Category: Incentives

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.

Time Constraints for Tenure, Promotion, and Funding Decisions Lead Academic Biologists to Over-Study Already-Studied Genes

George Stigler argued that when most economists were self-funded business practitioners economics was more applied and empirical, while after most economists were academics funded by endowments or the government economics became less applied and more formal. [In a quick search I failed to identify the article where Stigler says this–sorry.] A similar point was made to science more broadly by Terence Kealey in his thought-provoking The Economic Laws of Scientific Research. The article quoted below argues persuasively that research on human genes is aligned with the career survival goals of academics, rather than with either the faster advance of science or the quicker cure of diseases like cancer. The alignment could be improved if more of research funding came from a variety of private sources.

(p. D3) In a study published Tuesday [Sept. 18, 2018] in PLOS Biology, researchers at Northwestern University reported that of our 20,000 protein-coding genes, about 5,400 have never been the subject of a single dedicated paper.

Most of our other genes have been almost as badly neglected, the subjects of minor investigation at best. A tiny fraction — 2,000 of them — have hogged most of the attention, the focus of 90 percent of the scientific studies published in recent years.

A number of factors are largely responsible for this wild imbalance, and they say a lot about how scientists approach science.

. . .

It was possible, . . ., that scientists were rationally focusing attention only on the genes that matter most. Perhaps they only studied the genes involved in cancer and other diseases.

That was not the case, it turned out. “There are lots of genes that are important for cancer, but only a small subset of them are being studied,” said Dr. Amaral.

. . .

A long history helps, . . . . The genes that are intensively studied now tend to be the ones that were discovered long ago.

Some 16 percent of all human genes were identified by 1991. Those genes were the subjects of about half of all genetic research published in 2015.

One reason is that the longer scientists study a gene, the easier it gets, noted Thomas Stoeger, a post-doctoral researcher at Northwestern and a co-author of the new report.

“People who study these genes have a head start over scientists who have to make tools to study other genes,” he said.

That head start may make all the difference in the scramble to publish research and land a job. Graduate students who investigated the least studied genes were much less likely to become a principal investigators later in their careers, the new study found.

“All the rewards are set up for you to study what has been well-studied,” Dr. Amaral said.

“With the Human Genome Project, we thought everything was going to change,” he added. “And what our analysis shows is pretty much nothing changed.”

If these trends continue as they have for decades, the human genome will remain a terra incognito for a long time. At this rate, it would take a century or longer for scientists to publish at least one paper on every one of our 20,000 genes.

That slow pace of discovery may well stymie advances in medicine, Dr. Amaral said. “We keep looking at the same genes as targets for our drugs. We are ignoring the vast majority of the genome,” he said.

Scientists won’t change their ways without a major shift in how science gets done, he added. “I can’t believe the system can move in that direction by itself,” he said.

Dr. Stoeger argued that the scientific community should recognize that a researcher who studies the least known genes may need extra time to get results.

“People who do something new need some protection,” he said.

For the full commentary see:

Carl Zimmer. “Matter; The Problem With DNA Research.” The New York Times (Tuesday, September 25, 2018 [sic]): D3.

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

(Note: the online version of the commentary has the date Sept. 18, 2018 [sic], and has the title “Matter; Why Your DNA Is Still Uncharted Territory.” Where there are differences in wording between the versions, the passages quoted above follow the online version.)

The paper in PLOS Biology co-authored by Thomas Stoeger and mentioned above is:

Stoeger, Thomas, Martin Gerlach, Richard I. Morimoto, and Luís A. Nunes Amaral. “Large-Scale Investigation of the Reasons Why Potentially Important Genes Are Ignored.” PLOS Biology 16, no. 9 (2018): e2006643.

Kealey’s book, praised above, is:

Kealey, Terence. The Economic Laws of Scientific Research. New York: St. Martin’s Press, 1996.

