Yearly Archives: 2007

Medical tourism interview with Bumrungrad’s Curt Schroeder (transcript)

I’ve posted the transcript of my recent podcast interview with Curt Schroeder at MedTripInfo.com. Despite some serious jet lag, Curt provided significant insight during the discussion. It’s definitely worth a read if you have the time. Here’s the start:

David: Curt, can you tell me what are the basic cost differences between hospitals in Thailand and the U.S.? And, what are the drivers of those differences?

Curt: I think, typically, the price differential has been about 80 percent of the overall U.S. cost, so quite a bit less; a factor of four or five times. Obviously, the primary drivers of that are things like lower cost of personnel, which are quite noticeable, but I think beyond that is the actual model to deliver the care. It is substantially different in Thailand.

We have a very large, essentially multispecialty group practice made up of 700 or 800 physicians all operating as independent practitioners, but under one roof. What you get with that, is a very large clinic taking care of 1.2 million people a year, backed by a 550 bed hospital.

With that, you also get all the advantages: the economies of scale and the efficiency of the practice, so there is very little duplication; the doctors have access, as appropriate, to the medical records of the patients if they are being treated by other team members.

Altogether, it is not only a very inexpensive, but also a very efficient way of treating patients. Together with the obvious lower cost environment and less litigious environment, in terms of medical malpractice, this makes it a very cost effective comparison.

David:
How much of the difference is attributable to just the model of care versus the labor side, if you are able to break it down? Also, on the malpractice side, I know there is a direct cost difference, in terms of the actual malpractice premium that you might pay, or pay outs that might have to be made. Does it also affect the style of care? Does it enable a different sort of a model, if you are operating in a different kind of litigation environment than you would be in the U.S.?

Curt:: Certainly. A lot of it has been talked about in the U.S. with the litigious environment of defensive medicine. I think I have been able to see both; I have been a CEO of hospitals in the U.S., as well as other countries in addition to Thailand.

I have seen the actual effect, when physicians are nervous about litigation. They order more than, perhaps, they need to to protect themselves. Frankly, there is also a lot of overordering related to poor coordination of care, when doctors do not know what other doctors are doing in real time. Taking advantage of, for instance, a common electronic medical record that we use, you reduce a lot of that duplication.

In addition, when you are not so worried about lawyers coming after you, you tend to practice more what you got taught in medical school, which is what you actually need to do to diagnose and treat a patient. I think all those are pretty powerful, in terms of the overall cost reduction.

How much is related to the local cost, for example: our salaries? When you look at salaries as a percentage of the cost in the United States, it is upwards of 50 to 60 percent. In Asia, it is closer to the mid-teens at Bumrungrad, it is about 16 percent. Of course, that is on the back of costs that are 80 percent less, so you can do the math and figure out how much less it costs.

These are all baccalaureate trained nurses giving excellent service. Our physicians are, of course, all board certified in their specialties. 250 of our physicians at Bumrungrad are U.S. board certified, fully certified by boards in the U.S. Therefore I think that the value which can be delivered in that environment is incredible.

If you look at the physician fees, the physician fees are equally good value. The average doctor fee, to see as an outpatient at a place like Bumrungrad, is about $14. To see a board certified cardiologist or a gastroenterologist –this is pretty good value internationally.

You may ask, “Why is that?” I attribute it to a couple of things, not the least of which is the fact that, I think, the physicians’ expectations of income in Asia are less than they are in the U.S. and developed world. They do live well. They send their kids to good schools, but they are not considered the multimillionaires that they might be in other areas.

In addition to that, they have the advantage of working in these large multispecialty clinics, where they have very little overhead. The overhead offered to a physician in the U.S. is probably 50 to 60 percent. In Thailand, it is probably five or six percent, because they are working in a very large, multispecialty type of clinic, where there are thousands of patients going through a day. They get the advantage of that economy of scale.

They do not have to buy their own space; they do not have to rent; they do not have to buy their own computers; they do not have to worry about all of these complicated insurance forms. That is all taken care of by the hospital. Therefore they can afford to get much better pricing, where their overhead throughput is much, much higher.

To continue reading, see MedTripInfo.com.

Genentech and ophtalmologists now see eye to eye on Avastin

As reported extensively on this blog (see here, here, here, here, here, here, and here ) Genentech has undergone a contentious period with the American Academy of Ophthalmology (AAO) and American Society of Retina Specialists (ASRS). Compounding pharmacies have been repackaging Avastin into small doses, which eye doctors then use in place of Lucentis, a very similar drug from Genentech that is indicated for ocular use. This has been a real headache for Genentech, because repackaged Avastin sells for about $40 compared to Lucentis, which is $2000. The latest controversy was triggered when Genentech announced its intention to stop distributing Avastin to compounding pharmacies.

