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Issues & Legislative Committee Report

August 10, 2006

JCAHO/Gainsharing Update

Gainsharing Agreements  

Supply chain professionals gathered to discuss, in part, how to deliver better patient care more cost-effectively, at the recent VHA Leadership Conference attended by professionals in finance, materials management, nursing, pharmacy and other disciplines as well as approximately 275 vendors with Novation contracts exhibiting. This was the first VHA Conference to be held since VHA acquired Goodroe Healthcare Solutions in October 2005 founded by Joane Goodroe, who handled several Gainsharing agreements reviewed by the OIG. Without participation by physicians, however, it’s unlikely that healthcare costs can be reduced dramatically, states Goodroe. Goodroe indicates that working with physicians has benefits beyond the supply chain. “When you establish a business relationship with doctors, you can do other things unrelated to supplies or gainsharing,” she said.

Long before “gainsharing” placed it’s stake in the ground, “value analysis” was the buzzword and forerunner. As defined by Terri Nelson, R.N., director of value analysis for Mayo Clinic Rochester (Minn.), value analysis is the process used to evaluate products based on clinical efficacy, safety and cost. Value analysis works only if hospitals are willing to, among other things, proactively engage the hospital and clinician relationship to better channel difficult conversations. According to Lori Weih and Brenda Peterson, R.N., both directors for VHA:

Source: Repertoire Magazine, Vol. 14, No. 07, July 2006.

The Joint Commission (JCAHO)

Representatives from the Joint Commission have participated in 15 town hall meetings in 13 states to gather feedback and answer questions about the potential acquisition of case-identifiable data by the Joint Commission. Feedback at the town halls has run the gamut of opinion, from those who support the benefits of Joint Commission access to case-identifiable data, to those who expressed concerns about the potential change from aggregate to case-specific data. The Joint Commission has been able to clarify its position to mitigate most of the concerns. For instance, the models for the potential acquisition of case-identifiable data will not result in additional medical record abstraction, and sensitive patient identifiers (name and social security number) would be replaced with a unique “tracking number.”

The Joint Commission’s Sentinel Event Advisory Group met on July 7 to begin identifying National Patient Safety Goals (NPSGs) for 2008. Members revisited topics that were the subject of field review last year, but were not selected as Goals for 2007. Discussion included the following:

Source: www.JCAHO.com

Quality, Medication Errors and Safety Issues

Medication Errors: Among the most common medical errors, medication errors are harming at least 1.5 million people every year, says a new report from the Institute of Medicine of the National Academies. The extra medical cost of treating drug-related injuries in hospitals alone amount to $3.5 billion a year conservatively. It estimated, that on average, there is at least one medication error, per hospital patient, per day, although error rates vary widely across facilities. A study of outpatient clinics found that medication-related injuries there resulted in roughly $887 million in extra medical cost in 2000, and the study looked only at injuries experienced by Medicare recipients, a subset of clinic visitors.

New computerized systems for prescribing drugs and other information technology show promise for reducing the number of drug-related mistakes, the report says. Studies indicate that paper-based prescribing is associated with high-error rates. Electronic prescribing is safer because it eliminates problems with handwriting legibility and, when combined with decision-support tools, automatically alerts prescribers to possible interactions, allergies, and other potential problems, the committee found. In addition, labeling and packaging issues were cited as the cause of 33 percent of errors, including 30 percent of fatalities, reported to the program.

Source: Healthcare Purchasing News Online, July 21, 2006.

Consumer Driven Healthcare

BCBS Plans to Pool Health Data in Massive National Database

BCBS will make available to its 20 plans in 2007, a database for employers and researchers to use in identifying trends and best practices. Employers can use the database to trend cost versus outcomes. BHI can us it to publish a “Consumer Report” to drive data-driven health care decisions. Consumers can check quality indicators of providers. Researchers can obtain information for head-to-head comparisons of prescription medication results.

Source: The Advisory Board Daily Briefing, August 7, 2006.

Hospitals Push for Greater Transparency in Orthopedic Device Pricing

According to consultants 40% to 80% of reimbursement the hospital receives from implant surgery is for the implant. Because of marketing directly to physicians the orthopedic companies have had a historical price increase of 8% annual. As transparency to prices increase consumers and insurers are beginning to push
back at these increases.

Source: The Advisory Board Daily Briefing, June 30, 2006.

