What Price Technology? At NYT Health Confab, It’s a Loaded Question

5/30/14Follow @alexlash

The role of data and technological innovation in health care was front and center at a conference of top health experts from academia, industry and government, convened by the New York Times at the University of California, San Francisco yesterday. Voices of both optimism and caution were plentiful, but the discussion of technology was consistently grounded, no matter the speaker’s view, in the cost of health care.

“I have a 2011 car, and I’m happy with it. It doesn’t have all the latest technology. I don’t have a GPS system,” said Peter Bach, director of Memorial Sloan Kettering’s Center for Health Policy and Outcomes. Bach argued we should be providing and paying for health care with similar tiered standards and choices, not simply assuming that the latest and most expensive technology is warranted.

Kaiser Permanente CEO Bernard Tyson said it’s not acceptable to shift the cost of health care onto the backs of Americans who haven’t seen a wage increase in 15 or 20 years. And as we’ve seen from exposés about prostate cancer treatments, which Xconomy columnist Stewart Lyman discusses here, high-priced healthcare “innovations” can do more harm than good, literally adding injury to financial insult.

Throughout the day, discussions and Q&A sessions highlighted the tension engendered by technology. Eric Topol, who wears several hats at the Scripps group of institutes in San Diego, including director of the Scripps Translational Science Institute, made a pitch that technology such as genome sequencing and mobile monitoring will drive costs lower and make medicine personalized—or as he calls it, “individualized,” a term he uses to highlight the need for the individual to take better control of health care decisions.

“Doctors aren’t adopting these technologies,” said Topol (pictured above, with Times reporter and conference moderator Elisabeth Rosenthal). “Challenging the medical community is deeply disruptive.”

Lynda Chin, the chair of genomic medicine at University of Texas MD Anderson Cancer Center, told Xconomy that educating physicians who feel threatened by the new technology is crucial. “There’s always the worry that the new tools will shine light on the blind spots in their own practice,” said Chin, whose group is working with IBM on a data project called the Oncology Expert Advisor to help MD Anderson’s clinicians make treatment decisions. “But they need to be reassured that the tools aren’t supposed to replace them, they’re supposed to help them.”

A practicing cardiologist, Topol has some patients use a wireless cuff to measure heart rate, which is analyzed by a smart phone app. A patient can alert him if there are serious irregularities. Many lab tests can, or will soon be done via remote monitoring, he said.

But even while stumping for a warmer embrace of new tools, Topol blamed overuse of some medical technology, such as high radiation CT scans, on physicians’ unwillingness to properly inform their patients. Not enough technology? Too much technology? Either way, doctors seemed in Topol’s crosshairs.

Not surprisingly, there was immediate pushback from doctors in the audience who questioned the readiness of genomic testing and the premise of reduced costs in the future.

“I have to take exception to the notion that genetic diagnosis will lower costs,” said Drucy Borowitz, director of the Cystic Fibrosis Center at Women & Children’s Hospital in Buffalo, NY. “And it’s less clear than it’s ever been what’s a disease-causing mutation and what isn’t.”

Jeff Croke, a primary care doctor at the Palo Alto (CA) Medical Foundation, said he’s excited about pharmacogenetics but doesn’t trust the results of genetic tests.

Topol replied that ever-lower sequencing costs will lead to more people having their genomes sequenced, which in turn will fill in the links of gene variants to diseases. And if more tests are designed to link drugs’ effectiveness to people’s genetic profiles, there would be less money wasted on prescribing expensive drugs for people who won’t respond to them.

Studies have shown the effectiveness of many drugs can be profoundly influenced by a patient’s genetic makeup. These response rates vary, from a roughly 75 percent effectiveness for statins (prescribed to lower cholesterol) to roughly 25 percent for beta blockers (used to manage an irregular heartbeat) to 20 percent for cancer drugs.

Topol and others contend that sequencing a patient’s genome would help doctors dentify the drugs that would be most effective for patients with particular genetic variants.

Drug pricing was another major topic of conversation at the conference, with the hepatitis C (HCV) treatment sofusbuvir (Sovaldi) from Gilead Sciences serving as the poster child for exorbitant pricing. Gilead, which has taken a public beating from Congressman Henry Waxman and others, announced in December that sofusbuvir would cost $84,000 a year.

Marilyn Tavenner

Marilyn Tavenner

In the first Q&A session of the day, an audience member asked Marilyn Tavenner, administrator of the U.S. Centers for Medicare & Medicaid Services, about Sovaldi’s price. “Well, it didn’t take us long to get to that conversation,” she said wryly.

Later, William Haseltine, a legendary researcher and biopharma entrepreneur who now runs a nonprofit dedicated to healthcare access, delivered a withering assessment of his former industry peers: “I think [prices] are outrageous, and they can’t be justified by R&D costs,” which is a common explanation the industry and its supporters provide.

“It’s a failing business,” he said. “And when you’re failing there are two things you can do. If you have a monopoly market you can up your price. Or you can look for a tax break like Pfizer just did,” a reference to Pfizer’s aborted attempt to buy London-based AstraZeneca and gain tax advantages by moving headquarters overseas.

Gilead and Sovaldi took more pounding at the end of the day from two top health and public policy executives. Kaiser Permanente’s Sharon Levine, director and senior adviser for public policy, pharmacy and professional development, said that if Kaiser gave Sovaldi to every HCV patient in its care, “it would double our total expenditure on [all] drugs for the year.”

But don’t just bash Gilead, said Bach of Memorial Sloan Kettering. “Solvaldi is the natural consequence of what we’ve allowed to occur in this country,” he said, and pointed to the illogic of oncology pricing. “I could show you drugs that are highly toxic and minimally effective and others that work great, and you couldn’t tell the difference based on the price.”

To top it off, the Times’ Rosenthal, who was the main moderator of the day, said she invited representatives from the pharma industry to speak at the conference. None accepted, she said.

Alex Lash is Xconomy's National Biotech Editor. He is based in San Francisco. Follow @alexlash

By posting a comment, you agree to our terms and conditions.

  • Ryan

    Great to see you lead with Bach’s car model-year insurance analogy. That one quick line of his was the star of the show for me, yesterday.

    Turns out there is someone who has made a very robust proposal in this vein: Russell Korobkin of UCLA law school.

    I’ll save the specifics, but he proposes something called “Relative Value Health Insurance”, and it is a way to address the issue of consumer demand, risk tolerance, and bounded rationality all in one neat package.

    A link to a WaPo piece he did discussing it is here – it’s worth a read and deserves broader coverage:

    http://www.washingtonpost.com/news/volokh-conspiracy/wp/2014/03/12/relative-value-health-insurance/

    @ryangamlin

  • http://www.viddy-up.com/ Gregkumar

    Hi Alex Lash,

    Great info on Price Technology. I’ve started becoming proficient myself in Price Technology and have actually been selling video tutorials to earn some additional revenue. It’s pretty easy to do and I thought you might be interested so check it out when you get a chance, it’s free to sign up http://www.viddy-up.com/

    Thanks,
    Greg