Now the parties seem to have come to terms. The way I read the statements (see below) from Genentech and AAO/ASRS, physicians have essentially gotten what they wanted.

A number of fascinating issues are raised by this controversy, including:

  • Is Genentech selling a product or a solution to a problem? Obviously the manufacturing cost of Avastin/Lucentis is low relative to the sales price. If Genentech can make a real impact on wet Age Related Macular Degeneration they probably deserve more than $40 for it. Think of it like software: Microsoft licenses a home version of Office for much less than the commercial version. The product is the same, but it’s licensed for a different use at a different price. This strikes me as fair. Perhaps we will see indication or value-based models like this emerge in the future.
  • What role should the FDA play in regulating the quality of a product once it’s left the manufacturing facility? FDA is very strict about manufacturing plant quality and inspections. Yet once a product leaves the dock standards are much looser. This is true for all sorts of products, not just injectables. It’s an issue in traditional pharmacies, compounding pharmacies, doctors’ offices and patients’ medicine cabinets. I still don’t know how safe repackaged Avastin is.
  • When Genentech decided to develop Lucentis, it must not have expected Avastin to cannibalize the market so dramatically. In similar situations in the future, will companies go to the trouble and expense of developing and registering a new product or simply fall back on off-label use?

First, the statement from Genentech:

Genentech, in collaboration with the American Academy of Ophthalmology (AAO) and the American Society of Retina Specialists (ASRS), is pleased to provide an update on our joint efforts to address physician questions about access to Avastin® (bevacizumab) after Genentech’s January 1, 2008 change to the distribution of the product.

Since October, when Genentech announced it would no longer allow compounding pharmacies to purchase Avastin directly from authorized wholesale distributors, we have partnered with the AAO and ASRS to understand physicians’ needs related to their ongoing access to Avastin.

We are pleased with our collaboration and progress to date. Working together, we have determined that physicians can prescribe Avastin and purchase it directly from authorized wholesale distributors and wholesalers can ship to the destination of the physician’s choice, including to hospital pharmacies, compounding pharmacies or directly to the physician’s office. This process is one that the AAO and ASRS believe addresses the needs of their members. It is a significant step forward, reflecting the collaborative approach of Genentech and AAO and ASRS leadership.

Genentech continues to believe LUCENTIS® (ranibizumab injection) is the most appropriate treatment for patients with wet age-related macular degeneration (AMD) because it was specifically designed, formally studied, approved by the U.S. Food and Drug Administration (FDA) and manufactured for intraocular delivery for the treatment of wet AMD. At the same time, Genentech does not interfere with physicians’ prescribing choices and believes that physicians should be able to prescribe the treatment they believe is most appropriate for their patients.

We also remain committed to ensuring that eligible patients have access to Lucentis regardless of their ability to pay. Therefore, Genentech, the AAO and ASRS are working together to develop additional programs that will more efficiently facilitate and expedite patient access and physician reimbursement for Lucentis. Updates on our progress will be provided in early 2008. In the meantime, physicians or patients who have questions related to access and reimbursement services offered by Genentech can call 1-866-724-9394.

We would like to thank the AAO and ASRS for their leadership and collaboration over the past several months. We are encouraged by our progress to date and look forward to continuing our efforts with the common goal of helping patients with potentially blinding diseases.

Second, the statement from the American Academy of Ophthalmology and American Society of Retina Specialists:

Solution to Avastin Access Found through a Joint Effort by the Academy, ASRS and Genentech

The American Academy of Ophthalmology and the American Society of Retina Specialists (ASRS) are pleased to report that a solution has been found that addresses Genentech’s decision to no longer allow compounding pharmacies to purchase Avastin® (bevacizumab) directly from authorized wholesale distributors. The Academy and ASRS believed that this change in distribution could have impacted access to Avastin for some physicians and patients.

Since October, when Genentech made its announcement, the Academy and ASRS have been in discussions with the company to determine how physicians and their patients can maintain their access to Avastin. Working together, we have determined that physicians can prescribe Avastin and purchase it directly from authorized wholesale distributors and wholesalers can ship to the destination of the physician’s choice, including to hospital pharmacies, compounding pharmacies or directly to their office. This process is one that the Academy and ASRS believe addresses the needs of most of their members. It is a significant step forward.

Because laws differ from state to state, the implementation of this solution may vary. The Academy and ASRS recommend that physicians check with their legal advisors when considering this new option.