“Most Published Research Findings Are False”

(p. 10) How much of biomedical research is actually wrong? John Ioannidis, an epidemiologist and health-policy researcher at Stanford, was among the first to sound the alarm with a 2005 article in the journal PLOS Medicine. He showed that small sample sizes and bias in study design were chronic problems in the field and served to grossly overestimate positive results. His dramatic bottom line was that “most published research findings are false.”

The problem is especially acute in laboratory studies with animals, in which scientists often use just a few animals and fail to select them randomly. Such errors inevitably introduce bias. Large-scale human studies, of the sort used in drug testing, are less likely to be compromised in this way, but they have their own failings: It’s tempting for scientists (like everyone else) (p. C2) to see what they want to see in their findings, and data may be cherry-picked or massaged to arrive at a desired conclusion.

A paper published in February [2017] in the journal PLOS One by Estelle Dumas-Mallet and colleagues at the University of Bordeaux tracked 156 biomedical studies that had been the subject of stories in major English-language newspapers. Follow-up studies, they showed, overturned half of those initial positive results (though such disconfirmation rarely got follow-up news coverage). The studies dealt with a wide range of issues, including the biology of attention-deficit hyperactivity disorder, new breast-cancer susceptibility genes, a reported link between pesticide exposure and Parkinson’s disease, and the role of a virus in autism.

Reviews by pharmaceutical companies have delivered equally grim numbers. In 2011, scientists at Bayer published a paper in the journal Nature Reviews Drug Discovery showing that they could replicate only 25% of the findings of various studies. The following year, C. Glenn Begley, the head of cancer research at Amgen, reported in the journal Nature that he and his colleagues could reproduce only six of 53 seemingly promising studies, even after enlisting help from some of the original scientists.

With millions of dollars on the line, industry scientists overseeing clinical trials with human subjects have a stronger incentive to follow high standards. Such studies are often designed in cooperation with the U.S. Food and Drug Administration, which ultimately reviews the findings. Still, most clinical trials produce disappointing results, often because the lab studies on which they are based were themselves flawed.

For the full essay see:

Harris, Richard. “Dismal Science In the Search for Cures.” The Wall Street Journal (Saturday, April 8, 2017 [sic]): C1-C2.

(Note: bracketed year added.)

(Note: the online version of the essay was updated April 7, 2017 [sic], and has the title “The Breakdown in Biomedical Research.”)

The essay quoted above is adapted from Mr. Harris’s book:

Harris, Richard. Rigor Mortis: How Sloppy Science Creates Worthless Cures, Crushes Hope, and Wastes Billions. New York: Basic Books, 2017.

The 2005 paper by Ioannidis mentioned above is:

Ioannidis, John P. A. “Why Most Published Research Findings Are False.” PLoS Medicine 2, no. 8 (2005): 696-701.

Constraints and Incentives Help Explain Useless Medical Procedures

(p. D4) Researchers surveyed 2,106 physicians in various specialties regarding their beliefs about unnecessary medical care. On average, the doctors believed that 20.6 percent of all medical care was unnecessary, including 22 percent of prescriptions, 24.9 percent of tests and 11.1 percent of procedures. The study is in PLOS One.

Nearly 85 percent said the reason for overtreatment was fear of malpractice suits, . . .

. . .

More than 70 percent of doctors conceded that physicians are more likely to perform unnecessary procedures when they profit from them, while only 9.2 percent said that their own financial security was a factor.

“This study is essentially the voice of physicians about the problem,” said the senior author, Dr. Martin A. Makary, a professor of surgery at Johns Hopkins. “We’re told that there are too many operations done for narrowed blood vessels in the legs. Spine surgeons say that a quarter of all spine surgery may not be necessary. Half of stents placed may be unnecessary. These are significant opportunities to improve quality and lower costs.”

For the full story see:

Nicholas Bakalar. “Doctors: Overtreatment Weighed.” The New York Times (Tuesday, September 12, 2017 [sic]): D4.

(Note: ellipses added.)

