Category Archives: Policy


Pain is, well, a pain. It is the one thing we all have direct experience of, and can communicate to others, but which defies direct clinical measurement. We are left with subjective measures of pain, such as the ‘oucher’ scale or similar.

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While it is frustrating not to have a direct way to measure pain, it is a reminder that pain is also something we do create. Elaine Scarry’s insightful book, The Body in Pain, []I think puts pain into the right context, as easy to feel but hard to describe, so we are left with metaphors. As well, there is historical evidence that today’s patients are less tolerant of pain itself as Edward Shorter wrote about in “Doctors and their patients: a social history” [].

In terms of my own views, I did once chair a review of my hospital’s pain management, both acute and chronic, as we found poor compliance with pain protocols, so something wasn’t working. Indeed, we learned that burn patients may experience psychosis from the medicines that in effect separate their heads from their bodies to minimise the burn pain: they experienced a sense of being disembodied as they couldn’t feel their bodies. Surgeons, we also learnt, are of two types: those who would medicate post-operative pain slightly above the pain threshold, and those that felt the patient should perceive no pain. And then when patients could control their pain meds post-operatively with a pump, they tended to take less. The pain was telling them something important. Having said that, pain complaints are a frequent cause of medical litigation, as patients often feel that if they leave hospital in pain, the procedure was not successful. This is also telling us something important. In all cases, pre-operative pain counselling was an important part of surgical preparation for the patient.

This, of course, brings us to opioids.

While there is ongoing litigation, it is not appropriate to speculate on the outcome. It is, however, possible to look at the “pain ecosystem” and whether we can learn something. As while today it is opioids, tomorrow it may be psychoactive drugs for depression, or some thing we can’t today imagine.

Patients and doctors exist in a type of dance. Patient expectations, perhaps culturally or socially influenced, lead doctors to prescribe. And doctors need a good way to end the consultation, apart from standing up and holding the door open. Not getting a prescription for many patients is evidence that their needs have not been taken seriously; given how little time doctors actually spend listening to a patient — about 13 seconds! — should we be surprised? Doctors too exists in a type of dance with medicines and they are influenced as much as the weak clinical and practice guidance as the low quality of evidence and information available. They are left with taking each patient on their own merits, as they say, “the patient before me” to do what they think will work. Of course, there may be influential peers advocating specific pain practices, and often for pay — so-called Key Opinion Leaders.

The opioid crisis is a creature born of that broken medicines system, which plays off the anxieties of patients, and beliefs that somewhere “there’s a pill for that”. It plays off the failure of regulators to do their job, to ensure robust clinical guidance, and pain audits to capture emerging clinical / medicines risk. It plays off the failure of prescribing doctors to use evidence informed control and indeed self-restraint over the use of medicines. And it plays off the inappropriate use of incentives to pharmaceutical sales representatives.

In that respect as a systems problem, the opioid crisis is based on a profound ignorance and lack of evidence informed judgement by patients, doctors, industry and regulators.

If we do not get this sorted out, we will simply have this type of problem reassert itself again; indeed, it may already be lurking in the data.

Payer decision making

The relevance of value in establishing the positioning of medicines is the new normal for pharmaceutical marketing. Pharmaceutical companies have customers who are highly constrained by whether healthcare system funding is sustainable long term. Remember, payers think epidemiologically and in multiple years of costed care so industry needs to assess how that can be understood for product value. The pharmaceutical industry is constrained by its ability to generate revenues from medicines sales to cover the costs of research and development.

These two collide in the decision making process to adopt, or not, a medicine. The payers broadly have to balance the sustainability of their budgets with a potentially innovative medicine that will improve care outcomes. The pharmaceutical companies have to construct the value case to demonstrate these care outcomes. That probably means at least two things among many;

  1. Stop pricing drugs by the pill or pack, and start pricing valued outcomes for a defined set of patients over a number of treatment years, and
  2. Forget about trying to ‘time’ the market for product launch. The right time is set by payer budget cycles and their drug investment and disinvestment decisions. And, oh yes, the evidence.

By the way, my approach does differ from the journey model of Ed Schoonveld in important respects, by identifying the structured, and gated, decision processes involved; that why medicines aren’t sold, but bought.

Let’s first look at the colliding priorities. The diagram shows that payers are concerned with the value of a medicine in minimising treatment risk for the treated population. A company is seeking the value of the medicine by maximising the size of the treatment population that they believe benefits. As you grow the treatable population beyond the evidence, risk rises; for payers, reducing that risk is addressed through evidence.

