Here at the Road to Hellth, we’re normally all for letting the free market work whenever possible, but it’s important to remember that for markets to work properly there are certain pre-conditions. First, the economic relationship between businesses and their customers has to be relatively clear. For example, when a patient goes to a hospital, exactly who is the hospital supposed to be serving? Is it the patient who has the disease or the insurance company paying the bill? Second, working markets require that critical pieces of information, like prices, services and certain pieces of fine print, be relatively transparent. It does no good to comparison shop for price, only to find that the goods and services you’re receiving aren’t equivalent. Third, there have to be enough competitors in the market to produce actual competition. One reason American healthcare seems to be in such miserable shape is that one, two or even all three of these preconditions are absent in many cases. This is generally bad news for all of us who happen to be patients at one time or another. As the “little guy”, we’re typically the ones with the least information, the least amount of leverage and the most to lose during any brush with the healthcare system.
One example that came to our attention recently has its roots in the absurd amount of power that hospitals have come to wield over the patients and clinicians that, (at least back in the good old days), they are supposed to be serving. Look at any advertisement these days for a hospital or healthcare system, and you’ll see these institutions portrayed as big teddy bears: all fuzzy and warm, caring for you as an individual and sporting the best doctors, equipment and procedures money can buy. All of which makes it truly bizarre when they go ahead and screw us on the little things.
One of those little things is the hospital’s medication formulary; the assortment of medications that hospitals choose to carry in their inventory for use in treating patients. It used to be that hospitals made an attempt to stock just about every drug that might reasonably be used for taking care of patients. If you were admitted to the hospital on Chiquita Bananatol and your admitting doctor wrote that you were to get Chiquita Bananatol, the hospital pharmacy would send up exactly what the doctor ordered. No pussyfooting. No second guessing your doctor. From a clinician’s perspective, it was nice to know that your patients would get exactly what they were supposed to get. Actually, it was nice from a patient’s perspective as well.
Things began to change a bit around 20-30 years ago when money started to get tight, generics became more readily available and the cost of medications became increasingly important to insurance companies. Instead of filling prescriptions as written, hospital pharmacies began to replace brand names with generics that were (supposedly) equivalent to the original drug. Most of the time they were, but hospitals and pharmacies were never so pushy as to completely reverse a physician’s orders and replace one brand name medication for another. At least until now.
Welcome to the Insulin Wars. As many of you probably know, insulin is a hormone that is naturally secreted by the pancreas to regulate the amount of sugar in the bloodstream and allow individual cells to get the energy they need to live. Diabetes is caused either by an inability to make insulin, or insulin resistance that makes a given amount of insulin considerably less effective. In both situations excess amounts of sugar tend to stay in bloodstream. Over the years this can cause considerable damage to the kidneys, eyes, heart, nervous system, and just about every other organ system. All of these complications have made good blood sugar control a high priority for just about everyone involved.
For many years now, all Type I diabetics and a large percentage of Type II diabetics have been treated with injections of man-made human insulin. One peculiarity of the insulin market is that there are essentially no generics; apparently the technical requirements for manufacturing human insulin are sufficiently complex that it can’t easily be knocked off by cut-rate generic producers. Another interesting aspect of insulin is that it is continually being refined and improved to make dosing easier and more efficient. Ordinary insulin made by the pancreas has a half-life of 4-7 minutes, (i.e., only half of a given amount secreted is still present after that time). By manipulating the chemistry of how the insulin is formulated and packaged on a molecular level, it has been possible for drug companies to create varieties of insulin that range from very short-acting “meal time” insulin to long-acting “basal” insulins. The invention of a long-acting once per day insulin called Lantus® by Sanofi-Aventis was a particularly important development because it allowed for much simpler and more efficient dosing in many people. Most patients aren’t very sophisticated about how drugs work and how the various types of insulin should be combined, so it was a big deal to tell people that they could get one shot per day of a long-acting insulin, and then just cover their meals with small amounts of short-acting insulin. Approved by the FDA in 2000, sales of Lantus® rapidly rose to $5 billion annually.
With that kind of money at stake it wasn’t long before a big league competitor entered the field in the form of Novo Nordisk, Inc. Novo entered the field in 2005 with a competing basal insulin called Levemir®. They then began aggressively selling to hospitals in an effort to displace Lantus®. Specifically, Novo would frequently offer to give hospitals a good deal on Novo’s entire line of long and short-acting insulins, but only if those hospitals then agreed to dump all other brands of insulin from their formularies.