(Note: the online version of the story has the date Sept. 6, 2017 [sic], and has the same title “Overtreatment Is Common, Doctors Say.”)

The academic study in PLOS One mentioned above is:

Lyu, Heather, Tim Xu, Daniel Brotman, Brandan Mayer-Blackwell, Michol Cooper, Michael Daniel, Elizabeth C. Wick, Vikas Saini, Shannon Brownlee, and Martin A. Makary. “Overtreatment in the United States.” PLOS ONE 12, no. 9 (2017): e0181970.

People Thinking about the Rules They Have to Obey, Are Not Thinking about the Problems They Have to Solve

(p. A18) . . . I looked into the growing bureaucratization of American life. It’s not only that growing bureaucracies cost a lot of money; they also enervate American society. They redistribute power from workers to rule makers, and in so doing sap initiative, discretion, creativity and drive.

Once you start poking around, the statistics are staggering. Over a third of all health care costs go to administration. As the health care expert David Himmelstein put it in 2020, “The average American is paying more than $2,000 a year for useless bureaucracy.” All of us who have been entangled in the medical system know why administrators are there: to wrangle over coverage for the treatments doctors think patients need.

. . .

In every organization I’ve interacted with, the administrators genuinely want to serve the mission of the organization, but the nature of their jobs is to enforce compliance with this or that rule.

Their power is similar to what Annie Lowrey of The Atlantic has called the “time tax.” If you’ve ever fought a health care, corporate or university bureaucracy, you quickly realize you don’t have the time for it, so you give up. I don’t know about you, but my health insurer sometimes denies my family coverage for things that seem like obvious necessities, but I let it go unless it’s a major expense. I calculate that my time is more valuable.

As Philip K. Howard has been arguing for years, good organizations give people discretion to do what is right. But the trend in public and private sector organizations has been to write rules that rob people of the power of discretion. These are two different mentalities. As Howard writes, “Studies of cognitive overload suggest that the real problem is that people who are thinking about rules actually have diminished capacity to think about solving problems.”

. . .

. . ., Mark Edmundson teaches literature at the University of Virginia. The annual self-evaluations he had to submit used to be one page. Now he has to fill out about 15 electronic pages of bureaucratese that include demonstrating how his work advances D.E.I., to make sure his every waking moment conforms to the reigning ideology.

In a recent essay in Liberties Journal, he illustrates how administrators control campus life . . .

. . .

Organizations are trying to protect themselves from lawsuits, but the whole administrative apparatus comes with an implied view of human nature. People are weak, fragile, vulnerable and kind of stupid. They need administrators to run their lives. They have to be trained never to take initiative, lest they wander off into activities that are deemed by the authorities to be out of bounds.

The result is the soft despotism that Tocqueville warned us about centuries ago, a power that “is absolute, minute, regular, provident and mild.” In his Liberties essay, Edmundson writes that this kind of power is now centerless. Presidents and executives don’t run companies, universities or nations. Power is now held by everyone who issues work surveys and annual reports, the people who create H.R. trainings and collect data. He concludes: “They are using the terms of liberation to bring more and more free people closer to mental serfdom. Some day they will awaken in a cage of their own devising, so harshly confining that even they, drunk on their own virtue, will have to notice how their lives are the lives of snails tucked in their shells.”

Trumpian populism is about many things, but one of them is this: working-class people rebelling against administrators. It is about people who want to lead lives of freedom, creativity and vitality, who find themselves working at jobs, sending their kids to schools and visiting hospitals, where they confront “an immense and tutelary power” (Tocqueville’s words) that is out to diminish them.

For the full commentary see:

David Brooks. “Death by a Thousand Paper Cuts.” The New York Times (Friday, January 18, 2024): A18.

(Note: ellipses added.)

(Note: the online version of the commentary has the date January 19, 2024, and has the title “Lessons of the Trump Assassination Attempt.”)