“Big Names” Invest in Online Health Information Industry

Several foundations have invested more that $100 million into creating virtual resources that empower patient to take control of their healthcare. Investment made because of a Pew Internet and American Life Project report shows that 70% of the
95 million Americans who have searched for health information were disappointed with their findings. Companies receiving this funding are WebMD, HealthCentral Network and Revolution Health, which plans to launch this fall.

Source: The Advisory Board Daily Briefing, August 8, 2006.

First-rate Healthcare in Third World Countries: How Medical Tourism is Altering the Face of Competition in the Healthcare Industry

Not only is there competition between providers of healthcare in the U.S. but because of the high cost of healthcare there is competition from other countries. Medical tourism is becoming a major alternative to care in the U.S. The issue is cost. Below
are some examples comparing the cost of procedures done in the U.S. and India:

Procedure

Cost in the U.S.

Cost in India
Bone Marrow Transplant $250,000  $69,000  
Orthopedic Surgery $20,000  $6,000
Cataract Surgery $2,000    $1,250

Root Canal

$1,000

$100

Tooth Color Composite Filling 

 $500 $25

 

Other countries in the medical tourism market are Costa Rica, Singapore, Philippines, Malaysia and Thailand.

Source: Frost and Sullivan, Vital Signs, May 1, 2006.

Radio Frequency Identification (RFID)

To help make it more difficult for counterfeit drugs to reach the market, IBM launched its RFID pharmaceutical tracking system on Tuesday. The move came as Big Blue also announced it will contribute open-source software technology aimed at building a U.S. national system of electronic health records (see below).

Although still viewed as a rare occurrence in the U.S., the ability to successfully deliver a fake drug is on the rise. About 10% of the global medicine market is made up of counterfeits, with developing countries bearing the brunt of the problem where an estimated 25% of the medicines consumed are believed to be fakes, according to the World Health Organization.

But with those creating the menace becoming increasingly savvy, the U.S. and other countries are turning to technology to stop the infiltration. RFID systems, which can track an object, have been noticed by the U.S. Food and Drug Administration (FDA) as one of the more promising technologies to solve the problem.

Ethics/Pharmaceutical and Vendor Gifts

The Senate Finance Committee, as well as members of the House Ways and Means Committee, has continued to investigate the practices of the FDA. On May 17, 2006, Senator Charles Grassley has requested to speak to an FDA agent who has investigated and assisted in the prosecution of an Alabama physician charged with falsifying clinical data that resulted in the FDA’s approval of Ketek, a drug that was recognized to cause sever liver damage. On July 21, 2006, he also asked the Department of Health and Human Services to investigate whether there was a conspiracy between Merck and the FDA in which whistleblower David Graham was silenced when he attempted to speak on safety concerns with the drug Vioxx. He is calling for the FDA to “get rid of its mindset that it’s a facilitator for the drug industry and become (a) regulator once again”.

This follows a July 20, 2006 survey, in which the Union for Concerned Scientists reported that less than half of the FDA scientists think that the agency provides complete and accurate information to the public. These scientists report not feeling comfortable openly discussing concerns without fears of retaliation. They also expressed concerns that FDA post-market safety systems lack independence and authority. The FDA responded by calling the survey “highly unscientific”.

On July 23, 2006, the FDA announced that it would write guidelines to be available by the end of the year that detail the types of acceptable industry ties permitted for those scientists who serve on advisory boards. These guidelines will codify the waiver process for advisory members who have relationships with drug companies. All members receiving funds from the drug maker’s marketing departments to co-market drugs will be prohibited from serving on committees. However, the FDA states that there is difficulty finding advisors that do not have any ties to industry. Therefore, the waiver process will continue in which FDA regulators retain the authority to grant exceptions to those who have industry ties. The concern continues to exist that the FDA has failed to prohibit advisory board members with conflicts of interest from participating on advisory boards, and that continuing the FDA regulators’ authority to continue the waiver process may not improve outcomes.

Along the same line, "The New York Times" reports on a physician who was charged with receiving generous fees to advise other physicians on the use of a drug for
non-FDA approved treatments, commonly known as off-label use. Drug companies are prohibited from promoting such practices, so often they support physicians to do so for them. There is no regulation against that practice by the FDA, and professional guidelines by groups such as the AMA and the Accreditation Council for Continuing Medical Education give physicians wide latitude in this matter. However, the physician in question failed to make recommendations based on accepted medical and scientific evidence. He also was charged with committing fraud against insurance companies when he advised other physicians to leave the area on the prescription form that asked for disease diagnosis. He has since been released on bond, and is awaiting further hearings.