This is where the plot thickens.
Hospitals wanting to please insurers and protect their own bottom lines by saving on insulin costs soon began to take Novo up on their offer. By changing their formularies they exiled Lantus® to the local outpatient market and substituted Levemir® for Lantus® whenever patients were newly admitted. In institutions that employed hospitalists, this was as simple as telling their doctors to make the switch when they wrote their admitting orders. Other hospitals would have their pharmacists call the admitting physicians and ask them to make the change, or else. Or else what? Or else their patients wouldn’t have a basal insulin to use during this admission, and they’d better not try to bring in their Lantus® from home. “Hey,” the reasoning goes, “they’re both long-acting insulins. If you don’t like Levemir®, switch ‘em for the period of the admission, and then switch ‘em back later when you discharge them. Shut up and deal with it.”
But here’s the problem: Lantus® and Levemir® aren’t really interchangeable in the same way that a generic drug and its original brand name are simply version of the same compound made by different manufacturers using a similar production process. Instead, Lantus® and Levemir® are completely different medications with different formulas, mechanisms of action, durations of action, dosages and side effects. So when a patient who had previously been on Lantus® is discharged, someone (hint, someone other than the hospital) is going to have to go to a substantial amount of time and trouble re-adjusting their dose of Lantus®. In effect, the hospital has changed the patient’s familiar drug for an unfamiliar one solely for monetary reasons, and then dumped the cost of changing them back on someone else in the healthcare system.
And then of course, there’s the issue of thoroughly confusing patients. Many patients who have been on Lantus® for years have a hard time understanding that Levemir® and Lantus® are completely different drugs that do roughly the same thing. There are any number of examples in which patients who have been discharged by the hospital on Levemir® dutifully re-started their Lanus® once they get home. Needless to say, this resulted in very low blood sugars as a result of taking both long-acting insulins at the same time. Once again this has to be sorted out and treated by the patient’s regular physician at a cost of time, money and potential complications that dwarfs any possible cost savings the hospital might have achieved in making the switch.
While some might claim that this sort of thing is exactly why the world needs Accountable Care Organizations to “coordinate” care between the hospital and outpatient clinics, this logic is rather disingenuous. Fans of ACOs argue that when inpatient and outpatient facilities are controlled by essentially the same people, they’ll all standardize on the same medications. This might be true, but completely misses the point with respect to patient care. What happens when the makes of Lantus® come back with a better deal? Are ACOs going to give all of their patients whiplash switching them back from Levemir®? What happens to a new patient moving in from out of town? Are they going to have to completely change their medical regimen and turn their lives upside down to please the bean counters and purchasing agents in the hospital administration?
What we have here is clearly the result of a market failure, combined with what we would characterize as some questionable patient care ethics on the part of the hospitals involved. Consider the following:
- Clearly there is not enough competition among hospitals if administrators can afford to take such a cavalier attitude toward patients and the clinicians who refer them. Given the choice between two otherwise equal hospitals, who the heck would put up with this kind of hassle?
- If competition in the hospital world is limited, transparency is all but absent. Aside from a few endocrinologists and the patients who have suffered from this “we’re not about to carry the drugs you want to use” policy, who in the healthcare market even knows that this issue exists? Still worse, how would they find out? It’s not the sort of thing that newspapers – if your town still has a newspaper – tend to report on these days. If you expect to find it in those hospital advertisements, don’t hold your breath.
- Exactly who are hospitals really serving with policies that deprive patients of the specific drugs they’re used to and happen to work for them? This is clearly one of the biggest problems with the existing insurance system: providers aren’t working for patients; they’re working for the various public and private insurance companies who pay them. Apparently insurers don’t care how many patients or providers’ lives are disrupted by formulary manipulations as long as hospitals promise them “savings”.
- Finally, while everyone can applaud the innovation and competitive spirit portrayed by Sanofi-Adventis and Novo Nordisk, it strikes us as being just plain wrong that hospitals should choose to offer only one product or another, when doing so is clearly not in the best interest of a population of patients that routinely uses both drugs and benefits from both of them. They are completely different compound; this is not a case of “six of one, half dozen of the other”.
The healthcare market needs to work better than this. Much better.