The article by Lowrey mentioned above is:

Lowrey, Annie. “The Time Tax; Why Is So Much American Bureaucracy Left to Average Citizens?” The Atlantic, July 27, 2021. Available at: https://www.theatlantic.com/politics/archive/2021/07/how-government-learned-waste-your-time-tax/619568/

The academic paper co-authored by Himmelstein that underlies the Reuters article cited by Brooks above is:

Himmelstein, David, Terry Campbell, and Steffie Woolhandler. “Health Care Administrative Costs in the United States and Canada, 2017.” Annals of Internal Medicine (2020) doi:10.7326/M19-2818.

The article by Howard mentioned above is:

Howard, Philip K. “Bureaucracy Vs. Democracy.” The American Interest (Jan. 31, 2019) Available at: https://www.nytimes.com/2024/01/18/opinion/american-life-bureaucracy.html?searchResultPosition=1.

The article by Edmundson mentioned above is:

Edmundson, Mark. “Good People: The New Discipline.” Liberties Journal 3, no. 4 (2023) Available at: https://libertiesjournal.com/articles/good-people-the-new-discipline/.

The two Tocqueville quotes are from Book 4, Chapter 6 of:

Tocqueville, Alexis de. Democracy in America. Chicago: University of Chicago Press, 2000 (1st ed. 1835).

Regulations Slow the Creation and Adoption of Healthcare Breakthroughs

CPR is “cardiopulmonary resuscitation.” ECPR is “extracorporeal CPR.” The ATTEST randomized double-blind clinical trial (RCT) provided dramatic evidence of the efficacy of ECPR. But the INCEPTION RCT seemed to provide equally strong evidence of a lack of efficacy. The key difference is the high level of experience and dedication of those implementing the ATTEST RCT, and the lack of experience, and likely lower dedication of those in the INCEPTION RCT. Dr. Demetris Yannopoulos has improved his techniques through trial and error, probably in some ways that he can articulate and in other ways that are harder to articulate. Gary Klein with his naturalistic decision-making research, writes that experience gives emergency workers a quick “recognition” of what needs to be done in different situations.

At what point in the development of a therapy do you perform the canonical RCT? In the case of Emil Freireich’s four drug chemo-cocktail for curing childhood leukemia, he continually improved the ingredients and doses of the cocktail. If an RCT had been performed too early in that process, the result would have been a lack of efficacy, and a therapy would have been abandoned that had the potential to be developed into a useful efficacious therapy. Ditto for Vince DeVita’s development of his chemo-cocktail for curing Hodgkin’s Lymphoma. Ditto also for the development of the drug that eventually proved efficacious in the For Blood and Money book, where Stanford cancer doctor and Pharmacyclics co-founder acquired and developed cancer therapy Imbruvica, but abandoned it after an RCT of it failed. But Miller was ousted by major Pharmacyclics stock-holder, and entrepreneurial non-scientist, Bob Duggan, who did not want to give up on Imbruvica. Duggan persevered, overseeing its further development, until a later RCT was performed that proved efficacy.

In an earlier entry, I documented a much simpler and cheaper CPR innovation that also promises to improve heart failure therapy, called “neuroprotective CPR” (NCPR). Which one, if either, of ECPR or NCPR should we endorse? Ideally, in a fully function medical marketplace, we could comfortably say: “let the market decide.” Entrepreneurial scientists and physicians could develop the therapies and see how many willing patients would be willing to pay for each. Maybe the more expensive ECPR therapy would initially only be bought by the better-off. But as Yannopoulos improves it, as he is already working to do, making it simpler and cheaper, it would eventually be appealing to a broader customers. In Openness, I claim that this is the common path of a great many breakthrough innovations in areas outside of medicine.

Notice that the ECPR was heavily funded by the Helmsley Trust, a private foundation. This is consistent with my claim that medical innovation benefits from a diversity of funding sources, especially of private funding sources that are more likely to fund a diversity of methods and to take chances with heterodox ideas, partly motivated by private funders’ greater mission-orientation due to having more ‘skin-in-the-game.’

