The big problem in American health care besides not producing good results is that everything costs too damn much because no one is able or willing to say no. Evidence based medicine, pay for performance, reference pricing, narrow and multi-tiered networks are all attempts at introducing soft “No’s” into the equation but there are extraordinarily few hard no’s built into the system as someone is always willing to say yes and spread costs over everyone else.
A fascinating article in New York Magazine on why drugs cost so much in the US. It has a critical point about the power to say “No” on costs.
a committee already exists in England. Its technical name is the National Institute for Health and Clinical Excellence, or NICE, and it considers not only the benefit but also the cost in deciding what drugs will be covered by the U.K.’s National Health Service. Its decisions allow an implicit form of government negotiating over the price of drugs, because when NICE has turned down a drug as having too little clinical bang for the buck, companies have often come back to the panel with a lower price.
As a result, a British cancer patient usually pays substantially less than American patients. Gleevec costs about $33,500 a year in England, according to NICE; the U.S. price ranges up to $92,000 (according to the Blood editorial). Tasigna, a newer CML drug, costs about $51,000 in England, while the U.S. price ranges up to $115,000. Sprycel, another new CML drug, costs nearly $49,000 a year in England, while the U.S. price ranges up to $123,000.
More to the point, NICE has recently said no where Medicare has been forced to say yes. In January 2012, NICE declined to approve Avastin for both colon and breast cancer, and last June, NICE reached the same conclusion about Zaltrap as Sloan-Kettering’s physicians?it declined to cover the use of the drug, considering it too expensive.
The US even in the Obamacare world does not have a wide-scale entity that can directly say “No”.
IPAB has the ability to say that pricing is out of whack and it can change pricing models but it can not say no. The Patient Centered Outcomes Research Institute is forbidden by law from establishing cost effectiveness thresholds. It can generate cost and effectiveness tables but it is not allowed to do long division between these two tables. Medicare can not say nyet. The only entity with significant market power and the ability to say “No” is the Veteran’s Administration, and shockingly their drug prices for the drugs that they cover are amazingly low in the American context.