Clinical Trials grow--Industry Investment Key to a Healthy Future

The march toward healthcare reform continues with the Biotech and Pharma industries in the crosshairs. Several initiatives target the industry. Discussion continues on allowing drug importation as a mechanism to lower drug costs. Fortunately the rider to the Tobacco Bill, allowing for importation was removed on June 9, with the caveat that the issue would soon be brought up for a congressional vote. The rallying cry for Follow on Biologics continues as President Obama is reminded of his commitment to create "generic competition" for biologic agents. 

The industry remains a key target and a poster child for greed in a healthcare system that seems to grow unchecked. Unfortunately little attention is paid to the continued investment made by the industry to advance healthcare. An overlooked barometer for investment is the quantity of clinical trials that are ongoing in both the US and around the world. All studies that are in Phases II-IV, which are essentially all clinical studies conducted in patients, must be registered with the National Institutes of Health (NIH). These trials can be found on the database  at http://www.clinicaltrials.gov/. The quantity of these trials is astounding.

As of June 10, there are a total of 74,235 trials registered. As of April 13 the database contained 71,398 studies according to Deborah Zarin of NIH (FD&C Reports, April 27,2009). In a period of 8 weeks, 2,837 new studies were added, a rate of 350 per week! Of these studies 62% are interventional studies conducted with drugs and biologics. The industry itself accounts for 31% of the studies. Federal agencies are responsible for 26% of the studies and the majority are from Universities/other at 43%. Many of these University sponsored studies are funded through non-restricted grants provided by the Pharma industry. 

These studies are a considerable investment in our health future. Not only do we hope to find the next breakthrough in mitigating disease, these trials increase the knowledge base of disease mechanisms and provide crucial information on the safe and effective utilization of current therapies. Many of these studies increase the understanding of cost-effectiveness and how to efficiently utilize the drugs and devices being studied. 

Who benefits from all of these clinical studies? We all do. We should therefore be wary of the unintentional consequences of squeezing drug prices. If the industry is forced to decrease expenditures, this type of investment will be scrutinized and potentially scaled back. We should not expect or desire that the government offset such a decline by increased funding.

As healthcare reform moves forward, let's keep in mind not to "kill the goose" that advances the future of our nation's health.

Taxing Our Way to Better Healthcare?

On Monday the Senate Finance Committee released an outline of how it proposes to pay for the overhaul of our nations health care system. Extending healthcare coverage to the 46 million uninsured is estimated to cost $1.2 trillion over ten years, a staggering cost in light of the ever burgeoning deficit. 

The Senate outlined a plan for using taxation as a means to provide the funding. A cornerstone is the roll-back of the tax exemption for employer provided healthcare benefits. These taxes could be based on income or on the value of the plan or a combination of both. Also considered is the scaling back or elimination of the flexible spending accounts used by employees to offset health care costs with pre-tax dollars. The burden on the tax-payer is obvious.

Also under consideration is an increase to the alcohol tax as well as an institution of a tax on sugar containing beverages. The goal is not only to raise revenue but also to reduce the consumption of these items which contribute to the development of disease and result in an increase in healthcare expenditure. These taxes may indeed have an effect in driving a wanted behavior. 

Is there a similar behavioral  benefit to the taxing of the employer provided healthcare benefits? Perhaps the employee will seek the lowest cost plan if the benefit value is taxed. If the taxes are levied based on income there will be no effort to reduce usage.In general such taxes do not provide incentive to make efficient, cost effective choices and will not have an impact on usage, a key driver of healthcare cost.

On May 12, a coalition of the healthcare providers and insurers pledged to reduce the national healthcare spending by 1.5 percentage points per year from the projected growth rates. The promise was to accomplish this goal through advances in efficiency. So far there have been no concrete plans presented as to how these competing groups will be able to accomplish this. 

Financial incentive can drive change. Alignment of incentives has been very effective in driving generic substitution. Will the taxation of the healthcare benefit provide a similar alignment of financial incentive? I think not. When the costs of providing universal healthcare coverage escalate will the solution be increasing the tax? Can we tax our way to a better healthcare system?