Notice also that Yannopoulos’s implementation of ECPR was constrained by a scarcity of trained personnel. Yannopoulos could not act as a nimble entrepreneur because massive regulations limit nimble entrepreneurship in healthcare. This is especially try on labor market issues where massive labor market regulations pile on top of massive healthcare regulations. Breakthrough innovations are usually implemented by small nimble start-ups. To create Disneyland, Walt Disney created WED Enterprises, instead of try to created it with the large incumbent The Walt Disney Company. Jonathan Bush tried nimble labor market innovation in healthcare, but was stymied by regulations. So in the ECPR case, Yannopoulos had the beds to care for more cardiac arrest patients, but could not fill those rooms because of a lack of trained healthcare workers. He could not simply offer higher pay. He was part of a larger organization where he had limited decision-rights that reduced his nimble control. (On the importance of decision-rights, see Koch 2007.)

(p. 27) In reality, by the time a patient without a pulse arrives in the E.R., we know what the outcome is going to be. We continue CPR and shock the patient if we can. We insert a breathing tube and connect it to a ventilator. We inject medications: adrenaline, heart-rhythm drugs. But these treatments almost always fail.

. . .

Demetris Yannopoulos, an interventional cardiologist and professor at the University of Minnesota Medical School who created its Center for Resuscitation Medicine, refused to accept that this was the best doctors could do. In 2014, he began performing ECPR, a treatment that was starting to catch on in a few places, mostly in Asia and Europe. To his surprise, patients he didn’t expect to survive ended up doing well.  . . .

When a patient in cardiac arrest is placed on an extracorporeal membrane oxygenation (ECMO) machine, as Sauer was, the treatment is called ECPR. The type of ECMO intervention used in ECPR provides full life support, which means it does the work of both lungs and heart. (Another type of ECMO, used on Covid-19 patients, helps just with breathing.) ECMO evolved from the heart-lung machines that started being used during heart surgery in the 1950s.

. . .

ECPR by itself doesn’t actually cure anything. But by providing fresh blood flow to the brain and other organs, it lets the body rest and gives doctors time to fix the underlying problem, if it’s fixable.  . . .  After patients are hooked up to ECMO, angiograms of their hearts are typically performed to determine whether they have clogged arteries — as about 85 percent do. In Sauer’s case, Yannopoulos found a blockage in his largest heart vessel, the left anterior descending artery, also known as “the widow maker.” He inserted a stent to open it back up.

. . .

(p. 28) Several years after the program started, Yannopoulos, Bartos and their team conducted the first randomized, controlled trial of ECPR. The results were published in The Lancet in 2020 as the ARREST trial.  . . .

After enrolling just 30 patients, the ARREST trial was stopped early by an N.I.H. board because the patients who got ECPR did so much better than the control-group subjects who received standard resuscitation, and it would have been unethical to continue the study. After six months, 43 percent of the 14 patients who got ECPR were alive with good brain function, compared with zero in the control group.

. . .

The Helmsley Trust gave Yannopoulos grants totaling $19.4 million, which enabled him to add this “hub and spoke” mobile component to his program: The university hospital would be the hub, and a truck and some local hospitals would be the spokes. “It was a real big bet,” Panzirer told me.

To reach patients in areas that were more suburban and rural, Yannopoulos first had to team up with surrounding health systems. Competition is more often the norm among health systems, rather than collaboration, but he persuaded his chief executive, James Hereford, to gather his counterparts from other institutions. Eventually, they were willing to work together. But they had to sort out a lot more than simply agreeing to collaborate. How would insurers pay for what they were doing? Would the initial hospital get the money, or would the university hospital? Would malpractice coverage protect doctors outside their own institutions? What about transport?

Every question could be turned into a reason for hospital administrators and lawyers to say no.

. . .