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This is a collision of notions of ‘uncertainty’ in decision making and folks on the industry side should be used to requests for more evidence and novel access arrangements such as conditional reimbursement with evidence generation, and so on. As in any model of competing interests seeking a common price, the intersection of these two notions of uncertainty is defined by a price at which both parties will agree the price pays for the uncertainty it quantifies (i.e. it quantifies uncertainty in a certain way). The intersect quantifies risk, and sets the size of the treatment population that can benefit for that price.

The resulting curve may be thought of the ‘community effectiveness curve‘ depicting the optimal balancing of risk for the treatment community and a proxy for price agreement along that curve. This, by the way, is a better way to identify price corridors for people who still think that way.

This structured process is what this article is about.

Here is the gated decision process for payer decision making. While payers may not formally see themselves going through this in a linear way, they are thinking these thoughts, in this order.

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Gated Payer Decision Making for Market Entry of New Medicines

From the payer perspective, information needs to be specific to the decision gate and having the wrong information at the wrong time (e.g. the right information at the wrong gate) will just frustrate folks and probably irritate decision makers.

The diagram is read left to right, and a ‘yes’ answer to a question is needed in order to move through the gate. Getting a ‘no’ means the information supplied failed to make the case.

The following is a quick tour of the underlying logic. By the way, I call this a gated process as there are criteria for satisfying the conditions for passing through the gate; it is, I believe, unhelpful to decision making to characterise them as hurdles, as this suggests they are imposed to make life difficult. They are, actually, simply the structure of decision making.

Looking at this from a behavioural perspective, i.e. psychology informing decision making, each gate means this:

  • To get through the first gate, the payer is confronted with existing treatment options and asks why do I need another, or why change? Unfamiliarity may also be at work, with novel treatment benefits that lack comparators. Evidence of unmet need might be helpful along with good epidemiology to demonstrate the possibility of better outcomes.
  • Satisfied that a new therapy may be warranted, there is the question of risk and benefit compared to current treatment. While a new therapy might be indicated (yours?), the associated risk may be unacceptable compared to not using it. The benefits really do have to hold under increased uncertainty for a payer to agree to increased treatment risk. I suggest this is where discussion of standards of care begin to be quantified, having been introduced at the first gate. Payers often are not as aware as they should be on the current standards of care evidence in misdiagnosis, medical error and patient dissatisfaction.
  • Then having agreed that this uncertainty and its associated risk are acceptable, we are confronted with the cost and efficacy issue. Now we are beginning to price that risk. Good analysis of the costs of care and mis-care are useful, again because payers are not often aware of whole system costs (i.e. the costs of a treatment pathway) either because they are using using a fee schedule linked to DRG type classification or haven’t proofed their capitation models.
  • Success in pricing that risk moves to the question of the medicine in the context of total treatment costs and whether the treatment costs themselves for the patient population can be managed or will the scaling of the costs overwhelm the system for this treatment population versus all other options. Companies may see themselves as just suppliers of medicines for a price, and not a partner in the total system. But understanding the cost drivers along the whole treatment pathway, not just the costs a new medicine may drive, becomes an important element in final value pricing. If you have a medicine that reduces associated costs, or avoids certain costs (think the Triple Aim, here), then the determinants of value are much clearer. It may be that a biomarker is a value-add from one perspective but only if it reduces medical error and misdiagnosis, without increasing costs, so precision patient identification becomes important. If you’ve got this far, though, you’ll have already shown you can demarcate the treatment population, including the responder subset with a degree of precision.
  • Finally, the payer thinks about the future and whether there will be new medicines coming along that might address the same treatment population, alter risk differently, improve outcomes, avoid costs, with better patient adherence, and so on. Given, broadly, a medicine is alone in its treatment class for months, rather than years, payers may choose to delay decision making or consider options you’ve ignored that may trade off future costs and present priorities. This may be where a payer will be thinking disinvestment or product substitution and the determinants of that are critical in this final phase. Here’s a scenario: Why might a particular medicine not be a preferred medicine on a hospital formulary? The answer is simple: don’t have production problems where supply cannot be guaranteed. The lesson is that this is where the long game gets played out.

For those of you who read Kahneman’s “Thinking Fast and Slow”, or similar, there are decisional heuristics at work here. And across that gated process, you are contending not just with highly structured evidence informed quantitative information, but also how humans can be influenced by how human’s think they think. This has a raft of factors such as confirmation bias, hyperbolic discounting, choice overload, loss aversion, endowment effect, anchoring, mental accounting and social proof. It will pay to be attentive to when you present what information and the frame of mind decision makers are in. The reason this is important is that that regulators and payers in different countries, hospitals or regions can make different decisions from the same evidence, so something else is going on.

