, many oncology medications are first approved for severely ill patients and over time those drugs are tested for patients in earlier stages of the disease.

“Thanks to that, we’re now able to hold back the progression of cancer so that many of the major cancers have five-year survival rates of longer than 90%,” says Ms. Axelsen, who is also a policy adviser to law firm DLA Piper.

. . .

The law . . . could shift investment toward drugs that target the general population and away from seniors. That is because it only empowers Medicare to negotiate prices, leaving the commercial market wide open.

. . .

Perhaps the most serious concern is that the law picks winners and losers by favoring biologic drugs over small molecules, which face price reductions four years sooner than their larger molecule counterparts.

Small molecule drugs are chemically derived and simpler to make and can usually be taken orally by patients. These drugs—think medicine cabinet essentials like aspirin or statins—dominated the pharmaceutical industry during the 20th century. Biologics, therapies that are extracted from living organisms, are usually given through an injection and, because of their higher price tags, make up the bulk of today’s top-selling drugs. While biologics are at the cutting edge of medicine, discoveries of new small-molecule drugs continue to be made.

Eli Lilly’s CEO, David Ricks, noted in a recent earnings call that “it sends a signal to investors” that small molecules “aren’t wanted and are worth a lot less.” That could tip the scales toward more development in biologics, a likely unintended consequence of the law.

MIT’s Professor Lo says that is like effectively creating a tax on small molecules, or a subsidy for larger ones.

For the full commentary see:

Wainer, David. “Heard on the Street; Drug Industry’s Secret Weapon: ‘Guided Missiles’.” The Wall Street Journal (Saturday, Jan. 7, 2023 [sic]): B14.

(Note: ellipses added.)

(Note: the online version of the commentary has the date January 6, 2023 [sic], and has the title “Heard on the Street; New Biden Law Won’t Kill Drug Cures. It Will Reshape Them.” In the next to last paragraph quoted above, the second quoted sentence appears in the online, but not the print, version of the commentary.)

Medicare Bureaucrats Let Pretty in Pink Boutique Defraud Taxpayers

Fraudsters are scamming the Medicare bureaucracy out of billions of taxpayer dollars. How boldly audacious the fraudsters are. They don’t even bother to give their fraudulent catheter supply firm a plausible name. Pretty in Pink Boutique? Are the fraudsters high, are they stupid, or do they take malicious pleasure in seeing how far they can go and still get away with it? And who is working for the Medicare bureaucracy? Are they simply bitter because they work for a bureaucracy that neither rewards competent hard work, nor punishes incompetent dereliction of duty? Does anyone in the government know the meaning of the phrase “due diligence”? Does anyone care? Congress creates the incentives and constraints and so is more responsible than the bureaucrats. The article quoted below gives one more example of why we flourish when free enterprise grows and government shrinks.

Yes I take this personally–my identity was stolen by fraudsters borrowing government Covid money in my name for an alleged potato farm. Of course the truth is more complicated than my rant implies. Bureaucrats can be conscientious and entrepreneurs can be corrupt. But I do believe that the incentives and constraints of government bureaucracy encourage corruption, or at least lethargic inertia. And the incentives and constraints of free enterprise encourage conscientious hard work and innovative dynamism.

(p. A1) Linda Hennis was checking her Medicare statement in January [2024] when she noticed something strange: It said a company she had never heard of had been paid about $12,000 for sending her 2,000 urinary catheters.

But she had never needed, or received, any catheters.

Ms. Hennis, a retired nurse who lives in a suburb of Chicago, noticed that the company selling the plastic tubes was called Pretty in Pink Boutique, and it was based in Texas. “There’s a mistake here,” Ms. Hennis recalled thinking.

She is among more than 450,000 Medicare beneficiaries whose accounts were billed for urinary catheters in 2023, up from about 50,000 in previous years, according to a new report produced by the National Association of Accountable Care Organizations, an advocacy group that represents hundreds of health care systems across the country. The report used a federal database of Medicare claims that is available to researchers.

The massive uptick in billing for catheters included $2 billion charged by seven high-volume suppliers, according to that analysis, potentially accounting for nearly one-fifth of all Medicare spending on medical supplies in 2023. Doctors, state insurance de-(p. A15)partments and health care groups around the country said the spike in claims for catheters that were never delivered suggested a far-reaching Medicare scam.