(p. 29) The economics of ECPR are in line with those of other established lifesaving interventions, like dialysis and heart transplants. And if patients don’t survive, ECPR may perfuse their bodies with enough oxygen to keep their organs eligible for donation. The program in Minnesota costs about $3.2 million a year to operate, which is covered by its revenue. This doesn’t include the start-up funding from the Helmsley Trust, however, or the significant groundwork Yannopoulos laid before that — or his personal sacrifices. “When I started, I had hair and my beard was black,” says Yannopoulos, who is mostly bald and gray. For seven years, he was not paid for his ECPR work; some years, he was on call every day. Today, he still spends about 6,500 hours on call annually. “It’s the force of his will more than anything,” Hereford says when explaining why the program has succeeded.

. . .

Yannopoulos has invited physicians from all over to visit his program; afterward, he often hears from them that replicating his work at their home institutions — getting health and E.M.S. systems to collaborate, finding institutional support and start-up funding, coordinating 24/7 staffing — seems too daunting. For these reasons, Yannopoulos regards his ECPR program as “an administrative and political achievement, rather than a scientific or technological one.”

. . .

(p. 30) The trial, called INCEPTION, compared ECPR with standard care across 10 medical centers in the Netherlands. It was the first randomized, controlled trial to look at ECPR across multiple facilities, and unlike the ARREST trial, it found that ECPR resulted in similar survival as standard treatments.  . . .

Yet there are reasons to interpret the study as saying more about the real-world challenges of developing and implementing ECPR programs than it does about the treatment itself. In the INCEPTION trial, it took roughly a half-hour longer for patients to get on an ECMO machine once they arrived at the hospital than it did in the ARREST study. Of the patients who got ECPR, 12 percent were not successfully connected to the machines, compared with zero in ARREST. Several Dutch hospitals handled only a couple of ECPR cases a year, which means they hadn’t yet acquired the right skills. “I think they were destined for failure because of that rollout, with no experience up front,” Bartos says.

Experience matters profoundly: According to a 2022 paper based on data from the Extracorporeal Life Support Organization, an international nonprofit that Robert Bartlett founded, patients treated at centers that perform fewer than 10 ECPR procedures yearly have 64 percent lower odds of survival; for every 10-case increase, the odds go up 11 percent. (The Minnesota program treats about 150 every year.)

Not only does the procedure itself require mastery, but so, too, does the care in the I.C.U. afterward — an ineffable art as much as a precise science.

. . .

(p. 45) . . . it’s not much of a surprise to hear Yannopoulos ask, “What does INCEPTION have to do with what we’re doing?” His program was carefully developed, with deep expertise, over years, to achieve the best outcomes; INCEPTION studied what would happen if a lot of hospitals started doing ECPR tomorrow.

Engineering the ideal ECPR program can feel like a maddening calculus involving experience, availability and distance — all to beat time. To treat patients faster, maybe doctors should go directly to the scene. For more than a decade, doctors in France have been doing just that, performing ECPR on the streets of Paris, in Métro stations, even on the oak parquet floors of the Louvre. Early on, Lionel Lamhaut, the head of Paris’s ECMO team, was told that he was “a cowboy to try to do something outside the hospital.” But as he and his colleagues persisted, they “started a new way of thinking.”

. . .

. . . as much money as the Helmsley Trust has given, it is not enough to overcome some of the structural limitations in the American health care system. The organization funded a multimillion-dollar expansion of the cardiovascular I.C.U. at Yannopoulos’s hospital to add 12 more spacious rooms specifically designed to accommodate patients on ECMO. But on a weekend in January when I visited, the I.C.U. was closed to new ECPR patients: Not enough nurses were available to work, so four beds in the unit were kept empty.

Even as Yannopoulos and his team hit administrative roadblocks like these, they are still trying to redefine what is medically possible. Recently, a 74-year-old man collapsed on the streets of St. Paul and went into cardiac arrest. Forty-two minutes after the first 911 call, the man was already on ECMO and had regained his pulse. Yannopoulos was optimistic about the case, given how quickly ECMO was started, even though the patient had not been shocked with a defibrillator — which meant he technically fell outside the protocol and should not have received ECPR at all. (After a week in the I.C.U., the man died when his family decided to stop all treatment.)