Genentech also remains committed to ensuring that eligible patients have access to Lucentis® regardless of their ability to pay. Therefore, Genentech, the Academy and ASRS are working together to develop additional programs that will more efficiently facilitate and expedite patient access and physician reimbursement for Lucentis. Updates on our progress will be provided in early 2008. In the meantime, physicians or patients who have questions related to access and reimbursement services offered by Genentech can call Genentech’s Lucentis Commitment™ helpline at 1-866-724-9394.

For questions about Genentech’s authorized wholesale distributors, please contact Genentech at 1-800-551-2231 or csordermgmnt-d@gene.com.

Health plan association promotes “Guarantee Access”

A new paper from America’s Health Insurance Plans (AHIP) takes a pro-active approach to the health care coverage debate. In Guaranteeing Access to Coverage for All Americans, AHIP addresses a number of hot button issues. Notably, the proposal would guarantee access to insurance coverage for individuals –including those with pre-existing conditions and higher than average medical costs–, allow third-party review of recission decisions and pre-existing conditions, and cap premium levels for high-risk members at 150% of the base rate. The proposal, which is modeled on existing high-risk pools, relies on states and other funding sources to ensure affordability and to encourage individuals to purchase insurance.

I like the principles outlined in the proposal. In particular, “Guarantee Access” is a pragmatic alternative to guaranteed issue and community rating. The emphasis on encouraging widespread purchase of insurance is self-serving but also a legitimate public policy goal. After all, as employers reduce coverage it’s more often younger, healthier people who lose access to coverage. That raises costs for those remaining in the risk pool, who tend to be older and sicker.

Under the AHIP proposal, individuals who are denied insurance coverage –or offered substandard coverage– can apply for the Guarantee Access program. Those whose expected medical claims are 200% of the average will be eligible for a Guarantee Access Plan, again at 150% or less of the standard rate. Of course, some sort of subsidy will be required to make that work. Improvements in predictive modeling enable the health plans to more accurately place people in a specific cost category.

I expect the concepts in the proposal to be viewed reasonably favorably. They are compatible with the mainstream Presidential candidates’ views and most of the state-led reform efforts (though not, of course, with single-payer). The proposal is consistent with a push toward higher levels of coverage, promoting individual responsibility, and reducing the fear of losing access to health insurance or entering medical bankruptcy. It’s also compatible with increasing the portability of health insurance, which is key to enhancing labor market flexibility.

Expect some pushback, though, on the numbers. In particular, critics will point out that 200% is a modest threshold for putting someone in the high cost category. The proposal is also silent on how the plan will be funded.

I also wonder why AHIP calls the plan “Guarantee Access” instead of “Guaranteed Access.”

Free trade in counterfeit drugs

The New York Times has an extensive piece today on the role of free trade zones in enabling the trade in counterfeit drugs (Counterfeit Drugs’ Path Eased by Free Trade Zones). The article describes how the seizure of drugs in a free-trade zone in Dubai led to an unraveling of fraud in Canada:

… an examination of the case reveals its link to a complex supply chain of fake drugs that ran from China through Hong Kong, the United Arab Emirates, Britain and the Bahamas, ultimately leading to an Internet pharmacy whose American customers believed they were buying medicine from Canada, according to interviews with regulators and drug company investigators in six countries.

Some pills, a government official said at the time, contained cement powder.

The trail went through the Bahamas:

The site belonged to RxNorth, described by one trade association as the world’s first major online pharmacy.

A founder, Andrew Strempler, had been the subject of numerous profiles, including one in The New York Times in 2005 that described how at the age of 30 he had two Dodge Vipers, a Jaguar and a yellow Lamborghini with a license plate that reads “RX Boss.”

The article reported that Mr. Strempler’s innovation “created a whole new Canadian industry that has plugged a niche in America’s troubled health care system almost overnight, providing about $800 million worth of low-cost drugs a year to two million uninsured and underinsured Americans, many elderly.” Drugs have traditionally been cheaper in Canada…

As Mickey says, “At least with medical tourism you know what country you are in.”

I’d also be willing to bet that Pfizer’s PR people were the impetus for this story.

2007 Medical Weblog Awards: Nominations are now being accepted

MedGadget is initiating the fourth annual Medical Weblog Awards. You can nominate blogs in the following categories:

  • Best Medical Weblog
  • Best New Medical Weblog (established in 2007)
  • Best Literary Medical Weblog
  • Best Clinical Sciences Weblog
  • Best Health Policies/Ethics Weblog
  • Best Medical Technologies/Informatics Weblog
  • Best Patient’s Blog

Nominations can be made in the comments section of the MedGadget post.

I hope no one is deterred by the fact that last year’s winner of Best New Medical Weblog crashed and burned a few months after receiving the prize.

Blogosphere etiquette on these things is still evolving. I’ve been on the receiving end of fairly aggressive self-promotion by some nominees, while others stay quiet about it, even on their own blogs.