Several days after the Journal of the American Medical Association  (JAMA) announced that it was cracking down on researchers who do not disclose ties with drug manufacturers, an announcement was made that it was again misled by the authors of a study linking migraines to heart attacks in women. All of the researchers had received some sort of remuneration from the makers of these types of drugs. The authors claim they did not believe these ties were relevant; however, the Journal would have published these associations had they known about them.  They did publish an article on June 21, 2006 indicating that participation in clinical trials influence physician prescribing practices, although may not affect their adherence to national treatment guidelines.

On the non-pharmaceutical side, Medtronic announced that it would pay the federal government $40 million to settle accusations that its spinal implant division paid physicians kickbacks to use their products. These were in the form of “sham consulting agreements, sham royalty agreements and lavish trips to desirable locations” from 1998-2003. However, they did not admit liability. This would lead to the dismissal of a second whistle-blower suit, in which a former employee alleges that these payments continued in 2004 and 2005. This is being appealed by the second whistle-blower, who might lose a right to the share in the $40 million. 

"The New York Times" reports on disparities in training programs that physicians participate in for the education on new procedures. They vary greatly in their rigor and evaluation of competency. The Heart Rhythm Society, in recognizing a need for more physicians to be trained in implantation of defibrillators, developed fast track training guidelines which are voluntary and not monitored. However, they state that these courses should not be provided by vendors because of the potential conflict of interest. A comparison was made between one sponsored by a professional medical organization and one sponsored by a vendor. The first program required passing a day long written test and actual implantation of 10 devices under the observation of an expert. The second class was provided free of charge, and did not mandate the daylong competency test. It also allowed two physicians to train on one patient, a practice considered very unorthodox. This raises a great concern with potential patient safety issues. Vendors drive market share by tailoring such programs to demands of physicians, who then tend to use only that vendor’s product.

Concerns with ethics do not just apply to physician/vendor relationships. On July 16, 2006, "The New York Times" reported on the Healthcare Research and Development Institute, which is an organization of healthcare CEO’s. This group meets regularly with vendors for the purposes of advising them on how to best sell their products to hospitals. The hospital executives are paid directly for consulting at these conferences. These meetings usually occur in lavish resorts, where the hospital executives are wined and dined. Participation in this organization carries a hefty price tag for the vendors, but gives them the direct ear of some powerful healthcare leaders. Currently, there is an investigation into the organization by Richard Blumenthal, the Connecticut Attorney General, who has issued many subpoenas to hospital suppliers. This builds on the investigation by the Senate Antitrust subcommittee, which is looking into vendor relationships with GPO’s.

Sources:
(1) Abelson, Reed, “Medtronic will Settle Accusations on Kickbacks.” New York Times:  7/19/06.
(2) Abelson, Reed, “Settlement by Medtronic is Challenged in US Court”. New York Times: 8/1/06.
(3) Anderson, Morton, MD PhD et al, “How Conducting a Clinical Trial Affects Physicians’ Guideline Adherence and Drug Preferences”. JAMA: 2006; 295: 2759-2764.
(4) Berenson, Alex, “Indictment of Doctor Tests Drug Marketing Rules.” New York Times: 7/22/06.
(5) Bogdanich, Walt,  “Hospital Chiefs Get Paid for Advice on Selling to Hospitals.” New York Times: 7/17/06.
(6) Harris, Gardiner, “Rules Planned for Industry Ties on FDA Boards”. New York Times, 7/24/06.
(7) Kozeny, Jill, for Senator Grassley. “Union of Concerned Scientists Survey of FDA Scientists." U.S. Senate Committee on Finance: 202/224-1308: 7/20/06.
(8) Meier, Barry, “Growing Debate as Doctors Train on New Devices.” New York Times: 8/1/06.
(9) Union of Concerned Scientists, “FDA Scientists Pressured to Exclude, Alter Findings; Scientists Fear Retaliation for Voicing Safety Concerns”. www.ucsusa.org, 7/20/06.
(10) U.S. Food and Drug Administration, “Comment on Financial Conflict of Interest Disclosure and Voting Patterns at FDA Drug Advisory Committee Meetings”.  www.fda.gov/oc/advisory/analysis.html.
(11) Young, Donna, “Congress Probes FDA’s Approval of Ketek”. ASHP News: 5/17/06.
(12) Young, Donna, “FDA Under Fire from Top Senator”. ASHP News: 7/21/06.
(13) Young, Donna, “FDA to Reform Advisors Conflict of Interest Rules.” ASHP News:  7/25/06.