And so, a comment on pricing. To short-circuit this challenging gated process, it is common simply to cut the price, i.e. discount. Discounting is a quick win trick that only works if payers are trying to reduce present costs, which they all are. However, payers with their eye on the future are more likely to be interested in pricing arrangements that address uncertainty over time and so will be amendable to arrangements such as coverage with evidence development or outcomes guarantee. If they are focused on whole system issues, they will be interested in care pathway (cohort/whole system) pricing for instance. If, though, the future costs are a priority, think about capitation arrangements, or simple price/volume but be mindful that this last is like selling products door-to-door in the 1950’s.

I happen to think care pathway pricing of carefully demarcated patient populations with costs taken over say 5 years is a better pricing model for both parties. Value can be demonstrated on both sides along with evidence of such things as improved adherence (to reduce waste by non-responders) or diagnostic decision support aids to address misdiagnosis and sources of medical error or reduce time to the correct diagnosis, in the case of rare diseases for instance.

This article is designed to emphasise product value determination under conditions of uncertainty to arrive at a sustainable long-term relationship.

Mixed economy of healthcare is more intelligent than a supertanker

From the UK Guardian: private healthcare providers.

The research on comparative performance of for profit and not for profit healthcare providers is well developed, so it is surprising to see such a weak quality assessment about private providers in the NHS.

The NHS is a very difficult customer for a number of reasons, primarily the glass box of public scrutiny and politics. But many countries successfully navigate public scrutiny of providers in general. So what is the story behind this newspaper article?

  1. It is true that many private providers have handed back their contracts to the NHS usually because either they didn’t do their sums properly, or found the environment more challenging than they expected. But a significant number of NHS providers are in substantial financial trouble, too, and they can’t hand back their contracts, but instead get a state bail-out. This is hardly a level playing field of course, but indicates that the financial regimes for public and private providers is different and that the commissioners may be unable to purchase care services from a mixed economy of providers.
  2. Private providers are often accused of not providing the highest standards of care. This is an interesting problem as virtually all the doctors on private contracts work the bulk of their time in the NHS and all belong to their Royal Colleges and the GMC regulates doctors, not just NHS doctors. It is worth being reminded that the NHS employs 57% or so of all registered nurses, while 37% work in private settings and an additional 7% in nursing homes. As well, the public sector is not the major employer of pharmacists and nutritionists, and the list goes on. Are these health professionals agreeing to work in less well-run and managed private facilities or do they believe they are providing a higher personal standard of care.
  3. Yes, the private hospitals are free-riders on the training system for health professionals as they don’t participate in that system, but there is no reason they couldn’t. They also don’t have emergency facilities, which is pointed to as evidence of poorer standards of care as a patient in trouble would need to be transferred to an NHS provider. But in the NHS, A&Es are being rationalised, converted into trauma centres, and patients transferred to superior treatment facilities when a particular hospital cannot cope. Patients and ambulances are apparently queuing outside the A&Es. There could be a case to be made for private urgi-care centres (18 hours a day, out-patients only), but the private sector would need to made a strategic decision that they wanted to elevate their service mix above elective, private insured care. Until they do something to fix that fault line, they’ll likely be continuing target.
  4. As for the money, in the total scheme of things, private contracting is still less than 10% of total expenditure on the NHS. The article typically falls into the trap of making numbers look big, when as a proportion they are quite small.
  5. NHS managerial expertise is generally what is used to run private hospitals. Many former NHS managers work in hospital contract management, where a hospital is run by a management team on contract.
  6. Circle had trouble not because the Hinchingbrooke is particularly challenging but because the managerial and financial environment was unsustainable partly because of underfunding of the contract by the NHS among other reasons.
  7. It is worth keeping in mind that while the US is seen as a bastion of private healthcare, the majority of providers are not-for-profits (including the hospitals associated with universities where the care is of world class excellence) and that the US care system is over 50% funded from the public purse. Private care providers exist globally and we might usefully look to countries in Asia, such as South Korea, to see what at future healthcare system might look like. Think Samsung.

What Cognology would say:

The government does not consider healthcare as a whole system but fragments regulation by ownership type; this is the root cause rather than something intrinsically problematic with private care, especially given the substantial evidence of problems with NHS care. This means they have failed to create a single regulatory environment to cover both public and private providers which would benefit all citizens in the country regardless of their personal choices. Taking this one step further, embedding intelligence in organisations, hive mind type logic which drives complex adaptive systems, would alter the objectives of regulators and embolden the component parts toward greater autonomy.