. . .

Catheters and other medical supplies are frequent targets of billing schemes. Last April [2023], the federal government brought criminal charges against 18 defendants who had submitted bills for nonexistent coronavirus tests and other pandemic-related services. And in 2019, the Department of Justice said it had broken up an international fraud ring involving more than $1 billion in phony billing for back and knee braces.

. . .

Patients and doctors who have been reporting mysterious catheter claims to Medicare for months say they are frustrated by a lack of communication from the government about whether billions of dollars have been lost to an ongoing billing scam.

One of the advocacy group’s members, Dr. Bob Rauner, runs a large network of doctors in Nebraska. In an interview, he said his patients had been collectively billed nearly $2 million in 2023 for phantom catheters. (He tracks such spending because his organization gets bonus payments from Medicare when patients have good health outcomes with low overall medical spending.)

. . .

The vast majority of the suspicious claims identified by the new analysis came from seven companies, many of which have shared executives, according to public documents and the advocacy group’s report. Only one of the businesses had a working phone number, and it did not return a request for comment. The other numbers were either disconnected, went to different businesses or, in one case, went to a previous owner.

Pretty in Pink Boutique is registered with Medicare to a street address of a house in El Paso. Its phone number goes to an auto body shop called West Texas Body and Paint, where an employee who answered a call from a reporter said the shop receives “calls all day, every day” from Medicare enrollees concerned about fraudulent bills.

Pamela Ludwig runs an unrelated business in Nashville that is also called Pretty in Pink Boutique. She has received so many catheter complaints that she added a page to her website explaining that her business was not part of any scam.

“I have people calling me, cussing, screaming,” Ms. Ludwig said. “They feel violated.”

For the full story see:

Sarah Kliff and Katie Thomas. “Billions in Claims for Catheters Suggest Medicare Billing Scam.” The New York Times (Saturday, February 10, 2024): A1 & A15.

(Note: ellipses, and bracketed years, added.)

(Note: the online version of the story has the date Feb. 9, 2024, and has the title “Staggering Rise in Catheter Bills Suggests Medicare Scam.”)

Dislodging Entrenched Special Interests Requires the Courage to Be the Target of Ill-Will

Many years ago, for reasons I forget, I listened to an interview posted online with Charlie Munger, who for decades was Warren Buffett’s sidekick at Berkshire Hathaway. One portion of Munger’s comments struck me as particularly insightful, so insightful, that I replayed that portion several times so I could write down a rough transcript of the comments. I am posting that rough transcript a few paragraphs below.

A lot of progress in healthcare, and in the world more broadly, depends on individual heroes who have the courage to be the target of ill-will in order to champion truth and virtue, against the powerful special interests that benefit from falsehood and corruption. Those who speak out are often cancelled and have their careers ruined. We remember a few of the names of those who eventually were vindicated. For example Ignaz Semmelweis was cancelled by the medical establishment for arguing that doctors should wash their hands before delivering babies. He eventually was vindicated and remembered, though long after he died of a beating in an insane asylum. Several much-more-recent examples can be found in Marty Makary’s thought-provoking Blind Spots. (Makary has been named by President-Elect Trump to head the Food and Drug Administration.)

Those like Semmelweis who suffered but were vindicated, are painful to ponder. How much more painful to ponder are those who fought the good fight but were never vindicated, and so are utterly forgotten? We justly honor the unknown soldier. We should find a way to also justly honor the unknown speaker of truth to power.

I cringe at Donald Trump’s occasional rudeness and bullying, but I hope that his courage to be the target of ill-will, allow him to succeed in unbinding the entrepreneurs who create breakthrough innovations.

Below is my transcript of a small portion of Charlie Munger’s comments at the University of Michigan in 2010. My memory is that Munger made his comments in answers to expansive questions from Becky Quick as part of a celebration to honor Munger’s donations to the University of Michigan. Munger’s story below is from health care, but the moral from the story applies much more broadly. (Munger’s interest in health care led him to chair the board of trustees of Good Samaritan Hospital in Los Angeles for over 30 years.)

And so there’s a lot of abuse in health care. And one of the ways you fix it is to, is for the people who have the power, they exercise it to prevent the abuse.

In a lot of places you have live and let live, in the hospitals it’s live and let live, because nobody wants to criticize anybody. That’s a huge mistake, a huge mistake.

