Top Health Economics Stories of 2017

What were the top stories at the intersection of health and economics stories in 2017?  Here is the Healthcare Economist’s take.

Obamacare repeal. One of the top stories clearly must be the on-going debate around the repeal of the Affordable Care Act (ACA, a.k.a. Obamacare).  Although the ACA was not fully repealed, the most recent Republican tax legislation will repeal the individual mandate. Donald Trump today predicted that the repeal of the individual mandate will eventually cripple Obamacare leading to the need to replace it.  This prediction is not crazy as by repealing the individual mandate may cause healthy individuals to drop out of the health insurance market, leading to rising premiums, and the potential for an adverse selection death spiral.

Digital medicine is here.  The FDA this year approved the first digital medicine, an antipsychotic with an embedded sensor linked to patient’s smartphone’s and the cloud to better track patient adherence.  My own research has shown that giving physicians real-time, accurate patient drug adherence information can improve treatment decisions for providers treating patients with serious mental illness.  In fact, these types of digital medicines could lead to over $2000 in cost savings if physicians used this improved adherence information.

CAR-T launches with value-based pricing.  Two life sciences firms have gotten FDA approval for new CAR-T (chimeric antigen receptor T-cell) therapy.  The treatments have shown dramatic improvements in patient outcomes, but and are administered one time–rather than in multiple doses across months or years as would be the case for many chemotherapies.  Although the treatments cost $475,000, some payers–such as Medicare–will only pay for the treatments if they demonstrate improved patient outcomes. Not only is this medical breakthrough newsworthy, but so is this innovative pricing scheme.

The opioid epidemic is here.  The CDC reported that opioid deaths are rising among America’s teens.  Donald Trump declared that a state of emergency due to this crisis.  One film I saw, Heroin(e), documents not only the opioid epidemic but the first responders, police officers, judges, and others who are helping to fight this epidemic.   Unfortunately, this health story is likely to make the list again in 2018 unless there are serious efforts to combat the epidemic.

Antibiotic resistant bacteria represent a major public health challenge.  One report identified a numerous outbreaks of antibiotic resistant bacteria, known as CREs.  Seth Seabury and Neeraj Sood argue for a new model to incentivize life sciences firms and researchers to develop new antibiotics to fight this new and deadly threat.  Antibiotic resistance is a top priority at the World Health Organization as well.

Follow the money. An interesting paper by Sood, Shih, Van Nuys and Goldman tracks the flow of funds through the pharmaceutical system.  They find that “…for every $100 spent at retail pharmacies, about $17 compensates for direct production costs, $41 accrues to the manufacturer ($15 of which is net profit), and $41 accrues to intermediaries in the distribution system: wholesalers, pharmacies, pharmacy benefit managers and insurers (with $8 of net profit split among them).”

The Innovation and Value Initiative launches its Open-Source Value Project.  With value frameworks gaining more an more traction, IVI has launched an open-source tool to help a variety of stakeholders evaluate treatment value.  The tool is completely transparent, is based on the latest scientific findings, and allows users to measure treatment value based on their own preferences or preferences over the population which they are managing.  The first Open-Source Value Project covers DMARDs treating patients with moderate to severe rheumatoid arthritis.


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