E-Prescriptions and Comparative Effectiveness - $500 billion savings

This post at The Seminal (where I also post) by Jason Rosenbaum contained so much information that is good, I just copied it here:

A new report from the consulting firm Deloitte LLP shows that health care reform can indeed save money. A lot of money. Like half a trillion dollars:

U.S. health care spending could drop by half a trillion dollars over 10 years if policymakers make broad changes like adopting electronic prescriptions and relying on drugs and procedures proven to work best, consulting firm Deloitte LLP said on Thursday.

Deloitte issued its proposals and analysis of potential cost reductions less than a week before President-elect Barack Obama takes office promising a major overhaul of the U.S. health care system.

The details of Obama’s health care plans have not yet been released. Deloitte offered its own approach that embraced several ideas that experts have considered.

Deloitte proposed $220 billion in new spending upfront over three years on efforts such as getting doctors to use e-prescribing and electronic medical records, as well as better coordination of patient care through primary-care doctors.

Deloitte sees net savings beginning in the sixth year and 10-year savings of $530 billion.

While e-prescriptions and other tenants of electronic medicine are uncontroversial policy proposals, comparative effectiveness research to find out what drugs and procedures work best for least cost has been resisted heavily by drug manufacturers and makers of medical devices. Indeed, drug makers have actively tried to sweep this kind of research under the rug:

Consider how Pfizer reacted when Cardura, a fourth drug that went head-to-head with diuretics in the Allhat trials, failed the test. Over the course of the study, Furberg & Co. discovered that “patients taking Cardura faced serious risks: they were almost twice as likely as those receiving the diuretic to require hospitalization for heart failure.” Alarmed that putting patients on Cardura would mean putting them in danger, the Allhat team stopped testing Cardura in 2000, shortly before the study formally ended.

Cardura’s manufacturer, Pfizer, was quick to move when it heard the bad buzz surrounding its product. “Rather than warn doctors that Cardura might not be suited for hypertension,” says the Times¸ “Pfizer circulated a memo to its sales representatives suggesting scripted responses they could use to reassure doctors that Cardura was safe…” The company also mobilized its sales staff to downplay Allhat’s findings: “[I]n an e-mail message unearthed in…court documents, a Pfizer sales executive boasted to colleagues that company employees had diverted some European doctors attending an American cardiology conference from hearing a presentation on the Allhat results and Cardura. ‘The good news,’ the message said, ‘is that they were quite brilliant in sending their key physicians to sightsee rather than hear Curt Furberg slam Pfizer once again!’”

Of course, drug makers don’t want the public finding out some of their expensive drugs don’t actually work, or work less well than tried-and-true medical procedures. And, as the Wonk Room points out, private insurance has little incentive to conduct or enforce comparative effectiveness research, because they pass the high cost of unneeded medicine on to their customers in the form of skyrocketing premiums.

So, to save that half a trillion dollars, we’re going to need a health insurance plan that actually cares about cutting costs, and has a strong incentive to do so. The public insurance plan is just that vehicle. Without it, as we’ve clearly seen, costs can never be controlled.

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Another borrowing, this from Froomkin, "Bush Ends with a Whimper":

He even gave himself credit for his response to the financial crisis he didn't see coming: "When challenges to our prosperity emerged, we rose to meet them," he said.

Keep waving until you can't see the hat bobbing along anymore.