In our leading academic hospitals (I’m sure this isn’t happening in Michigan); [1:41:03 of recording] but I have a friend whose daughter is head of infectious diseases and something at a medical school hospital, a great hospital.

And of course the doctors there are fishing the patients out of nursing homes, and bringing them in so they can walk by the beds, and bill them. And they are bringing in these terrible infections. And that takes a lot of treatment, and a lot of walks by the bed, and so on, and so on.

Of course the parents of this particular doctor recognize that she is sort of risking her life going through medical school because of the abuse of the system by some of the doctors in a hospital where nobody is stopping the abuse.

It’s like Burke said, for evil to triumph in the world, all that is necessary is that good men do nothing. And all over America some people are intervening to stop some of these abuses. And, and you have to identify them; you have to rationalize them; you have to be willing to take the ill-will.

I have a friend, this is another wonderful story on human nature, chief of the medical staff, southern California hospital.

A bunch of non-board-certified anesthesiologists, who came out of, I forget the sub-branch of medicine; but it’s not, it’s not chiropractic, but it’s . . . anyway they got in control of the anesthesia department of the hospital.

[1:42 of recording]

And he could see that they had created three totally unnecessary deaths and had covered up every single one. And he knew that this was just gonna to ruin his life. So he got rid of them all. Changed the whole system. He ruined families, he ruined incomes, he cleaned house. And he told me the story 20 years later, and I said what happened. And he said, to this day none of the people I cleaned out and none of their friends has ever spoken to me. He was willing to take all that ill will to do the Lord’s work, and do it right.

And you can say, why did he wait for the third death? Maybe he felt he needed that much horror to accomplish the fix.

But all over America, there are stories like that. That’s a GOOD story about human nature. That’s a story about wisdom and virtue triumphing; and of course they don’t always win.

Even in a bull fight, the bull sometimes wins.

[1:44 of recording– relevant segment over]

The interview with Munger is:

Quick, Rebecca (interviewer). “A Conversation with Charlie Munger.” University of Michigan Ross School of Business, Sept. 14, 2010.

(Note: at three places in the recording I roughly indicate in brackets the time into the posted recording, in case anyone wants to watch the video and check the accuracy of my rough transcript. Let me know if you find an error.)

The Marty Makary book that I praise in my initial comments is:

Makary, Marty. Blind Spots: When Medicine Gets It Wrong, and What It Means for Our Health. New York: Bloomsbury Publishing, 2024.

Medicare Rewards Health Insurers for Overestimating Future Prescription-Drug Costs

I believe that the perverse incentives that Medicare creates for insurers, as described in the 2019 article quoted below, still exist. But I need to confirm my belief.

(p. A1) Each June, health insurers send the government detailed cost forecasts for providing prescription-drug benefits to more than 40 million people on Medicare.

No one expects the estimates to be spot on. After all, it is a tall order to predict the exact drug spending for the following year of the thousands of members in each plan.

However, year after year, most of those estimates have turned out to be wrong in the particular way that, thanks to Medicare’s arcane payment rules, results in more revenue for the health insurers, a Wall Street Journal investigation has found. As a consequence, the insurers kept $9.1 billion more in taxpayer funds than they would have had their estimates been accurate from 2006 to 2015, according to Medicare data obtained by the Journal.

Those payments have largely been hidden from view since Medicare’s prescription-drug program was launched more than a decade ago, and are an example of how the secrecy of the $3.5 trillion U.S. health-care system promotes and obscures higher spending.

Medicare’s prescription-drug benefit, called Part D, was designed to help hold down drug costs by having insurers manage the coverage efficiently. Instead, Part D spending has accelerated (p. A12) faster than all other components of Medicare in recent years, rising 49% from $62.9 billion in 2010 to $93.8 billion in 2017. Medicare experts say the program’s design is contributing to that increase. Total spending for Part D from 2006 to 2015 was about $652 billion.

The cornerstone of Part D is a system in which private insurers such as CVS Health Corp., UnitedHealth Group Inc. and Humana Inc. submit “bids” estimating how much it will cost them to provide the benefit. The bids include their own profits and administrative costs for each plan. Then Medicare uses the estimates to make monthly payments to the plans.

