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Living in economic times – Health Policy Today, 15th August 2008

A glance at today’s press confirms the tagline currently used by the Economist – ‘we live in economic times’.  

Report that Roche are bidding to buy out Genentech suggests investors see a bright future for Avastin, Herceptin and the other cancer breakthrough drugs in Genentech’s stable.   All the press cover the research published in the BMJ that finds the over fifties receive a poor standard of healthcare.  The real story is that economic incentives work – as GPs prioritise the care rewarded in the Quality & Outcomes Framework (QoF) and pay less attention to geriatric conditions that are not.

This comes the same day as analysis from Saga shows the costs of long-term care are increasing, suggesting the over 50s should save to cover the costs of their parents care.  Insurance is their core business and it is clear that some see a bright future for insurance in certain areas of healthcare.  And this will not be the only area of growth, according to today’s Economist , which predicts that ‘most local’ of industries, healthcare, will soon become a global market, as more and more Americans choose cheaper treatment options abroad.

Roche move to secure Avastin and Herceptin is rejected

The Swiss drug company Roche this week bid $44billion for the 44% of Genentech that it does not already own.  The bid has been rebuffed with the directors of the US biotech company saying,  ‘the offer fails to reflect the firm’s portfolio of cancer drugs.  

‘Genentech’s share price continues to trade well above Roche’s $89 dollar per share offer, indicating investors expect a revised bid’.

In the FT today, Lex says, ‘nobody can be surprised by the firm but polite rebuff from Genentech’s special committee of independent directors. The market had already raced ahead of Roche’s modest offer, more than doubling the premium to 20 per cent’.  The column continues, ‘the fact is that Roche needs the deal more than Genentech. The current partnership between the two has worked well but Roche, one assumes, is thinking ahead to 2015 when its licensing rights over Genentech drugs outside the US comes to an end. To mop up that minority stake now, especially in advance of eagerly awaited data that could increase the potential for Avastin, an important cancer drug, would be neat.’

Genentech also produce Herceptin, and the move suggests that Roche sees a bright future for these drugs both within and without the US.

Research says over fifties are being let down in the healthcare they receive – GPs pay more attention to general medical problems that geriatric issues

Research published in today’s BMJ has attracted headlines that suggests age discrimination in the NHS with the over-fifties and older people, in particular, receiving a poorer standard of support from GPs.  Two things about the story puzzled me.  Why the focus on the over fifties (when the story seems to be about the over 70s)?  And why is the focus on age discrimination, instead of the obvious economic incentives that are at the heart of the story?

What the research actually shows is that the Quality and Outcomes Framework (QoF) has been very successful.  It shows that incentives shape clinical behaviour.

According to the Guardian report today, ‘Conditions that come under the Quality and Outcomes Framework (QOF) - which give incentives to GPs - received better attention. In 75% of such cases, people got the right treatment. People were far more likely to receive screening and preventative care (80%) than treatment and follow-up care (64%) or diagnostic care (60%), the study found.’ http://www.guardian.co.uk/society/2008/aug/15/nhs.health

Rather than problems that particularly effect the ‘old and frail’ such as ‘osteoarthritis, incontinence and osteoporosis’, the researchers found ‘that doctors paid particular attention to conditions where assessments earned them extra money, including heart disease, diabetes and high blood pressure’.

Comparing conditions within QoF and without shows quite a difference.  ‘Scores on the quality of care ranged from 83% for heart disease (in the framework) to 29% for osteoarthritis (which is not).

The Guardian reports Gordon Lishman, the director general of Age Concern, saying, “the rewards system for GPs to treat particular conditions has worked - but this hasn't included health problems older people particularly suffer from like depression, falls, and vision and hearing problems".

Saga analysis suggests the over-fifties need to begin saving for a rainy day

Research from the Saga group, reported in today’s Evening Standard says ‘rising costs mean a generation may have to eat into their own savings to support ageing parents’.  It is ‘a stark warning that pensioners and their children are unprepared for the financial burden of long-term care’.

The report warns that people are not prepared for the cost.  ‘Just one in ten children surveyed had discussed what they would do if their parents’ health failed later in life’.    Care homes already cost between £25,000 and £30,000 each year.  ‘But Saga forecasts the figure will double in the next 20 years’ because charges are rising faster than inflation.

The solution to this problem is not mentioned, but it is likely that Saga would suggest some form of insurance or savings scheme to help prepare for the costs of long-term care.  Saga specialise in selling financial products, in particular, insurance to an older age group.  They even run a social networking site – the Saga Zone.  They run a scheme to award respite care to over-50s carers.

Because healthcare costs are rising so quickly, it is likely that more insurance markets may open up for healthcare.  While still relatively young, and at an earnings peak, the over-fifties might begin to save to support their parents or their own long-term care, for frightening scenarios.  Some firms have already created schemes to save for expensive cancer drugs.

The Economist predicts that healthcare will become a global market as people choose to receive care overseas

‘Healthcare has long seemed one of the most local of all industries.  Yet beneath the bandages, globalisation is thriving’.  So begins an Economist leader, ‘importing competition’.  

It argues that the next growth area for healthcare is the flow of patients abroad from America.  This is likely because ‘tens of millions of middle-class Americans are uninsured or underinsured and soaring health costs are pushing them and cost-conscious employers and insurers to look abrad for savings’.  

Although some are critical of the trend, worrying that it will divert money and expertise from state health systems (home and abroad), the Economist supports the move.  ‘The foreigners’ arrival could improve things in developing countries, for the poor as well as the rich’.  It will also create jobs in local economies.  

But probably the most beneficial element, for the newspaper, is the pressure it puts on US systems to improve.  ‘The prospect of losing revenues to India or Thailand is already shocking hospital administrators and insurers into raising standards, increasing prince transparency and lowering costs.  It may even bring the growing political pressure for reform to a head’.

The Economist is so supportive of the move that it believes two obstacles should be removed to as to speed the process.  First,  ‘America’s arcane restrictions still forbid out-of-state doctors from consulting with patients on the Internet or by phone, which inhibits follow up care for medical tourists.  Second, legal and insurance barriers make it hard for employers to give employees a financial incentive to choose medical tourism over local options – even though insurers are allowed to offer such incentives to prompt patients to pick cheaper doctors inside America’.