The man’s heart was almost certainly in pulseless electrical activity (P.E.A.), which many experts think should not be treated with ECPR. Of the three published ECPR randomized, controlled trials, only one did not limit the intervention to people with shockable rhythms. That ambitious trial, in Prague, included patients whose hearts were in the same P.E.A. pattern as the St. Paul man’s. The study was stopped early when it appeared that ECPR wasn’t saving significantly more people than standard care was. These enigmatic cases that lack shockable rhythms are vexing: When the Prague data was reanalyzed without these patients, the findings were favorable for ECPR.

Yannopoulos is undeterred by the Prague results. “You have to decide what’s more important: your survival rate” — what is often used in studies and by institutions to justify support for a program — “or the number of patients you actually save.” Because its program is now well established, Yannopoulos’s team is starting to treat patients with less promising rhythms, even though that may drive down its overall survival rate.  . . .

Yannopoulos wonders if, in a decade or perhaps less, ECPR science will still require the same specially trained teams using the same high-tech equipment — at least before patients get to the hospital. Instead, he imagines small cannulas that will be easy to place in the patient’s neck and attached to compact, simple machines that provide some blood flow to the brain. In his vision, which he is currently working to realize, medics could be trained to start people on this, and then doctors could transition them to regular ECMO once they reach the hospital. If the brain is protected, the rest of the body can eventually recover.

. . .

“There is this idea that people in cardiac arrest, you cannot harm them,” Yannopoulos says. For some doctors, that means cycling relentlessly through chest compressions and medications, so they feel as if they did everything they could. For others, it means briefly going through the motions, so they feel as if they did something. And for still others, it has always seemed kindest to do nothing at all, to let their patients die peacefully. Because almost none of them lived — no matter what the doctors did. “But now we know what is possible,” Yannopoulos says. “So if you’re not achieving that, then you are harming them in a way, right?”

For the full story see:

Helen Ouyang. “Reinventing CPR.” The New York Times Magazine (Sunday, March 31, 2024): 22-31 & 45.

(Note: ellipses added.)

(Note: the online version of the story was updated June [sic] 19, 2024, and has the title “The Race to Reinvent CPR.”)

Some references relevant to my discussion at the start of this entry are:

Bush, Jonathan, and Stephen Baker. Where Does It Hurt?: An Entrepreneur’s Guide to Fixing Health Care. New York: Portfolio, 2014.

DeVita, Vincent T., and Elizabeth DeVita-Raeburn. The Death of Cancer: After Fifty Years on the Front Lines of Medicine, a Pioneering Oncologist Reveals Why the War on Cancer Is Winnable–and How We Can Get There. New York: Sarah Crichton Books, 2015.

Diamond, Arthur M., Jr. Openness to Creative Destruction: Sustaining Innovative Dynamism. New York: Oxford University Press, 2019.

Klein, Gary A. Seeing What Others Don’t: The Remarkable Ways We Gain Insights. Philadelphia, PA: PublicAffairs, 2013.

Klein, Gary A. Sources of Power: How People Make Decisions. 20th Anniversary ed. Cambridge, MA: The MIT Press, 2017.

Klein, Gary A. Streetlights and Shadows: Searching for the Keys to Adaptive Decision Making. Cambridge, MA: The MIT Press, 2009.

Koch, Charles G. The Science of Success: How Market-Based Management Built the World’s Largest Private Company. Hoboken, NJ: Wiley & Sons, Inc., 2007.

Silberner, Joanne. “How a Plunger Improved CPR.” The New York Times (Tues., June 27, 2023): D5.

Taleb, Nassim Nicholas. Skin in the Game: Hidden Asymmetries in Daily Life. New York: Random House, 2018.

Vardi, Nathan. For Blood and Money: Billionaires, Biotech, and the Quest for a Blockbuster Drug. New York: W. W. Norton & Company, 2023.