Health Wonk Review – 2 Nov 2006 edition

 “Economic depression cannot be cured by legislative action or executive pronouncement. Economic wounds must be healed by the action of the cells of the economic body – the producers and consumers themselvesâ€? – Herbert Hoover

When economists analyze any industry, their first step is to look at the incentives facing the producers and the consumers. Next, an economist will examine the manner in which the government is regulating the industry. In this week’s Health Wonk Review we will focus on each of the 3 entities – producers, consumers and the government.



Pharmaceutical firms make money when patients purchase drugs.  Thus, it is in their interest to push physicians to prescribe pharmaceuticals to their patients.  In his post “Disease mongering or saving lives,” Fard Johnmar of Envisioning 2.0 looks at a Seattle Times special report detailing how the pharmaceutical industry promotes medications for a range of conditions, including hypertension and obesity.  David Williams looks at a specific pharmaceutical company at the Health Business Blog.  Mr. Williams claims that although Massachusetts politicians are celebrating the building of a new Bristol-Myers Squib (BMS) facility in their state, the financial future of BMS may not be as joyful.


In “Drug-induced dissonance”, Joe Paduda of Managed Care Matters is confused. Drug company profits are way up, primarily driven by increased prices in the US, but the Congressional Budget Office (CBO) concludes that Democratic Congress’ efforts to reduce Medicare drug spending by negotiating directly with pharmaceutical manufacturers will not work. 


Big business is not all bad, however.   Bob Vineyard of InsureBlog notes that Walmart is offering prescription drugs for as little as $4 for some generics.   



Craig Lefebvre of On Social Marketing and Social Change claims illiteracy is a major problem in the U.S….health illiteracy that is!  Mr. Lefebvre cites a 2003 National Assessment of Adult Literacy study which shows that that fewer than 1 in 8 (12% ) American adults are proficient in health literacy skills.  These figures bode poorly for the effectiveness of the consumer-directed health movement.


Leif Wellington Haase of The Century Foundation claims that high American health care costs are driven by the high intensity by which most diseases are treated in the U.S. compared to other countries.  Mr. Haase states that “when patients and their families are fully briefed about their condition and about treatment alternatives, they tend to be more conservative than physicians”.  Yet, Mr. Haase agrees with Mr. Lefebvre and writes that putting the onus on patients to reduce costs-such as under a health savings account-is a short sighted solution.



Election Day is November 7th and the hot topic political issues are Iraq and homeland security.  In a post by Drew Altman and Robert Blendon at the Health Affairs blog, the authors ask why health care is not a major issue for most races in this fall’s election.  Adam Fein of Drug Channels looks at the possibility that a Democratic victory in the election and a subsequent repeal of the current Medicare prohibition on direct negotiation with drug makers may actually help one of the Democrats’ supposed enemies: Walmart!


Interested in seeing how government regulation can often fail?  If so, look no further than Michael Cannon’s examination of the FDA’s record on folic acid in the Cato@Liberty blog. Also see Roy Poses’ post at Health Care Rewewal which finds that the body which regulates organ donation (United Network for Organ Sharing) “has never recommended that the government close an active transplant program.”


On the positive side, Marcus Newberry commends HHS Secretary Mike Leavitt in his Fixin’ Healthcare blog for the “development of science-based comprehensive guidelines to assist Americans include adequate physical activity into their lives.”



For an interesting perspective, go to The Health Care Blog and check out Matthew Holt’s interview of David Gratzer, a practicing psychiatrist who has written a new book called The Cure: How Capitalism Can Save American Health Care. 


Shahid Shah, The Healthcare IT Guy, offers practical advice to life science companies trying to bring their products to market.  Jason Shafrin (myself) has written at Healthcare Economist (this site) that when Medicare reduces physician fees, the quantity of medical services supplied by doctors may actually increase.


For all those interested in the health blogging community, please read Dmitriy Kruglyak’s proposal “HealthTrain: An Open Healthcare Manifesto.”



And finally, for those who also value the importance of a healthy environment, Vreni Gurd’s Wellness Tips on how to reduce e-waste may be of interest.


“The trouble with always trying to preserve the health of the body, is that it is so difficult to do without destroying the health of the mind” – G.K. Chesterton


  1. Jason:

    Thanks for putting together a crisp and compelling edition of the Health Wonk Review. It’s gratifying to see the Review growing and major organizations/publications like Cato and Heath Affairs participating.

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