After the year ends, Medicare compares the plans’ bids to the actual spending. If the insurer overestimated its costs, it pockets a chunk of the extra money it received from Medicare—sometimes all of it—and this can often translate into more profit for the insurer, in addition to the profit built into the approved bid. If the extra money is greater than 5% of the insurer’s original bid, it has to pay some of it back to Medicare.

For instance, in 2015, insurers overestimated costs by about $2.2 billion, and kept about $1.06 billion of it after paying back $1.1 billion to the government, according to the data reviewed by the Journal.

. . .

If those big insurers were aiming to submit accurate bids, the probability that they would have overestimated costs so frequently and by such a large amount is less than one in one million, according to a statistical analysis done for the Journal by researchers at Memorial Sloan Kettering Cancer Center, who study pharmaceutical pricing and reimbursement.

Insurance companies use heaps of data to predict future spending. If truly unpredictable events were blowing up their statistical models, the proportion of overestimates to underestimates would be closer to 50/50, says Peter Bach, director of Sloan Kettering’s Center for Health Policy and Outcomes, which conducted the statistical analysis.

“Even expert dart throwers don’t hit the bull’s-eye every time. But their misses are spread around in every direction,” says Dr. Bach. “If they start missing in one particular direction over and over they are doing it on purpose.”

For the full story see:

Joseph Walker and Christopher Weaver. “Medicare Overpaid Insurers Billions.” The Wall Street Journal (Saturday, Jan. 5, 2019 [sic]): A1 & A12.

(Note: ellipsis added.)

(Note: the online version of the story has the date Jan. 4, 2019 [sic], and has the title “The $9 Billion Upcharge: How Insurers Kept Extra Cash from Medicare.”)

Medical Researchers Have Incentive to Exclude Older Patients from Clinical Trials

As human beings, medical researchers would like to offer experimental therapies to whoever needs them and is willing to take the risks and uncertainty of new frontiers. But as practical medical researchers medical researchers know their careers depend on the success of their clinical trials, and the success of their clinical trials depends on the number of patients who thrive on the new therapy. So their personal incentive is to cherry-pick clinical trial enrollees, picking only the most robust who are most likely to thrive. The solution? Allow medical researchers to be both human beings and medical researchers. Allow them to give the therapy to those at high risk, based on their cumulative experience and judgement. Not all sound actionable knowledge arises from randomized double-blind clinical trials.

(p. A5) Many cancer trials cap enrollment at age 65. Even when trials for older people are available, oncologists are reluctant to enroll elderly patients because frailties might make them less resilient against side effects from toxic treatments, according to a 2020 study in an American Cancer Society journal. People over 70 represent a growing share of the cancer-patient population but are vastly underrepresented in clinical trials, the study said.

“How can we make decisions for people over 70 if people over 70 are not included in the trials that we use to base our decision making?” said Dr. Mina Sedrak, deputy director of the Center for Cancer and Aging at City of Hope, a cancer center near Los Angeles and an author of the paper.

. . .

The Food and Drug Administration guidelines recommend “adequate representation” of the elderly in cancer trials, including people over age 75. The Journal of the National Cancer Institute in December 2022 published a series of papers presented at a workshop focused on how to improve trial enrollment of older people.

Researchers have developed geriatric assessment tools that try to predict patients’ survival chances based on more than age alone. Professional groups are also working to try to address gaps. Despite these efforts, enrollment of older patients still lags behind, cancer doctors said.

. . .

To participate in many trials involving transplants, patients would have to undergo the more intense chemotherapy whether randomly assigned to receive an experimental treatment or the standard of care. That makes it harder to incorporate older patients into randomized trials, cancer doctors said.

For the full story see:

Amy Dockser Marcus. “Cancer Patient Contests Age Limit for Clinical Trials.” The Wall Street Journal (Monday, Jan. 9, 2023 [sic]): A5.

(Note: ellipses added.)

(Note: the online version of the story has the date Jan. 8, 2023 [sic], and has the title “71-Year-Old Cancer Patient Broke Trial Age Limits for a Chance at a Cure.”)

A preface to the “series of papers” about how to improve trial enrollment of older people,” mentioned above, is:

St. Germain, Diane, and Supriya G Mohile. “Preface: Engaging Older Adults in Cancer Clinical Trials Conducted in the National Cancer Institute Clinical Trials Network: Opportunities to Enhance Accrual.” JNCI Monographs 2022, no. 60 (Dec. 2022): 107-10.